Thursday, October 21, 2021

Polkadot Bull Case, Cardano Bear Case, Cryptanalyst

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With spectacular growth of around 700% in assets, the firm has become one of the major players in Europe’s crypto investment market. Clients have access to investment products ranging from individual exchange-traded products to index-style funds that track baskets of crypto assets. In less than nine months, crypto investment firm 21Shares has built its assets under management from $250 million in January to just shy of $2 billion today.

The ability to spot leading products investors want exposure to partly comes down to the research team led by Eliezer Ndinga.

21Shares’ products include some of this year’s most popular crypto assets, including the stars of the most recent bull run, such as solana (SOL), cardano (ADA) and ethereum (ETH).

21Shares’ research is free and independent. Investors can get insight into the outlook for the crypto market, as well as the rationale for buying into the products the company launches. 

“All of these need to feel comfortable that we’re actually launching a product that has an investment rationale,” 21Shares managing director Laurent Kssis said.

This transparency and accessibility of 21Shares research is one of the reasons that star stock picker Cathie Wood joined the board of the startup in May.

“We really try to research into and spot the trends that are ahead of the market coverage,” Ndinga said.

For Ndinga, one part of the market investors are overlooking is polkadot.

Polkadot bull case

Earlier in the year, the layer-zero polkadot (DOT) token rallied by as much as 440% to a record of almost $50. It’s since come back to around $33, marking a year-to-date gain of about 252%. But Ndinga thinks there’s still room to grow.

“A lot of people think that polkadot is a smart-contract platform,” Ndinga said. “It’s not. It’s an intercommunication platform that connects different blockchains with one another.”

Layer-one represents the various blockchain technologies, such as ethereum, bitcoin and solana. Polkadot is a a layer-zero protocol and will eventually be able to seamlessly connect with any layer-ones.

This is becoming increasingly important as activity starts to increase on “ethereum killer” blockchains, such as solana and binance smart chain.

“That’s why for us in the next few months is going to be very important for polkadot because they’re going to launch their main technology set in order to connect all these blockchains, parachains,” Ndinga said. 

Ndinga thinks of each crypto blockchain like a startup hub. He sees ethereum as similar to San Francisco, with lots of startup activity. But there are also other busy hubs popping up, such as solana, which he compares to New York, and avalanche, which he compares to Boston.

Most investors still don’t understand the case for buying into something like that, because they aren’t able to see the connections between blockchains happening yet, Ndinga said.

“Ethereum has a lot of activity on, especially developer-wise,” Ndinga said. “But we see a lot of brain-drain coming from ethereum to other blockchains, such as solana, and we’re very optimistic about polkadot, because they really enable the communication between all these different ecosystems, which does not exist today.”

Looking at layer ones

“The main upgrade for polkadot to connect all these different blockchains is going to happen over the next month or so,” Ndinga said. “And that’s when we’re going to see a lot more inflows into, for example, our polkadot ETP and obviously the underlying assets in crypto services.” 

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