Weekly Altcoin Update – Week 10

This week's HoC Weekly's Altcoin Update will highlight Zilliqa.

Zilliqa

XR-Metaverse

The Metapolis is one of the spearheads of the renewed Zilliqa corporate vision. The XR-Metaverse is a highly immersive and gamified platform, allowing users to engage with their favourite brands. Players and brands can acquire domes, a fully customizable plot land, whereby real-estate, e-stores, games and concepts can be developed.

Metapolis SWOT

Strengths

The Metapolis is the first metaverse launched by a layer 1 protocol; therefore, Zilliqa has a significant first-mover advantage. However, the cryptocurrency market is fast-changing, whereby competitive advantages are quickly dismissed. Nevertheless, the ZRC-2 ecosystem can capitalize from Metapolis and benefit from the new possibilities regarding NFT implementation, fan engagement, brand building and more. Furthermore, Metapolis could attract new developers and investors to launch and fund upcoming ZRC-2 projects. The current ZRC-2 ecosystem is thin, with currently approximately 50 tokenized projects. The Metapolis will be business and consumer-oriented, allowing companies to acquire a 'Dome', a fully customizable plot of land, and consumers to utilize supported NFTs. Thus, giving ZRC-2 NFTs more utility and, therefore, more use-value.

Weaknesses

The Metaverse technology is still very early; therefore, multiple technology flaws exist. The graphical performance of metaverses is significantly below the traditional gaming industry benchmark, making these metaverses not as attractive for traditional gamers. Moreover, development stages are high and include relatively high costs due to many 'moving' parameters (e.g. implementation of NFTs, avatars, other blockchain-related assets). The VR/XR hardware remains expensive, partly due to global supply-chain issues but mainly because of hardware immaturity. To experience a truly immersive metaverse, the player needs a GPU with significant processing power. Currently, these GPUs are extremely expensive and not attainable for most retail consumers.

Opportunities

The Metaverse industry is a fast-approaching industry; therefore, it is expected to mature over time, and the number of financial and technical thresholds will significantly decrease. The technology can be used for multiple industries, allowing for various use-cases (i.e. Training, education, gaming). Thus, developing a metaverse, even if it is barebones in the beginning, could significantly increase the digital footprint and, therefore, the project's reach. Additionally, as highlighted earlier, a metaverse allows for unique user experiences.

Threats

The primary threat for Zilliqa with the upcoming Metapolis is the potential of a conflicting brand image. Currently, the brand image of Zilliqa is; a fast, inexpensive and green layer 1 protocol. However, an XR-Metaverse isn't necessarily an extension of that brand image. Therefore, it could lead to a situation whereby the investor is unsure of the ecosystem's operations. Hence, investors can be wary of investing in an ecosystem where the operational direction is unclear.

Metapolis integration example

The eSports industry is one of the quickest growing global entertainment industries, with multiple international brands sponsoring events and eSport teams. The Zilliqa focus on eSports is evident by onboarding multiple global eSport brands. The ecosystem currently has partnered up with three major brands, and it is expected that these will play a vital role in Metapolis. The global audience of esports is approximately 450 million people, whereby most people are 18-30. Thus, the prominent audience of eSports events is youngsters. The global audience of the cryptocurrency industry is the younger generations, with 44,3% being millennials. Therefore, there is a clear overlap between the audience of eSport events and cryptocurrency investments. However, claiming that the eSports audience is per definition interested in cryptocurrencies is relatively far-fetched. Nevertheless, the probability of an eSport enthusiast investing and engaging with cryptocurrency is significantly higher than a baby boomer.

Liquidity and accessibility

The Arrow-Debreu paradigm suggests that the market is efficient, and the liquidity is excellent under certain economic assumptions (i.e. perfect demand, competition, independence). In practice, imperfections are present in all financial markets reducing the overall liquidity. The ZRC-2 ecosystem currently suffers from not having a fiat off-ramp, forcing users to utilize CEXs or to bridge over their assets to other chains. The upcoming Bifinity payment processor, powered by Binance, partnered with Zilliqa to provide fiat on/off ramps on the ZRC-2 ecosystem. Currently, only IDR and SGD are supported on the Zilliqa ecosystem; however, a BUSD pair will significantly help kickstart upcoming and established ZRC-2 DeFi projects. Additionally, making ZRC-2 DeFi more accessible through more complex trades (e.g. hedges) without bridging ZRC-2 assets to other chains, essentially lowering TVL.

Near Future

The upcoming few quarters will be vital for the ZRC-2 ecosystem, with many exciting events and partnerships. The ecosystem will continue onboarding aggressively new partners to expand the ZRC-2 ecosystem and increase TVL. Primarily, the ZRC-2 DeFi industry is actively being worked on by Zilliqa Research and close partners (i.e. Ignite). The upcoming Zilliqa event in Miami will be a milestone within the ZRC-2 ecosystem and the start of a revised vision.