Daily Review: “Do Cryptoassets Really Capture the Value of Something at All?”

The value of a traditional security-like financial asset is straightforward to model, and usually translates into the famed discounted cash flow equation. Its subset of variables is widely discussed in the financial literature, and, although most of them turn out to be hard to predict in practice, empirical data surfaces enough correlations for investors and analysts to rejoice in their models.

In the case of security tokens, the model may still apply. In the case of everything else in cryptoland, it doesn’t. – Felipe Gaúcho Pereira, Co-founder, Paratii, On immaturity of tokenized value capture mechanisms

Pick #1. On the immaturity of tokenized value capture mechanisms

There is no such thing as winning in a red queen race, just like in cryptoland (Bitcoin aside, for some); the best you can ever do is run faster than the competition. To succeed is to survive. No differentiation is permanent, unforkable or unmatchable.

There’s no more moat and piranhas to hide behind. Value capture is not going to show up in the X-ray of a product’s life cycle, but rather be modeled at the protocol level. Investors should pursue assets that accrue the most value, and learn how to *capture *this value themselves. Or, on a deeper level, understand which agents are going to capture this value in new market configurations, and invest directly in them (think Radar Relay, a non-custodial 0x-based exchange with less than a year of activity and that has recently surpassed a million dollars in daily trading volumes).

Just like CPU mining has evolved into more specific strands and eventually even spawned the practice of spec-mining, token investing may be evolving towards active token investing. The Decred bag-holder who doesn’t know how to stake is being diluted by inflation day after day. The Livepeer fan who is not delegating towards reputable transcoding nodes is missing on higher returns block after block. There are even virtual mining pools for stake-based protocols already being formed – definitely a specialized form of investment!

Analyzing value accretion mechanisms is an exercise to be done before injecting capital in a new token, but also to be revisited consistently. Open-sourced networks can’t hold CAPs long enough to sustain differentiation or value capture in the form of economic rent. But individuals who learn to operate within these networks early on can still capture a bunch of value for themselves. Just don’t expect it to be easy, predictable or passive like joining a cap table once and waiting for something to happen. – Felipe Gaúcho Pereira, Co-founder, Paratii

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Pick #2. SoftBank Leads $450M Investment in Paytm Mall

Online retail firm Paytm Mall has received a capital commitment of about $450 million from Japan’s Softbank Group Corp. and existing investor Alibaba Group Holding Ltd in a new round of funding that will come in four tranches.

We are committed to increasing the business growth for the offline merchants, who serve their customers’ daily. The funds will be deployed for empowering the shopkeepers with superior technology, building superior logistics, strengthening the Paytm Mall brand and bringing an enriching experience to the customers, Amit Sinha, Chief Operating Officer at Paytm Mall, said.

Paytm Mall claims a run rate of $3 billion in GMV (gross merchandising value). Offline stores registered on the platform drive over 60% of sales. It has currently partnered with 75,000 stores and aims to triple its offline presence by the end of 2019. Paytm Mall currently serves 700 towns across India.

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Pick #3. China’s First Smart Hospital Featuring AI Opened in Guangzhou

The AI system can provide recommendations to patients before they arrive at the hospital and help them make appointments, as well as payments through the WeChat account of the Hospital. A smart diagnosis system helps doctors prescribe medications. Patients can also establish their medical profile through facial recognition on WeChat.

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Pick #4. South Korea’s Capital Is Planning to Launch Its Own Cryptocurrency

Seoul is developing its own cryptocurrency – the S-Coin – to be used in city-funded social benefits programs. Mayor Park Won-soon revealed that the city will create a fund to support the advancement of blockchain technology and related startups.

As Seoul is the world’s leading city in the field of information and communications, including the Fourth Industrial Revolution, I think we should study new technologies such as blockchains, he said.

Park thinks that the blockchain can be applied to all bureaucratic administrations in Seoul, such as the public transport system operated by Seoul City and the provision of youth allowance.

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