Macroeconomist calls business models of most altcoins unsustainable
Lyn Alden also noted that the UST stablecoin attracted investors with its high yield, but could not be used as a means of payment
25.05.2022 - 11:10
What’s new? Macroeconomist Lyn Alden said that most altcoins are based on unsustainable business models. She explained that many projects intentionally sell assets at lower prices to make more profits. According to Alden, in such models, after an initial explosive phase of revenue growth, altcoin developers may raise prices. However, this will only work if the asset is in demand for its own sake, not because it is underpriced.
If you make a business selling $20 bills for $10 each, your revenue growth will be massive and your total addressable market will be nearly infinite.But of course it's unsustainable.Many altcoin projects and persistently unprofitable growth stocks, are basically that.— Lyn Alden (@LynAldenContact) May 22, 2022
What else did Alden add? The expert believes that a similar model underlay the Terra project: investors were attracted by the high yield, but the unstable structure of the UST did not allow the asset to be used as a means of payment. The economist added:
“If you make a business selling $20 bills for $10 each, your revenue growth will be massive and your total addressable market will be nearly infinite. But of course, it's unsustainable.”
What happened before? Crypto analyst Michaël van de Poppe spoke about three promising altcoins. He urged to buy Chainlink (LINK), Decentraland (MANA), and THORChain (RUNE) as soon as possible.
Also, analysts at investment bank Goldman Sachs named a condition for the success and viability of algorithmic stablecoins. To do this, the projects need to find a wider application for payments in the real economy. The bank noted that stablecoins fulfill a need of the cryptocurrency market, allowing investors to trade less volatile assets without the difficulty of converting them into fiat currencies.
How the largest cryptocurrency exchange’s initiatives help it maintain its leadership
Nov 19, 2022
What fan coins are needed for and what events contribute to their growth
Nov 16, 2022
Why Binance set the trend to publish transparent data on available funds
Nov 14, 2022
The journalists got acquainted with the documents revealing the details of the financial condition of the exchange
Nov 13, 2022
Desperate traders with stuck assets resort to semi-legal schemes to save deposits
Nov 11, 2022
Experts predict when to expect new peaks of the crypto market by analyzing its previous cycles
Nov 10, 2022