Outlier Ventures Weekly Brief Issue #30 View Online

The State of Blockchains
Q2 2019

Be it Bitcoin's price surging roughly three times or Facebook's, rather public entry into the space with Libra, 2019 may have been one of the most happening times to be in the space. Given past cycles of hype and price action, it is only fair that one approaches the space with a fair amount of skepticism. However, there may be emergent data points suggesting that the run up in prices this time was not solely driven by hype and speculation. Our State of Blockchains report for the quarter explores a mix of on-chain data, traction of dApps and venture financing trends to lay a story on what may be going on behind the scenes for the space. Read on to know more about what we have discovered about the previous two quarters. 

Three Numbers To Know

Markets and the weather hold one common attribute – they function in cycles. The token economy has suffered a prolonged winter throughout 2018 to Spring 2019.  However, things have been looking increasingly positive throughout the second quarter of 2019. Whilst the price of tokens are already up roughly 3 times, analysis of on-chain activity indicates that a full recovery may be imminent. Metrics such as transactions, hash power (dedicated to mining) and the number of new wallets opened have begun showing recovery signs similar to highs witnessed during the bull run of 2017. While Bitcoin’s rapid surge from a low of $3,200 to $11,000 surprised many analysts, it could be noted that price is simply following other indicators driven by actual demand in comparison to pure hype of the past. 

  • $822 Million
    The total amount of venture capital raising, specific to blockchain related ventures is currently at $822 million across 279 deals. Slightly over half of these deals were specifically for seed stage ventures. This is an indication of the fact that even though prices dipped through 2018, the ecosystem’s ability to attract entrepreneurial talent and early stage investments have not slumped. Exchanges as an investment theme continue to dominate in terms of size of deal due to their relative maturity in stage and profitability
  • 68,000,000 TH/s
    Compute power dedicated to mining Bitcoin has reached new all time highs, surpassing levels previously seen during the bull run of 2017. In other words, it is now harder than ever before to mine Bitcoin. A similar trend is evident with Litecoin. The resurgence in interest in mining Litecoin may be fuelled by its halvening in the coming month. Hash rate has roughly doubled since last year’s low in November. It could be taken as a measure of confidence in Proof of work tokens as heavy investments are required to set up mining facilities.
  • 157,000 
    Decentralised applications see roughly over 157,000 users in average each day. They are growing beyond test use-cases and slowly finding traction. The average value of a transaction on an Ethereum based dApp is at $40, while the same figure is as low as $5 for EOS and Tron. This disparity may be fuelled by the nature of fees on individual chains. However, challenges in user experience, discovery and scalability may be hindering adoption. Brave continues to be the leader in terms of adoption with over 5.5 million monthly average users reported earlier in the year. 
Unlike the previous run up of 2017, there is a well developed ecosystem to support the token economy today. Early signs of use is becoming evident from on-chain activity. For more on why this is optimistic for the industry, we recommend reading the entire deck on the State of Blockchains Q2 2019 in our latest report here. 

Get Involved

If you are looking to engage with our Diffusion Program please get in touch with the respective contacts below:

What The Team Is Reading
I think the biggest thing I’ve learned this year is that when you have a plan and it’s working, the work is boring; just keep showing up. Consistency.

Making big changes to the plan feels like you’re doing something but is often counter-productive. Good investment is boring
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