Is Bitcoin a Safe Haven Asset?
1) DApp ecological observation in the first quarter of 2020
The data analysis platform DappRadar released a DApp ecological observation report for the first quarter of 2020, covering most of the mainstream blockchains, including: Ethereum, Tron, EOS, WAX, Loom, etc. Here are the relevant points:
Ethereum continued to grow in the first quarter of 2020, with a 64% year-on-year increase in the number of unique daily activities (year-over-year) and a 371% year-on-year increase in dollar value; the two DApp categories, DeFi and Exchanges, saw the fastest growth in the number of independent daily activities
Tron DApps’ unique DAU down 15% YoY, 85% in value
EOS DApps average unique DAU down 74% year-over-year and 7% in value
Of the other smaller blockchains, only WAX and NEO saw a significant increase in user network activity. And all because of the release of new DApps
Ethereum still maintains its leading position in the DApp space
2) Review the development of DeFi in the first quarter of 2020
In Q1 of 2020, "the value of locked ETH reached a record high of US$1 billion", followed by the "black Thursday crash on March 12". These two events defined DeFi. In Alethio's 2020 Q1 DeFi report, Alethio analyzed them in detail and interpreted specific DeFi protocols, user behavior, DEX performance, etc.
The development of DeFi protocols can be properly measured by three data points: the number of ETH locked, the number of unique addresses (used as an approximation of unique users), and the number of interactions (i.e. network activity). With these three numbers, we can see how different DeFi protocols grew or stagnated over time in the first quarter.
As shown in the figure below, from the end of January to the end of March, the number of ETH locked positions has decreased. There is no doubt that this is due to the liquidation of orders for locking ETH in exchange for stable coins in the entire market. Even before the market frenzy in March, the number of user interactions increased steadily throughout the quarter, increasing by roughly 20,000 every two weeks, until a significant increase occurred in mid-March.
Related report recommendation:The Block Research Report | March 2020
CoinDesk Quarterly Review, Q1 2020
3) Comparing the return rate of DeFi and HODLing
After a rare market crash, many crypto asset investors are pondering: Can their assets withstand the test of current market volatility?
Rebecca, the beauty responsible for the growth of DeFi one-stop application Zerion, wrote a blog to compare user participation in Uniswap (providing funds for liquidity pools), Compound (lending interest rate), TokenSets (ETH-20&50-day MACO strategy) and the same period ETH/BTC HODLing strategy. The data is as of April 13, which also means that the market crash on March 12 is included.
In the end, Rebecca concluded that participating in DeFi is a more sensible decision.
4) The Onion Model of Blockchain Security
In this article, Hasu explores blockchain security. He pointed out that the security of the public chain is like an onion, and each layer adds additional security. He believes that the defense layer has these: cryptographic guarantees, consensus guarantees, economic guarantees, and social guarantees.
Blockchain is simply a method of automating the process of establishing social consensus among participants, a tool for maintaining and updating a shared database. The state of this database is valuable to participants, and they are strongly incentivized to recover the system when it crashes.
For example, if a cryptographic hash function is broken, the social layer can reach a manual consensus (under the guidance of technical experts) to replace the broken part.
Likewise, if a consensus attack passes the economic security layer, the social layer can still manually reject it. If an attacker with a majority of computing power begins to DOS the network by mining empty blocks, and fully accepts his economic loss, the user can decide to change the PoW function, thereby manually removing that miner's control of the network.
As we have seen, the only way to kill a blockchain permanently is to either lose interest in the distributed ledger itself, or break the system beyond repair.
An attack is dangerous when it can pierce through all layers of defense and eventually drain the social core of the system until it can no longer cover and heal those damaged outer layers.
game theorygame theoryThe propensity of people to choose in the absence of communication, perhaps because it seems natural, special, or relevant to the chooser).
These core values are constantly renegotiated, and not all users will agree on all attributes. However, the stronger the agreement around a particular value, the more likely it is to be supported in times of trouble.
5) Is Bitcoin a safe-haven asset?
The narrative about Bitcoin’s value has shifted over the years and is still being debated today. Bitcoin has been described as electronic cash, censorship-resistant digital gold and an anonymous dark web currency.
Of all the competing narratives, two are particularly important when looking at Bitcoin as an investment or store of value:
Bitcoin is an uncorrelated financial asset
Bitcoin is a safe haven asset
Coin Metrics then conducted data analysis on Bitcoin, the S&P 500 Index (S&P 500 Index), and gold, and concluded that historically, Bitcoin has not been very correlated with stocks or gold, although the correlation has been more recent reached an all-time high. But in the long run, the correlation between Bitcoin and the S&P 500 is unlikely to remain high without major changes in the fundamentals of one or both markets. But there is some evidence that the correlation between Bitcoin and gold may be starting to increase, at least marginally.
Despite short-term uncertainty amid the global pandemic, if federal banks around the world continue to pump water at a historic rate, this could become a long-term inflection point for Bitcoin.
