Miscellaneous Op Piece

Crypto Tokens : A Squid Game Project

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Squid Games recently became one of the most-watched shows on Netflix.

Do you know that?

A few weeks back, a play-to-earn platform called Squid Game project was launched on the Binance Smart Chain inspired by the Netflix show. The game’s token SQUID gained popularity and was up by 35,000% in just three days despite drawing scepticism from analysts. The token had an inherent inability for buyers to sell them in the open market. The developers behind the project eventually sold their tokens for over $2 million, causing the price to crash by 99.9% in just 24 hours.

Imagine this scenario – your friend introduces you to a new crypto token that is ‘definitely’ going to do a 100x in the next 6 months. He says everyone is talking about it and that it is already up 10x since he invested last week. You fear that you will miss out on such extraordinary gains and immediately buy the same from a decentralized exchange (DEX) where it is available. Now, you call up all your other friends to talk about the extraordinary crypto you discovered recently and if only you had more cash, you would buy a lot more. The cycle repeats until the day the crypto undergoes a huge 80-90% drop caused by promoters siphoning capital off – a rug pull.

We need to embrace vigilance

Indians are familiar with the multi-level marketing (MLM) schemes that run based on hype and in drawing new investors to support the early investors. In such schemes, about 90% of the investors always end up in losses. It is unfortunate that in this information age, crypto investors are still falling for such schemes, knowing very well that most often than not, they will encounter losses.
Crypto investing need not be like this – it is as much a science-based approach as investing in bank deposits or precious metals like gold. Yes, risk levels are higher but the truth is, Bitcoin and the overall crypto market will trend up with time for long term investors. Below, we suggest a few failsafe methods to ensure your investments are safe.

What are the use cases of crypto?

Value is accrued only when the cryptocurrency is useful to a wider audience and is solving a real-world problem. Use cases determine the market adoption of that crypto and how its price action is expected to behave over time. Every cryptocurrency is expected to have a whitepaper that shares key information that an investor seeks as to how many promoters are behind this project, their profile, the use cases, design of its tokenomics, how regular the updates are and what is the eventual roadmap of the project. Every investor must read every whitepaper before they park money in a project. Also, additionally, investors should join community groups on Discord, Telegram and other media to understand the adoption that it is receiving. For example – if a community is only talking about price actions and not the utility of the project, it is a direct red flag. If you read a whitepaper and it doesn’t make sense to you immediately, do not invest in the project, whatever your friend claims it will do in the future.

Give projects their due time

One of the reasons for investors flocking to new cryptocurrencies is the allure of a quick 100x gain. No project that is meaningful and sustainable can grow 100x within a year. Projects take time to implement their roadmap and price actions usually follow this timeline. Naturally, 5-10x is a more likely multiple that investors should aim for in case of new projects. As a good practice, invest in projects that are at least 6 months old with a market capitalization that puts it in the top 500 list.

Practice sustainable investing

Indian cryptocurrency exchanges act as gatekeepers for Indian investors. Investors are advised to avoid exposure to new, untested cryptocurrencies via DEXs in the hope of an astronomical gain. It is better to invest in blue chips such as Bitcoin, Ethereum or trust the coins launched in the top Indian exchanges which would have undergone proper due diligence required before listing them. The cryptocurrency market is still in a high adoption stage and is set to grow multi-fold over the next few years. By investing for the long term, all investors today will be able to grow their wealth sustainably, without much worry.

Views on the proposed cryptocurrency bill to be tabled in the parliament during this winter session

This news of regulation comes as welcome news. However, what remains to be seen is that nobody has yet seen the bill or its contents. If we go by recent statements and our belief in the system, things are going to turn positive as against certain narratives going on right now. In the past few years, the crypto industry has grown by leaps and bounds. Even the most reputed people from the crypto industry in India have always advocated positive crypto regulations and the belief is that this bill listing is the first step towards that journey.
After the proposed bill news, we are seeing a significant downturn in prices in Indian markets. We should take note of an important factor that is causing the price fall, for you to make an informed decision, Crypto prices are caused due to market demands and are not based upon geographies as they are inherently decentralized and distributed. Due to this news, we are witnessing significant discounts only in the Indian markets. Global markets remain unaffected and we strongly believe that due to this news, the average investor is in a state of panic and is, unfortunately, selling out their losses. As iterated above, we strongly recommend everyone to do research and then make a decision, in times of higher volatility like these.

To sum it up, we are confident that smart and sensible regulations will pave the way for greater adoption of the industry and millions of Indians will embrace this new age asset class.


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