New listings on KuCoin: FT Fracton Protocol may be a ramp for crowds to enter the NFT market
In 1994, Jeff Bezos was 30 years old and vice president of a prestigious hedge fund in New York. He seemed to have reached a dream point in his career, with a position enviable by a large majority of professionals, which gave him a lot of money and prestige. Everything was going well in his life, until one day he realized that an industry, that was generically called “Internet”, was growing at a rate of 2000%+ per year. Can something grow at that rate? Does this happen many times in a lifetime? Should he give up a career and a secure future and risk an adventure in this Internet thing?
The rest is history.
In times like these, it is difficult to identify gems because most crypto projects look attractive. Let us think for a moment if 20 years ago we would have had a platform like KuCoin that would show us new releases that promised to become fabulous successes like Google, Facebook, Amazon, or Netflix, in an industry unknown until then such as the Internet, which was growing at insane rates that few understood, as is the case today with the crypto sphere. Anyone business oriented with a curious and investigative spirit should be drawn to this potential gemstone discovery activity. If we are careful enough and do a deep and judicious analysis, KuCoin offers us a unique opportunity to quench our thirst for exploration, listing tokens that do not appear on other exchanges and that represent potential gems. You just have to know how to evaluate them.
KuCoin has a definite strategy of attack: to release new products in an incessant and overwhelming number. It is impossible to keep up with all their proposals, and there are activities every day for all targets. Let us remember the slogan “The People’s Exchange”. On the subject of gems, KuCoin has recently added a new feature called GemBox. You can see it in the mobile app when you access your KuCoin account.
By clicking on the GemBox, we can see a lot of information about the gem of that day, in this case, BRISE. Price, rating, percentage of whales and pros who are buying or selling, how many traders traded in the last hour, reasons for buying, and other particular characteristics of the token.
I repeat what I said earlier. Imagine that we could have had such a tool at the end of the 20th century with the explosion of the Internet.
Although KuCoin is designed to serve all kinds of investors, it is widely recognized as the “People’s Exchange”. KuCoin is by far the top 1 altcoin exchange, with 700+ assets and 1,200+ trading pairs. A number of crypto gems like BLOCK, CHMB, VR, KMA, and DAO had their primary listing on KuCoin. It stands to reason that KuCoin is the go-to platform for trading and investing in gems.
KuCoin currently provides Spot trading, Margin trading, P2P fiat trading, Futures trading, Staking, and Lending to over 20 million users in 207 countries and regions around the world. According to CoinMarketCap and CoinGecko, KuCoin is a top 5 crypto exchange.
The question is: is it worth hunting for gems as a routine business?
I am convinced that it is worth it. After all, what else is a businessman or businesswoman other than a gem finder? Doesn’t the differentiation that a businessman or businesswoman proposes in their business mean in itself a “gem”?
Over the past 7 years, cryptocurrencies have skyrocketed from a market capitalization of the top 100 coins of $5.2 billion to a current figure of $1.7 trillion (January 2022). Bitcoin alone has a market capitalization that would place it among the 10 largest companies in the S&P 500 index.
Cryptocurrency is one of the most recently-introduced and fastest-growing industries around the globe. Though the first cryptocurrency was only created a mere 13 years ago, the reach and value of digital currencies have soared.
The global crypto market is projected to grow with a CAGR of 56.4% between 2019 and 2025. By 2026, the global Blockchain technology market is expected to grow with a CAGR of 68.4%. In January of 2016, there were 5.78 million crypto wallets worldwide, and as of November 2021, there are 79.3 million crypto wallets.
With these figures, are we still wondering if gems are worth hunting for?
The price of an Amazon share was $0.78 in 1998 and today it is $136.97.
The new tokens listed on KuCoin in July and August 2022 are as follows:
Open Leverage (OLE)
Cult DAO (CULT)
Lido DAO (LDO)
Origin Dollar Governance (OGV)
NFT ETF — hiBAYC
NFT ETF — hiPUNKS
Fracton Protocol (FT)
NFT ETF — hiENS4
EVERY GAME (EGAME)
NFT ETF — hiSAND3
We are going to do a fundamental and technical analysis of one of these tokens, with the tools that this young industry has.
The token chosen this time is FT Fracton Protocol. My nose tells me that it could be one of those great opportunities that allow a massive entry of new users to the NFT business.
On August 8, 2022, KuCoin hosted a very interesting AMA session with the Product Manager of Fracton Protocol, Bill.
1) Fundamental analysis
As the popularity of NFTs rises, so do their prices, which is a very good thing for investors, collectors, and artists who jumped on the NFT ecosystem early. But what about those people who are just entering? The vast majority of new entrants cannot afford to buy the more expensive NFTs, and for this reason, fractional NFTs are born. The concept of fractionation is similar to owning shares in a company. It opens ownership of NFTs to multiple collectors, making them accessible to anyone rather than just whales.
A fractional NFT is simply an entire NFT divided into smaller parts, allowing different people to claim partial ownership of the same NFT. As in a cake that can be cut into several pieces to serve several people.
The idea of fractionating an NFT is based on the Ethereum blockchain structure. The ERC-721 and ERC-1155 token standards are the most common standards used to create NFTs on the Ethereum blockchain. For its part, the ERC-20 standard is used to make altcoins and other fungible tokens. The idea of the fractionation is then to implement a smart contract to generate multiple ERC-20 tokens linked to an indivisible ERC-721 NFT. In this way, anyone who has any of the generated ERC-20 tokens can own a percentage of the linked NFT.
The Fracton Protocol is a fractional trading platform for blue chip NFTs, allowing users to buy, hold and trade fractional tokens on the ERC-20 and ERC-1155 standards.
If you don’t have enough money to buy a Bored Ape, now you can buy a fraction of your favorite BAYC. At first glance, this can mean an avalanche of idle money. Money that was previously not used or used elsewhere can now be redirected to the fractional purchase of NFTs, fulfilling the dream of many collectors that could not be fulfilled due to not having enough money.
Fracton Protocol is an NFT liquidity infrastructure, with 2 split steps (ERC721-ERC1155-ERC20), that provides permissionless and Oracle liquidity for all types of NFTs. Fracton Protocol built a smart contract system to increase protocol efficiency, reduce gas fees, and maximize asset security. This project is dedicated to abstracting the financial layer beyond the usefulness of NFTs. Fracton Protocol can be easily integrated into CEX and Dapps, and also offers solutions for cross-protocol liquidity providers and fractional NFT market makers. Fracton Protocol currently supports BAYC and PUNKS slicing. However, the project looks to expand into other flagship NFT projects over time.
Fracton protocol is fully decentralized. Users can pre-screen NFT collections before splitting them, actively manage NFTs, and distribute related profits. Fracton Protocol creates the Meta-Swap mechanism that supports swapping between ERC-20, ERC-721, and ERC-1155. Additionally, it aggregates valuation information from many users to provide fairer prices for NFTs, laying the groundwork for creating NFT financial products such as perpetual NFTs and ETFs.
Fracton Protocol Token (FT) holders play a key role in shaping future government of proposals and votes without the permission of the Fracton Protocol.
The first step of the fractional process of the target NFT is open fundraising. After receiving your People’s NFTs (i.e., the ERC-1155 fractions), you can swap them for smaller pieces of ownership, the $FFTs at a 1:1000 ratio. If the fundraising round succeeds, the Fracton Protocol will acquire the targeted NFT and deposit it into the treasury. Then, the fractions owners are allowed to redeem any NFTs with enough People’s NFTs instantly. If the fundraising round fails, Fracton will use the funds raised to repurchase the accrued $FFT released in this round, ensuring the exchange rate is valid. Meanwhile, fractions owners can trade $FFTs in DEX and cooperative CEX, seeking arbitrage opportunities.
The business model is very original, it is fair to admit it.
Fracton Protocol does not have a White Paper, but it does have a very useful channel called the Fracton Protocol Academy that provides a lot of information about the quite complicated processes it carries out. There is also more or less extensive documentation of the project on the site, which in a certain way replaces a White Paper.
It is difficult to think of traditional fundamental analysis in the field of cryptocurrencies. When one does the fundamental analysis of a company to arrive at a valuation and from there infer the price of the shares, one part of historical data that can be projected forward in time, to then discount a cash flow with a certain rate and obtain a value that is the sum of the present value of cash flow “during” explicit forecast period plus the present value of cash flow “after” explicit forecast period, the latter being known as “continuing value”. We look for the “intrinsic value” of a stock, or, in our case, of a currency.
The usual fundamental analysis that we can carry out with any company gives us data referring to earnings or ratios that reflect the book value of an asset. The problem with cryptocurrencies is that it is a totally different universe and these metrics are outdated, so to speak.
The problem is not very big with Bitcoin and Ethereum, since we can currently consider these projects as commodities and do a more or less traditional fundamental analysis. The problem occurs with most cryptocurrencies, and especially with nascent projects, some of which could be considered “gems”.
However, many analysts are beginning to seriously consider the topic of fundamental analysis in cryptocurrencies.
To get started, we should consider the infrastructure of the coin.
Being FT an ERC-20 token, Etherscan can give us some information.
There we see that on August 24, 2022, the Max Total Supply is 100,000,000, that there are 16 holders and 33 transfers. (Just for the sake of reference, at the same time, USDT, another ERC-20 token, has 4,382,591 holders and 155,141,935 transfers. Sometimes comparing ourselves to the big brothers gives us an idea of how far apart we are, and also how much unites us).
CoinGecko shows us a token price of $1.26 (Aug 26, 2022) and a traded volume in the last 24 hours of $1,872,264, but it does not allow us to make a very useful comparison with other cryptocurrencies, because the market capitalization of FT could not be verified. This occurs because the number of tokens in circulation cannot be determined with certainty.
As we do not have a market capitalization number, we cannot calculate other fundamental analysis ratios that are usually calculated for other cryptocurrencies.
Since this post can be a review guide for potential upcoming gems, we mention them anyway.
> NVT- Network value to transaction ratio. It is calculated by dividing the market capitalization of a coin by its daily trading volume. The higher the value of this indicator, the more likely it is that we are in the presence of a bubble. Typically, this occurs when the NVT ratio is above 90–95. A decreasing ratio indicates that the cryptocurrency is becoming less and less overvalued.
> MVRV- Market value to realized value ratio. The realized value discounts lost or forgotten coins in inaccessible wallets. To obtain this ratio, we divide the market capitalization by the realized capitalization. A ratio above 3 suggests a sell-off could occur as traders take profits as a result of the currency being overvalued. If the value is too low and below 1, the market is undervalued. This situation would be a good buying point, as buying pressure builds and pushes the price higher. In any case, it would not make sense to calculate this ratio for FT or for any other coin that is just beginning its journey, since it is assumed that there would still be no “forgotten coins” in wallets.
> Stock-to-Flow ratio. We calculate this indicator by taking the total global circulating supply and dividing it by the amount produced each year. Diminishing returns lead to a higher ratio that reflects scarcity, making the asset more valuable. In this case, it also makes no sense to calculate this ratio for FT or any other potential gem, due to its short life on the market so far. However, as the crypto ecosystem changes from one day to the next, we could consider shorter periods than one year to calculate this ratio and evaluate the scarcity of FT in, for example, a quarter.
Continuing with the fundamental analysis, on GitHub we see two repositories and two followers, and there doesn’t seem to be much activity in recent months.
I couldn’t find any information about the developer team, although the two followers listed on GitHub are senior. There is also no information about the Tokenomics of the token.
Due to the short life of the FT token, we cannot obtain much more infrastructure information at the moment.
As for FT’s competitors, we can find other proposals, such as Fracada on the Cardano blockchain, Daofi, Fractional, Liquid Marketplace, Otis, and Unicly. The fractional market seems to be populated with new proposals, as a result of the high prices of NFTs. However, the competitors mentioned are a mix of exchanges, NFT platforms, and marketplaces. We do not see for now a direct competitor of Fracton Protocol FT, totally dedicated to the NFT fractionation business.
As we said before, the fundamental analysis aims to forecast the price of a currency based on its infrastructure performance, in the medium/long term, and with a mathematical basis of the evaluation of discounted cash flows. However, for a potential gem that has been recently launched/listed, this cannot be done as long as the coin has no “history” in the market.
For these cases, business analysts developed some prediction models, which are applied in the Venture Capital industry to evaluate promising StartUps.
One of the best-known methods is the so-called “Hockey Stick Method”.
The hockey stick method is based on an undeniable truth: all companies that are successful today were once StartUps, and their growth curves, at the beginning of their operation, are very similar. In a nutshell, when Amazon started operations, it had a growth curve equal to that of FT Fracton Protocol. Amazon grew in a way that we all know. Could any similarity be inferred, considering that FT is a potential gem?
The name “hockey stick” derives from the shape of the growth curve of most companies, once they pass the critical periods of early development.
For example, see the “hockey sticks” for Alphabet (Google) and Meta (Facebook):
Can you think of such growth for FT?
As is often said in the VC world, nobody believes in the hockey stick model, but nevertheless, the hockey stick cannot be missing from any pitch, because investors want to see potential investments that multiply many times the initial investment. On the one hand, a rational investor does not believe in the optimistic projections of the entrepreneur who presents them, and on his/her part, the entrepreneur usually does not have a full idea of how his/her StartUps can grow. The result is that all the analysis is then based on some hockey stick from a similar company, and then unrealistic and unjustified growth projections can come out.
On the PricePrediction site, you can see the price forecasts of all cryptocurrencies with a horizon of 10 years. These predictions are undoubtedly based on the hockey stick method, if only in part, as the company claims to work with AI models and other disciplines.
If we take the forecast price figures for FT over the next 10 years on this site and plot the corresponding hockey stick, we have the following result:
Fracton Protocol Price Prediction 2022, 2025, 2030 | FT Price Forecast
If you're looking for Fracton Protocol price predictions/forecast for 2022, 2023, 2024, 2025, 2030 and want to know…
With all these data, we could say that we have a more or less coherent fundamental analysis of FT. Afterward, each analyst will draw their conclusions.
1) Technical analysis
We already know that, unlike fundamental analysis, technical analysis looks for short-term results, sometimes in a few minutes. Technical analysis is very useful for people who want to make money in the crypto market by buying and selling a currency in the short term, as opposed to fundamentalists who are more inclined to invest in the long term.
For this, traders have a large number of indicators, and their timely application can mean the difference between a loss and a profit in the trade. That is why there are traders who win and others who lose with the same crypto and in the same period. It’s like being in front of the chessboard, evaluating several moves, making a decision with one of them, and seeing what happens with the rival. Do not forget that the money that some trader wins is the money that another lost. Therefore, the indicators are not more important than their correct interpretation.
On the KuCoin site, for each chart that represents the movement of orders in the market for a certain pair of currencies, we can find about 100 indicators, divided into the categories “trend”, “momentum”, “volatility”, “volume”, and “others”. Each trader, in addition to making his/her own drawings and interpretations, chooses which indicator to use and how to use it, according to his/her style or the need of the moment. But it should never be forgotten that it is very unlikely that a single indicator will give us exact information for decision-making. It will always be necessary to use and combine several indicators to have a more professional look, especially considering that we are working in the very short term with this type of analysis.
From KuCoin's main page, go to “Trade”, and there to “Spot trade”.
The chart shows support for FT at $1.11.
Then click on the “Indicators” icon.
I am going to use MACD as a “Trend” indicator. MACD, short for moving average convergence/divergence is designed to reveal changes in the strength, direction, momentum, and duration of a trend in a cryptocurrency’s price.
Click on “Trend” and then on “MACD”
We see a Signal-line crossover. A “signal-line crossover” occurs when the MACD (blue line) and average (red line) cross; that is when the divergence (the histogram) changes sign. The standard interpretation is to sell if it crosses down through the average line (a “bearish” crossover). Normally, the trend in the stock is about to accelerate in the direction of the crossover.
The next indicator I choose is RSI from the “Momentum” category. RSI, Relative Strength Index, shows the price strength of a currency by comparing the individual upward or downward movements of successive closing prices. The RSI ranges from 0 to 100. Traditionally, the RSI is considered overbought when it is above 70 and oversold when it is below 30. The RSI can also be used to identify the general trend. What the RSI does is compare the recent gains in the price of a coin to its losses and convert this information into a concrete number ranging from 0 to 100.
Using the RSI, we see that the recommendation of the previous MACD indicator is not confirmed, as the index bounced around 40% and shows to the upside, as seen also in the price of FT which is now around $1.15.
Finally, I am going to use a “volatility” indicator, the so-called “Bollinger Bands©”. Bollinger Bands© are two curves that wrap around the price chart. The distance between the upper and lower curves, equal to four standard deviations, is a measure of the volatility of the asset price. Normally, if prices exceed the bands, it indicates that the market is overbought (if they go above) or oversold (if they go below). If the bands narrow on the prices, it is indicating that the value is not very volatile, on the contrary, the bands widen if the value is volatile. Its joint use with other indicators helps to determine with high probability the tops and bottoms of the markets. Something very important that emerges from the practice of trading is that, in the short term, approximately 80% of prices occur within the Bollinger Bands©.
We see that the bands are very far apart, announcing high volatility. The central band is a moving average. According to this indicator, we have a high margin to operate, whether for purchase or sale and in no way can we speak of a marked trend.
But the really fascinating thing about trading on a crypto market is that, when we started this post, the price of the token was $1.11, and an hour later we are around $1.20, which means 8.1%. In other words, if you invested $10,000 in FT, in one hour you could have earned $810. You too could have lost them.
Now, if you have a heart condition, this business isn’t going to help you much.
The ever-increasing prices of some of the more popular NFTs are not affordable for many, preventing smaller investors or collectors from participating in the NFT space. Fractionating an expensive NFT reduces costs and makes it accessible to more people.
With the growing popularity of NFTs, popular collections tend to go up in price a lot. This makes some NFTs accessible only to a few wealthy investors. With fractional NFTs, you can split ownership of ERC-721 and ERC-1155 tokens across multiple ERC-20 tokens, making them more affordable.
Fracton Protocol wants to build a bridge between the decentralized world and centralized exchanges, bringing more people into the world of NFTs, keeping more collections of high-quality NFTs, and making the NFT market potentially fabulous. All this through a novel fundraising mechanism that allows fragmented copies of a target NFT to be obtained, and at the same time allows the arbitration game inside and outside the ecosystem.
As a protocol dedicated solely to this process, Fracton Protocol has no direct competitors, although it does have several substitutes. From my point of view, it has a very high potential due to its intrinsic ability to attract money to the NFT ecosystem, money that was previously either not used or used for another business. So it is very valid to consider it as a true gem, which, if it had not been for KuCoin, I would hardly have known in time, given the unbridled frenzy of the crypto sphere that greatly limits the time for research and learning.
If you still don’t have a KuCoin account for some strange reason, I ask you to consider doing it with my referral link.
If you prefer, you can do it by entering my referral code: rJE8S2S
Thank you for reading! Decentralize yourselves as much as you can, and much more! Work for yourselves, not for others. When you work for someone else, they pay you what YOUR POSITION is worth, when you work for yourself, they pay you what YOU are worth. No one achieves financial independence by working as an employee. Live long and prosper!
As usual, none of the things written in this post are financial advice and are not intended to replace personal research. My sole intention in writing this post is informative. Several of the things discussed here could be wrong, so in no way can this post be construed as financial advice, and in no way should it replace your own research.
If you have any questions or comments, please feel free to leave them down below
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