Week 27: EOS Trades Sideways Despite Strong Fundamentals – Tradecipher

EOS 7 Day Outlook: HOLD

Market Cap: $5.43B
Rank by Market Cap: #6

July 2nd: $5.82 - June 25th: $7.30
7 Day Change: -20.3%
YTD: 126.47%
52 Week High/Low: $9.04 / $1.81

Positive:

New tools from Zeus SDK and The DAPP Network make it easier to develop apps and accelerate EOS network adoption (and token demand)
EOS proves its speed, security, and on-chain trading capability as it launches EOSFinex, its first decentralized exchange

Negative:

EOS underperforms BTC, XLM, and ETH
Sentiment hits a lull ahead of Block.One’s Voice launch

In this issue: View the PDF here

Price Reports: EOS is down 20.3% over the last 7 days - it has underperformed Bitcoin (-13.5%) and most other top coins like Ethereum (-9.4%), or Stellar (-16.4%).

Tradecipher Take (TT) #1: The launch of Zeus SDK, the DAPP network, and pEOS Privacy Fund accelerates a positive feedback loop to drive EOS adoption

Tradecipher Take #2: EOS proves its security and speed with the launch of EOSFinex decentralized exchange bringing more assets on chain
Tradecipher Take #3: Technical Analysis: EOS continues to trade sideways

Tradecipher Take #4: The market is quiet - the time to buy is soon

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Price Report:

We give EOS a HOLD this week, as it has been trading right below the $6.00 resistance (1) at low volume (2).

EOS expected to remain between $5 and $6 in the near term
If it breaks $6, buy. It will likely head to $7.00 - 16.7% gain
If it breaks $5, sell. It will likely head to $3.85 - 23% loss

Wait until either a SELL signal - price drops below $5 - or a BUY signal - price climbs above $6 - before taking action.

TT #1: The launch of Zeus SDK, the DAPP network, and pEOS Privacy Fund accelerates a positive feedback loop to drive EOS adoption

EOS adoption continues to grow, thanks to a positive feedback loop. Users are excited to engage on EOS dApps (decentralized applications for people to do things on the blockchain). That provides Developers with positive feedback, encouraging them to create more dApps This in turn engages existing users further and draws new ones in which increases EOS token demand. This week saw the release of several new products to accelerate the cycle.

LiquidApps launched Zeus SDK (software developer kit) to make the development of dApps more affordable, efficient and scalable. The DAPP Network, also built by LiquidApps, launched ‘oracles’ for EOS allowing smart contracts to pull external data securely. This address a major challenge faced by smart contract developers - difficulty sourcing good data . A new pEOS privacy fund is paying developers to build more on-chain privacy platforms.

Developers can now build better apps, faster with Zeus SDK.

Zeus SDK allows developers to create a smart contract, and test and deploy their dApp with simple one-line commands. If users seek additional functionality they can plug in their own Zeus extensions. Zeus is easy to use, easy to learn and highly customizable. Its public beta has been enthusiastically received on LiquidApps twitter with 22 retweets and 44 favorites.

The current most popular apps on EOS are gambling apps: EOSbet and EOS Jacks represent about $10M in 24HR volume, or ~11% of on-chain volume. Seven of the top 10 apps are gambling apps which only appeal to a narrow demographic. With Zeus SDK making it cheaper to create and launch dApps, the EOS community is excited to see more broadly appealing apps launch on EOS in the near future.

The DAPP Network brings real world data on the blockchain.

There are limitations to blockchains - they are blind to the outside world. Smart contracts have historically been limited to data on-chain - but The DAPP Network is changing this.

With the integration of dApp Service Providers (DSP), the DAPP Network is introducing off-chain data from the internet to smart contracts. Integrating supervisory groups into the DSP’s - the network verifies that the data used by Smart Contracts is accurate.

Data being brought on chain by this service includes content on the internet available via HTTPS, transactions on major blockchains, Wolfram Alpha data, random numbers, and scheduled and recurring transactions.

pEOS brings more financial incentive for developers to build privacy enabled apps

EOSIO in its current form is a centralized public blockchain. All transactions are publicly broadcasted and there is no anonymity. pEOS is changing this - the pEOS privacy fund is providing tokens to those who use their new privacy enabled EOS token.

The pEOS fund further accelerates the positive feedback loop mentioned previously, because it incentivizes a specific kind of development that EOS has historically lacked. As more consumers use these new platforms funded by pEOS - computing power will rise and so will demand for EOS.

TT #2: EOS proves its security and speed with the launch of EOSIO decentralized exchange bringing more assets on chain

EOS has a reported $3B of trading volume per day, however, according to Onchain FX, it has only ~$95M of on-chain transactions - creating a ratio of approximately 30:1 for exchange volume to on-chain volume. When compared to ETH - which has a much lower ratio of 12:1 - we see that the EOS blockchain is underutilized. The greater the ratio of trading volume to on-chain transactions, the more we can assume interest in a token to be a function of speculation rather than use.

But how is it possible that only ~3% of the daily EOS transaction volume actually engages with the EOS blockchain? Well, most exchange transactions are centralized, meaning they hold an internal database of transactions and the assets don’t actually move, until a user withdraws their assets.

EOSfinex increases on-chain transactions with the first ever decentralized EOS exchange

Decentralized exchanges run on smart contracts that execute on-chain. Clients place orders in their half of a smart contract. When the order is matched to the other side of the trade, the smart contract executes - adding to on-chain volume. As trading volume on the decentralized exchange increases, so does on-chain volume. As on chain transactions increase, so does demand for EOS tokens, driving prices higher.

Furthermore, exchanges require custody and order matching - this will require greater computing power to be added to the EOS blockchain, further driving prices.

In addition to increasing demand for EOS, EOSfinex will prove EOS capable of rapid peer to peer transactions and securely encrypted custody. Helping it compete with ETH as a smart contract platform - especially as a platform for decentralized exchanges.

If EOSfinex proves successful, it would represent the first major decentralized exchange - and could quickly double EOS’s on chain volume, or more, increasing the underlying value of EOS

Sentiment: The market is quiet - the time to buy is soon.

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After a sharp decline (1), sentiment is at a low for EOS, as the market waits for the announcement of the Voice platform.

The ideal time to buy is right before “Voice” headlines hit
Sell once the headlines cause a price spike - and take the profit.

As mentioned, we currently have EOS as a HOLD. However, the Ideal time to buy EOS will be after price breaks $6, but before Voice’s official launch date is announced.

That’s it for the EOS weekly report from June 25 - July 2, 2019. Make sure to subscribe to get tomorrow’s BTC + Industry report. Full reports are free until July 9, 2019, at which they will only be available for Tradecipher Members.

Additional Readings And Sources

TT#1: The launch of Zeus SDK, the DAPP network, and pEOS Privacy Fund accelerates a positive feedback loop to drive EOS adoption

TT#2: EOS proves its security and speed with the launch of EOSIO decentralized exchange bringing more assets on chain