When I made my first ever trade in the financial markets in 2003, I remember feeling that the day when I hold a substantial amount of index funds like the S&P500 or DOW would be the day I can say to myself that I have made it.
Back in those days, each trade was tagged with huge transaction fees. And you need to be able to constantly keep track of them unless you are a big trader with a lot of funds to burn.
Which is why buying and holding is the smarter way to play, especially when you have read just 1 book on Warren Buffett.
And what better to hold than reputable index funds made up by the best listed companies approved by the experts.
How times have changed.
Trading fees these days are so minimal that people don’t even think about them anymore. But the age-old investment strategy of buy and hold is still as revered today as it was decades ago.
As cryptocurrency exchanges have provided the platform for the explosive rise of trading crypto, it is only a matter of time before indexes like index funds in the stock market spruce up. After all, HODL is the motto for a lot of diamond-handed investors.
Polylastic is bringing indices into the crypto space that tracks the performance of baskets of coins and tokens. Indices are something so obviously lacking in this space, yet overlooked.
And there is good reason for that.
Most players in the crypto world are generally risk-takers with a huge appetite for risks. And many would rather pick a token with a potential 100x return compared to a traditional index delivering less than 10%. This level of return is a stereotype of an index that can be difficult to shake off.
But even though the returns of crypto indices can be expected to be low by crypto standards, it is important not to forget that the returns can also be very substantial when compared to those in the stock markets.
The DOW Jones Index for example, generated a return of about 20% in 2021. And the S&P500 gave a slightly better 25%. In the financial markets, these are very good returns that you can brag about to your friends over dinner. The average return of both assuming equal weightage in a portfolio is about 22.5%.
However compare that to the returns of Bitcoin and Ethereum in 2021 of about 50% and 200% respectively. The average return for these 2 in the same basket would be 125%.
While 125% in the crypto world can seem small when we compare it to those that has 500x, it is still a very good return when we compare it to the traditional stock market indexes.
As index funds are expected to contain assets that are “safer” than others, it wouldn’t be wrong to assume that crypto indices containing digital assets would make up of staple tokens that have proven to have longevity.
This is why crypto index funds can be a very attractive proposition for those with more reserved returns expectations and want to do better than the DOW. Which can mean the launch of credible index funds can potentially pull a lot of stock traders into the crypto space if they are not already in it.
Polylastic is set to launch their flagship product in 2022 and the crowd is eagerly waiting to see what they are keeping under the hood. What they are doing is not a novel idea, but if they play their cards right, they can potentially become the S&P500 of crypto.
However, the development of the project seems rocky to say the least. Since coming onto the scene in Q2 2021, they have been constantly teasing the public about what they are going to launch. And it has been lemons entering 2022.
It started off building on Ethereum and has now moved onto the Polygon network for better scaling and lower gas fees.
It is understandable that the team would prioritize building a strong foundation. I just hope the wait is worth it.
The POLX token is what powers the Polylastic economy. Each network transaction is taxed with the fees splitting into 3 segments of distribution to holders, liquidity, and burn. Making POLX a deflationary token.
Holders of POLX would be able to stake their tokens to be rewarded with more tokens. The current APY for staking POLX on the platform is about 85%.
Key factors for success
It should be noted that Polylastic is not the first of it’s kind. There is a project of the same idea in CryptoIndex with the token CIX100. They already have their indexes launched some time ago. And it has not been a big success to put it mildly.
There’s also the Index Cooperative that is enjoying a slightly better adoption rate and total value lock (TVL).
If we use them as the benchmark of how popular such projects are, then the future looks bleak for Polylastic.
And interestingly the current market cap of POLX is right between CryptoIndex and Index Cooperative. This is even before the launch of Polylastic’s first index.
The good news is that they have aligned themselves very well with Polygon which is becoming a major force in the industry. The latter also gave Polylastic a grant for their innovative approach to this.
Time seems to be on the side of Polylastic as there don’t seem to be any upcoming projects of note that would motivate them to move faster. But is that a sign that this project would be dead on arrival? Have talents in this space determined that the prospects of such projects are just not worth working on?
As the bigger the crypto industry expands, the higher an index would go, which in turn would drive the demand for index funds and POLX. So if we look at it from this perspective, POLX has a lot of room to grow as the crypto industry is still a baby relative to other classes of assets such as stocks and real estate.
If their indices really turn out to be the DOW Jones of crypto, Polylastic can become a very influential stakeholder for crypto at large.
What price can POLX attain?
We have yet to see any comparable projects that have attained the heights of what Polylastic is targeting.
So it’s difficult to say what range of market cap POLX will play within.
And since mainnet has yet to come online, the token price has plummeted from an all-time-high (ATH) of nearly 1 cent to the current price of about $0.0006.
There also seems to be a huge price discrepancy between it’s price on Kucoin and Pancakeswap. Another sign that retail investors are still unsure of how to price POLX other than with their gut.
A reason for this discrepancy appears to be that tokens on Pancake is a different version than those on Kucoin. So people are unable to smoothly arbitrage the difference.
But this also raises the question of why such a situation can be allowed to proliferate for so long.
Is it a strategic decision? Laziness? A lack of resources?
Whatever the case, if the first index does not launch by 2Q 2022 or is underwhelming, POLX holders are going to be very disappointed.