Blockchain projects from Zug are among the greatest hopes, but they got badly under the wheels in the sale of crypto currencies. While $ 47 was paid for Polkadot’s currency dot in mid-May, a dot changed hands for less than $ 12.
The Polkadot Foundation, like the Tezos, Cardano and Ethereum foundations, has its headquarters in Zug. Like Cardano, Polkadot is one of the Ethereum rivals, the so-called “Challenger Projects”. Cardano’s crypto currency ADA has halved in sales just like Ethereum in value. The price of Tezos slumped from $ 5.70 to less than $ 2.
There is no single trigger for the sale. For experts, the previous bull market went too fast and too far. “The market was overvalued,” says Désirée Velleuer, CEO of Crypto Consulting AG.
With Polkadot and Cardano, unlike Ethereum, no fees are yet generated, which is why expectations for the future determine the price. “In uncertain times, such projects are particularly hard hit,” says the crypto expert. The banishment of “miners” from China and the discussion about the energy consumption of Bitcoin came on top of that.
Around 960 blockchain companies have pitched their tents in Switzerland and Liechtenstein, half of them in the blockchain Mecca of Zug. The Tezos project rented an entire floor from CVLabs, CV VC’s co-working space. Cardano is also quartered there.
“Extremely convinced of the long-term success of the technology”
Olaf Hannemann is the co-founder and chief investor of CV VC, which not only assigns space to start-ups, but above all invests in them. 30 companies from 17 countries are in the portfolio. According to Hannemann, the mood in the Zug blockchain community is very good despite the correction: “The entire industry is still extremely convinced of the long-term success of the technology. Most start-ups are only partially affected by the ups and downs in the crypto markets “says Hannemann. It is important that the projects are not stopped and that blockchain-based applications continue to spread.
In principle, this also applies to blockchains with their own currency. This serves to maintain the operation of the blockchain. If Hannemann has his way, the technological promises are big in projects like Polkadot or Cardano.
“However, they are only successful if they have enough attractive projects on their logs. They are currently going through a decisive scaling phase, regardless of whether ADA (Cardano) corrects 50 percent.” Ethereum has caught up some ground compared to rivals Polkadot, Cardano, Solana or Polygon. More and more so-called Layer 2 solutions based on Ethereum (such as Optimism or ZkSync) are available.
If Polkadot and Cardano had previously benefited from the high fees on the Ethereum platform, this advantage is now lost. In the case of Layer 2 solutions, the costs are between a tenth and a hundredth of what was previously the case.
The current weakness in crypto currencies is only classified as temporary by the experts. “The crypto market has corrected around 60 percent, we are starting to ramp up our systems again,” says expert Désirée Velleuer. However, she sees exciting investment opportunities less in the Ethereum rivals from Zug than in blockchain projects from the decentralized financial sector such as Sushi or Synthetix.
This article first appeared in the online offer of “Bilanz” with the title: “Despite the crypto bear market: The Zug blockchain community is in a good mood”