Or better said, what low-cap altcoin can provide significant returns in 2021?
I’ve been asked multiple times: ‘’What low-cap altcoin should I invest in?’’. I recently answered the question ‘’Which cryptocurrency is the best investment during 2021?’’ in which I covered various low-cap, mid-cap and high-cap altcoins.
However, I did not add my latest pick in this post yet, as I had yet to complete my research. After doing research to Spartan Protocol (SPARTA), I’m excited to share my findings with you, of what I consider to be a very promising low-cap altcoin for early 2021, that’s already listed on BINANCE and currently has a $4M Market Cap.
Spartan Protocol
(Image from Spartan Protocol Medium Development Update)
The Spartan Protocol is a protocol for incentives liquidity and synthetic assets (assets pegged to the price of another asset) on the Binance Smart Chain. The core piece of the protocol are liquidity pools, similar to Uniswap, but instead of a fixed-rate fee model a liquidity-sensitive fee model similar to THORChain’s slip-based fees is used.
Currently, liquidity providers (and traders) are penalised on automated-market maker protocols, such as Uniswap, because of manipulation from value-extracting arbitrage bots. These arbitrage bots have been around for a long time now, and suck up millions of liquidity from unknowing users on a weekly basis.
As well as, synthetic mining protocols such as MakerDao and Synthetic use illiquid collateral/markets to liquidate collateral on, which makes it vulnerable to a downwards spiral which has already caused multiple chain liquidations in the past.
Spartan wants to solve these issues through an AMM protocol, through the use of a single settlement asset and protocol-wide incentives to grow liquidity. A slip-based fees model is used to reward liquidity providers rather than slippage bots, a solution discussed and researched a lot by THORchain. Finally, collateralised pool shares (synthetic assets) are used instead of liquid collateral. Synthetic assets are generated through the protocol, using price anchors offered by the liquidity pools, collaterised by liquidity pool shares. These shares are on-market, value-stabilised and can instantly be liquidated. Thanks to this, positions can be liquidated within causing downwards spirals.
The protocol aims to be community-driven and therefore uses a DAO (governance) set-up for fee rates, time factors and upgrades of certain parts of the code (voted on by holders who get incentivised to do so). But, doesn’t overcomplicate governance or sets high requirements for any proposal to pass.
Because the protocol was built on the Binance Smart Chain, BNB is required to use the protocol and pay for fees. Similar to how ETH is used to pay for gas on the Ethereum Network.
Summarised, I got interested in Spartan Protocol because:
- It took the best parts from the most popular AMM protocols, combined them and created a very solid protocol by doing so.
- The protocol was launched on the Binance Smart Chain, which is a very unique value proposition at this point, subject to Binance exposure.
- The SpartanDAO is set up in an effective way, not overcomplicating participation and decision making.
SPARTA - The Token
As stated, a single settlement asset is used in all pools. This asset is the SPARTA token, which powers the Spartan Protocol.
SPARTA was distributed in a unique way, where users would burn selected BEP20 tokens to receive a piece of the 100,000,000 initial SPARTA tokens. The team called this a ‘Proof-Of-Burn’ concept where tokens are ‘bought’ rather than distributed for free through minting or an airdrop. This means no team tokens, no advisor tokens, no shady stuff!
This means token holders have a skin in the game, and are less eager to dump the freely acquired token on the market. Those interested in using the protocol will need SPARTA to use as a base and collateral asset.
55M SPARTA was minted through the burn mechanism ($16,500,000 worth of BEP-20 tokens burned), the remaining 45M SPARTA will be brought into circulation through the newly announced bonding program. This alternative method enables users to input BNB, BUSD or USDT and have an equal-value amount of SPARTA minted, adding both assets to the liquidity pool, these tokens are vested for 12 months.
The max. Supply will be 300,000,000 SPARTA, the remaining 200,000,000 will be distributed to holders of SPARTAN liquidity pool (LP) shares, based on the total tokens locked (DailyEmission = [300,000,000 - totalSupply] / EmissionCurve, which starts at 30% and reduces to 3% after 10 years).
The initial value of SPARTA was set at $0.30 per token, meaning most current token holders paid $0.30 per token, where it’s currently trading at $0.071 (= 76% discount?!).
The burn address shows over $35,000,000 in tokens were burned so far. BscScan shows currently circulating supply is 57,771,455 SPARTA, with a market cap of $4,097,473 and 2,452 token holders, meaning there aren’t huge whales.
What do I think about SPARTA?
I’m well aware the current price of the token is below the ‘sale’ price. This could have various reasons such as impatience, the protocol being at an early stage, Binance not having given the project exposure yet, the protocol not having done major marketing yet, etc.
That said, I strongly believe the current price of $0.07 per token offers a huge opportunity. Realistically, the circulating supply won’t increase until the price reaches at least $0.30, as there won’t be any reason to mint more against the $0.30 valued price if it can be bought cheaper on Binance.
Total pooled liquidity reached $1,000,000 about a week ago, with $2,555,194 total protocol volume. This is small, but is growing, meaning this might be a risky pick, but it’s one with high reward:risk potential as we’re very early. The team states ‘’This is a low number in the scope of things, however, the focus has been on contracts, distribution and DApps to have everything prepared for the proper utilization of such liquidity. We do not want to pump a hype train without the maturity of the protocol to back it’’.
The November update shows new community members joined the (anonymous) team to ramp up communications. The new bonding mechanism was announced, the DAO will finally be enabled (whereas community already had huge involvement on decision-making before the launch of the DAO), and various other exciting updates were shared.
The community, current token price, current protocol stage and growth, communication and potential Binance exposure combined makes this a solid gem in my books well worth the risk versus potential rewards.
This post is for informative purposes only, I’m not a financial advisor and I currently do have a position in SPARTA. I have not been paid for this post, this post is out of personal interest.
