Smart contracts are the new stars on the blockchain. This technology allows classic legal contracts such as a purchase or a loan transaction to be relocated to the digital world. Smart contracts do not require any human participation, as they are based purely on certain smart contract protocols such as Ethereum or Polkadot. The more the smart contract ecosystem is used, the greater is the demand for the coins. The digital agreements are particularly popular in the art world, for instance, in the form of non-fungible tokens (NFTs). These enable artists to sell their forgery-proof digital videos or works of art. Demand for them is enormous: figures from DappRadar show that the volume of NFT sales in 2021 totalled USDbn 24.9, compared with just USDmn 94.9 the year before. According to the platform NonFungible.com, the most popular category was NFTs for collecting, followed by art. NFT sales for land in metaverse environments also attracted attention. In November, for instance, virtual property investor Republic Realm acquired “The Sandbox” in the virtual world for USDbn 4.3.
NFTs are most frequently purchased using Ethereum. NonFungible.com puts daily turnover of the second largest cyber currency in the world at an estimated USDbn 15-20. The blockchain project most used for smart contracts is about to undergo an important upgrade to Ethereum 2.0. This is set to change the network from the classic proof-of-work (PoW), such as Bitcoin uses, to proof-of-stake (PoS). It is an energy-efficient and easily scalable algorithm that is based on consensus as to which participants are allowed to generate the next block. This consensus mechanism is used with Polkadot as well as Ethereum 2.0. To remain efficient and guarantee speedy transactions, Polkadot also uses sharding, a technology which allows many transactions to be processed in parallel on different parts of a blockchain. As regards the value of the crypto assets, Ethereum has its nose in front. Not only does Ethereum bring a much higher capitalisation to the table, but the coin has appreciated by 54% in value over the last year, whereas Polkadot posted a loss in value.
Management Fee: 1.35% p.a.
Index Sponsor: Swissquote Bank SA
Issuer: Leonteq Securities AG, Guernsey
The recently launched Smart Contract Platforms Index combines a total of six digital coins targeting the trend towards smart contracts: Avalanche, Cardano, Ether, Polkadot, Polygon and Solana. At just under 39 per cent, Ether has by far the highest weighting. When ranked with the other almost 10,000 cyber currencies currently available on the market, the half dozen speak for themselves, with all six among the 20 largest cyber currencies in the world. Solana recently attracted particular attention, the coin appreciating by more than 500 per cent on a one-year view. In the interim the world’s sixth most valuable digital currency even rose fourteenfold. Founded by Anatoly Yakovenko, the network is characterised by a very high speed of 50,000 transactions per second as well as extremely low transaction costs of less than USD 0.01. The Solana network currently has more than 400 projects, which are concentrated on the DeFi, NFTs and Web3 sectors.
With the new, actively managed tracker certificate on the Swissquote Smart Contract Platforms Index, Leonteq is offering investors an opportunity to participate in the key players of the smart contract revolution. The structured product reflects the development of the index almost completely. Only trading and management fees of no more than 1.50% p.a. are charged. The open-end certificate is denominated in Swiss francs and can be traded daily on the SIX.
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