I’m very excited about our newest recommendation, WAX. WAX stands for Worldwide Asset eXchange, and it’s one of the most promising and real crypto projects in the world.
I’m putting this pick in our Speculative Portfolio due to its small size and relatively early stage of development. However, as you’ll see below, this coin has a lot of great things going for it, including one of the largest user bases of any crypto project in the world.
WAX is building a platform to facilitate the exchange of virtual/digital items, starting with the huge video game industry.
This is a big market. It’s estimated that 400 million gamers worldwide already buy, trade and exchange digital items.
WAX was created by the company that built and operates OPSkins, the world’s leading digital asset exchange. It’s the go-to site for gamers who want to trade in-game items. OPSkins has already processed more than $150 million of sales of digital items.
OPSkins is also a critical part of the WAX bull case. Most importantly, it shows that this team has strong leadership and can execute a business plan with excellent results.
What types of items are bought and sold on OPSkins? For now, it’s mostly “skins” – items that modify the look of your characters or weapons. To get an idea, you can see some listings here on OPSkins.
The skins market alone is huge, but it’s just a starting point. Most new games have rare, highly desirable items. Players always try to find a way to trade them, so more games are allowing for the exchange of goods.
WAX Platform
OPSkins is the first application that will run on the WAX platform (once WAX is completed). But WAX will allow anyone to develop digital trading applications on its platform.
Think of it like eBay, where “power sellers” can set up their own shops, but more powerful and flexible.
All of this commerce will be done using WAX tokens as currency and smart contracts to handle the transfers.
You can already buy and sell items for WAX tokens on OPSkins, but it’s optional at the moment. All prices on OPSkins are listed in dollars and WAX.
Eventually transfers between fiat currency and WAX currency will get easier, but this takes time due to anti-money-laundering regulations. As it becomes easier to exchange fiat and crypto, the process of conversion between dollars and WAX will become seamless. Solutions are being built to handle this sort of operation by many different crypto companies around the world.
Digital Collectibles
I understand that some of you out there may be skeptical. You’re not sure about investing in a token for a blockchain-enabled digital item platform.
But this is the perfect early use-case for blockchain tech, and I’ll explain why. (By the way, I’m not the only one who thinks so; two of the best venture capital firms in the world, Andreessen Horowitz and Union Square Ventures, just invested in CryptoKitties, which was a major viral hit late last year.)
Digital item trading is huge and growing rapidly. Gamers today want rare items, and they want to trade them with their friends and others. I’ve seen it firsthand with my 9-year-old son. He plays a game called Fortnite, which is probably the world’s most popular video game right now.
There are hundreds of digital items he and his friends crave and try to trade for. Because they trade within the game itself, there’s no efficient way to do it. One of the traders has to put their item down first, and they just have to trust each other.
Scamming is commonplace. It’s a major problem. OPSkins and WAX can solve it using blockchain tech.
Video game makers are in a tight spot. They can’t spare developers to create a marketplace from scratch, but their players want to trade. I believe many of these video game makers will turn to a third-party solution like WAX.
WAX will allow game makers to integrate the exchange into the game itself – especially if they want to customize the look and feel. Or they can connect to OPSkins, or one of the other exchanges that will be built on WAX.
Smart contracts will take care of the exchange part of things, but there’s more to WAX than that. It’s also building a reputation system. You’ll be able to tell if someone is trustworthy or not based on their history (which is in a blockchain where it can’t be tampered with or manipulated).
In-game trading is the perfect application for blockchain and crypto technology today. It has a young, tech-savvy user base, many of whom already use cryptocurrency.
The industry also needs a solution to the trust problem in trading. Blockchain will solve this and allow for efficient transfer, settlement and reputation tracking.
I believe WAX is the best bet in this market, primarily because it has OPSkins in its pocket. It’s almost an unfair advantage.
And the experience the team has from operating it is priceless. They’re building WAX for themselves. Built by an exchange, for exchanges – this is often how the best businesses are created.
Digital item trading is a huge and fast-growing market on its own. It’s a great starting point for WAX, but the potential here goes beyond just video game items.
A vast array of digital assets is being created today. There are already tokens for property registers, equity shares, rewards programs, digital access (utility tokens), voting and more.
It’s going to be a big market, and WAX is setting itself up as an attractive platform to build exchanges for all of this. And if it gains enough users, WAX could become a popular cryptocurrency in its own right (outside of the WAX platform).
Traction
OPSkins’ success has shown that this team has the business development skills to partner with major companies and close deals. There are digital items from dozens of popular games for sale on OPSkins, and all of those deals required cooperation and partnership.
Building and running an exchange as large as OPSkins is also a technical victory. It’s no easy feat. Clearly they have a good handle on large-scale development.
It will take time to close large new gaming partners, but we believe that WAX is in a strong position to build the leading digital item exchange platform.
They have a great team, the leading platform to experiment on, and a large existing user base to build on.
The WAX Token
WAX is already a payment option on OPSkins.com. For now, the volume is low. By buying the token, we are making a speculative bet that demand will be higher in the future.
Currently, WAX exists as an ERC20 token on the Ethereum network. Eventually, there will also be a token released on WAX’s proprietary platform, which all holders of the current token will receive. (We’ll let you know if you need to do anything as we get closer.)
This platform will be built using a “variant of the EOS network.” EOS is a highly scalable blockchain platform. WAX will be using a customized version of it.
Here’s the exact wording from WAX’s April development update:
| Lukas Sliwka, Vice President of Engineering, has been leading the engineering team’s extensive efforts to identify the optimal model for the WAX consensus and chain structure. After careful consideration, we will be building the WAX custom blockchain and protocol token using a variant of EOS combined with numerous custom features and functions to support the unique requirements of WAX. |
It’s clear that the team went to great lengths to evaluate different options for building the main WAX platform. They installed local versions of four leading blockchain platforms to perform testing. To read more about the selection process, read the full update here. I was impressed by their thorough examination.
Tokenomics
Ticker: WAX
Price: $0.28
Exchange: Bittrex
Market cap: $178 million
Circulating supply: 624 million tokens
Total supply: 1.85 billion
About 33% of the total supply of tokens are currently in circulation. The remainder are either held by WAX to fund future development or by insiders who invested or contributed early.
These tokens are currently in “lockup,” meaning the parties that hold them can’t sell them yet. Beginning in June, however, they will be able to sell some of their tokens. Roughly 200 million coins given to advisors and early contributors will be added to circulation next month. You can read more about the upcoming token lockup period ending here. (WAX is admirably transparent by posting circulation updates, which most coins do not.)
This is not ideal, but I believe there is enough demand to soak up the additional supply. In the last 24 hours, more than $40 million of WAX tokens have been traded, according to CoinMarketCap. In addition, many of the coins will continue to be held and have no effect on price.
Reserving coins to fund future development and incentivize stakeholders is a necessary part of a modern crypto project such as this.
There is high speculative demand for this asset, with the expectation that, in the future, there could be a great deal more demand from people looking to buy and sell their digital items, or even use WAX as a standalone cryptocurrency or store of value.
How to Buy
Note: I am recommending you move into this position in two stages. Buy half of your desired position now and half in July (after the lockup period expires for insiders, in case it hurts price). We will let you know when we think is a good time to buy after July.
If you don’t already have bitcoin, you’ll need to buy some on Coinbase, Gemini or a local exchange if you’re outside the U.S.
I’m recommending you buy on Bittrex using bitcoin (BTC). You’ll need a Bittrex account, which you can sign up for here if you don’t already have one.
Then you’ll need to transfer bitcoin from Coinbase to Bittrex as described here.
Now, once you’re logged in to Bittrex, search for WAX under “bitcoin markets.”
You can also use Ethereum to purchase Decred, but I recommend bitcoin since the market is larger and more liquid.
The Bittrex buying process is described in-depth on our site here.
Risks
All cryptocurrencies and tokens are speculative investments. Only invest what you can afford to lose, and nothing more.
WAX faces significant challenges if it is to become the world’s platform for exchanging digital assets. However, if it succeeds, the rewards will be substantial.
Additional Information
Good investing,
Adam