Internet of Things Explained

The wave of the digital future is upon us. If you’ve been remotely interested in technology, you’ve likely come across the term Internet of Things (IoT). The convergence of IoT and decentralized networks is becoming increasingly evident, and Helium leads this convergence.

This article aims to provide an easy-to-understand primer on IoT, Web3, and Helium’s role in shaping the future. The world of decentralized technologies is vast and ever-evolving. As we move forward, the fusion of these technologies will only become more profound.

But first, let’s break things down.

Demystifying IoT with Web3

At its core, IoT refers to the interconnection of everyday objects with the internet. Think of your smart refrigerator alerting you when you’re out of eggs or your wearable device measuring your heart rate. These are all part of the vast IoT ecosystem.

The essential components of the IoT are:

  • Devices/Sensors: Physical objects embedded with sensors to collect data.
  • Connectivity: Methods like Wi-Fi, cellular, or LoRaWAN that allow data transmission to the cloud.
  • Data Processing: Software that interprets the collected data.
  • User Interface (UI): Platforms that present processed data to users.
  • Actuators: Components that perform actions based on the processed data (e.g., adjusting room temperature).
  • Network Infrastructure: Hardware like routers and gateways facilitate data movement.
  • Data Storage: Often cloud-based systems that retain collected data for later use.
  • Security: Mechanisms to safeguard data and devices, including encryption and authentication.
  • Standards and Protocols: Rules ensuring consistent and interoperable data exchange between devices.

Web3 is the next evolution of the internet. Web1 was about static web pages, and Web2 was about user-generated content and interactivity. Similarly, Web3 is about decentralization and true user ownership. It shifts power from centralized entities to individuals.
In this decentralized world, trust, security, and verification are paramount, which is where blockchain and other decentralized technologies come into play.

How Does Helium Fit In?

Helium presents a novel approach to building a decentralized wireless network for the IoT. Instead of relying on traditional telecom companies to provide connectivity, Helium has created a peer-to-peer network where individuals can host hotspots—essentially powerful routers—to provide coverage. And the reward for doing so is Helium tokens (HNT).

The Helium Hotspot is a pivotal node within the Helium network, primarily facilitating wireless connectivity for IoT devices through the LoRaWAN protocol. More than just a gateway for connectivity, it’s the cornerstone of a decentralized network, empowered by individuals who amplify and reinforce the network’s reach. Users have the opportunity to gain HNT as rewards for:

  1. Proof-of-Coverage: Hotspots garner HNT as they validate the wireless coverage of their fellow nodes.
  2. Device Data Relay: HNT rewards are also given for relaying data from IoT devices across the network.

A hotspot’s earning potential correlates directly with its activity and reliability in enhancing coverage and channeling data. The ethos of the Helium Hotspot extends beyond mere IoT linkage. It symbolizes a shift towards a decentralized, community-centric telecommunications model. Helium champions this vision, motivating people to establish and sustain hotspots and democratizing network strength and governance.

The Helium IoT Network employs the LoRaWAN protocol to offer online connectivity to the “Internet of Things” devices, serving as the foundational sub-network within the Helium ecosystem.

The genius of Helium’s adoption of LoRaWAN is evident. The protocol:

  • Maximizes Range: LoRaWAN allows data transmission over large distances. A single Helium Hotspot can cover miles, making it efficient for urban and rural setups.
  • Ensures Low Power Consumption: IoT devices often operate on batteries. LoRaWAN’s minimum power requirement ensures these devices can function for years without a battery replacement.
  • Enhances Security: LoRaWAN incorporates end-to-end encryption, ensuring data remains confidential and secure as it travels across the network.

Here is everything you should know about helium: Whitepaper

A Revolutionary Ecosystem

With Helium’s approach, the promise of web3 meets IoT:

  1. Decentralized Network: Traditional networks are centralized, meaning a few entities control them. Helium turns this on its head. Anyone can join the network, providing IoT coverage and earning rewards. This leads to a more robust, expansive, and democratized network.
  2. Security and Trust: With decentralization comes the need for trust. Helium’s use of blockchain ensures that every transaction and every piece of data is verified and immutable. This is crucial for IoT devices, where data integrity is essential.
  3. Empowering the Individual: Remember the Helium tokens? Those are incentives for people to host hotspots. This expands the network and allows individuals to participate in and benefit from the IoT economy.
  4. Scalability: The decentralized nature of the Helium network ensures that as more users join and host their hotspots, the network grows, making it more resilient and scalable than traditional models.

Bridging the Gap for the Everyday User

You might wonder, “This sounds tech-heavy; how does it benefit me?”Imagine a world where your smart devices seamlessly connect wherever you go, not because of a centralized telecom provider but due to a global community-driven network. A world where you, too, could set up a device in your home, help power this network, and get rewarded for it. That’s the vision Helium brings to the table. Furthermore, the blend of IoT with Web3 ensures:

  • Transparency: Every transaction, every connection, and every piece of data is transparently stored on the blockchain.
  • Ownership: Instead of tech giants profiting off your data, you have true ownership. Your devices, your data, and your rules.
  • Lower Costs: As network maintenance isn’t shouldered by a single entity but distributed among many, costs are potentially reduced, benefiting the end-users.

Everyday Implications
If you are pondering the real-world relevance of this fusion, consider many scenarios. 
In smart cities, street lights, traffic signals, and public transport could seamlessly communicate, optimizing energy and reducing congestion. 
Furthermore, farmers could deploy sensors that provide real-time soil and weather data, allowing for timely interventions and better crop yields. 
But also in healthcare, wearable health monitors could relay real-time data to medical professionals, facilitating early diagnosis and treatment.

The decentralized approach of Helium can underpin all these scenarios, ensuring reliable data exchange, transparency, and cost efficiency.

Conclusion ~ Looking forward.

As Web3 technologies continue to evolve, their integration with IoT will become even more pronounced. Helium is a harbinger of the future. It showcases what is possible when you combine the power of IoT devices with the principles of decentralization.

So, the next time you come across a Helium Hotspot or think about the smart devices you use daily, remember you’re not just looking at a piece of tech. You’re witnessing the future unfold—a future where you’re not just a passive consumer but an active participant in a global, decentralized digital ecosystem.

Remember: it’s no longer just about observing technological marvels around us. It’s about embracing our roles as active contributors, and shaping tomorrow’s reality. We are part of an interconnected world fueled by collaboration, fairness, and transparency. This is all made possible thanks to Web 3.0 and the emergence of symbiotic relations between IoT and decentralized systems.

In collaboration with: Fiji

Nothing in this report/analysis constitutes professional and/or financial advice. The shared content is for educational and informational purposes only. Do your own research before investing.

Blockchain Layers Explained

Blockchains consist of several layers that work together to provide a secure, decentralized, and transparent platform for recording and verifying transactions. The primary layers of a blockchain are as follows:

Physical Layer: refers to the hardware infrastructure that supports the blockchain network. It includes the computers (nodes) that participate in the network, network connectivity, storage devices, and other physical components required for the blockchain’s operation.

Network Layer: responsible for communication and data propagation among nodes in the blockchain network. It ensures that information is transmitted securely and efficiently between nodes. Nodes use protocols like peer-to-peer (P2P) networking to share data, validate transactions, and reach a consensus on the state of the blockchain.

Consensus Layer: vital for maintaining the integrity of the blockchain. It involves protocols that allow nodes to agree on the validity of transactions and the order in which they are added to the blockchain. Different consensus algorithms, such as Proof of Work (PoW), Proof of Stake (PoS), and Delegated Proof of Stake (DPoS), determine how nodes reach an agreement without relying on a central authority.

Data Layer: stores the actual data of the blockchain. Data in a blockchain is organized into blocks, each containing a batch of transactions. Blocks are linked together in chronological order, forming the blockchain. This layer also includes mechanisms for managing cryptographic hashes, which ensure the immutability of data within blocks.

Smart Contract Layer: Smart contracts are self-executing contracts with the terms of the agreement directly written into code. This layer allows developers to create and deploy decentralized applications (Dapps) on the blockchain. Smart contracts enable automation, trustless execution, and transparency of agreements without the need for intermediaries.

Protocol Layer: defines the rules, standards, and protocols that govern how the blockchain functions. This includes rules for creating, validating, and broadcasting transactions, as well as rules for maintaining consensus among nodes. Examples of blockchain protocols include Bitcoin (BTC) for the Bitcoin blockchain and Ethereum (ETH) for the Ethereum blockchain.

Application Layer: encompasses the various use cases and applications built on top of the blockchain platform. It includes applications beyond cryptocurrencies, such as supply chain management, voting systems, identity verification, and more. Developers and organizations leverage the blockchain’s underlying layers to build decentralized solutions.

User Interface (UI) Layer: provides the interface through which users interact with the blockchain and its applications. It could include web interfaces, mobile apps, and other user-friendly platforms that allow users to create accounts, view transactions, interact with smart contracts, and manage their assets.

It’s important to note that while these layers are conceptually distinct, they are interconnected and work in tandem to enable the functionality of a blockchain. The precise architecture and terminology might vary between different blockchain implementations, but the fundamental layers remain relatively consistent across most blockchain systems.

Layers 0,1,2 and 3 Explained

In the realm of blockchain technology and its ecosystem, the terms Layer 0, Layer 1, Layer 2, and Layer 3 are frequently employed. These layers serve to delineate various aspects of the technology, each representing a distinct level of abstraction and functionality within the broader blockchain landscape.

Layer 0 can have multiple meanings depending on the context:

  • Firstly, it refers to the hardware, protocols, and connections that make up the network architecture for blockchains.
  • Secondly, Layer 0 also refers to inter-chain operability and communication between blockchains. The goal is to create a crucial infrastructure that reduces friction and addresses scalability issues in the future.

To encourage participation and progress, Layer 0 often utilizes a native token. Examples of Layer 0 blockchains include Polkadot and Cosmos.
In addition, there is Layer Zero Labs, which has developed an interoperability solution for connecting any blockchain. This eliminates the need for specific bridges between individual chains. Utilizing Ultra Light Nodes ensures direct, trustless transactions across all chains, making it more economical and secure than traditional bridging methods. This omni-chain approach simplifies interoperability, reduces costs, and enhances decentralization.

Layer 1 refers to the foundational base layer of a blockchain protocol, such as Ethereum or Bitcoin. It provides the underlying infrastructure and consensus mechanism.

Key characteristics of Layer 1 include:

  • Consensus Mechanism: Layer 1 determines the consensus mechanism that the blockchain network uses, such as Proof of Work (PoW), Proof of Stake (PoS), or another algorithm.
  • Blockchain Data: Layer 1 handles the creation, validation, and management of blocks and transactions. It defines how blocks are added to the blockchain, how transactions are confirmed, and how data is stored and secured using cryptographic techniques.
  • Native Cryptocurrency: Most Layer 1 blockchains have their own native cryptocurrency, which serves as a means of value transfer, an incentive for miners or validators, and sometimes as a governance token for decision-making.
  • Decentralization: The degree of decentralization is established at Layer 1. It determines how many nodes are required to maintain the network, participate in consensus, and validate transactions.
  • Security: The security of the blockchain network, including resistance to attacks and tampering, is largely determined by the protocols and mechanisms established at Layer 1.

Alternative Layer 1’s, also known as “Alt L1s,” are blockchains at the Layer 1 level. These blockchains are separate from Ethereum but offer similar functionalities such as smart contracts and DApps. While they share similarities with Ethereum, they specifically tackle challenges like scalability, transaction fees, and speed. Notable examples of Alt L1s include Binance Smart Chain (BSC), Solana, Polygon, and Avalanche.

Layer 2 solutions are designed to address the limitations of Layer 1 blockchains, such as transaction throughput and latency. These solutions enhance scalability, speed, and functionality. One popular approach is “rollups,” which aggregate multiple transactions off the primary chain into a single batch. This batch is then collectively submitted to the more secure main chain to validate those transactions.
By reducing the data stored on-chain, this method significantly improves transaction times and lowers fees. Rollups demonstrate the potential of Layer 2 solutions in enhancing blockchain efficiency. Examples of Layer 2 solutions include payment channels like the Lightning Network for Bitcoin, optimistic rollups such as Optimism and Arbitrum, and ZK rollups like ZK Sync and Loopring for Ethereum. These solutions provide improved scalability and faster transaction speeds.

For more on Arbitrum Rollups click here

The term “Layer 3” is not widely used, but it can be used to refer to the user interface (UI) layer that users interact with when using various blockchain applications on L1 and L2 networks.

To summarize:
Layer 0 deals with the physical networking infrastructure and interoperability between blockchains.
Layer 1 is the secure core blockchain protocol layer.
Layer 2 offers scalability solutions built on top of Layer 1.
Layer 3, refers to the user interface layer for blockchain interactions.
These layers work together to enhance the functionality, security, and scalability of blockchain networks.

Conclusion ~ Multi-layered Architecture.

Understanding the layered architecture of blockchains provides a comprehensive view of the intricate workings of this revolutionary technology. Just like a skyscraper’s strength lies in its foundation and the coordinated levels, a blockchain’s power stems from the seamless integration and cooperation of its distinct layers.

This multi-layered architecture is not just a construct; it is a dynamic symphony of innovation, collaboration, and progress. It weaves together the complexities of hardware, protocols, and human interactions into a harmonious ensemble that expands the possibilities of technology. As the blockchain landscape continues to evolve, these interconnected layers will shape a future where transparency, security, and empowerment define the new normal.

In collaboration with: Insightful

Nothing in this report/analysis constitutes professional and/or financial advice. The shared content is for educational and informational purposes only. Do your own research before investing.

Bitcoin Ordinals Explained

The most fun we get from Bitcoin is from Michael J. Saylor’s tweets and ETF proposals. But in January, something happened. Bitcoin Ordinals and BRC-20 tokens (the hottest thing in the Web3 industry now only after the Azuki Elementals).

Bitcoin Ordinals allow people to inscribe (pictures, videos, music, you name it) data onto individual Satoshis (0.00000001 BTC) on the Bitcoin blockchain. This creates something called an Ordinal, which can be thought of as a Bitcoin-based NFT. The process of inscribing data onto Ordinals is similar to minting NFTs. 
Ordinals also allow us to assign an index to each transaction performed on the Bitcoin Blockchain based on the order included in the blocks (so we can identify each transaction by its ordinal number instead of using the standard 64 characters).
The numbering system follows a first-in, first-out scheme, preserving the order of transactions. In other words, it represents the order in which transactions are added to the Bitcoin blockchain (this numbering system is not formally recognized by the Bitcoin protocol).

On the Ethereum Chain, NFTs are created with smart contracts, and the assets they represent are hosted elsewhere, such as IPFS. Instead, Ordinals are inscribed into each individual Satoshi, therefore on-chain. This means that as long as Bitcoin or its forks exist, the data attached to an Ordinal will not disappear.

Is Bitcoin Evolving?

Actually, yes, with the use of Ordinals, we can now develop decentralized apps (dApps) such as DEXs, DiFi applications, lending platforms, YIELD Farms, and more. 
Ultimately, BRC-20 tokens (fungible tokens) can be tokenized to represent real-world assets. 

Bitcoin Ordinals have the potential to make Bitcoin more competitive with other blockchain platforms like Ethereum and Solana, which have been the primary ecosystems for NFT collections and token-based innovations. Bitcoin is now the second-largest blockchain for NFTs, after Ethereum!

It’s worth noting that Ordinals are a new technology, and their use cases and potential applications are still being explored.

Inscription Process

To create a Bitcoin Ordinal, there are various inscription services available. These services provide a user-friendly interface for inscribing data onto Ordinals. The process typically involves the following steps:

  1. Choose an inscription service that you prefer (Gamma, Unisats, Magic Eden, or OrdinalsBot).
  2. Select the data you want to inscribe (such as an image, video, text, etc.).
  3. Follow the instructions provided by the inscription service to upload your data and complete the inscription process.

It’s important to note that inscribing data onto Ordinals comes with a cost. Therefore, the size of the data and the associated fees should be considered when creating a Bitcoin Ordinal.

Where can you buy and sell Ordinals?

Remember to exercise caution and do thorough research before engaging in any transactions involving Ordinals. Consider factors such as the reputation of the marketplace, the authenticity of the Ordinals, and any associated fees or risks. There are many decentralized wallets you can set up, such as Ordinals Wallets, Unisat Wallets, and EXVerse Wallets.

When it comes to BRC-20 tokens, you can decide using: 
1. CEX: and OKX. 
2. Ordinals Exchange: 
3. DEXs: BisoSwap, Trustless Market, etc.

Pros, Cons, and Limitations.

+50 million non-zero addresses have been created on the Bitcoin blockchain since January. The numbers are proof of the increased adoption of Bitcoin, which increased the earnings for Miners, incentivizing them to validate blocks. Also, during the inscription process, these data are saved on-chain, as mentioned before, which increases the weight of the chain and gas fees. 
Also, Bitcoin is NOT EVM-Compatible; therefore, you can’t bridge your assets from Bitcoin to EVM-Compatible Chains and vice versa. However, there are centralized bridges that offer the opportunity to do so. This process would consist of locking, trusting the centralized authority that will not sell or move the asset because there are no smart contracts on the Bitcoin Chain, and minting the same asset (BRC-20 or Ordinals) on the Ethereum Chain, for instance.

That being said, I do not suggest using any centralized bridge. The game is not worth the candle.

As many know, the Bitcoin Chain is not scalable; increasing the block weight is not going to help scale the chain, and there is a limit to the inscriptions that can be performed, which is the number of transactions on the Bitcoin Chain.

Conclusion ~ Two fractions.

It is important to acknowledge that there is an ongoing debate within the Bitcoin community regarding the role and impact of the Ordinals. Some (Bitcoin maxis) argue that Ordinals are unnecessarily occupying Bitcoin’s blockspace and causing transaction fees to rise, while others recognize the cultural and memetic value they bring.

Bitcoin should be considered a commodity, and therefore its purpose is to preserve its value (even if is not doing very well, at least not yet). Many refer to Bitcoin as a medium of exchange, but I do not agree with this definition considering that there are better solutions out there (for instance, Dogecoin is a better medium of exchange because it has enough liquidity to perform trades and lower gas fees).
Ordinals are a way to expand Bitcoin’s utility, which does not mean that they are needed. Bitcoin is literally digital gold, and fundamentally, it works as gold; it has to stay in a safe place and fulfill its purpose as a commodity. We don’t need to use Bitcoin to perform daily transactions or to build on top of it; for that, we have Ethereum, the digital oil.

That being said, NFTs are mostly considered fun more than utility itself.
Bitcoin Maxis are calling the FUD, which does not necessarily mean they are right (they made mistakes in the past, such as not including smart contracts back in 2014), but they are not wrong either, considering the speculative nature of the NFTs.

I like to think of ordinals as golden ornaments, such as rings, necklaces, earrings, and more. Just like these ornaments, the value of ordinals depends on various factors: the amount of gold they contain, their artistic and cultural significance, and the sentimental value that makes each one unique. But that is all; they do not provide utility (and if they do, it is not different from Ethereum’s NFTs), unlike tickets, for instance, which may have a lower monetary value but give access to something, perhaps an experience.

Ultimately, market trends don’t determine the true value of an asset – its use cases do.
Sure, art holds value, but without generating profits or benefits, it’s nothing more than a flex.

Nothing in this report/analysis constitutes professional and/or financial advice. The shared content is for educational and informational purposes only. Do your own research before investing.

Utility and Security tokens Explained

Cryptocurrency markets have evolved rapidly, leading to the emergence of various types of tokens. Two key classifications are security tokens and utility tokens. But what is a token? A token is a digital asset that represents ownership of something, such as a real-world object or a financial instrument. In the context of blockchain technology, tokens are created on top of existing blockchains (like Ethereum) to represent new assets.

Token utility refers to the specific function or purpose of a token and answers the question, “Why should I hold this token?“. Ex: paying transaction fees, providing access to specific services or features, etc.

Token use-case refers to the specific application in which a token is used within the ecosystem and answers the question, “What is this token used for?“. Ex: medium of exchange, governance, etc.

Tokens have diverse applications ways, such as providing access to specific services within a designated platform; acting like rewards points allowing users special privileges when using them while interacting with different applications built on top of the same network; facilitating transactions between parties directly without intermediaries involved by paying transaction fees through these coins. The value and function of tokens vary widely depending on their use case which could range from improving security protocols to streamlining payment processes.

Now, let’s explore the differences between the two tokens.

A utility token is a digital asset that provides access to specific products or services on a blockchain network, usually by providing users with the right to use certain features of an application. Utility tokens are different from security tokens in that they do not represent ownership in any real-world asset nor do they confer rights to dividends, or profit sharing, and their value is derived solely from their functionality within the associated platform. Utility tokens are generally subject to fewer regulatory requirements than security tokens, although regulators may still classify some utility tokens as securities, depending on their specific characteristics.

Examples: Ethereum (ETH), Binance Coin (BNB), and Chainlink (LINK).

A security token represents ownership in an asset, such as equity or debt and token holders have rights to dividends, interest, or other forms of profit sharing. Unlike utility tokens, which provide access to specific products or services, security tokens represent regulatory-compliant financial instruments, making them subject to federal laws and they offer investors the opportunity to profit from price appreciation, dividends, revenue-sharing rights, interest payments, etc., much like traditional securities do.
Regulatory Compliance: Security tokens are subject to securities regulations and must comply with relevant laws and regulatory frameworks, such as the Securities Act of 1933 and the Securities Exchange Act of 1934 in the United States.
Issuers of security tokens must adhere to Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements, which involve collecting and verifying the identity of token holders.

Examples: tZERO (TZRO), Polymath (POLY), and Harbor (R-Token).

Governance tokens should not be considered utility tokens, as they are used or held exclusively when a proposal requires voting. However, can utility tokens possess governance rights? Yes, they can.
The Curve model introduces Vote Escrow Tokens (veTokens), which can be used to give voting power to stakeholders and/or liquidity providers.

Disagree? shoot me a DM.

Summary and More

Security tokens and utility tokens serve different purposes within the realm of cryptocurrencies and blockchain technology. While security tokens represent ownership in an underlying asset and are subject to strict regulatory compliance, utility tokens provide access to specific products, services, or platforms, with less regulatory oversight. Both types of tokens have distinct use cases and offer various opportunities for investors, developers, and users in the expanding digital asset ecosystem.

To determine if a token is a security or utility token, we can apply the Howey Test, which is also used by the Securities and Exchange Commission (SEC) to distinguish between securities and non-securities. This test has been employed in the crypto industry on numerous occasions to ascertain whether a token is a utility or security token.

Ask yourself these questions:

• Is there an investment of money involved?

• Does the investment involve a common enterprise?

• Is there an expectation of profit for the investors?

• Is this expectation reliant on the efforts of others?

The majority of token sales (ICOs) meet these criteria, so it’s important to recognize that most tokens in the market should be considered securities.

Equity tokens

An equity token is a type of digital asset that represents ownership in a company or organization. They are essentially similar to traditional securities, such as stocks and shares, but operate through blockchain technology.

Equity tokens allow companies to raise funds by offering investors access to an ecosystem where their assets can appreciate over time based on the success of their venture. These tokens can be traded much like other cryptocurrencies, providing liquidity for investors who want an exit from the investment. Unlike utility tokens, which are used primarily within a specific platform or application, equity tokens represent an actual value within real-world businesses.

Tokenization of real-world assets, like real estate, art, or intellectual property, is an expanding trend in the crypto space. As more assets are tokenized, the distinction between these two types of tokens might become less apparent, leading to the emergence of new classifications. This token belongs to the security token category.

What the future holds

As the cryptocurrency and blockchain industry continues to evolve, we may witness the emergence of new types of tokens, as well as the convergence of characteristics between security and utility tokens. For instance, some projects may explore hybrid token models that combine features of both security and utility tokens.

Regulatory authorities worldwide are intensifying their efforts to provide clarity and guidance for token offerings. The evolving regulatory landscape will likely lead to the development of more sophisticated token models that better adhere to legal requirements and protect the interests of investors.

Memecoins are tokens without utility, serving as speculative assets.
Fueled by a narrative that entices speculators to buy low and sell high.
Indeed, there is an expectation of profit.
Therefore, it raises the question of whether they should be considered security tokens. We welcome your thoughts on this matter. Let us know your thoughts.

Conclusion ~ Understand your investment

Understanding the differences between security tokens and utility tokens is essential for investors, developers, and regulators navigating the cryptocurrency landscape.

Each type of token presents distinct opportunities and challenges, and their ongoing evolution will significantly influence the future of digital assets and blockchain technology. By staying updated on the latest trends and developments, stakeholders can better position themselves to capitalize on the growth of this dynamic and rapidly evolving industry.

Nothing in this report/analysis constitutes professional and/or financial advice. The shared content is for educational and informational purposes only. Do your own research before investing.

Portfolio Diversification Explained

“Diversification is for idiots, because you can’t diversify enough to know what you are doing.” – Mark Cuban
“Diversification generally makes very little sense for anyone that knows what they are doing. Diversification is a protection against ignorance.” – Warren Buffett
“Much of what is taught at modern corporate finance courses is twaddle.” Charlie Munger

Many respected investors in the traditional market suggest that diversification is not the best solution to building financial wealth, some investors, such as Bob, suggest that investing in multiple asset classes, such as stocks, bonds, real estate, and crypto, can reduce exposure to any single investment that may decline in value. This helps ensure that if one part of your portfolio underperforms or experiences losses due to market fluctuations or other factors beyond your control, the rest will continue generating profits for investors, which helps balance out overall portfolio performance over long-term horizons.

“To diversify, or not to diversify, that is the question”.

Diversification plays a crucial role in long-term financial planning as it helps balance short-term risks with long-term gains, resulting in better overall returns.

So which investment strategy is the best?

  1. Concentration. By focusing your investment on three assets or areas you’re familiar with, you can conduct deeper due diligence and devote more time to preparing your entry and exit strategies. However, this approach also increases risk: if an investment goes sideways in one of those areas—such as during stock market crashes—it may significantly impact your portfolio.
  2. Diversification. Spreading your investment among 10 to 100 assets reduces liquidation risks, but at the same time, diversifying also means that you are not heavily invested in any one particular opportunity, and thus profits generated from each investment may be lower than if you had bet on just one or two opportunities.

While no strategy guarantees success every year, nor does it guarantee against loss, prudent investors understand how diversified portfolios provide smoother experiences through market cycles than more concentrated ones do.

That being said, there are many self-made millionaires who made it by investing in 1–3 assets at the right time, which is a very important variable when it comes down to entry and exit strategies, as previously mentioned.

Ultimately, both concentration and diversification have pros and cons. Finding the right balance between the two depends on your experience, goals, preferences, risk tolerance, and other factors.

E&E (enter and exit) STRATEGIES
Smart investors know when to invest and when to get out of an investment; usually, the exit strategy is well-defined before investing (during this period of time, the investor’s mind is more rational, not being involved with the investment yet).
With regard to the entry strategy, it is important to take into consideration variables such as market sentiment and the project development stage.

Conservative diversification

Diversification is one of the most important principles in investing, but it’s easier said than done. It requires extensive market knowledge and experience to build a well-rounded investment strategy.
Many investors work with brokers or financial advisors to help them make a personalized long-term plan that takes into account their risk tolerance, time horizon, liquidity needs, tax concerns, and other factors that affect their investments.

If you can’t afford a broker or a financial advisor, we suggest going for conservative diversification, which has lower risks involved but also lower expectations of profits. Developing a conservative diversification plan requires conducting proper due diligence on desired assets and gaining a deeper understanding of the market and its regulations. Here are two examples:

Traditional market

  • 15% in liquid cash.
  • 40% on long-term investments (ex: ETFs, bonds, commodities, etc.).
  • 25% on blue-chip assets (ex: Amazon, Bank of America, Google, Netflix, etc.) +$100 billion market cap. These assets must:
    • must have long-term expectations (+10 years)
    • must have a high reputation.
    • might pay dividends.
  • 15% mid-term investment on growth stocks (ex: Mercedes-Benz, Airbnb, Shopify, etc.); assets with high expectations.
  • 5% in high-risk investments (crypto and penny stocks).

Allocating a bigger piece of the pie to ETFs, bonds, and commodities is not a bad idea considering that the traditional market is less volatile; that being said, a 15% allocation to cash is a must. Being liquid is also very important because performing transactions (i.e., selling assets) is slower in the crypto market.
In the traditional market, you can allocate more money to mid-term and high-risk investments because the return on the investment is slower and lower compared to the crypto market.

Not only can brokers or financial advisors help you build an investment portfolio, but corporate lawyers also play a crucial role when crafting complex portfolios for high-net-worth individuals or private equity firms looking into merger and acquisition opportunities.
We suggest watching this TV show for fun and educational purposes: Suit.

What is an ETF?
ETFs (exchange-traded funds) are a type of index fund; by buying these funds, you invest in everything that is in the fund. Investors do not own the underlying assets, but they may still be eligible for dividend payments. There are many ETFs in real estate, energy, and more.

Crypto market

  • 30% in liquid cash or stablecoins (at least 2 of them). Read more about stablecoins in Episode #5.
  • 35% on blue-chip assets (ex: Bitcoin and/or Ethereum).
  • 20% on long-term investment (ex: providing liquidity to stablecoins).
  • 12% mid-term investment (ex: staking Ethereum for passive income).
  • 3% short-term investment and highly volatile assets (ex: NFTs, DeFi, etc.).

We have allocated a huge piece of the pie to cash and stablecoins because of the high volatility of the crypto market and because of the many opportunities (it is good to have liquid assets ready to be invested). As per the other allocations, it is very important to know what you are investing in, and experimenting with asset classes can broaden your knowledge and experience, even if it’s only 3%.

Modern Portfolio Theory
MPT is a set of rules in finance that are meant to help investors get the most out of their investments while minimizing the risks.
This method involves spreading out investments by putting together groups of assets that have a good balance of risk and reward.
The goal is not only to get the highest expected returns but also to take into account how much risk a person is willing to take.

Disclaimers: DO NOT take these allocations for granted; this is just an example. The fund allocations should depend on your investment plan, which is based on many variables such as individual goals, preferences, risk tolerance levels, and more, as previously mentioned.

How many assets should you hold in your portfolio?

Know that you can’t beat the companies that have more than 10 market analysts, whose job it is to lower the risks and increase profits for the companies they work for. Over-diversifying into assets that might give you a 100x return might not be the best idea, especially in the crypto space.

How to diversify in 2023

Needless to say, 2023 will be a tough year for investors. Will the bull market continue? Are we going into a market recession? Or is the bull market next door? Whatever your gut tells you, trust only the numbers, and if you don’t have a plan, fly safely with a super-conservative investment plan.
This is a historical moment for the market. Everyone is more or less suffering as a result of COVID, the Russo-Ukrainian War, and the bank collapse (even though many people were able to hedge the market and profit from the situation, such as pharmaceutical companies and their investors).

You can’t beat the market; you have to adapt your plan to it. Where there is fear and depression, there are more risks involved with investing, and to mitigate these risks, the best solution is to get ready for the worst outcome that may come and invest when bullish signals start appearing (ex: when the FED makes it clear that it will stop these interest rate hikes or start doing interest rate cuts; it is all a matter of timing!). Here are two examples:

Traditional market

  • 35% in liquid cash.
  • 35% on long-term investment.
  • 18% on blue-chip assets.
  • 10% mid-term investment in growth stocks.
  • 2% in high-risk investments (high-risk investments include investing in start-ups, venture capital projects, and options contracts.).

Money is sovereign. Cash is the most liquid asset we have in our economy, making it less volatile. Nevertheless, investing is important because, as we all know, money loses value over time due to inflation. To safeguard against inflation, we must put our capital to work while always attempting to limit losses. Considering the scarcity of information and uncertainties with regard to the market, it’s essential to conduct proper due diligence before investing (this advice cannot be emphasized enough).

Crypto market

  • 50% in liquid cash or stablecoins.
  • 25% on blue-chip assets.
  • 15% on long-term investment.
  • 9% for mid-term investment.
  • 1% short-term investment and highly volatile assets.

The crypto market is the most volatile of all. For this reason, more time and attention have to be deployed before investing, and even if you are not invested but hold a big chunk of your bag in stablecoins, there is no guarantee that the asset won’t depeg. Diversification is a good way to mitigate your risk, but it is not a final solution.


If you are a new investor and you don’t know how to diversify your portfolio, you can fly safer by buying the S&P 500 and ETFs for passive income (7–12% yearly).
But what if you are new to the crypto industry? Here are some options:

  • Go solo, learn by yourself, and invest in what you know and understand. More risks are involved.
  • Join DAO-driven ventures or investment groups that will help manage your investment (similar to ETFs, but less regulated).
  • Hire MHL Solutions to build you a custom investment plan based on your needs and goals. Click here to request this service.

Risks involved with diversification

  • Over-diversifying (or deworsifying) your investments may lead to lower overall returns as the gains from high-performing assets will likely be offset by losses in underperforming ones.
  • Holding too many different assets could make it difficult to keep track of all your holdings and monitor their performance effectively.
  • Even if you buy a lot of different securities, that doesn’t mean you’re truly diversified if they all move in the same direction with market trends instead of being affected by different things that affect each security on its own. This phenomenon is called correlation risk.

Conclusion ~ it’s up to you!

So, what’s the answer? To diversify, or not to diversify Better to all in on one asset or spread your investment among 100 investments? Both strategies are right in their own way; it mostly depends on the investor’s mindset and needs. New investors tend not to diversify, while more experienced investors have a well-diversified portfolio. Diversification can be a beneficial solution, provided that investors stay informed and conduct thorough due diligence, while also being aware of the associated risks. Don’t get fooled by influencers who put $10 into hundreds of projects, hoping for a 100x return, when you can invest in a few projects and perhaps earn more. But what really matters is having a plan, whatever it may be.

Nothing in this report/analysis constitutes professional and/or financial advice. The shared content is for educational and informational purposes only. Do your own research before investing.

Stablecoins Explained

Are Stablecoins Securities?

What else can you do with stablecoins?

Are stablecoins safe?

Conclusion ~ Long-term stability

Nothing in this report/analysis constitutes professional and/or financial advice. The shared content is for educational and informational purposes only. Do your own research before investing.

Liquid Stacking Derivates Explained

What is staking?

How do LSDs work?

More about lido

Risks involved with staking with LIDO:

A new type of staking is available with LSD now, called leverage staking, which basically works this way:

Swap ETH for stETH (on Lido)
Earn rewards
Stake stETH to earn ETH
Swap ETH for stETH (on Lido)
Earn rewards
Stake stETH to earn ETH
and repeat that again…

It looks to me like an endless Ponzi scheme… I do not like it at all.


Nothing in this report/analysis constitutes professional and/or financial advice. The shared content is for educational and informational purposes only. Do your own research before investing.

Liquidity Explained

Who will catch the most fish today?

Crypto Liquidity Pools

What if I want to sell MHL for AVAX?
Well, if the DEX does not have the pair AVAX/MHL, you will still be able to exchange your MHL tokens for AVAX; in this case, the contract will execute 2 transactions:
Sell MHL for ETH then Sell ETH for AVAX.
It will take a little longer, and you will have to pay more in gas fees.
Most of the time, you do this kind of procedure because the token may have just been launched and the DEXs are not offering that specific pair.
If you really want to buy such a token, I would suggest you do it on a big DEX, such as Uniswap, so that the trade will be faster (if the token is liquid enough).

The bigger the value of the pool, the more stable will be the price of the assets; this means that if the pool is small, the price impact will be bigger.
Always ensure that your trade will not have a significant impact on the price of the token, because if you buy an illiquid token and its price rises by 30%, traders will sell to make a quick profit out of it.

Risks of investing in liquidity pools:

Conclusions — Don’t be exit liquidity

Why do people say that NFTs are not liquid? Because they are not. In order to sell your NFT, you have to list it on a marketplace and wait until someone meets your price needs and buys it. This is a peer-to-peer trade.
Even though there are some protocols trying to fix this issue by introducing liquidity for NFTs, the problem persists. It is indeed harder to sell NFTs than token.

Nothing in this report/analysis constitutes professional and/or financial advice. The shared content is for educational and informational purposes only. Do your own research before investing.

Crypto Fundraising Explained






Benefits and risks of fundraising

Here are two websites where you will be able to follow the investors’ money during the fundraising of blockchain-based applications:

Having difficulties with company valuation for fundraising purposes?
Check out Educational Program #1.
Be prepared to explain the amount of funding you are requesting from the investor. Know your numbers.

  • Clearly define the purpose of the fundraiser and the benefits of the product or service being offered.


Nothing in this report/analysis constitutes professional and/or financial advice. The shared content is for educational and informational purposes only. Do your own research before investing.

Startup Valuation Explained

How to evaluate your business

Usually, during the 3Fs-round, the valuation of the company is very low because of the high risks, and it can range from $50,000 to $500,000.
Are the investors in the 3Fs-round a good deal? No, most of the time they bring only money and no experience, and they take a big chunk of your equity.

Risk management in the early stages

Before spending funds on advertising, it is very important to build a marketing plan based on the financials of the company. No rush; just because you are spending money today does not mean that you will make it back tomorrow.
Door-to-door and word-of-mouth advertising are the best and cheapest forms of advertising because you are selling your product directly to the consumer.

The revenue is the income generated, including the expenses. Profits refer to the net income earned after accounting for taxes, employee salaries, investor returns, and personal compensation.

Other variables

The Friends and Family round could be structured as a convertible note (which converts to equity at a later stage to delay the company’s valuation) or a SAFE (Simple Agreement for Future Equity) which is a convertible security that has no payment requirement, no maturity date, and no interest rate.
Pre-money valuation. EX: $100,000 investment for 10% at a $1 million valuation keeping the valuation at $1,000,000 after the investor has made the investment.
Post-money valuation. EX: $100,000 investment for 9.09% at a $1 million valuation brings the valuation to $1,100,000 after the investor has made the investment.
Vesting. Both for the founders, in order to ensure that they will continue to work after the funds are raised (between 2 and 4 years), and for the investors.
A business idea is not a business. Before making up valuations, think of the expenses and your margins. Do you have a prototype or beta test? How are you and your investors going to be profitable?

Once you have the answers to these questions, the product, and the business model, you can get closer to a realistic valuation of your business.

WEb3 project valuation

Can we apply the same valuation model to Web3 startups? Yes, we can.
Even though valuations in the Web3 space are frequently exaggerated, we can apply the same valuation model to blockchain-based startups.
Whether they are selling equity shares or tokens during the sale rounds, the team evaluates their project at a “future evaluation”, which is why investors sign SAFE and/or SAFT agreements.

Simple Agreement for Future Equity is a founder-friendly alternative to convertible notes, which are used by founders to raise capital in early rounds).

Is there a formula to calculate your future valuation without revenue? No, there is no such thing. This type of valuation is based on two factors:

Nothing in this report/analysis constitutes professional and/or financial advice. The shared content is for educational and informational purposes only. Do your own research before investing.