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The Jewel of the Crypto Winter: Digital Tokens Backed by Viable Products

The crypto winter that’s taken over the market in the last few months has been brutal. Besides tanking prices, there has also been the stunning realization that algorithmic stablecoins weren’t really all that stable after all. But that’s not to say that tokens backed by something useful are off the table. Here we look at what new opportunities are emerging, particularly in cybersecurity.

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The crypto market has not been in the best shape for the past few months as it plunged into a dark crypto winter. As a result, several crypto platforms have restricted users’ ability to withdraw their deposits. The restrictions have been attributed to falling cryptocurrency prices and extreme market conditions. Another discovery was that stablecoins aren’t that stable after all.

The Cyber Security Industry Comes to the Rescue

Nevertheless, one should not forget that every crisis also offers an opportunity. This opportunity is best proven by the security companies, who quickly devised relevant and working solutions.

The crypto winter and lack of trust in algorithmic stablecoins have created a new breed of cybersecurity tokens. These are stablecoins backed by useful products: namely the security audit of new blockchain protocols and smart contracts.

Introducing the ETD and TURN Tokens

In April 2022, just weeks before the Terra Crisis and the UST stablecoin crash, Europe-based cybersecurity provider Hacken introduced the ETD token, marking the first instance of tokenization in auditing. They created a stablecoin backed by tangible service rather than an algorithm or fiat currency.

The market conditions of the next few months have confirmed the merits of this idea. Other providers in the industry are joining the bandwagon.

In particular, ConsenSys Diligence recently introduced TURN tokens, which perform the same task as ETDs in the form of NFTs. So now Hacken and Consensys, the two most prominent crypto audit players, are offering digital tokens that developers of new blockchain projects can use to have their platforms audited. For them, it has the advantage that the check has been carried out more quickly, but overall it is intended to contribute to transparency in the market.

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How the Tokens Work

Both tokens provide the priority queue for security reviews by the respective company. ETD is available in a limited number of 1000 tokens, while the number of TURN is unknown. An ETD token has a fixed value of 5,000 USDT, with the stablecoin USDT (Tether) being tightly pegged to the value of US dollars. In the meantime, ConsenSys Diligence is offering 8 time-limited auctions for TURN NFTs at a starting price of 100,000 DAI (equivalent to $100,000).

Each ETD corresponds to one day’s work by Hacken’s smart contract review team, including Senior Auditor, Middle Auditor, Security QA Lead, and Reporting Expert. In contrast, TURN stands for 40 hours of exam time with a deadline by which the tokens must be redeemed.

Immutable Value

By setting a constant and finite time, ETD’s value remains the same regardless of market conditions, making it an ideal stablecoin. In contrast, the ConsenSys Diligence auction model does not put a cap on the price of TURN, instead leaving the decision to market forces.

ETD’s fixed cost at the lower end of the price spectrum makes it more accessible to the community. There is also a 10% discount for the first 250 EDTs. ETD offers higher stability, while TURN could be more beneficial for players hoping to sell it on the secondary market at a higher price than any other cryptocurrency.

Ultimately, there is no “one size fits all,” as each token’s usefulness depends on the project’s size and the audit’s scope. Either way, tradable utility stablecoins are a solid investment choice as they provide a hedge against the rising costs of the underlying services.

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(Featured image by Michael Dziedzic via Unsplash)

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Michael Jermaine Cards is a business executive and a financial journalist, with a focus on IT, innovation and transportation, as well as crypto and AI. He writes about robotics, automation, deep learning, multimodal transit, among others. He updates his readers on the latest market developments, tech and CBD stocks, and even the commodities industry. He does management consulting parallel to his writing, and has been based in Singapore for the past 15 years.