Bitcoin was designed to be peer-to-peer cash, a digital token that could be transferred between individuals, completely bypassing incumbent payment intermediaries such as banks.
Ethereum launched 6 years later, and enabled a novel mechanism (ICOs) to fund startups, totally side-stepping the traditional capital raises provided by venture capital firms.
Hedera Hashgraph, on the other hand, has been focused on attracting existing enterprises to the blockchain. This is a challenge however, considering all the rules and regulations traditional corporations must comply with.
Despite these obstacles, the HBAR token that powers Hedera has increased from $0.05 to $0.30 over the past three months. In this article, we will explore the reasons why HBAR is on the rise.
Hedera's Design
Hedera can do everything Ethereum can - smart contracts, token issuance, decentralized exchange (DEX), non-fungible tokens (NFTs), etc - only faster and cheaper thanks to its novel consensus algorithm, Directed Acyclic Graph (DAG) implementation, and limited, permissioned validator set.
Similar to Nano, Kaspa, Taraxa, and others, one of the key design features that sets Hedera apart from typical blockchains is its DAG structure, which increases its scalability (transactions per second). Unlike these other projects however, Hedera is a permissioned network.
Distinct from Bitcoin and Ethereum for example, Hedera validators are not permissionless. Rather, the network is composed of roughly 30 permissioned consensus nodes operated by the Hedera Governing Council, which includes the likes of established corporations like IBM, Dell, and Boeing.
Although this governing council doesn't inspire thoughts of freedom, nor institutional disruption, the project is growing nevertheless. DappRadar illustrates that unique active wallets (UAW), transactions, and volume have all been trending upwards on Hedera over the past three months.
Why is this? Perhaps we should dig a bit deeper into Hedera's ecosystem to learn more about its decentralized applications (dapps) and other initiatives.
SaucerSwap
Possibly getting more publicity due to the recent UFO psyop happening in New Jersey, SaucerSwap is the leading DEX on Hedera. Inspired by automated market makers (AMMs) like Bancor and Uniswap on Ethereum, SaucerSwap allows users to swap Hedera tokens and provide liquidity permissionlessly.
Like other AMM's, SaucerSwap has its own token ($SAUCE), which is used for things like voting on governance decisions. Moreover, you can stake your SAUCE tokens in the "Infinity Pool" for 5% APR. The yield is made possible thanks to swapping fees, farm emissions, and HBAR native staking rewards.
HashPack
Sporting a slick user interface, HashPack is currently the leading wallet in Hedera's burgeoning ecosystem. From HashPack's web interface, you are able to manage your HBAR, swap it for other tokens, trade NFTs, and stake the native token for "interest".
The project's token is called $PACK, and you can earn it for swapping tokens on HashPack's DEX. Similar to SAUCE, you can stake PACK for an APR of 5%. Notably, there is no unlocking period when you unstake your tokens.
The primary risk with staking SAUCE or PACK would be a smart contract vulnerability that could result in the loss of your tokens.
DeRec Alliance
A major problem facing non-technical users in the crypto space is the management of seed phrases and private keys. Due to the risks associated with managing these secrets, a lot of users end up storing their crypto assets on centralized exchanges, which defeats the primary purpose of cryptocurrency (self-custody).
To solve this problem, Dr. Leemon Baird (the co-founder of Hedera) has partnered with the likes of Cardano and Algorand to work on a solution. Together, these blockchain foundations have formed the DeRec (decentralized recovery) alliance.
Essentially, DeRec is a protocol that splits user secrets into multiple parts and distributes them among a set of trusted entities. In the event of loss, these "helpers" would assist the user to reconstruct their secrets, and get their crypto back.
From Enterprise to Community Focus
In a recent video call on X, members of the Hedera team mentioned that while enterprise adoption remains one of their core objectives, there has been a growing movement to cultivate a grassroots community in the ecosystem. This involves the launching of meme coins, NFT markets, and more.
In my mind, crypto is here to replace the old institutions. Rather than trying to fit the old world into crypto, we should be building a new economy based on crypto. Although Hedera started off as a "professional" crypto project aimed at enterprise adoption, it has succumbed to meme coin and NFT degens. But is that necessarily a bad thing?
The primary obstacle facing the enterprise adoption of cryptocurrency are the laws and regulations these traditional entities must adhere to. Decentralized communities, on the other hand, can transcend the old paradigm and build without restrictions.
Until next time...
The key to crypto adoption is decentralized, grassroots communities that can grow organically outside of the current system. Hedera's shift from enterprise adoption to a community focus could explain its recent price surge, and will pave the way for more adoption.
If you learned something new from this article, be sure to check out my other posts on crypto and finance here on the HIVE blockchain. You can also follow me on InLeo for more frequent updates.
Resources
Hedera's Community Call on X [1]
SaucerSwap's FAQ [2]
HashPack Wallet [3]
Community Growth Image [4]