For those holding HARD, it is not just the governance of Hard protocol that is at stake. Controlling the economic makeup of Hard’s forecasted $3 billion valued platform and implementing a 1% fee policy could generate around $30 million to HARD holders.
It is no more news that a growing number of crypto participants have begun to identify and incorporate DeFi for its high yield earning benefit. A significant percentage of this growth hinges on the modalities of money markets and how it provides impactful and applicable financial models that dwarf the earnings from traditional alternatives. As expected, developers have begun to tinker with this financial application for even more advanced functionalities, compatibility, and mouthwatering yields. And thanks to this drive, this year has birthed successful DeFi-based lending and borrowing protocols.
While each of the existing money market options has its unique selling point, we could not help but notice a compelling narrative brewing within this sector in the form of Hard protocol, a recently introduced cross-chain money market on the Kava blockchain. From our initial analysis, it was clear that this project has enough innovative power to fare against established alternatives. However, after taking a closer look, we discovered that Hard money markets will blow the competition out of the water. Despite this massive potential, the price performance of its governance token, HARD money markets, is yet to reflect the project’s propensity for success. In this article, we will look to investigate the growth potential of Hard money markets and project the future value of HARD using historical performances of similar projects.
Overview of Hard Protocol
Launched on the 15th of October, Hard protocol is the first application to run on Kava’s blockchain infrastructure. In other words, it has inherited some of the peculiar functionalities of Kava, most especially the cross-chain feature, to amplify its offerings for a network of highly liquid asset holders. Some of the digital assets compatible with Hard protocol are BTC, XRP, BNB, Kava, and USDX. And so, Hard money markets become the de-facto option for non-Ethereum users that were previously locked out of the emerging open-finance terrain. Furthermore, it focuses on providing intuitive and user-friendly features, which are alien to the Ethereum DeFi landscape. For its working model, Hard protocol functions similar to Compound and Aave in that it provides a money market where DeFi users can borrow, lend, and earn.
The protocol, thanks to its governance token, has established a fully decentralized mode of operation that puts everyday users at the helm of affairs. With a fixed supply of 200 million HARD, this protocol will distribute 40% of the governance token to users to offer them a say in the maintenance and evolution of the ecosystem. In just over a month of operation, the platform has distributed around $1 million worth of rewards and managed to attract $12 million in total value locked (TVL).
So, despite this initial impressive performance, why do we think that this is a modest beginning? Well, much of my argument stems from the price movement of HARD and how it compares to the governance tokens of established money markets. Below are some of the reasons HARD and the Hard money markets are undervalued.
Transcending the Ethereum Factor
Hard’s biggest competitors are Compound and Aave. There is currently over $1.4 billion worth of assets locked on Compound, while Aave’s TVL is reported to be in the $1.2 billion range. On the other hand, the market caps of COMP and AAVE are $500 million and $800 million respectively. Further analysis reveals that the market cap of both tokens is within 40% and 60% of the total asset locked in their respective protocols. Therefore, if we are to analyze the potential of the Hard money markets using the market metrics of Compound and Aave, then it is safe to project that the market cap of HARD will maintain an average of 50% of the application’s TVL.
However, in the case of Hard money markets, the scope of its market promises endless possibilities. For Compound and Aave, their target market is restricted to the Ethereum ecosystem. Unlike these two, Hard’s cross-chain feature gives its access to a cluster of digital assets, including the world-renowned BTC market presently worth around $300 billion. Imagine that Hard successfully captures just 1% of the BTC market, then its TVL will fall within the $3 billion range. And in line with earlier assumptions, its market cap could rise to $1.5 billion. Note that this forecast centers on Hard’s disruptive power and does not consider its market potential in other supported networks, including XRP with a $12 billion market cap. Hence, as stated earlier, this project promises endless possibilities.
For those holding HARD, it is not just the governance of Hard protocol that is at stake. As stakeholders of the network, controlling the economic makeup of Hard’s forecasted $3 billion valued platform and implementing a 1% fee policy could generate around $30 million to HARD holders.
Lastly, as explained by Brian Kerr, CEO of Kava, the fact that 6 million HARD is being distributed via launchpad to stakers for the next 30 days will naturally cause the price of the token to underperform. However, as soon as this campaign ends and a slashed supply of the token resumes, expect its valuation to correct. It is worth mentioning that HARD has a fixed maximum supply. Also, it supports a diminishing supply model similar to “Halving” on the bitcoin network. Hence, there are compelling factors at play to ensure that HARD does not just retain its value but maintains an uptrend.
Founder and editor at BTC PEERS. Andrey writes about financial experiments, DeFi, cryptocurrency, and blockchain.