Overview of new POW tokens: A victory for miners, communities, and mining machine manufacturers?

In September 2022, Ethereum switched from POW to POS. The mining community looked for new POW tokens, which gave rise to some new POW projects. After more than a year of development, in November 2023, the price of Kaspa, a new POW project, soared, with a market value of more than 3 billion US dollars, entering the top 30. Driven by Kaspa, new POW tokens as a whole have achieved a good increase.

This report briefly analyzes the reasons for the rise of POW projects, takes stock of new POW projects with a market value of more than 40 million, and the current problems.

1. Reasons for the rise of new POW projects

First, Ethereum switched from POW to POS in September 2022, resulting in a large amount of idle computing power. These computing powers are looking for new POW projects. Kaspa was launched during this period and quickly gained support from these computing powers. Some miners of old POW tokens observed the new trend and gradually invested their computing power in new POW projects.

Secondly, there are some investors who prefer the POW model, believing that this model is the orthodox blockchain model, and become early participants in the POW project community. The main members are mainly from the European and American communities, and many Twitter bloggers participated in the early POW projects.

Third, the new POW projects have a lower market value, which is more friendly to newcomers who have just entered the market. Newcomers are willing to buy a low-market-value project and wait for the overall market to come. Old POW projects, such as BCH and LTC, have a higher market value and a lot of locked-in shares. As for the Ethereum series projects, due to the large number of VCs gathered before, the valuation is very high, the market value of newly listed tokens is hundreds of millions of dollars, and there is a long period of release and selling pressure. For these projects, newcomers are less willing to enter.

Fourth, these projects have a new trend in narrative. In addition to high-performance, smart contract operation platforms, most of them are combined with concepts such as artificial intelligence and the Internet of Things, and put forward the concept of "useful proof of work" to attract capital attention.

Fifth, Kaspa was initially driven by miners and the community. By February 2023, it had already attracted much attention in the POW project. In March 2023, mining machine manufacturers launched professional mining machines to increase the computing power of mining. At this point, mining machine manufacturers entered the market and participated in the new POW project. The surge in computing power led to a drop in the price of KAS, but then it continued to rise until it jumped into the top 30 in market value.

The success of KAS has opened up new market value potential for new POW tokens, and projects with decent fundamentals have all achieved good growth in November.

2. Brief introduction of new POW projects

When POW projects were first launched, their market capitalization was usually only a few hundred thousand dollars. After early community development, tokens were listed on small exchanges such as Xeggex (called "Egg Exchange" by the community). Egg Exchange has a large number of POW tokens with market capitalizations ranging from hundreds of thousands to millions. Early players made their fortunes here.

A POW project may enter a second-tier exchange, such as Matcha or Gate.io, after reaching a market value of 5 million to 10 million US dollars. After listing on a second-tier exchange, the market value can grow to between 10 million and 50 million US dollars. As for a larger market value, more cooperation in capital and fundamentals is required.

In terms of market capitalization, KAS and TAO are in the first tier, with market capitalizations exceeding $1 billion and ranking within the top 50. In the second tier, with market capitalizations exceeding $100 million, there is only one project, QUBIC. Moreover, this project has not yet been listed on any second-tier exchanges, so the actual trading volume is very low and the price may be inflated. The third tier is between $10 million and $100 million. At the bottom are a large number of tokens with a market capitalization of less than $10 million.

The following table is a brief summary of POW tokens with a market cap of over $40 million.

3. Issues in the development of new POW projects

First, most projects are equivalent to L1 projects and are currently in the early stages of development. They have only built the architecture for mining and issuing coins. As for business and ecology, most of them are still in the expansion stage. For example, the smart contract platform of KAS is currently under development. ZEPH is a stable currency, but its stable currency currently has no usage scenarios. ATOR is a privacy routing network, but due to the breakdown of cooperation with the Onion Network, it needs to rebuild its user base.

Second, the POW tokens with certain fundamentals in the early stage, with a market value between 40 million and 100 million US dollars, have basically experienced a 5-10 times increase. The development expectations in the short term have been digested, and the community's financial strength has also been consumed. It is currently entering a period of shock consolidation. Tokens with a market value of less than 10 million US dollars have basically not yet been to second-tier exchanges. Their trading volume is very low and they are easily manipulated, with prices soaring and plummeting in the short term.

Third, POW tokens are also facing the release of tokens. Most tokens may release 30%-40% of tokens in the first two years. These tokens are mainly in the hands of large miners. If large miners sell, the project tokens will face a significant decline.

Third, projects that are combined with specific AI businesses are more likely to attract funding attention. TAO and CLORE both superimpose the concepts of POW and AI. TAO belongs to the AI ​​algorithm model market, where developers from all over the world provide AI algorithm models to form an AI algorithm model market; users choose the algorithm model they need. The higher the evaluation and the more models are used, the more incentives their developers will get. CLORE is an AI computing power leasing platform, equipped with nearly 6,000 NVIDIA mid-to-high-end GPU chips, which can be rented out for mining, rendering, AI training, etc. Lessors who provide high-performance chips to the network will receive CLORE token incentives.

IV. Conclusion

It can be seen that the revival of POW projects is the result of the joint efforts of multiple parties. In essence, miners use their computing power to find new POW projects, the community looks for projects with low market value and good narratives, and mining machine manufacturers look for projects that can gain community support. At the same time, the rise of AI has increased computing power to the level of infrastructure in the data age, and POW projects have their own computing power, which is easy to combine with AI, resulting in a secondary superposition of narratives.

However, there are a large number of POW projects, both good and bad, and it is necessary to investigate and understand the project narrative, business, team, and community, and consider the probability of its sustainable development and the probability of obtaining large financial support.