This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
It's been a good year for the stock market, with the broad-based S&P 500 up by roughly 25%, through Dec. 8. But it's been a great year for the cryptocurrency space, with the aggregate value of digital currencies more than tripling to $2.37 trillion over the same span.
But for some well-known cryptocurrencies, a 200% year-to-date gain would represent a drop in the bucket. For each of the following four cryptocurrencies, a $10,000 investment at midnight on Jan. 1 would have easily made you a millionaire, if not billionaire, as of late evening on December 8.
Shiba Inu: $5,024,657,500
In what may well be described as the most eye-popping single-year gain in history, meme coin Shiba Inu (CRYPTO: SHIB) has moonshot from an opening value of $0.000000000073 per SHIB on Jan. 1 to almost $0.000037 per token as of Dec. 8. In losing six zeroes, Shiba Inu has delivered a greater than 50,000,000% year-to-date gain. In context, a $10,000 investment would now be worth more than $5 billion!
As you might imagine, a lot of catalysts have played a role in pushing Shiba Inu to historic short-term gains. In no particular order:
- More cryptocurrency exchanges than ever are listing SHIB, which is improving liquidity and increasing awareness of the coin.
- The launch of decentralized exchange ShibaSwap in July has also boosted liquidity, as well as lifted the average hold period for SHIB tokens (thanks to staking capabilities).
- The fear of missing out (FOMO) has clearly played a role, with investors expecting more upside, even on the heels of life-altering gains.
- Coin burn has reduced the supply of SHIB tokens, making each remaining coin scarcer.
But in spite of all these positives, a simple truth remains: Shiba Inu lacks competitive advantages, true differentiation, and meaningful utility. Fewer than 380 merchants accept SHIB as a form of payment, and nothing about it stands out as a lure that'll drive businesses to accept it over a growing sea of other payment coins. Shiba Inu may have had a year to remember in 2021, but it could well be the worst-performing popular digital currency in 2022.
Axie Infinity: $2,177,500
Putting aside Shiba Inu's outlier gain, the next best-performing cryptocurrency in 2021 has been Axie Infinity (CRYPTO: AXS). A $10,000 investment to begin the year in this relatively obscure token would now be worth almost $2.18 million.
Axie Infinity is a play-to-earn game built on the trusted Ethereum blockchain. The game allows users to collect, raise, and battle token-based monsters known as Axies (you'll need at least three Axies to go to battle). As with traditional battle gaming, experience points are earned by the winner, which can be used to improve certain aspects of a users' Axies.
Additionally, each of these Axie's is a non-fungible token (NFT) that can be monetized. Users can buy or sell Axies in a marketplace, or they can be bred to create unique Axies that can be utilized in the game or sold later.
The reason Axie Infinity has likely done so well has to do with the revenue the game is generating. In August and September, Axie brought in $342 million and $220 million in revenue, respectively. That placed it second only to Ethereum among blockchain-based applications.
Perhaps the biggest concern, as we head into 2022, is whether Axie Infinity can remain popular. With so many other blockchain-based games in development, gaming interest can shift in the blink of an eye.
The Sandbox: $1,434,500
Another cryptocurrency that wasn't playing around in 2021 is The Sandbox (CRYPTO: SAND). SAND, the primary protocol token of the platform, began the year below $0.04, but has since rallied to well over $5. This means a $10,000 investment on Jan. 1 would be worth over $1.4 million, as of Dec. 8.
The buzz surrounding The Sandbox is somewhat similar to what's fueled Axie Infinity higher. The difference is The Sandbox is all about monetizing the metaverse -- i.e., the next iteration of the internet that allows users to interact in a 3D virtual environment. This blockchain-based gaming platform rewards gamers for creating virtual worlds and interacting within their own or other worlds.
What's particularly appealing about The Sandbox is that, unlike most games which are owned/developed by corporations, users retain full ownership of their virtual worlds as NFTs. These NFTs can be utilized within a game on The Sandbox's platform, or they can be monetized on its marketplace.
Furthermore, SAND tokens have likely benefited from brand-name companies investing in the metaverse. For example, Facebook changing its name to Meta Platforms and announcing billions in annual investments geared at the metaverse and virtual reality provides a tangible lift for SAND.
Though it remains to be seen if metaverse investments will pay off in the short-term, The Sandbox has certainly put itself on the map this year.
Solana: $1,186,600
Last, but not least, a $10,000 investment in Solana (CRYPTO: SOL) at the beginning of the year would have crypto investors smiling ear to ear. That's because Solana has skyrocketed from around $1.61 to north of $191 per token. Investors would be nearing $1.2 million in their portfolios with an initial $10,000 investment.
The key aspect about Solana that's driven its token price higher is the need for speed. Whereas Bitcoin (prior to the Taproot upgrade) and Ethereum are processing approximately 7 and 13 transaction per second (TPS), Solana is capable of handling 50,000 TPS. To put this figure into context, 50,000 TPS would be more than double the 24,000 TPS claimed by global payment processing giant Visa.
The secret sauce that allows Solana to be such a blockchain-based speed demon is its unique proof-of-history protocol. Typically, validators need to talk to each other to determine how much time has passed between events. But with Solana, the proof-of-history protocol establishes a record of time that's elapsed between events. Eliminating this validator lag dramatically speeds up the network and gives it real-world appeal.
The icing on the cake is that Solana's transactions are also markedly cheaper than payments executed on existing infrastructure. It would take in the neighborhood of 4,000 transactions for a user to tally a mere $1 in fees on Solana's network.
Among this years' top crypto performers, Solana is the one you should be watching closest.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
