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Can long-tail asset be the savior in the bull market?

Financial institutions deploy many strategies to make their ventures and investments successful. The long tail strategy is prevalent for companies chasing profits by selling low volumes of rarer items. It is a strategy that can be useful in the blockchain space as well.

Explaining the long-tail assets

People familiar with the financial industry will have heard of the long tail. It foregoes the traditional large volume selling of a lower number of popular items as a business strategy. Instead, companies try to increase their profits by selling lower volumes of rare items to a much broader customer base. It is a trend that has been around since 2004 and can prove to be successful when executed correctly. 

It is no secret that consumers are slowly moving away from traditional mainstream markets. Given the sheer number of online marketplaces in existence today, there is a growing opportunity to sell items online. By making sure less popular goods are only available in smaller quantities, businesses can increase their overall revenue. Long tail goods can remain on the market for long periods, yet their low distribution and production cost allows for higher profit margins, even if they are only sold through off-market channels. 

Banks use a similar strategy

In the financial world, banks tend to flock to the long tail strategy in recent years. As sales dynamics continue to change constantly, financial institutions have to explore different strategies to remain competitive. Diversification of the customer segment and the services rendered is a viable strategy. 

By creating a mass market of niche customers, the unbanked and underbanked can still access necessary services. As the number of consumer segments increases, the longer the tail will become. Banks will keep making a profit as these niche transactions have no overhead costs. More niche transactions generating small profits can cascade into a snowball effect and revenue stream. 

It is interesting to note that the long tail approach in banking changes the appeal of banks as brick-and-mortar spaces. Instead, financial institutions can present themselves as omnichannel providers capable of providing many different services. 

The long tail and blockchain

The concept of long-tail crypto assets is still relatively new, but Liquidify sees many opportunities. There are many assets with low liquidity, trading volume, and market capitalization today. Hodlers of these long tail assets can collateralize them through Liquidify’s liquidity accelerator, which synthesizes all assets into a fixed total amount of tokens, called Liquidity Accelerator Tokens (LAT) and Liquidify Tokens (LFY). Converting from these tokens to the original assets will always remain possible.

The vast majority of crypto assets have little or no trading volume today, creating a liquidity concern. If there is no trading volume, these currencies serve no real purpose either. While there may be many reasons why the trading volume is low, there are many projects that deserve a second chance. Regardless of how one wants to look at it, something needs to be done about these long tail crypto assets. 

By “revitalizing” these long tail assets, investors can rediscover the value inherent to these forgotten currencies. Creating new cash flows and introducing new investment opportunities can make a genuine difference for these projects. Moreover, they can serve a purpose as a catalyst for creating a new synthetic asset. There are many potential opportunities to explore, making the broader cryptocurrency industry more appealing to onlookers. 

Closing thoughts

Of the many cryptocurrencies on the market today, the vast majority do not seem to serve any real purpose. In a lot of cases, there are still some intriguing technical developments associated with these ecosystems that warrant further exploration. By creating a new life cycle for long tail crypto-assets, industry-wide innovation can accelerate.

Many good ideas have gone to waste, yet they can still be useful if more people are exposed to the opportunities. Long tail crypto assets represent a large market waiting to be explored. 

About Author

Jake Simmons

Jake Simmons has been a crypto enthusiast since 2016, and since hearing about Bitcoin and blockchain technology, he's been involved with the subject every day. Beyond cryptocurrencies, Jake studied computer science and worked for 2 years for a startup in the blockchain sector. At CNF he is responsible for technical issues. His goal is to make the world aware of cryptocurrencies in a simple and understandable way.

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