For many investors, billionaire Mark Cuban may be best known as one of the investors on the popular ABC program Shark Tank. But for crypto enthusiasts, Cuban is best known as a champion of Bitcoin, Ethereum, and Dogecoin during the previous crypto bull market rally.
So what is Cuban buying during the recent crypto bull market? The names might surprise you. He's expanding beyond just the two big cryptocurrencies -- Bitcoin and Ethereum -- in search of utility coins that promise to deliver real-world use cases. Let's take a closer look at what he's adding to his portfolio.
Polygon
Polygon (MATIC +0.00%) is a Layer-2 scaling solution for Ethereum, helping it to run cheaper, faster, and more efficiently. You can think of Polygon as a secondary blockchain that sits on top of the core Ethereum blockchain. By doing so, it can mitigate some of the pricing and congestion issues typically faced by Ethereum users.
That's a clear example of utility, and it's easy to see why Cuban is all aboard the Polygon train. After Ethereum co-founder Vitalik Buterin laid out the blockchain's strategic roadmap for 2024, he made it a point to highlight the growing role played by Layer-2 scaling solutions. Right now, the future growth story for Ethereum is all about enabling these Layer-2 scaling solutions to do even more. So if Polygon can hitch its growth to that of Ethereum, it should be good news for investors.
Image source: Getty Images.
The bad news, though, is that the Layer-2 blockchain niche has become especially crowded during the past 12 months. As a result, Polygon hasn't seen the types of price gains initially expected by investors. Around the time of Ethereum blockchain update knowns as The Merge in 2022, Polygon was trading near the $1 mark. But in the 18 months since, Polygon has dropped below $1 . It is currently trading for less than $0.70, and is down more than 30% for the year. Nonetheless, with a $6.6 billion market cap, it remains one of the top 20 most valuable cryptocurrencies in the world.
Injective
Injective (INJ +10.58%) is a Layer-1 blockchain that was purpose-built for decentralized finance (DeFi). In theory, core DeFi activities -- such as being able to create new DeFi lending protocols, or swapping tokens on decentralized exchanges -- should be faster, cheaper, and easier on Injective than on rival blockchains. In terms of utility, Injective is the blockchain you use if you want to build new financial applications or participate in DeFi.
And, indeed, as measured by one important metric, total value locked (TVL), Injective is gaining ground in the DeFi world. In February, Injective set a record with more than $110 million in TVL, suggesting that more and more crypto users are embracing Injective as an on-ramp to DeFi. Right now, there are more than 100 projects on the Injective blockchain, and a reported 150,000 community members.
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Key Data Points
But, as with Polygon, the results just haven't been there this year for Injective. After soaring in price from $1.25 in January 2023 to over $50 in March 2024, Injective is now down about 35% year to date. With a $2.4 billion market cap, though, Injective still ranks as a top 50 crypto in terms of valuation.
The ongoing search for utility in crypto
During a January AMA ("Ask Me Anything") on X (formerly known as Twitter), Cuban shared an important insight about investing in crypto: "I hate the speculation but love when there is utility." Like many longtime crypto investors, he's seen the extreme volatility in the crypto market, and has warned against believing too much in the hype and speculation surrounding certain coins.
To mitigate some of that risk, one option is to focus on utility. If you don't understand what a crypto does, or what purpose it serves, it might just be that there is no purpose. If that's the case, then you probably shouldn't be adding it to your portfolio. Trying to chase a speculative meme coin may be fun, but it will rarely be profitable. There's no guarantee that you will be profitable with utility coins either, but understanding the core use cases of a crypto can help you make smarter long-term investment decisions.
