Last year, in aggregate, hedge funds returned just over 10%, significantly underperforming the S&P 500 index’s return of 26.9%. Their crypto counterparts, however, outperformed the market and digital asset indices.

Nasdaq-listed cryptocurrency exchange Coinbase is planning on launching derivatives trading after acquiring derivatives trading platform FairX. FairX is a Designated Contract Market (DCM) derivatives exchange regulated by the CFTC.

Bank of America has told clients in a research note that the Solana blockchain could become the “Visa of the digital asset ecosystem” as it focuses on scalability, low transaction fees and ease of use.

Top stories in the Crypto Roundup today:

• Crypto Funds Outperformed Traditional Hedge Funds
• Coinbase to Launch Derivatives Trading After New Acquisition
• Solana Could ‘Become the Visa’ of Crypto: BoA
• What is Solana (SOL)?

Crypto Funds Outperformed Traditional Hedge Funds in 2021

Last year, in aggregate, hedge funds returned just over 10%, significantly underperforming the S&P 500 index’s return of 26.9%. Their crypto counterparts, however, outperformed the market and digital asset indices.

Hedge fund managers’ lagging results are tied to their underexposure to big tech firms like Apple and Tesla, which surged in 2021. Data from Hedge Fund Research’s crypto index suggests crypto hedge funds returned 214% on average in 2021.

Aside from the 2017 bull run, the figure represents the best performance for crypto hedge funds since the firm started tracking their data back in 2015. In comparison, Bitcoin returned 48.5% in 2021.

The MVIS CryptoCompare Digital Assets 100 Index, a modified market cap-weighted index which tracks the performance of the 100 largest and most liquid digital assets, moved up around 145.41% over the same period.

Still, some cryptocurrencies outperformed crypto funds. Ethereum, the second-largest by market capitalization, saw its price increase over 400% in 2021.

Coinbase to Launch Derivatives Trading After New Acquisition

Nasdaq-listed cryptocurrency exchange Coinbase is planning on launching derivatives trading after acquiring derivatives trading platform FairX. FairX is a Designated Contract Market (DCM) derivatives exchange regulated by the CFTC.

While the firm launched in May 2021, it has secured brokerage partnerships with industry leaders TD Ameritrade and E*Trade, along with 18 other firms. In an announcement, Coinbase revealed it’s looking to roll out derivatives trading for customers in the U.S., saying:

“The creation of" a transparent derivatives market will unlock further participation in the crypto economy for retail and institutional investors alike.”

Coinbase added that the “development of a transparent derivatives market is a critical inflection point for any asset class.”

Solana Could ‘Become the Visa’ of Crypto: BoA

Bank of America has told clients in a research note that the Solana blockchain could become the “Visa of the digital asset ecosystem” as it focuses on scalability, low transaction fees and ease of use.

Solana experienced an explosion in adoption in 2021 and has so far settled over 50 billion transactions, while global payments giant Visa processed 164.7 billion transactions in the year ended September 30.

In the note, Bank of America analyst Alkesh Shah wrote the network has over $11 billion in total value locked and has been used to mint more than 5.7 million non-fungible tokens. Per his words, Solana is optimized for consumer use cases such as micropayments and gaming.

The analyst wrote that Solana “prioritizes scalability, but a relatively less decentralized and secure blockchain has trade-offs, illustrated by several network performance issues since inception,” while Ethereum prioritizes “ decentralization and security, but at the expense of scalability, which has led to periods of network congestion .”

Shah suggested Solana and other blockchains could grab market share from Ethereum over time and will start to distinguish themselves.

What is Solana?

Solana is a high-performance blockchain founded by former Qualcomm, Intel, and Dropbox engineers that uses a delegated Proof-of-Stake (dPoS) consensus algorithm. The network uses a unique method of ordering transactions to significantly improve its speed and throughput.

Blockchain networks have historically struggled with scalability issues, with the few that

managed to solve them dealing with centralization issues. A decentralized network with small confirmation times and transaction fees has been hard to create, but the problem was tackled in 2017 with the creation of Solana.

The Solana blockchain has a native cryptocurrency, the SOL utility token. SOL is used to pay for transaction fees when moving funds around and interacting with smart contracts on the blockchain.

Anyone holding SOL tokens can interact with applications on the network, the same way anyone holding ETH can interact with applications on the Ethereum blockchain. While Ethereum uses the ERC token protocol, Solana uses the SPL protocol.

Learn more about Solana on CryptoCompare.

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