Market Summary

Bitcoin Price: US$ 16,850.36(+1.05%)
Ethereum Price: US$ 1,256.90 (+3.49%) 

Rage Trade Attracts Users but Fails to Gain Volume Share

• Over the past 7 days, Rage Trade has seen an average of 405 users, representing a user market share of 31% among the top 5 perpetual DEXs on Arbitrum.
• Despite the bear market, the protocol has seen elevated interest from users since the beginning of October 2022. Currently, the DEX only offers an ETH perpetual product.
• However, the typical ticket size for Rage Trade users is considerably smaller than others as the protocol does not even account for 1% of the volume market share.
• In comparison, GMX has an average of 65% user market share over the past 7 days but 97% volume market share.
• Rage Trade also offers delta-neutral vaults that provide liquidity to GMX. Since launching the vaults, TVL in Rage Trade has increased over 4x from $3.2M to $13.4M.

The Great Reset: Navigating Crypto in 2023

• DeFi was the golden child of 2020, acting as the first true narrative of the last market cycle. Its initiation into the crypto mainstream has now endearingly gone down in history as “DeFi Summer.” Any of you who were involved in crypto at the time probably remember the sleepless nights as project after project launched to guaranteed short-term success. Yet, 99%+ of those projects probably never made it to the end of the year – or even the end of the month.
  • Broadly speaking, DeFi tokens have had a tumultuous year. Ethereum DeFi, which is the largest DeFi ecosystem, saw some of its highest-rated coins take a beating.          
  • The past six months saw crypto as a whole get shaken up, with several key players taking large losses or blowing up entirely. Despite DeFi’s mechanisms protecting users from this fallout, DeFi tokens didn’t manage to scrape through unscathed.
  • While TVL has fallen almost 75% from its peak, DeFi still accounts for a large portion of capital in on-chain products. Compared to the broader finance industry, DeFi is still a drop in the pond. The highest traction products are DEXs and money markets.
  • Skipping to the present, we’ve had five straight months of declining DEX volume leading up to November 2022. But the hidden silver lining is that despite this massive fall from grace, DEXs on Ethereum still did about $30-40B in monthly volume — no small feat.
• Continue on Delphi…

December Gaming Roundup

• The total market cap for all gaming-related tokens dropped 14% to $6.34B in December. When we look at changes over the past month, all of the top 10 tokens (by market cap) ended on a low, with most dropping more than 50% in price. ImmutableX did see the market cap for its ecosystem token, IMX, increase by more than 60% this quarter. However, this was primarily due to a sizable unlock of tokens allocated to private investors and ecosystem development that occurred on Nov. 5th. Some estimates state the unlock to be more than 200M tokens, or roughly 12% of the total supply. It is worth noting that the ImmutableX team has expressed that many of these freshly unlocked tokens will not be sold, and thus current figures are not an exact representation of actual circulating supply or market cap.
• Upon closer inspection, we can see that the FTX collapse that occurred in early November has had a significant impact on token prices across the board. ApeCoin and Axie Infinity’s SLP token were the least affected, but still saw their prices decrease by 34% and 37%, respectively. ApeCoin managed somewhat of a comeback from late-November to early-December, as we dove into in last month’s report.
• Despite all this doom and gloom, the weekly number of unique active wallets (UAW) interacting with gaming dApps over the past quarter has consistently remained 2x+ above the second most active sector, DeFi. December did see a slight drop-off, but the number of daily UAW has largely remained between 800k and 900k. We have discussed before how UAW is not a great representation of actual users, as many of the most popular gaming protocols are heavily botted and some others require very few on-chain interactions. However, with a number of highly anticipated blockchain games releasing in 2023, we believe this does demonstrate an exciting future for the sector.
• Continue on Delphi…

First Mover Asia: Bitcoin Rises, Cryptos Savor FOMC Data

• Favorable Economic Conditions Make for a Flat Market
• By all accounts, the Fed’s moves to curb inflation are working, and that’s been good for crypto.
• Bitcoin began the day in Asia fairly flat, up 1.2%, trading at $16,851 according to CoinDesk pricing data. Ethereum was up 3.46%, coming in at $1,254.
• Recently released minutes from the Federal Open Market Committee aren’t painting a clear picture of what’s next. The Fed says that price increases are stubborn, saying it “proves to be more persistent than anticipated”, while raising interest rates another half a percentage point.
• A smaller increase than the three-quarter of a percentage point increases of before — indicative of inflation that has peaked — but still another rate hike.
• “Participants generally observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to 2 percent, which was likely to take some time,” the minutes say. “In view of the persistent and unacceptably high level of inflation, several participants commented that historical experience cautioned against prematurely loosening monetary policy.”
• The minutes also say that despite the need for a continued restrictive policy stance, flexibility is also on the agenda.
• “Most participants emphasized the need to retain flexibility and optionality when moving policy to a more restrictive stance,” suggesting that the next interest rate increase might be a quarter of a percentage point, or 25 basis points.

Crypto Bank Juno Tells Customers to Self-Custody or Sell Amid Custodian Wyre’s Turmoil

• Crypto banking firm Juno has advised its customers to self-custody their digital assets or sell them for cash as it works to migrate client funds to a new custodian, according to a tweet Wednesday morning.
• The decision comes as Juno’s current custodian, Wyre, prepares to wind down its operations in the coming weeks, says Juno CEO and co-founder Varun Deshpande.
• “We are switching custodians because we expect potential issues with Wyre given they might be scaling back or winding down,” Deshpande told CoinDesk.

Web3 Builders Lose Dozens of High-Value NFTs in Back-to-Back Attacks

• CloneX COO Nikhil Gopalani and prominent NFT collector CryptoNovo lost NFTs estimated to have been worth hundreds of thousands of dollars to scammers.
• Two prominent Web3 builders lost dozens of high-value non-fungible tokens (NFTs) to scammers over the past few days after their crypto wallets were compromised.
• The first victim was NFT collector CryptoNovo, who tweeted on Tuesday that he had been hacked.
• The attacker appears to have made off with a hefty haul – three CryptoPunks, a Bored Ape, a Mutant Ape, three Meebits and two CloneX NFTs.
• Within 16 hours of taking over the wallet, the new owner was able to sell all ten NFTs for a total of 492.66 ETH, worth around $618,000 at the time of writing. The funds were then apparently transferred to an account on crypto exchange ChangeNOW, according to on-chain sleuth ZachXBT.
• It appears that an attacker may have also taken over CryptoNovo’s Discord account in an attempt to steal more funds.
• Another attacker had targeted Nikhil Gopalani, chief operating officer at RTFKT, an NFT project now owned by Nike. According to Gopalani, his wallet was drained due to a phishing scam.
• It appears that two wallets drained Gopalani’s collection, making off with 19 CloneX NFTs, 18 RTKFT Space Pods, 17 Loot Pods, 11 CryptoKicks and 19 RTFKT Animus Eggs. Not all of the NFTs have been sold, and it is difficult to estimate the exact value of each NFT, though the collection is likely worth upwards of $140,000, based on the current floor prices of each collection.

Binance Controlled 92% of Bitcoin Spot Trading Volume at End of 2022: Arcane Research

• The world’s largest crypto exchange, Binance’s market share of bitcoin (BTC) trading volume rose to 92% by the end of 2022, according to Arcane Research.
• The exchange’s market share was just 45% at the start of last year, but the elimination of trading fees in June, not to mention the collapse of rival FTX in November, served to push users to Binance.
• “No matter how you look at it in terms of trading activity, Binance is the crypto market,” Arcane wrote. “After lifting trading fees for its BTC spot pairs this summer, Binance completely overtook all market share in the spot market.”
• While Binance has been by far the biggest crypto exchange by trading volume for several years, these and other numbers suggest monopoly-like dominance. A report from CryptoCompare showed Binance’s overall year-end crypto market share was 66.7%. Coinbase (COIN) came in second with a relatively tiny 8.2%.
• “Retail crypto could enter a dark age that takes forever to exit” should Binance fail, said Edward Moya, senior analyst at Oanda. “Binance is too big … It is not healthy to have so much of the trading volume concentrated with any one exchange.”

Fake Solana NFTs Are Being Sold on Magic Eden in ‘Massive’ Exploit

• Creators and collectors of Solana-based NFTs are up in arms today as a major exploit at leading marketplace Magic Eden appears to be allowing scammers to pass off and sell fake NFTs as being part of prominent, verified collections.
• Discussion around the exploit flared up early this morning on Twitter, where users alleged that Magic Eden was listing fraudulent NFTs from popular collections like ABC and y00ts. Sellers were apparently able to pass off the NFTs as being part of those projects, and sell them for hundreds of dollars’ worth of SOL or more.
• Magic Eden tweeted about the situation this morning, thanking community members for “alerting us there was an issue where people could buy fake ABC NFTs.” The marketplace said that it had “added more verification layers per collection to resolve the issue,” and encouraged affected traders to reach out to marketplace support.

Crypto asset funds saw inflows plummet 95% last year to just $433 million

• Crypto asset funds clocked the worst year since 2018, with inflows plummeting 95%.
• Funds tracked by CoinShares netted a total of just $433 million in 2022 compared to a massive $9.1 billion in the previous year, a decline of 95%. The price of bitcoin fell about 60% over the same period, as a crypto winter engulfed the market amid U.S. Federal Reserve interest rates hikes to combat red-hot inflation.
• 3iQ experienced the most significant net outflows, which totaled $529 million during the year. CoinShares’ XBT product saw outflows of $446 million, while ProShares crypto funds experienced the most inflows, reaching $320 million.
• CoinShares Head of Research James Butterfill said it was difficult to predict what the new year would look like. The collapse of crypto exchange FTX kicked off a crisis of confidence in crypto, and questions remain over the liquidity of some key crypto platforms and lenders, he added.
• “Sadly, we expect it will take many years for investor confidence to improve to match the levels seen in 2021 and early 2022,” Butterfill said in a report from the asset manager. “We believe a continued weaker U.S. dollar and a pivot from the Fed in the second half of 2023 are likely to be very supportive for bitcoin due to it being an interest rate-sensitive asset, but until this happens, the market is unlikely to see significant investor inflows.”

Ethereum Builder ConsenSys and AMD SPAC Plows on Despite 95% of Shares Being Redeemed

• W3BCLOUD, a joint venture between chip maker Advanced Micro Devices (AMD) and Ethereum builder ConsenSys, says it will plow on with plans to go public, despite investors opting to redeem 95% of the shares in the deal with blank check company Social Leverage Acquisition Corp (SLAC).
• Billed as a decentralization-promoting alternative to Amazon Web Services (AWS), the W3BCLOUD special purpose acquisition company (SPAC) deal was expected to bring $345 million to the balance sheet of the combined business and value it at about $1.25 billion. The SPAC will carry on with just $16.6 million remaining in its coffers for now, following the redemption vote, filed over the Christmas period.
• “We remain very excited about the opportunity to merge with SLAC and become a public company,” a W3BCLOUD spokeswoman said via email.

Ether-Bitcoin Ratio on Bullish Path After Triangle Breakout, Trader Says

• The ether-bitcoin (ETH/BTC) ratio could rally toward a two-month high, according to Lewis Harland, a portfolio manager at Decentral Park Capital.
• That’s because the ratio has broken out of a multi-month triangle pattern, often called a wedge, indicating a bull victory in the prolonged tug-of-war with bears.
• “ETH/BTC has broken out of its multi-month wedge to the upside,” Harland told CoinDesk, adding that the breakout has opened the doors for a rally toward the early December high of 0.07636 and early November highs of nearly 0.078.
• The chart shows ether-bitcoin ratio has blasted through the upper end of the three-month triangle or wedge identified by trendlines connecting highs registered in September, October and December and lows hit in October, November and December.
• Triangles occur when both bulls and bears are unwilling or unable to lead the price action, leading to volatility compression. Hence, an eventual breakout or breakdown often brings a big bullish or bearish move.
• In other words, ETH/BTC looks set for a notable rally.

Ethereum in 2023: Here’s What to Look Forward To

• Staked ether withdrawals are imminent
• Proto-danksharding this fall, perhaps?
• Dealing with Ethereum’s censorship problem and centralization
• More cool events, like Devcon and ETHGlobal meetups