Wednesday, 19 January 2022

Market Summary

Market Summary 19 January 2022

Bitcoin Price: US$ 42,352.12 (+0.36%)
Ethereum Price: US$ 3,159.85 (-1.55%)


LooksRare Wash Trades, Ohm Forks Fall, ETH 2.0 Staking

  • The yield on 10-year U.S. Treasury notes jumped to a 2-year high as investors brace for a more aggressive timeline on policy tightening by the Federal Reserve.
  • Sustained periods of negative real rates have historically been bullish for risk assets, including crypto. Accordingly, when real rates rise, risk assets tend to take a hit, as we’ve seen since the start of the year (the Nasdaq 100 is down nearly 7% YTD). Even though real yields are still negative, the positive rate of change we’ve seen recently is enough to spook investors.
  • LooksRare, it appears wash trading has grown more rampant. We analyzed this phenomenon using the Zero Royalty Volume, where only 2% fees are paid on each transaction toward the platform and back to $LOOKS stakers. NFT Traders accumulate volume to earn a share of the daily 2.8M $LOOKS given as trading rewards, worth $12.6M ($4.4 per $LOOKS at the time of writing). This incentivizes wash trading on the platform and accounts for 98.8% (Zero Royalty Volume) of all volume on LooksRare.
  • The same Zero Royalty volume metric on OpenSea is much lower at $400k to $1.2m daily compared to LooksRare, where these collections trade consistently with $400M-$500m in daily volume.
  • The $LOOKS token has high staking rewards at ~782% APR, consisting of 343% of APR from $LOOKS staking rewards and 439% APR from $ETH from platform fees. Wash Traders likely stake their earned $LOOKS to reduce their platform fee through the rewards from staking. However, phase A rewards, which distributes the bulk of $LOOKS for staking or trading, ends on February 9th. After that, the $LOOKS rewards are reduced by more than 50%.
  • This model seems unsustainable long-term and will likely lead to a reflexive drop in trading volume as wash traders leave when it is no longer profitable.
  • More than 9M ETH are now staked in the ETH 2.0 deposit contract. This represents 7.7% of the current Ethereum supply staked in ETH 2.0.
  • Each validator is required to stake 32 ETH to run their own validator. For those with less, there are also liquid staking options like Lido’s stETH that enable users to earn ETH 2.0 staking rewards.
  • The ETH merge to Proof-of-Stake is expected to happen in Q2 2022.
  • Olympus DAO has been suffering large price drawdowns the last few days, largely due to a large holder of OHM taking profit as well as liquidation cascades.
  • Ohm forks have similarly suffered the same fate, with the top few Olympus forks down 40-70% since the start of this year.
  • Founder Daniele Sesta recently announced plans to turn off token holder dilution and convert Wonderland’s treasury into a VC investment DAO that will resemble the SPAC model.


Yield Strats #42 – Stablecoin Farm, New Money Market, ETH Pools and Airdrops

  • Airdrops and Rumours
  • OpenSea‘s new CTO, Nadav Hollander has stated OpenSea will embrace decentralization and that users should be rewarded for the value they bring on the platform, hinting at a retroactive airdrop.
  • Agora is airdropping 4% of the total token supply to METIS token holders to reward early Metis adopters and achieve an initial distribution of users for the protocol. The airdrop will be dropped via a claim process.
  • Hundred Finance will airdrop 37,500 FTM to veHND holders in two separate tranches. The airdropped FTM tokens will be claimable according to the proportion of veHND in existence during the time of the snapshot. The initiation of the second airdrop will follow in 2 weeks time.
  • Slingshot DEX aggregator will have an NFT drop on January 25th which gives utility on the protocol. There is speculation the NFT may contain a token airdrop.
  • According to @litoceon, Uniswap may begin liquidity mining incentives on Arbitrum and Optimism in the near future (rumoured to be 2-3 weeks). On December 11th, a consensus check whether to incentivize UNI liquidity on L2 passed.
  • Cream Finance token holders will be eligible to receive IB (Iron Bank) token distribution. Cream token holders need to stake their CREAM before the snapshot on January 27th.  These tokens will have a 4-year lock, in the form of veIB on Fantom Opera.
  • LUNA staked on Stader Labs allows stakers to receive airdrops. LUNA staked on TerraStation (bLUNA) do not.
  • Wonderland Money will turn off their emissions and move to a ve(3,3) model where stakers receive airdrops and farming rewards.
  • Check to see if you’re eligible for any airdrops you missed.


Microsoft’s massive Metaverse move: Buying Activision for $69B

  • Microsoft Crop. is acquiring gaming giant Activision Blizzard Inc. for $69 billion as part of a move to ramp up its gaming and Metaverse plans.
  • Activision Blizzard is home to a long list of iconic gaming franchises such as Call of Duty, Overwatch, Candy Crush, World of Warcraft and Tony Hawk’s Pro-Skater. Following the deal, its games are set to be added to Microsoft Xbox’s Game Pass service that has 25 million subscribers.
  • According to a Jan. 18 announcement from Microsoft, the firm will acquire Activision Blizzard for $95.00 per share at a valuation of $68.7 billion. The deal is set to close in the 2023 fiscal year, and it will see Microsoft become the third largest gaming company in terms of revenue behind Riot Games owner Tencent and Playstation developer Sony.
  • Microsoft outlined that the acquisition will support the growth of its services across mobile, PC, console and cloud gaming, and also notably stated that it will “provide building blocks for the Metaverse.” 


OpenSea acquires Dharma Labs and a new CTO

  • OpenSea announced Tuesday the acquisition of Dharma Labs, a cryptocurrency lending platform and digital wallet, for an undisclosed amount. According to the statement, Dharma Labs would effectively shut down and its co-founders, Nadav Hollander and Brendan Forster, will become OpenSea’s new chief technology officer and its head of strategy, respectively.
  • OpenSea claimed this acquisition will help accomplish its mission to scale product development, grow its team, expand its safety and reliability efforts and invest in the nonfungible token (NFT) and Web3 ecosystem
  • Devin Finzer, OpenSea’s co-founder and CEO, believes that the “union” between the marketplace and Dharma Labs will “help us dramatically improve the experience of buying, minting and selling NFTs on OpenSea.” 


NFT-focused Animoca Brands valued at $5B following $358M raise

  • Hong Kong-based software and venture firm Animoca Brands has secured $358.8 million in capital investments to fuel new acquisitions in the nonfungible token (NFT), gaming and metaverse sectors, further cementing crypto’s biggest trends in 2022. 
  • The funding round was led by Liberty City Ventures and had participation from some of blockchain’s biggest venture funds, including 10T Holdings, Gemini Frontier Fund, ParaFi Capital, Provident, Sequoia China and Winklevoss Capital, among several others.
  • Animoca said the capital injection will go towards financing strategic acquisitions and investments, product development and license acquisition for intellectual properties. The company said its vision is to create a metaverse that enhances users’ digital property rights through NFTs. Opportunities within GameFi — a broad concept that refers to the financialization of gaming through NFTs and DeFi — are also envisioned as being part of this environment.


Bitcoin hodlers ‘under siege’ at $42K as 30% of BTC supply flips from profit to loss

  • Bitcoin (BTC) hodlers face a crucial week in more ways than one as $42,000 rekindles a familiar battle.
  • As noted by on-chain analytics firm Glassnode on Monday, 30% of the BTC supply is now at a loss — historically, this has been a key number to defend for bulls.
  • These were the post-COVID-19 market crash in March 2020 and summer 2021 in the aftermath of the China mining crackdown. The 30% in-loss level resulted in an upside impulse move for spot price in both instances.
  • Bitcoin percent of supply in profit annotated chart (screenshot). Source: Glassnode
  • Continuing, Glassnode acknowledged that the same result is nonetheless far from guaranteed this time around.
  • “The reaction from this level will likely provide insight into the medium-term direction of the Bitcoin market,” the newsletter continued.


Malaysia’s central bank actively assessing CBDC options

  • Malaysia has joined the growing cadre of nations that are exploring the value of researching and developing a central bank digital currency (CBDC).
  • Malaysia’s central bank, Bank Negara Malaysia, stated to Bloomberg on Monday that while a decision about exactly how to move forward with a CBDC has not yet been determined, it has focused research on a CBDC “via proof-of-concept and experimentation to enhance our technical and policy capabilities.”
  • It also stated that the ostensible reason for the current research effort was to ensure it is prepared to launch a CBDC program “should the need to issue CBDC arise in the future.”

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