The Weekly Airdrop: 0x57

March 24, 2023 // Overall Market +7.6% while the Fed simultaneously hikes rates 25bps and reverses ~70% of last year's QT

MARKET UPDATE​

The overall market (+7.6%) continued its rally and BTC (+11.7%) saw increased inflows & adopters (non-zero addresses reached ATH of 45.1m) thanks to the Fed printing another $100bn to provide more capital to banks in duress​

L1s/SCPs (+9.5%) was the top performing sector again led by STX (+22.4%) and FTM (+14.0%) as Stacks 2.1 went live, providing support with native Taproot and Segwit addresses

Onchain Activity

• Arbitrum launched their ARB token on Thursday, leading to massive activity on the L2: +2m daily transactions, +950k DAUs, & ~$1.8m in 24h fees​

• Tether issued an additional $1bn USDT on the Tron network with a total of $4bn USDT issued in the past 7 days, increasing the dominance to 59.0%​

Offchain Activity

• The Federal Reserve increased rates another 25bps, emphasizing their commitment to achieving 2% inflation and securing the banking system​

• Coinbase, Sushiswap, and Justin Sun are the latest entities to face regulatory pressure from the SEC in the ongoing scrutiny of the crypto industry

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DEFI OVERVIEW​

Performance: ​

• Lending protocols achieved remarkable growth with a revenue of $29.5m, +247.0% m/m. The rising demand for capital led to ~$13bn in borrow volume across lending protocols, in March so far ​

• DEXs (+2.1%) led by JOE (+101.9%) saw TVL increase +18.7% after the DEX benefitted from its Arbitrum deployment, processing $310m in trade volume

Key Highlights:​

• Uniswap processed ~$1.8bn in trade volume on Arbitrum over the last week, as users looked to trade the ARB token after launch. The DEX earned ~$2m in fees over the last 24 hours​

• Radiant Capital is dominating crosschain borrow/lend with TVL up +71.2% m/m & monthly revenue of $500k, the highest level since Sep 2022 ​

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WEB3 OVERVIEW​

Performance:​

• Data Services (+8.0%) was the best performing sector led by LINK (+9.7%) and BAND (+4.9%) as Chainlink posted product updates for Q1 23 covering details of CCIP development progress

• LPT (+18.3%): Xeenon, a Web3 streaming platform launched a new creator revenue sharing model on Livepeer, providing creators with revenues paid in ETH​

Key Highlights:​

• Akash Network vCPUs leased increased +44.8% w/w, as demand for decentralized compute power continues to increase ​

• Arweave looks at becoming a cross-chain dApp hub as WeaveDB, partnered with LitProtocol & integrated Lens Protocol

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PROTOCOL HIGHLIGHT

Liquity (LQTY) is a decentralized borrowing protocol that allows users to take out interest-free loans using ETH as collateral. These loans are paid out in LUSD, a USD pegged stablecoin backed entirely by ETH. ​

How It Works:​

• Collateral Ratio: Users can borrow against ETH at a minimum collateral ratio of 110%, which improves capital efficiency and allows for up to 11x leverage ​

• LUSD Peg: The ability to redeem LUSD for ETH at face value and the collateral ratio set a floor and ceiling price through arbitrage opportunities ​

• Chicken Bonds: Bonding mechanism that provides users with an opportunity to earn boosted yield while the protocol gains protocol-owned-liquidity ​​

• Interest-free Borrowing: LUSD can be borrowed interest-free; users only pay one-time borrowing and redemption fees that are paid to LQTY stakers​

• Immutable: Liquity is governance-free with immutable code, meaning that no one can ever alter the protocol in any way​

Network Metrics: ​

• LUSD supply has increased 47.2% YTD while TVL is up 68.5% YTD​

• A total of $30.9m in revenue generated and $4.5bn in LUSD borrowed

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About M31 Capital

M31 Capital is a global investment firm dedicated to crypto assets and blockchain technologies that support individual sovereignty.

Website: https://www.m31.capital/

Twitter: https://twitter.com/M31Capital