The Weekly Airdrop: 0x59
April 7, 2023 // Overall market (+0.8%) BTC dominance falls, capital rotates to alts, LSD assets rise ahead of "Shapella" upgrade, and a Bitcoin easter egg on your Mac...
MARKET UPDATE
The overall market (+0.8%) saw BTC dominance decline for the first time since Sept 2022, indicating a rotation towards ETH & alts. LSD assets were the top winners of the week, driven by the anticipation of Ethereum’s upcoming "Shapella" upgrade, which will enable users to withdraw staked ETH for the first time.
Onchain Activity
The launch of zkEVMs in March resulted in a +129.2% jump in gas consumption for L2s. With the anticipation of more rollups being launched in the near future, the demand for ETH blockspace is expected to further increase, clearing doubts that L2s are parasitic to Ethereum
Activity on zkSync ERA is steadily increasing, with weekly TVL growth +69.8% to $143.7m. This growth is fueled by more protocols launching on the mainnet, and speculation around a zkSync token airdrop in the future
The price of Bitcoin has experienced a sharp increase YTD and the Miners-to-Exchange Flow has reached a three-month low of 2.7 BTC, pointing towards a trend of accumulation
Offchain Activity
PostFinance, Swiss Government-owned bank, collaborates with Sygnum Bank to provide crypto services to its 2.5m customers
Market Capitalization of tokenized Gold exceeds $1bn as PAX Gold and Tether Gold compete for the top spot, driven by increasing Gold prices and demand for safe-haven assets amid banking crisis concerns
DEFI OVERVIEW
Onchain Activity
Synthetix reached an ATH of $730k in daily fees generated from perpetuals on March 30th as they start to roll out V3
Uniswap has surpassed Coinbase in monthly trade volume for the second month in a row, with a total of $71.6bn vs. Coinbase's $49.4bn
Offchain Activity
Arbitrum’s AIP-1 proposal was rejected by the community but the Foundation sold ARB tokens anyways, stating that the proposal was a “ratification not a request”, which sparked intense backlash
Manifold Finance introduced mevETH, an MEV-optimized, native multichain liquid staking protocol
DEX(Derivatives) +5.2% led by PENDLE (+47.3%) and SNX (+10.3%) as PENDLE TVL reached an ATH of $52.1m, +27.0% due to demand for staked ETH yield
WEB3 OVERVIEW
Onchain Activity
Covalent added support for over 30 new chains in Q1, leading to a total of 1.8bn DEX trades and 82m NFT trades using the Covalent API
Audius reached an ATH in the number of plays in March, hitting 10.5m, +18.3% m/m
Offchain Activity
Blockchain messaging protocol, LayerZero, raised $120m in its Series B round, tripling its valuation to $3bn
SK Labs, a data management and marketing firm, partnered with Ava Labs to launch the UPTN Avalanche subnet which offers Web3 infrastructure to South Korea
Compute +3.0% led by GLM (+6.0%) as Golem Network released JS API to make decentralized computing simple for JS developers with easier access to the platform through browsers
NARRATIVE HIGHLIGHT:
Concentrated Liquidity
Uniswap’s implementation of concentrated liquidity (Uniswap v3) 2 years ago cemented its place as the leading DEX in crypto, generating ~$1.7m in fees per day on average over the past year, with ~$1.5bn in daily trade volume
To protect itself from forks and vampire attacks, like with Sushiswap, Uniswap protected its V3 product with a license from forking, which helped it maintain its moat
Despite it being impossible to fork Uniswap code, V3 AMMs proved to be a highly desirable feature for many top DEXs, which led them to implement their own versions of concentrated liquidity, like with Quickswap V3 and Trader Joe Liquidity Book
Benefits of Concentrated liquidity:
Capital Efficiency: Enables LPs to concentrate their capital in specific price ranges, rather than spreading it across the entire price spectrum
Lower Slippage: As liquidity is concentrated in tight range around the current price
Higher Return for LPs: By choosing a tight range, LPs operate with more “virtual liquidity” and get a larger portion of fees generated
Drawbacks of Concentrated Liquidity:
Higher IL: When price moves out of the chosen range, LP positions remain 100% in one of the assets, depending on the upper/lower boundary of the range crossed
Lower Fees (If managed improperly): As price moves out of the chosen range, the LP position will no longer earn the fees
Constant Monitoring: To maximize the APR, position has to be actively managed to optimize fees and minimize IL
As Uniswap V3 license expired on April 1, 2023, some of the large DEXs already announced implementation of V3 AMM including PancakeSwap, and Thena with more to come.
Liquidity management protocols built on top of Uniswap V3 automate things like providing liquidity in ranges, rebalancing, compounding and optimizing the range size provide a much better UX to users, while also ensuring they are maximizing their earnings potential.
Gamma Strategies: Gamma's position management helps mitigate IL for LPs
Unipilot: Optimizes and manages liquidity, boosting fees for LPs
Arrakis Finance: Offers active LP position management to passive LPs
Popsicle Finance: A suite of products that help LPs maximize their trading fee gains and passive income
Performance Metrics:
TVL increased by +2,782% YTD to $72.9m
Revenue reached $97.1k in March, +60.2% m/m
DAUs increased by 176.7% m/m to 0.5k
TVL increased +157.2% to $3.2m
Revenue increased +90.4% m/m
THE NEWSROOM
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