The Weekly Airdrop: 0x73
July 14, 2023 // Overall market (+6.7%): Inflation reaches two-year low; XRP partial victory over SEC, Mining stocks outperform BTC YTD; Argentina launched Bitcoin index-based futures contract
MARKET UPDATE
Sentiment has changed.
The overall market rallied +6.7% after Ripple partially won its lawsuit against the SEC, and the judge ruled that XRP, was indeed, not a security. This sets invaluable precedent for the cryptocurrency space as an asset class, and paves a clear path ahead for regulation. An ETH ETF is now much closer than we think.
In another shot in the arm for crypto, inflation data was published this week, with CPI down to 3.0% vs the expected 3.1%, a two-year low. The market is still pricing in one more rate hike, but inflation data now suggests that it is likely the end of the tightening cycle is upon us.
Bitcoin adoption continues as Argentina’s first Bitcoin index-based futures contract went live on Thursday, while U.S. institutions continue loading up on BTC mining stocks, causing a significant rally for these assets in the traditional markets.
While sentiment in the market may be turning bullish, it is important to remember that July will see significant token unlocks from various projects, including APT, DYDX, OP, APE, AXS, with a combined value of approximately $150m.
DEFI OVERVIEW
Onchain Activity
As we recently highlighted, the demand for RWAs in DeFi is on the up. The value of tokenized USTs reached a new all-time high of $621m, with Franklin Templeton holding $297.8 million, and newcomer Maple reaching $21.3 million in less than two months
Maverick Protocol surges to become the 6th largest DEX by trade volume, reaching an ATH $462.1m this week, +68.5% w/w. Maverick significantly increases capital efficiency for liquidity providers by allowing automated liquidity management strategies
Offchain Activity
The AAVE GHO mainnet launch proposal is currently passing with a unanimous "Yes" vote, and if successful, the GHO will be launched with a 1.5% borrow rate and a borrow capacity of 100m GHO
Ribbon Finance is planning to merge with AEVO, a rapidly growing options and derivatives chain, utilizing the OP Stack. This integration will provide users with an options super-app, offering perpetuals, options, and yield products all in one place. The RBN token will transition to AEVO, which will be issued on the Ethereum mainnet and used for governing the AEVO protocol and chain
WEB3 OVERVIEW
Onchain Activity
The amount of CPUs leased on the Akash Network crossed 1.05k, +23.4% since the beginning of July. This increase in demand for computing power from the network comes after it made significant progress in GPUs testnet, bringing it closer to its mainnet launch
Starknet’s “Quantum Leap Upgrade” has been successfully deployed on mainnet, resulting in improved transaction processing speed and network health. This upgrade has led to a significant increase in network activity, with the number of daily transactions reaching a monthly high of 206.2k
Offchain Activity
Polygon announced a proposal to launch the $POL token (1:1 conversion with $MATIC), which will be the main token for the revamped Polygon 2.0 Network. The initial supply will stay at 1B POL tokens, with a 2% annual inflation rate (1% to validators and 1% to the ecosystem treasury)
Google made a significant policy change to its app store, now allowing developers to integrate digital assets like NFTs into their apps and games available on the platform, which could catalyze the blockchain gaming industry that has been stagnating for a while
Protocol Highlight: Maker DAO (MKR)
MakerDAO, amongst the oldest DeFi protocols that exist today, has been making significant changes to their mechanisms (while the core protocol outcomes remain the same), in order to keep up with the rapidly changing macroeconomic as well as onchain environments that it finds itself within. We take a look at MakerDAO and see what it has been up to.
DAI: As you would expect, during a long bear market, DAI supply contracted quite a bit. Supply is down -19.8% to 4.67B over the last 6 months, as it is a collateral backed stablecoin, and users likely withdrew a chunk of that during the bear. As market conditions get better, we expect DAI supply to steadily begin its ascent. More DAI means more fees
Move To RWA: MakerDAO has been one of the leaders in DeFi when it comes towards a larger move towards real world assets. $3.37B in real world assets have been locked as collateral to mint ~$2.27B in DAI
Revenues: MakerDAOs annualized revenue chart over the last year speaks volumes of what the protocol has been trying to achieve. Annualized revenues have increased ~400% from $20m in Aug last year, to ~$86m, today. This has been driven by their aggressive push to allocate towards USTs
Conclusion:
Maker has displayed a strong ability to adapt to market fluctuations, effectively enforcing essential protocol modifications, and has emerged more robust from the bear market. The protocol is anticipated to progressively deepen its involvement with real-world assets (RWAs) and utilize the boosted revenues from this to enhance the protocol and ensure MKR and DAI maintain their position as primary DeFi assets.
THE NEWSROOM
About M31 Capital
M31 Capital is a global investment firm dedicated to crypto assets and blockchain technologies that support individual sovereignty.
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