DeFi Market Overview
-Will Sheehan
Aave eMode and the LSD Lending Race
Long awaited Aave V3 has deployed on mainnet, it has been running smoothly on optimism/arbitrum/others for months now, but mainnet will be the true test to see how much liquidity it attracts. Initially e-mode is the must substantive addition to the protocol. Historically DeFi spot lending markets have attached an LTV to each asset and regardless of borrow/collateral mix that LTV is applied equally. This has clear inefficiencies in the case of highly correlated assets. Liquid staking derivatives are a great example, cbETH/ETH has a yearly volatility roughly equivalent to the staking yield, whereas cbETH/USD has is a 60-150 vol asset. e-mode allows for borrow specific LTVs within the monolithic aave pool of liquidity. Aave is already the leader in LSD leverage with a custom integration of stETH in v2, v3 will allow for more efficiency with e-mode. The launch comes on the back of compound-v3 launching an ETH only borrow pool with cbETH and wstETH as collateral assets. Pooled models have a huge advantage over usd borrows (maker/fraxlend/abra) since an ETH borrow can be much more safely levered up. Maker is aware of this disadvantage and has ETHD in the works, an ETH pegged DAI style synthetic. Challenges here are liquidity (who will actually want to hold this vs. stETH) but I expect maker to not be alone in this endeavor.
LSD Lending is quite the prize, particularly in 2023 with withdrawals set to go live.
OUSG & Flux
Ondo launched Flux protocol this week, a lending protocol that allows permissionless supplying of USDC & DAI and the gated ability to borrow stables against OUSG, a wrapper for short term US treasuries. Borrowers get to leverage up treasury yield, while depositors get access to UST rates minus a spread. With only one large borrower onboarded flux has already pushed supply rates to >3.5% on USDC, head and shoulders above deposit APRs on other venues. Hard to understate the effects OUSG could have towards onchain lending, borrowing just got more expensive and reflective of real rates. The rate limiter for passthrough is onboarding borrowers through Ondo’s system, but if scaled up flux will rerate interest rates across DeFi.
NFT Market Overview
-kezfourtwez
Good morning jpeg enthusiasts, I’ve been on holiday for a few weeks now so I apologize for the lack of market coverage, but let’s get back to it.
Lots has happened since I’ve been gone but I’ll start with market health and general narratives - NFT volume and interest has been on the rise over the past couple of weeks due to a few clear trend leaders and catalysts. Yuga is still dominating by marketshare, Jack Butcher’s Checks took a significant mindshare and sparked an onslaught of ERC1155 open editions, Canto NFT’s had a brief blip and now we have BTC ordinals.
The overall market has shown great strength since the beginning of January with BTC/ETH peaking at 50% off the lows. Generally when the coins are running, NFT’s take a hit and are repriced down in USD terms. Though, this time jpegs managed to capture and hold attention on the way up, and many collections caught higher valuations as the price of ETH climbed. A phenomenon not really seen since peak bull market back in August 2021. News of the SEC cracking down on Coinbase staking has stifled the current momentum, BTC/ETH have both experienced their biggest ‘nuke’ since the beginning of the year (5%) and in turn, NFT momentum has stalled.
Despite volume rising, most bluechip NFT’s are down or flat in the last 7 days. Pudgy’s and Clones got murdered yesterday, both charts fell off a cliff as a flurry were sold into bids and are down around 10% in the last 24h. A Kid Called Beast is this weeks clear winner with almost a 3x on the week, and the Kanpai Pandas continue to rally off the back of their partnership announcement with UFC fighter Jon Jones.
Some of these sell offs are to do with Blur being in the final week before the airdrop, farmers are beginning to pull their bids causing a panic in the market. With BTC/ETH looking shaky it’s hard to say how the market will react - two likely scenarios:
If crypto can hold here or at least flatten out after another leg down, and the airdrop comes in around or over expectations giving traders more free capital - then likely that we see a post Blur NFT pump
If crypto doesn’t hold and general market confidence stays low, I think we see volume start to filter out as people re enter capital preservation mode
Checks by Jack Butcher
Checks started as an open edition by marketing guru and founder of Visualise Value, Jack Butcher. Jack made a name for himself by posting inspiring yet aesthetically simple graphics on twitter and selling his expertise in the form of an online marketing course. His teachings are all about how to trim down and curate your businesses content to what your target market actually wants to see, a remove the noise and reap the benefit style, his ethos is simplicity.
16k checks were minted at $8 each at the beginning of January, each NFT is a black grid containing 80 checkmarks - though the metadata has changed multiple times to represent different notable artworks and narratives, from the famous highest sale alien punk, to the Mona Lisa, to Vincent Van Dough’s pepe check derivative. Checks are in a way an on-chain game. The aim is to reach the final singular black check through a series of 8 burns. Burn 2 original checks to get the 2nd stage, burn 2 of those to get the 3rd stage and so on. Each time you burn, your new NFT will have half the number of checks on it as it did before. It would take 4096 checks to reach the the final stage, meaning that at maximum there could only ever exist 3 black checks. The current top holder has 508, and at current floor 1 black check would cost over Ξ5000 to accomplish.
Countless speculation threads have been written on the topic, as holders try and decipher the outcome. The top holder Schmrypto (508 checks), has created BlackCheckDAO which aims to pool enough together to create the first black check.
Checks have been on an absolute tear since they minted in early Jan, they topped out around Ξ2.6 which is a 500x, and they currently sit at a Ξ1.7 floor. Who knows how high it will go, it’s a well thought out ponzi that’s captured the attention of the entire space and sparked an entirely new OE > burn meta. The cope and chase is always strong when something of this gravity hits, it reminds me of the euphoria and cope that was present when goblintown ran from a free mint to 9e, and I wouldn’t be surprised to see the same happen to checks as the burns begin. Though, the writing was on the wall when it came to this latest retrace, a clean bear divergence and diminishing volume.
Thanks for reading and bye for now, stay on top of the markets with Parsec and we’ll see you next week
hab
nice