DeFi Market
-Will Sheehan
After last weeks shakeout things have been very quiet, onchain leverage has not picked pack up, with only a few million getting liquidated in the sizeable move last week. The merge looms large but it’ll have to wait for a few more weeks.
Tribe Dissolution
Last week the Fei Labs team proposed a wind down of the Tribe DAO. Whats unique here is that usually when teams close up shops they return any remaining funds behind closed doors. To complicate matters there is an extra stakeholder in this situation.
FEI holders, general signal/sentiment is that this is the senior tranche, redemption at par for $1
TRIBE holders
fuse hack victims/creditors
The hack is the real monkey wrench here, when tribe and rari merged last year, tribe bought the fuse product which was by far the most successful project out of rari, with over $1bn of long tail lending pool at its peak. Turns out tribe also implicitly bought its future liabilities. In April an $80m hack crushed the protocol, fuse was always very good at partnering with DAOs so olympus and frax were among the largest impacted directly by the hack. In the wind down proposal the payout to these hack victims are capped and Sam from frax among others have a big issue with this. Olympus DAO is proposing a bribe contract to swing a vote in favor of full repayment.
TRIBE’s Utility is rearing its head, with value buyers scrambling to calculate the nav and votes shuffling around (keep an eye on olympusdao.eth delegations). Risk arbitrage meets DeFi.
Reasons for the dissolution are unknown, but the protocol that lived for a bit over a year has imparted a number of ongoing lessons
Giant hype launches (>$1bn raised in 4 days) are bad for sentiment and leave giant holes to crawl out of
PCV is a misnomer, it is simply a reshuffling of creditors in a sufficiently decentralized system - the protocol did not own the assets, FEI holders / TRIBE holders and ~hack victims ultimately control this value.
The rari merge had a giant put option embedded within it in smart contract risk, a risk that was accelerated when the (entire?) rari team left the project upon merge, allowing a bad code push that should have been caught.
DAO’s holding your token is not a diamond hand situation, things change fast and execution will be public and slow.
cbETH
Coinbase announced a staking derivative custodied by coinbase called cbETH. This is a progressive move from coinbase, launching a DeFi compatible product with a clear differentiation in custody (coinbase’s security record is very clean).
cbETH has actually been deployed and already has a supply of 642k ETH, but most was minted initially back in June, flows will be important to watch relative to its competitors.
A uni-v3 pool has been seeded with a decent range, but I would expect a curve pool to compete for liquidity over time. What is trickier for coinbase is the inability to incentivize liquidity with emissions, a distinct advantage for lido.
My current mental model for cbETH is cbETH:stETH::USDC:DAI. stETH is not the most decentralized system one could design (rETH is a more permissionless system for example). But stETH doesn’t have a blacklist (cbETH does) and will likely be more aggressive with mev extraction (unclear if coinbase will participate).
cbETH is trading at 0.95 ETH on thin liquidity so far.
NFT Market Overview
-kezfourtwez
Overall outlook for NFT’s is still ‘not great’ as volume further dries up on risk assets across markets, altcoins with pictures being no different. Though, every week we are still seeing new projects mint out and do impressive volume for market conditions as well as established ones on the uptick. There was a brief scare that we were about to see the first domino fall causing cascading liquidations from BendDAO on apes et al. but that situation has calmed down since the team put forth a proposal to change the liquidation and bidding thresholds. Despite volume trending lower we saw some impressively high sales on art and pfp’s, up to 500 ETH.
Pudgies are the latest OG collection to go on a tear. They briefly broke ATH around 3.9 ETH, topping out at an 83% gain on the week
Finiliar’s are the new mint on the block reaching 0.4 ETH and a 5x from mint
10KTF Combat crates up 40%
Oddities gained 53% on the week
Bluechips receiving some love - Moonbirds and Azuki both up around 7%
Finiliars - A project I’d place somewhere in between NFT fine art and a 10k pfp collection dropped this week - by UK contemporary artist Ed Fornieles. Finilars have a very interesting concept attached, cute little creatures that express the fluctuations in currency through their emotions. Fini’s will be tied to the price action of their respective coins (cuteility if you will). There are 10 coin families, BTC, ETH, DOGE, XTZ etc and each Fini will react to the PA of their respective coins using chainlink oracles.
This won’t take place for around 3 months, so for now each Fini has the same stock animation, but I must say they are damn addictive and I am definitely dabbling. Along with the 10 families there are 5 frequencies (how often they react) and 161 clans. They are astoundingly varied and aside from the above mentioned, their other differentiations aren’t baked into the metadata; which I love. When it comes to artists dropping NFT’s, Ed definitely chose hard mode; Finiliars have been in the works since 2016, it’s hard to say exactly how many without the metadata but the team have said that there are thousands if not tens of thousands of traits. For context Punks have 86 and BAYC around 160. Fun fact: there is currently a Finiliar sitting in the lobby of a Manhattan trading firm reacting to the price of the Japanese Yen.
Other than their reactiveness we don’t currently know what’s in store but some new information has been circulating. Sleuths did some digging and found a function in the contract called ‘battleTransfer’ with the description “Let battle contract transfer tokens”. Also surfaced were some old Youtube videos of Fini’s fighting each other that have since been made private, alpha leak indeed.
Finiliars originally minted 1.8k of the supply back in January to fund development, the remaining 8.2k were minted last Thursday for 0.08 ETH each to a combination of current holders and an oversubscribed allowlist. The collection minted out in 30 mins with a brief rise to 0.15 before dropping below mint price to 0.06. Since the original dip Fini’s consistently made higher highs and had a healthy climb to 0.4, since retracing to where they sit now at 0.22. There is a lot of information about the project out there dating all the way back to 2016, if you’d like to learn more; The website, this thread and this one are a good place to start
Gem and Sudoswap - A feature greatly anticipated by hungry NFT traders is releasing this week. Gem is integrating Sudoswap support, you will be able to view and buy Sudo listings straight from an aggregator. This is a first and has the potential to give the NFT AMM a decent boost in marketshare.
In a little over three weeks Sudo has managed to grow to an average of around 9% marketshare, Sudo remains useful mainly for market makers and arbitragers and there are big drawbacks in trading on the platform for other classes of traders, rarity and pool exploration are the big ones and this update will solve that. It seems to have already gone semi-live with traders in the wild spotting hints of what’s to come (It’s me, I am traders in the wild hence the Fini). Though for now Sudo listings are yet to be shown on the main listings page and you can only see them if you search an NFT ID that you know is listed on Sudo.
The other big qualm that the NFT community has with Sudoswap is the lack of royalties. If you are unfamiliar with the royalty debate here is a great article from Zeneca on the topic, written largely from a collector/creator standpoint as opposed to a trader/market efficiency view. Royalties aren’t currently baked into the contract, the current standard is royalties being set at the marketplace level when creators create the collection page. Sudo is an aggregation of different pools with different parameters setup by many different people, so it’s not currently possible for creators to go in and just ‘turn on royalties’ like it is with x2y2. Though there are ways that creators can funnel value back to project using Sudoswap and in my opinion there will be many more. Competition breeds innovation and this is just the beginning for NFT AMM’s. Vasa from Gem wrote some good thoughts on the royalty debate in this thread, some of which they are even planning to implement in later updates.
Punk 6529’s on-chain University degree - One of the great web3 thinkers has set in motion an interesting approach to education. Anon king of the mega-thread, Punk6529 in collaboration with UNIC and OnCyber are to create an entirely on-chain University degree which will take place in the OM100m open Metaverse. The tagline;
“An open introductory course to NFTs and the Metaverse, delivered on-chain and in the metaverse”
From the enrolment, to attendance, to lecture material and graduate certificates everything will be on-chain with 0 centralised databases.
The course will cover a wide range of content; from learning how to interact on chain to the history of digital art, from generative to 1/1’s and 10k pfp’s, venture capital to DAO’s and everything in between. It features a star-studded web3 lineup; Snowfro, Chris Dixon, Gargamel, Claire Silver, Beeple, Kevin Rose, gmoney and Tyler Hobbs, to name a few.
It will be fascinating to see how this plays out, I am supporter of the advancement of web3 education and this is a big stepping stone. I’m personally a fan of the idea that blockchain can be a viable solution for the official record keeping of documents like birth certificates, medical records, passports etc. so it will be interesting to see the implications of keeping education records on the blockchain.
I highly recommend checking out the website, having a read and seeing the full line up of lecturers. The course is entirely free and entry is granted by a free NFT that can be minted here.
A personal observation; lately we have been seeing approximately one to three new collections per week successfully launching and steadily climbing the charts. When scouting new collections, look for outliers in a sea full of …shit. It might be a novel concept, great art, interest from veteran communities and bluechip communities or originating from proven creators. All new and successful collections in the past few weeks have shown one or more of these qualities;
Webaverse is a decentralised Metaverse powered by AI and AR with a novel drop mechanic that promoted price speculation
8liens was created by crypto veterans, with art by OG artists and minted for free with zero royalties
Based ghouls made use of a new NFT/DeFi primitive to gain traction
Finiliars use NFT’s and blockchain as a fun medium to convey markets with objectively great art
Even in a bear market there is fun to be had and ETH to be accooomulated for those that keep their finger on the pulse.
In other news…
400 ETH 1/1 Pudgy sale
500 ETH sale of XCOPY’s ‘Don’t panic’
Stani, founder of Aave buys 1/1 Finiliar for ATH sale of 13 ETH
Mastercard partners with Binance to launch a pre-paid crypto credit card
Make sure to use Parsec to stay on top of the markets and we’ll see you next week
nice
good