DeFi Market Overview
-Will Sheehan
Canto
Canto has had a resurgence in October driven by a strong CANTO bid. Canto’s core DeFi primitives are reflexive to CANTO via reward rates. Canto has been a popular chain among a cohort of DeFi natives and the “slow” buildup is a testament to 2 things, 1) The market is quiet and participants are less eager to rotate away from a promising project, a hidden benefit of bear markets.
Canto has differentiated itself well with a couple actually novel mechanisms. NOTE notably is a money market backed stable unit of account issued against lent assets. Between the 5 LP assets listed there is around $80m lent to the money market, with >$30m of that being volatile pairs. The Accountant (NOTE issuer) is effectively collateralized with these assets at sizable scale, with a peg that has consistently come in 2-4 cents above par. LP tokens in money markets have been a notoriously hard nut to crack with no at scale implementation, even isolated lending has struggled to size these up (cvxTriCrypto on abra a notable - if short lived - exception).
Rubber hits the road for CANTO when yields compress and the mechanisms get put to the test under a liquidity crunch, but signs of innovation thus far.
Gearbox
Gearbox launched the supply side of the long awaited leveraged yield farming protocol, assets have flowed into the protocol with depositors looking to secure $GEAR yield once borrowing is enabled and the token unlocks.
Gearbox is not without previous art. Alpha Homora ascended in early 2021 riding the DeFi golden bull reaching enormous sizes into the may crash, only to be all but abandoned as a project 18 months later. Abracadabra similarly reached enormous heights in late 2021 on the back of looped farming among other strategies, but again abra is on its last legs with FTT propping up MIM issuance. This is clearly a large opportunity for a team with a long term vision, farming your farms explodes tvl in many cases (see arrakis). The challenge is one of risk appetite, can these markets size up without pushing limits and breaking farms - creating negative feedback loops for the farm and loopers (degenbox’s impact on UST was very material). That being said, on chain actors are desperate for yield as treasuries outperform many yield strategies, could be a recipe for the yield hungry to lever to the hilt.
NFT Market Overview
-kezfourtwez
‘Digital collectibles’ are the words being echoed throughout twitter this week after Reddit NFT’s spike in popularity, floor price and volume, more on that below. With ETH on the rise it’s been a fairly flat and down week for most of the market, new projects are mostly having a hard time staying above mint price as they fight each other for a share in what little liquidity is left rotating around the NFT market. Generative art continues to outperform in this bear market, provenance prevails - Chromie Squiggles hit 15 ETH and flip mutants. RTKFT dropped a collab with luxury luggage brand Rimowa, but a contract exploit let savy users loop the mint. Looksrare follows suit and announces the move to optional royalties, will give creators a share in 25% of their marketplace fees.
Performance highlights:
R Planet had a bullish continuation post reveal and is up 150% off the lows
StreetMachine is down 73% on the week post reveal
Degenheim is down 80% since mint 8 days ago
RTFKT x Rimowa worker bots are sitting at 3x mint price despite users looping the contract
Art Gobblers
With Gobblers only two days away from mint, I thought I’d do a little recap/overview of what I personally think is the coolest thing happening in the NFT space at the moment.
Art Gobblers is “An experimental decentralised art factory by Justin Roiland and Paradigm”. In its simplest form, Gobblers are creatures that love eating art, the art they eat is drawn by the community on pages that can only be bought with a hyper-inflationary token that only Gobblers produce, this token is called $GOO and the more $GOO a Gobbler has, the more it will produce. When a Gobbler eats some art, it is forever stored in its stomach gallery. The thought behind this is that it creates a positive flywheel - as Gobblers gain in popularity, artists will want to create more cool art, giving more cultural relevance to Gobblers, making artists want to create more art.
In a way you can think of it as a game, and the aim of the game is to amass as many gobblers, $GOO and eat as much cool art as possible, but the caveat is that it’s a delicate balance between all three. You can read more about how the mechanics work from the whitepaper or my initial article.
As $GOO is hyper-inflationary, if you hold $GOO with no Gobblers your % of the supply will get inflated away to nothing very quickly. If you hold Gobblers but spend too much of your $GOO, the price of more gobblers and pages will quickly fly out of your reach. So you want to maintain the delicate balance of $GOO production and spending it on Gobblers and pages. This is exactly what participants of the closed circuit test had to try and do just last week!
Paradigm got 14 top traders together for a two week long stress test of the Gobbler mechanism. The rules were simple, everyone starts with 100 Gobblers and the aim was to gain as much $GOO and as many Gobblers as possible. Collusion and hacking were encouraged to further the stress test. There were three main strategies:
Mint early, mint fast - buy as many Gobblers as you can as fast as you can to increase your $GOO multiplier, the risk was overbuying while the price was high
Accumulate $GOO and wait for the price of Gobblers to recede
Use proper mathematical strategy based on issuance etc
When the competition began, most played it cool and waited for price to come down, but it didn’t. The price of Gobblers quickly ran from 69 to 500 in a couple of hours giving the people who bought early a distinct advantage. A combination of collusion, fomo, panic, devious strategy and some psyops resulted in the price of Gobblers going from 69 $GOO all the way to 2m over the course of the two weeks:
Day 1: 500
Day 3: 6.5k
Day 5: 24k
Day 6: 200k
Day 10: 500k
Final day: 2m
Thank you to Misaka for writing that thread and sharing what it was like from the inside, the emotions and urgency really came through, I felt like I was hooked on a good book! It’s Worth noting that this experiment was completely turbo compared to how it will actually go down, it was Art Gobblers on steroids played at 100x speed and without the art element. Nonetheless a very cool experiment and that thread definitely involves some alpha if you are planning on partaking. Good luck to those who are, and gobble gobble.
KPRVERSE
Chimpers said it best “Mystery, surprise and reward”, these are the values that make up a good story, and a good story is the driving force of a great NFT project, the glue that holds the community together and keeps them wanting more. Every good project needs a sprinkle of each of these qualities, KPRVERSE is the latest to wield the story-telling meta. A 10k collection comprised of two factions - the Keepers and the Citizens, “Divided in belief, united in purpose”.
An apocalyptic universe set within the New Eden safe zone at the Keep, KPRVERSE demonstrates spectacular art shrouded in mystery. The amount of effort put into the lore, character and world creation shines brightly through their website and art examples. I would go as far as to say their interactive scroller is chapter one of their story. Honestly, we know very little about the Keepers so far - Though, the team have done a wonderful job at drawing in users, intriguing and giving shape to the beginnings of the KPRVERSE.
Pictured in the gif above, ‘Kai’ is the mysterious energy source that seems to be the inanimate protagonist of this story, “the discovery heralding a golden age, or so they believed” are the last words you will see on the website - sounds like a Wakanda/Vibranium situation.
The art is a vibrant and colourful painted style that gives me Apex Legends/Valorant vibes. Though, click and hold on the website and you will see high quality 3D renders of all sorts of things from the within the universe; food chains, elixir components, weapons, radio stations, character models, machinery, topology models, weather patterns, structure blueprints etc. Many are likely clues pertaining to how New Eden became what it is and what other characters and themes we can expect to see as the narrative unfolds.
I suspect if you spend enough time collating these clues, one could begin to reverse engineer the mysteries of the Keeper universe. I highly recommend digging around on the website, they have truly put a mammoth amount of work into setting the scene and it shows, this plus the 3D models make me think that the 2D pfp’s are just the the beginnings of what the KPRVERSE could become. The team boasts some stacked web2 and web3 stars, ex IBM, EA, Riot, Nintendo, VC’s, DeFi founders, Phd’s etc.
Like many hyped new projects fizzing and bubbling up at the moment, KPRVERSE has decided to go the route of the application meta. From a business perspective, I understand that letting a community naturally form is not a guaranteed path to success, and that creating exclusivity and curating your initial holder base is a good way to give your project a solid foundation. On the flip side, it gate keeps and gives the vast majority a very slim chance of ever obtaining said NFT. Anyone new to the space, with low capital or a small following generally has a hard time getting accepted. Though, props to the KPR team for being transparent and putting out a statement explaining the selection process. 20k applications were scored based on 4 factors; the aggregate score was what decided the final success or not.
Reddit NFT’s
I won’t go too deep into them as our friends over at Page One wrote a fantastic article, thoroughly covering everything from the front lines.
Reddit seems to have ignited the ‘digital collectible’ flame, onboarding 3m+ users with their collectible avatars. Reddit NFT’s saw a massive influx of volume and subsequently attention this week. The social news aggregator/forum behemoth recently facilitated its users minting 86,000 NFT’s without them ever having to touch crypto, create a wallet and most importantly without calling them NFT’s. An incredibly calculated decision, how do you further facilitate the adoption of NFT’s to millions of users that actively dislike them? Simply stop calling them NFT’s and erase any mention of crypto.
The collectible avatars began minting/selling directly on Reddit back in July for between $10 and $100. Users could pay directly with a credit card and even use Apple/Google pay. Gen 1 took months to sell out, but by the time gen 2 was released popularity and awareness had massively increased and they sold out in 24 hours. There are 169 seperate collections and each is a collaboration between Reddit and an artist that puts their own spin on the classic reddit mascot, Snoo.
The NFT’s are minted on Polygon and are editions, ie. every one in the collection is the same as opposed to having different traits. Some of the most sought after are selling for more than 20 ETH, and at the time of writing the top project on Polygon by volume is a halloween themed Reddit collection with over 1k ETH in volume on the week. Once word got out, Reddit sales activity went parabolic, volume absolutely exploded as speculators piled in. On the 24th, Reddit volume totalled a whopping $2.4m and at the time of writing a gen 1 full set costs around $126k. If you want to learn more, dive into the Page One article, check the floor prices here and see overall performance on this Dune dashboard.
Thanks for reading and bye for now, stay on top of the markets with Parsec and we’ll see you next week.
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