DeFi Market Overview
-Will Sheehan
The narrative vacuum continues post merge as dollar strength and higher interest rates loom over the market. This is stark opposition to onchain lending rates which have been on a steady decline since November 2021
The divergence is indicative of onchain lending still being almost entirely dependent on demand for crypto leverage which tracks market beta. Additionally treasury yields do not passthrough to stablecoins, currently issuers like circle and tether do not pass yields on to holders. Regulatory hurdles make the notion of a stUSD quite tricky, but pressure will build while rates remain this high. MakerDao has been an early mover looking to generate yield on a portion of the PSM’s USDC holding with a proposal from coinbase. The low interest rate environment of 2020-2021 was perfect for stablecoin growth as the rates were low enough to ignore for many (+ bull market), but high rates are a huge risk for stablecoin growth and I would expect USDC net redemptions to continue in these conditions.
Headwinds aside, remaining onchain actors are in max pvp mode and narratives are flashes that are ruthlessly sold into. Pockets of activity will pop back up but nothing substantial as of yet.
NFT Market Overview
-kezfourtwez
The market has had a liquidity booster shot this week, nothing to write home about but we are seeing more successful new projects and more volume, possibly a symptom of participants feeling slightly more risk on after a successful merge. Bluechips and up and comers are fairing well and mostly on the rise. On the free/cheap mint side we are seeing the return of the low supply meta - degens are taking advantage of the intense volatility that comes with sub 1k collections.
Highlights and performance:
Posers lay claim as first PoS pfp collection minting a few blocks after the merge. A nearly free mint to a top of 0.26, 13k trades and 1.4k ETH in volume
Digidaigaku with the almost 100% gain on the week, nearly back at ATH floor price, currently sitting at 14 ETH
Hedz a 0.66 mint to a top of 3.3, 3k ETH in volume
Renga had a brief drop back to 0.7 but ran it back turbo to 1.4 ETH - 2.2k in volume
Mutants back to 15 from a low of 10 ETH
Azuki running on a potential $30m raise at $300m valuation, rumours that Azuki maxi and Chinese billionaire Adrien Cheng is involved
8pes and Walk the Plank, 888 and 666 supply and both AI generated art (potential new meta to keep an eye on). Experienced swift rise and falls. 8pes - 0.01 to a top of 0.90 ETH and almost 1k ETH in volume
Hedz - OG meme and crypto artist Matt Furie released his second major NFT art collection this week - ‘HEDZ’. 1000 hand drawn 1/1’s in classic Furie style, bright colours yet dark overtones - there is a childlike nostalgia in Furie’s art that resembles the surrealist style of 90’s children’s cartoons like ‘Rocko’s Modern Life’ and ‘Ren and Stimpy’. 1000 is a huge number of 1/1’s and the diverse yet unified style really comes through when you scroll through the collection with no extra visual noise on the website. The collection features all sorts of weird and wonderful creatures carved out from the depths of Furie’s imagination.
From hooded seals and skeletons to reptile-humanoids, furby-esque creations to pepe-cumulus hyrbids and 100’s of others I don’t even have the words to describe. The collection is insanely varied but stays 100% true to Furie’s style. I think anyone who grew up in the 90’s and early 2000’s (which seems to make up a lot of the NFT space) would resonate with the collection - this includes myself, I love the Hedz. I believe that this plus Matt’s notoriety as the creator of Pepe the Frog is why the collection has done so well so far.
Around 900 were minted to lucky allow-listers for 0.66 ETH each over the course of 2 days. During that time the floor price ran up to 3.5 ETH - a 4x increase from mint price. The remaining 100 spots were given away to active members and mint out was followed by a brief sweep back up to the early 3’s before retracing and finding a base around 1.7 ETH.
Hedz had a sybil attacker that managed to mint 7% of the supply, though they sold off early and didn’t seem to affect the run up to the 3 ETH range. Since, a new king has taken the throne amassing 91 Hedz since mint - you can see their accumulation above.
Currently there are 40% of Hedz listed on OS alone, in my experience high percentage of listings is a symptom of an extremely varied collection. The less fungible the art is, the more categories of sale, the higher the amount of listings. It’s not necessarily a bad thing though as Hedz listings are spread out with 20% above 4 ETH.
QQL - Renowned crypto artist Tyler Hobbs alongside Dandelion Wist are in the process of releasing a new generative art experiment. QQL is Tyler’s second large scale collection following only the famed Fidenza. QQL is a collaborative venture between code, artist and user. Tyler and Dandelion have created the algorithm for QQL but the final artworks will be curated by the collector instead of randomly generated upon mint. The project will consist of 999 pieces, 900 of which will be distributed in a dutch auction starting off at an eye watering 50 ETH. Winners of the auction will have unlimited time to play around with the algorithm before choosing their final piece to be minted. The curation of the final product on a collection of this magnitude and cultural relevance is truly unique, alongside having no expiry date on minting it makes for a super interesting mechanic and I’m not sure it’s ever been done before.
The team have made the algorithm public and built a beautiful interface for interacting with it. The user can tweak all of the settings in the frame below here and produce an unlimited amount of art before picking their final frame. The user can also find their favourites and take the parameters from that piece to try and further nail down into a specific artistic territory or recreate certain aspects.
QQL’s core ethos is about celebrating the randomness of generative art and happenstance over forced rarity. Adding a curation step as opposed to {code > mint > final art} has allowed Tyler a little more freedom in experimentation when it comes to the algorithm. Creators will generally perfect, iterate and perfect again until they are entirely happy with the calibre of art that the algo will produce. In this case Tyler is happy in trusting the collector to search for the real stand outs before finalising, in my opinion incentives are aligned and it should make for some incredible artworks. Talking about aligned incentives, a few days ago it was announced that the wallet used for minting will receive 2% of royalties for every sale of their mint - in perpetuity as a core contributor to the creation of QQL.
The dutch auction will begin on the 29th September at 10am PT on Archipelago, it should make for some interesting charts through our contract logs element. The team are currently running a twitter competition giving entrants a chance to win nine mint spots. Of those nine, three will be personally chosen by Tyler and Dandelion, outputs that they think represent the best of what the algorithm can produce. In addition to their mint pass those three winners will have their entries immortalised as QQL #7, #8 and #9, three of only 11 day-0 QQL’s.
I’ve been messing around with the QQL creator, it’s a lot of fun and I highly recommend. You could get lost in it for hours if you let yourself.
Nounlets - by Tessera (previously Fractional), Nouns just got a whole lot more accessible. Nounlets is the latest NFT innovation inspired by the OG cc0 project Nouns. In case you don’t know how it works, I’ll give you brief rundown. One Noun is auctioned off every day forever, 100% of the funds go to the Nouns treasury, people submit proposals to the DAO and each Noun represents proportional ownership and voting rights to direct those funds into projects that will further the Nouns ecosystem. Proposals that have been funded include irl Nouns glasses, mugs, story books, colouring books, AR filters, sailing boat sponsorships, games and analytics, a full list can be found here. A Noun auction rarely ends below 30 ETH and lately the average is closer to 70, not very attainable for your average NFT trader, but this is where Nounlets come in.
Many sub-communities have attempted to provide partial ownership over Nouns, though Tessera believes none have been truly successful yet. Nounlets are an experiment in the fractionalisation and collective ownership of Nouns.
A Noun is vaulted by the owner and one Nounlet is auctioned off every four hours until 100 have been created and sold. Nounlets have the same head as its parent and the rest of the traits are randomised, I think this is really cool as sub communities will be built around each fractionalised Noun, all different representations of the original artwork, diverse yet easily recognisable as children of the original Noun. Each Nounlet represents 1% of the parent and gets a vote in the delegation of the governance rights, the chosen delegate gets entry into the very exclusive NounsDAO private channel. 98% of the proceeds goes to the original owner and 2% to Tessera.
Nounlets have an interesting method of reconstitution called optimistic buyouts. I won’t go into full detail but basically someone places a bid by locking some ETH and at least one Nounlet up as collateral and anyone is allowed to purchase these Nounlets at the implied value. If they deposit 99 ETH and 1 Nounlet then the implied value of the bid is 100 ETH. If the market deems the bid too cheap then the Nounlets put up as collateral will be bought and the bid is rejected. The bid is accepted if there are still Nounlets available after 7 days. The buyer then gets the original Noun and holders of the Nounlets can burn them to redeem the implied value in ETH.
Bye for now, make sure to use Parsec to stay on top of the market and we’ll see you next week
god
nice