Data & Insights - March 27, 2023

Zero knowledge of an airdrop 

Source: The Block

• This past Thursday marked the highly anticipated launch of ARB and its respective airdrop claim.
  • While the front-end website for the claim, along with the Arbitrum block explorer, did go down due to the initial spike in activity, 86% of the airdrop still managed to get claimed. 
  • There were 2.7 million transactions on Arbitrum the day of the airdrop, marking the highest day ever. 
• And what this whole process taught many is that there is nothing worse than the FOMO of missing an airdrop and there's nothing quite like the thrill of getting one, so it's essential to start looking now for the next opportunity.
  • And look no further than ZK rollups; at least, that's what the general consensus seems to be, with a massive spike in depositors into ZK rollup bridges the week of March 19th. 
  • Over 207,000 different addresses deposited into bridges on Ethereum that move funds over to an L2 solution utilizing zero-knowledge proofs. 
  • Breaking it down by bridge, zkSync was getting the most action, with over 30,000 users depositing into its bridge on March 24th alone. Prior to March 18th, the protocol had never exceeded 9,000 depositors on a given day, compared to seeing over 15,000 every day since then.
  • StarkNet has also seen a pickup in deposit activity but quite to the degree of zkSync. It has also seen an uptick in many activity metrics, hitting its highest transactions per second and main calls per second this past week. 
• March 24th did coincide with a big day for zkSync, as they opened zkSync Era to everyone, whereas previously, it had only been open to developers.
  • The deposits tracked were coming from zkSync Lite, the v1 version of the ZK rollup solution, which was not EVM compatible.
  • zkSync Era opening its doors to the broader public marks the first zkEVM to reach this milestone. The launch was also not completely unexpected, given it became available for developers to test last month. 
  • The anticipation for Era and a potential airdrop to come along with it seemed to be the driver of the depositor activity last week. Unfortunately, the CEO of Matter Labs (the development team behind zkSync) said there was no need for a token now since the network is still very centralized, but he does see the sequencer becoming decentralized in about a year's time.

Binance says bye to zero fee BTC

Source: The Block

• I guess you can say it's the end of an era if you count an era as a fee promotion that's been running on Binance since July 2022.
  • The fee promotion in question? Binance's zero-fee trading on the majority of bitcoin pairs, a policy that saw over 60% of Binace's trading volume generate no fees on most days. 
  • The pairs were set to remain fee free "until further notice," but it seems the notice has come. While it initially started as part of Binance's 5th-anniversary celebrations, CEO CZ touted the decision as something in line with the exchange's "user-first philosophy" and stated that "Binance has always strived to provide the most competitive fees in the industry."
• The changes that hit Binance's fee promotions include a preservation of the zero fees on BTC/TUSD, a removal of maker fees on BNB/TUSD and ETH/TUSD, and the zero maker fees on BUSD pairs promotion now excludes BTC/BUSD, ETH/BUSD, and BNB/BUSD.
  • It was tough luck for BUSD in February when issuance of the Binance-linked stablecoin was halted by Paxos in accordance with the New York Department of Financial Services. Additionally, the SEC labeled the token as an unregistered security, a term they've been throwing at a lot of crypto firms as of late. 
  • While this all initially unfolded, Binance was committed to continuing to support BUSD but was also open to exploring other options. Then a few days later, Binance minted almost 50 million TUSD, seemingly a sign of the times. 
  • BTC/TUSD had its highest day of volume ever on Binance on March 23rd, reaching $181.9 million after putting up only a few hundred thousand dollars of volume most days prior to September. 
  • And while this does seem like a push to gain some TUSD traction, which partially worked in the upshoot of volume, it still does not compare to the likes of BTC/USDT and BTC/BUSD on the exchange, despite the fees now on those pairs. 
  • The share of no-fee volume on Binance also fell to just over 3% on March 23rd and now sits at 7%, with a majority of volume on the exchange now generating fees for the exchange.

Pulled out from the DEX of despair

Source: The Block, Coingecko, The Graph

• Though March continues to march on, DEX volumes for the month have already exceeded the past nine.
  • So far this month DEXs have accumulated $99.7 billion in volume, putting March on track to be the highest month of DEX volumes since May 2022. 
  • This past month follows a trend we've seen in which months of market panic mark spikes in trading volume as people move to exit risky positions. May marked the collapse of the Terra ecosystem and November was the bankruptcy of FTX, and both months saw a jump in DEX activity. This month was the depegging of USDC amidst a broader banking crisis that drove up the numbers. 
  • Prices across many crypto assets have also been on the upswing this month, so the increase in USD value also drove up volumes in terms of USD and also could have incentivized trading out of stables or other lower-performing assets into tokens that saw the most price action this month. 
• Uniswap, as expected, has been the main driver of most of this volume, accounting for 62.7% of volume so far this month after putting up its highest volume day ever. It is a slight decline from the previous month but is still one of the overall more dominant months for Uniswap.
  • Despite having the highest day of volume, March is still on pace to be only the fifth-highest month of volume for the DEX.
  • Curve, which also saw its highest day of volume ever on March 11th, is on pace to have its second-highest month of volume behind May 2022. Its focus on stablecoin to stablecoin swaps made it an attractive option, while many tried to convert their stablecoin portfolios two weeks ago.
  • Uniswap's volumes are only up 42% from February into March so far, whereas Curve's are up 265%, more than tripling its February volumes already. 

Number of addresses holding USDC remains low

Source: The Block

• USDC has been trading around $1 for two weeks now after its destabilizing event in early March. All of Circle's funds wound up being safe, MakerDAO decided to keep USDC as the primary reserve asset for DAI, and Circle's even shooting for a new French license. So all's well that ends well, I guess?
  • Well, not so fast. For starters, USDC's supply has continued to decline day after day since March 9th, meaning every day since then has consisted of more burns than mints of the stablecoin. The supply is now also at its lowest point since November 2021 at 31.88 billion. 
  • And it doesn't look like many users are looking to stock up on USDC either, with the number of addresses holding USDC plummeting the weekend of March 11th and not bouncing back. 
• For the most part, addresses holding USDC balances of all thresholds have been on a straight decline since the 9th.
  • The number of addresses holding over 100 thousand, 1 million, and 10 million USDC have all reached their lowest point in over a year, whereas the number of addresses holding over 1 thousand and 10 thousand USDC only reached their lowest level since early last summer. 
  • While there has been a slight recovery in the number of addresses holding over 1 thousand USDC, rising from 145.33k to 148.83k since March 14th, the other balance thresholds have continued to trend downward. The 148.83k wallets holding over 1,000 USDC is also still much less than the almost 200 thousand holding that much USDC on March 9th. 
  • So, despite the fact that, in the end, everything worked out, it seems people are still shaken by the events of the past two weeks. While a lot of what went down seems out of Circle's control, their initial lack of response to the Silicon Valley collapse, despite many knowing they had funds with the bank due to their transparency reports, seems to have people losing faith. 

Tron holds second place TVL

Source: DefiLlama

• The SEC charged Justin Sun, the founder of Tron, and his companies, including the Tron Foundation, with the offering of unregistered securities, highlighting Tron's native token, TRX, as one of those alleged securities.
  • While Sun was quick to come to Twitter and say the claim "lacks merit," news like this isn't the type of thing a market thrives on, as seen by Coinbase, who also got hit with a Well's notice from the regulator that same day and saw their stock price tumble. 
  • At the time of writing, TRX remains the 16th largest cryptocurrency by market cap and its price is a bit down from where it was prior to the news from the SEC, but it has recovered from a low of $0.058 to $0.064.
• The Tron blockchain, which historically has been comparable to BNB Chain in terms of TVL, has managed to hold on to its second place position behind Ethereum through it all.
  • Tron's native lending protocol, JustLend, remains the second-highest lending protocol by TVL, behind Aave but ahead of Compound. 
  • The TVL of Tron has stayed largely unaffected in terms of USD after the news, beginning at $5.31 billion on the 22nd, then dropping to only $5.1 billion the next day, and then bouncing back to $5.3 billion on the 24th. 
  • The TVL seemed to have a much more adverse reaction the weekend following the failure of Silicon Valley Bank, which saw TVL get as low as $4.08 billion on the 12th, which it eventually largely recovered from.
  • As for now, given Sun didn't settle the charges like some of the celebrities charged for promoting the tokens, Tron and its ecosystem can continue on until a trial plays out. And even a result in favor of the SEC would mostly only limit Tron's U.S. exposure, possibly explaining why it has fared so much better than COIN. The stakes for U.S. publicly traded compliance poster-child Coinbase seem a bit higher and it is likely why its stock price is still over 10% lower than it was before the news.