Data & Insights Recap - July 3, 2023

ElementaL

Source: NFT Price Floor

• Last week marked the highly anticipated Azuki Elemental Beans mint, each of which could be “consumed” to reveal an Azuki Elemental that could control earth, wind, fire, or lightning.
  • The mint brought in $37.5 million in revenue for Azuki and sold out within 15 minutes, not even making it to the public phase of the launch. 
• But the new collection was not safe from backlash. Two main sticking points were the topics of contention: the chaotic minting process and the perceived dilution of the original Azuki collection with the new Elementals looking so similar.
  • The team acknowledged they had “missed the mark” with the latest drop and are committed to rebuilding trust within the community.
• The Azuki team wanting to fix things was not enough to stop a massive sell-off of the NFTs.
  • Azuki’s floor price fell from 14.44 ETH the day before the mint (June 26th) to 5.6 ETH as of this morning, a week later, marking a 61% drop. 
  • Long-term Azuki holders selling their collectibles jumped by 871%, partially due to an increased number of liquidations and repays on Blur’s lending platform, which lets you use NFTs as collateral, freeing up the collectibles to be sold.
  • Azuki’s weekly volumes climbed to $53 million, the highest they’ve been in over a year. 
  • The average sale price of an Azuki fell to just under $13,000 this week, a roughly $20,000 drop compared to two weeks ago. It is the lowest the weekly average sale price has been since November of last year, but the floor price in terms of ETH has dropped to around the lowest it's been since the collection’s launch.
  • Holders of Azuki are down approximately $21,500 per NFT since the fallout began.

dYdX volumes surge

Source: The Block

• The decentralized derivatives exchange dYdX’s volume jumped to $3.07 billion on June 27th, the highest day of daily volume since November 2022.
  • The spike seemed to be tied to the end of the free trading promotion the exchange had been running for almost a year. 
  • The trading frenzy was likely tied to people trying to make any last-minute trades they wanted before they needed to start paying to do so. 
  • The reinstatement of fees on Binance bitcoin pairs dropped the spot trading volume of the asset 65% month over month, so time will tell how it moves to impact dYdX, which is the largest decentralized derivatives platform. 
  • Volumes on the platform did drop to only $866 million the day after the spike (and the first days of fees coming back), but volumes did reach $1.9 billion on June 30th, which is comparable to volumes when there were no fees. 
• Coincidentally, the day after the surge, dYdX announced the public launch date for their testnet of their Cosmos-based blockchain. 
  • It will go live on July 5th and marks the next step in the exchange’s v4 update.
  • The current version of the exchange exists on StarkEx, an Ethereum layer 2 powered by Starkware.
  • With the new version on Cosmos, the protocol will be spinning up its own blockchain in the ecosystem. The exchange has said that while their method is untested, they believe the migration will increase the project's decentralization and is “the best shot at having a network that could offer a long term competitive product experience with centralized exchanges’.”

Lending leaning in Aave's favor

Source: The Block

• There is some heat in the Ethereum lending markets lately, with Aave’s latest v3 version eclipsing Compound v2 in TVL. 
  • Aave v3 exists on Ethereum as well as Avalanche, Polygon, Arbitrum, Optimism, Harmony, Fantom, and Metis. 
  • Its growth on Ethereum has been steady since it launched on Ethereum and January and has essentially just followed an upward trend to get its $2.03 billion in total value locked as of two days ago. 
  • Compound v2, on the other hand, is more akin to Aave v2 in the sense that it was the original version of the project that saw vast amounts of success in the peak of DeFi, with its TVL reaching over $20 billion in September of 2021. It has since declined and has been hovering around $2 billion since November, currently sitting at $1.81 billion. 
  • Compound, like Aave, has also embarked on a v3 journey, but it has not taken off as Aave v3 has. Aave v3 is very similar to Aave v2, with enhancements like cross-chain asset flow and gas optimization, and also introduces an eMode that maximizes capital efficiency for collateral and borrowed assets with high price correlation. Compound v3, on the other hand, differs a bit from the original Compound, having a more limited set of assets (you can only borrow USDC and ETH on Ethereum) to borrow but offering capital efficiency and risk management enhancements. 
• Aave v3 seems to be beating out the previously giant Compound v2 coming out of June. 
  • June 14th was the first day Aave v3 took the top spot, but the two were very close during the month and flipped a few times. After June 20th, we saw the still narrow gap begin to widen and Aave v3 seems to have emerged as a winner.
  • As a reminder, total value locked isn’t the end all be all metric, but higher value locked for lending protocols means the ability for more loans to be created. Lending protocols want people to supply assets to their protocol to increase the size of their markets. 
  • It is a strong sign for Aave that, on a versioning level, they are now the first and second largest lending platforms by TVL.

Bid to blur

Source: The Block

• Perhaps unsurprisingly, NFT volumes in June sank for the fourth month in a row. The NFT market overall has shown a lot of slowing signs, especially after the excitement around the latest NFT marketplace Blur (and its associated token) died down. 
  • But Blur’s market share of NFT trading volume on Ethereum last week was the highest it has been since February when its BLUR token launched and pushed the exchange to its highest month of volume ever. 
  • Blur accounted for 68.3% of trading volume the week of June 25th, compared to OpenSea’s 22.3%. Earlier in the week OpenSea was on pace to account for 18.6% of volume which would’ve been the lowest it has been since September 2020, and even now it wound up comparable. It marks an 8% decline from its share the previous week. 
• On a daily level, volumes for Blur spiked much higher than OpenSea’s did in the wake of the Azuki sell-off post-Elementals mint, which we talked about before. 
  • Blur’s volume jumped from $10 million on June 26th to $43.9 million a day later, a 337% increase, whereas OpenSea’s volume only moved from $4.3 million to $10.6 million over the same time, just a 143% rise. 
  • This does make sense when you consider how Blur has been incentivizing trading on their platform. You can earn “bidding points” which you earn by placing bids on the marketplace, and the number of points you get for bidding is based on the collection’s 24-hour volume (making Azuki a smart thing to bid on last week). Bids that are more risky and that last longer also earn more points. The points play a part in how much BLUR you’ll get in the Season 2 airdrop, so people are incentivized to bid (and then buy) NFTs on the platform. It would then also make sense that sellers offloading their Azuki’s would list them on Blur. There are also listing points you can earn, but beyond just farming an airdrop, you can likely get a better price for your NFT with the amount of bid liquidity Blur is generating for you. 
  • Blur also seemed to play a part in Azuki’s downfall with its lending platform Blend, as the price pressures on the collection forced people to repay or be liquidated on their loans that used Azukis as collateral. The NFTs being unlocked increased the free trading supply of the collection and allowed them to also be sold as people panicked. The number of outstanding loans backed by an Azuki was 532 at the start of June 27th (the day of the mint) and dropped all the way down to 237 that same day. 
• In some good news for the NFT fans, while volumes declined again, the number of NFT traders and the number of NFT trades on Ethereum turned around in June, and OpenSea again maintained its dominance in both metrics despite the fact that its volumes are less than Blur’s.

I'm openly interested

Source: CFTC COT

• The number of reportable traders on CME that hold at least 25 bitcoin futures contracts open (>125 BTC), or large open interest holders, reached 121 on June 27th, according to their Commitment of Traders Report released on Friday, the second largest number ever, only behind the 122 traders from March 21st. 
  • The number of large open interest holders of bitcoin futures on CME has generally been trending upward, but after hitting the peak back in March, the number started falling as bitcoin’s price stabilized after strong gains earlier in the year. 
  • But now, as bitcoin has been gaining more momentum again, especially on the heels of a flurry of spot bitcoin ETF attempts by major traditional finance players, it seems people are more interested (haha, get it?) in trading derivatives of the asset on CME. 
• Notably, hedge funds have had a major turnaround in the amount of long open interest they’ve taken on. On June 13th, hedge funds reported only $240.6 million of long open interest compared to $941.5 million two weeks later. This is the highest amount of long open interest we’ve seen from hedge funds since October 2021. 
  • Hedge funds have also upped their short game in recent weeks, rising from $988 million to $1.6 billion in the same period. So, as a group, hedge funds are still net short on bitcoin futures, with a net position of $-653.6 million. (But in the two weeks hedge funds grew short exposure by 62% compared to a 291% growth in long open interest.)
  • Asset managers, on the other hand, are net long $1.15 billion, their largest position in over a year. 
  • The price pump that would likely happen on the heels of a spot bitcoin ETF being approved (or the price drop the asset would face in times of adversity like we saw this week) seem to be having more traditional trader groups get back into crypto trading levels we haven’t seen in some time. Their outlook for bitcoin also seems a bit more optimistic than it has been in recent months.