Data & Insights Recap - July 31, 2023

Part of your world

Source: Blockscan

• The 7-day moving average of daily transactions on Optimism was 715,760 on July 27th, placing the activity on the optimistic rollup above its main competitor Arbitrum for the first time since January of this year. Optimism has maintained its lead since. 
  • Prior to 2023, the two scaling solutions put up comparable numbers of transactions, and after a brief lead from Optimism at the start of the year, it seemed like Arbitrum emerged as the winner between the two. 
  • The two are largely similar in the sense that they are both EVM-compatible optimistic rollups on Ethereum, although there are slight differences in the logic behind the fraud proofs the rollups use. 
• A lot of the growth Arbitrum saw this year was tied to its airdrop, which went live in March. The all-time high 7-day moving average of transactions on Arbitrum is 1.49 million, which it reached on March 27th, the same week users could start claiming ARB tokens. 
  • Airdrops have the tendency to inflate transaction activity as, ahead of the drop, people try to “farm” rewards by maximizing their engagement with the protocol that's releasing the token. Claiming tokens on the network also drives up transactions, as we saw in Arbitrum’s case. 
• Since Arbitrum had a peak in transactions, the number has mostly been on the decline through the summer, whereas Optimism's have been on the upswing. Optimism has actually hit a new high for the 7-day moving average of transactions despite not being in the midst of an airdrop (of which they’ve had two so far).
  • One reason for the recent drive of Optimism transactions could be the launch of Worldcoin. The crypto identity project had been setting up accounts for users and also launched its token on the rollup this week. There are over 950,000 WorldApp wallets as of writing, so it's natural that a project of this magnitude going live on the network would have a broad impact on activity.
  • That being said, Arbitrum still leads the way in terms of total value locked in optimistic rollups with almost triple that of optimism at $4.3 billion. So despite sluggish transaction numbers as of recently, there are still a lot more funds that have been moved to Arbitrum to be used. 

Volatility Stability

Source: The Block

• The annualized 30-day volatility of bitcoin fell all the way to 23.26% on July 23rd, the lowest it has been since July 2020, or about two years ago. The rate has stayed below 25.5% since July 21st. 
  • As a reminder, the 30-day volatility of bitcoin is the standard deviation of the average daily percentage change in bitcoin’s price over a 30-day period. We annualize the rate by multiplying by the square root of 365 since bitcoin trades 24/7. 
• The low volatility is a reflection of the relatively stagnant price bitcoin has been putting up for much of the last month. After rallying to $30,000 on June 21st, it has hovered around there since. 
  • The push to $30,000 was spurred on by an influx of firms filing to register a spot bitcoin ETF. By June 21st, BlackRock, BitWise, WisdomTree, Invesco, and Valkyrie had piled into the mix. 
  • But a flurry of other news and macro events after that, like Fidelity also joining the race for an ETF, the XRP ruling high deeming the secondary sales of the tokens not securities, and the recent rate hike in the United States, all left bitcoin still riding the $30,000 line. 
  • It’s not so far-fetched to believe bitcoin wouldn’t move on these pieces of news. Fidelity wanting a spot bitcoin ETF was just another hat in the circle; the market had already reacted to the fact that so many other firms were vying to get one through. The XRP ruling was mostly a win for tokens which might be securities, and bitcoin has clearly been identified as a commodity, so it was less of a victory for BTC. And the recent 25 bps rate hike was heavily anticipated. 
  • CryptoQuant identified that many large holders of bitcoin are currently holding onto their bags amid the tepid price action. Flows of bitcoin to exchanges are on the low as trading looks less attractive in current conditions. 
  • It does leave open the question of what will eventually buck the trend for bitcoin’s price, but for on-edge traders can enjoy low volatility summer. 

Sharing the spotlight

Source: The Block

• Binance’s spot market share is on pace to be just over 45% this month, its lowest share since June 2022. Last year in June, FTX accounted for about 7% of the spot market share, making the recent share drop more significant as the exchange no longer is facing one of its larger competitors.
• It may not be particularly shocking that Binance has faced struggles maintaining its once over 60% share on the market. 
  • It has faced a myriad of regulatory challenges in recent months as pressure on centralized exchanges got turned up after FTX’s collapse. Not only is it being sued both by the Commodities Futures Trading Commission and the Securities and Exchange Commission in the United States, but is faced setbacks abroad as well. Binance deregistered in the U.K., withdrew its application to be licensed in Austria, exited the Netherlands after failing to register as a virtual asset service provider, and also withdrew its license application in Germany. 
  • There has also been some internal turmoil at the firm, with several executives leaving their positions, citing CEO Changpeng Zhao’s handling of regulatory investigations as the reason. There were also layoffs at the exchange along with cuts to benefits. 
  • Beyond just things that might harm an exchange’s reputation and customer pool, Binance is still facing repressed volumes after the reinstatement fees on bitcoin pairs. In March (when fees were still lifted for most of the month), bitcoin spot pairs did 13.12 BTC of volume on Binance. In July, so far, those pairs have only done 2.43 BTC of volume. 
• It is quite impressive that despite all of that Binance still manages to control roughly half the market. 
  • Binance’s chief strategy officer, Patrick Hillmann, has said that it is “not a concern” that the exchange has dipped below the 50% mark. He cited that the exchange already has sufficient market share and that he doesn’t “feel the need to capture more.”
  • As Kaiko noted this week, the spot trading world is becoming more and more concentrated, so it could be a good thing for the industry to see Binance’s dominance in the market be reigned in.

Full send

Source: The Block

• The number of weekly stablecoin senders on Ethereum from July 23rd to July 30th was just 302,445. This is the lowest number of users transferring stablecoins since October 2022. 
  • The number of weekly stablecoin senders stayed above 350,000 from January to March of this year. In April, the number of senders dropped off, but still tended to stay above 310,000. There was a spike in June as USDT depegged, but for the most part the number has been on a slow decline. 
• One factor in the slowdown could be the now more limited availability of stablecoins to send after many major dollar-pegged tokens faced trouble this year. At the start of August in 2022, the total stablecoin supply on Ethereum was 108.68 billion, whereas now it is 75.06 billion, a 31% drop.
  • BUSD has had one of the larger drops in supply more recently, mostly due to the fact that its supply can no longer increase after Paxos was ordered to stop minting the stablecoin by the New York Department of Financial Services in February. Its supply has fallen from 17.92 billion on August 1st of last year to now only 3.7 billion - an 80% drop off. It has also now taken its seat as the fourth most dominant stablecoin by supply on the blockchain after it fell below DAI earlier in the summer. 
  • USDC’s supply has also faced a downward trend after it depegged back in March when it was revealed Circle had over $3 billion at Silicon Valley Bank. It still holds its second place position, but its supply is now 24.67 billion compared to 45.4 billion roughly a year ago. While the supply of USDC can still grow, unlike that of BUSD, it has been shrinking since it lost its dollar-parity as the incident shook a lot of people’s confidence.
  • The largest crypto-collateralized stablecoin, DAI, has also faced a supply drop after the fallout of UST last year also caused people to question stablecoins backed by more volatile assets.
• The top dog in terms of supply on Ethereum is USDT, and while its supply has been one of the only ones to go up over the past year, it has not been without some difficulties. USDT also lost its peg. It came at a time when Coindesk got access to documents from a 2021 settlement with the stablecoin issuer, which didn’t seem to have a huge impact since they were outdated, but did reveal that USDT had been backed by Chinese securities. 
• So, overall, it is not too surprising we’ve seen a drop in stablecoin senders, given there are just fewer stablecoins to send. And even then, the majority of the big stablecoin players on Ethereum have had some kind of incident over the past year that might just make using them less attractive to people. 

Bored of the ape

Source: NFT Price Floor

• From November of last year all the way to this past May, Bored Ape Yacht Club and CryptoPunks NFTs had a similar floor price. The two largest NFT projects had a slight decline in the minimum prices you could pay for one of them, with both of them having a floor price around 65 ETH in November to under 50 ETH come May.
  • The fall comes amid a slower time for the NFT space, with marketplace volumes on Ethereum falling for a fifth straight month in July.
• In May, however, the two collections started drifting apart in terms of floor price. CryptoPunks began to have a slight lead and have maintained that lead for over 3 months now. It’s the longest period we have seen one of the collections take control since August of last year. 
  • As of this morning, the floor price for a Bored Ape was 29.49 ETH, compared to CryptoPunks’ 47.19 ETH. It’s the largest difference between the two in nominal terms that we have seen since a year ago. It is also a reversal of that difference, with CryptoPunks now sporting the higher floor price. 
  • There doesn’t seem to be any particular reason for the recent CryptoPunks dominance, but as my colleague Brad Kay pointed out, BAYC seems to have a limited number of buyers these days, leading to their overall floor price decline. 
  • The weekly average sale price for CryptoPunks has also emerged higher than that of Bored Apes, with the average CryptoPunk going for $125,000 the week of July 23rd compared to $56,000 for a BAYC. 
  • A handful of CryptoPunks were also burned on Ethereum to be minted as Ordinals on the Bitcoin Network, which has added a bit to the scarcity of the collection on Ethereum. 
• It does seem like CryptoPunks will be able to hold this lead for a while, given the gap between the two has been expanding. The Punks have largely held their floor through the summer while the Bored Apes have fallen off.