Data & Insights Recap - August 14, 2023

Fountain of y00ts

Source: The Block

• Birds are not the only thing to be migrating these days. In 2023 so far, we’ve seen a swath of NFT collections moving from one chain to the next.
  • For one, we saw a handful of NFTs get burned on Ethereum and re-minted on Bitcoin as Ordinals. 
  • But the more jarring migrations have been those of entire collections, like the two from the creator who goes by “Frank,” DeGods and y00ts. At the end of last year, the teams for the collections, which were powerhouses on Solana, announced that DeGods would be moving to Ethereum and y00ts would be going to Polygon. 
  • It was a big deal since the two were contributing a lot of volume in the Solana NFT ecosystem. The projects both completed their migrations in April and total weekly NFT volumes on the chain went from pretty consistently reaching $10 million to now rarely hitting that mark. 
  • DeGods have put up similar volume since being migrated over to Ethereum, with weekly volumes fluctuating but tending to stay between $2.5 million and $7.5 million. y00ts have fared a bit worse on Polygon, with weekly volumes now rarely reaching $1 million, compared to them typically coming in around at least $2 million on Solana.
  • But maybe the third time’s the charm? It was announced this week that y00ts would be moving again and reconnecting with DeGods on Ethereum in a move to unite the two communities. Polygon provided y00ts a $3 million grant because of the migration that it returned. 
  • Volumes for y00ts did perk up a little on the heels of the news, jumping to $1.27 million, the highest they’ve been since April when the collection first moved to Polygon. 
• DeGods Season III was also unveiled, adding 20,000 new pieces of art to the DeGods collection. The tweet made sure to specify that there would be “no dilution” in an attempt to dodge an Azuki Elementals moment. The co-founder of DeGods and y00ts, who goes by Johnny, did have to issue a video clarifying the art approach after it did get some negative feedback. 
  • The announcement prompted a surge in trading volumes as people moved to sell their DeGods. Many people were selling DeGods in mass batches, like this one transaction where 0x88BD handed off 60 of them.
  • On a daily level, DeGods’ volume spiked to $7.6 million on August 10th and stayed high at $4.6 million the next day, the collection’s two highest days of volume ever. DeGods also dominated weekly volume for art and collectibles NFTs on Ethereum, coming in at $16.11 million.

Rolling in the deep

Source: The Block

• Rollbit has been exploding in popularity recently. It’s a platform offering casino games, sportsbook betting, NFT gambling and loans, and 1000x leverage crypto derivatives. 
  • Its native token, RLB, has been soaring to new heights. From the token’s launch in May 2022 to this past June, the token only surpassed $0.05 for a brief period in February of this year. Now, the token is trading around $0.16 but peaked over $0.20 this weekend. 
  • In a more tepid crypto environment like we are seeing now, there is not too much hype around just trading, so it makes sense we’d see an increase in excitement around gambling activities. Take, for example, the hamster betting craze that wracked the crypto community at the end of last month.
• Rollbit helped their token skyrocket last week by announcing they would begin to buy back and burn RLB tokens depending on daily platform revenue. 
  • 10% of casino revenue, 20% of sportsbook revenue, and 30% of leveraged futures revenue get burned daily.
  • Initially, the burns were happening in big batches, but the team automated the process and now burns happen on an hourly basis. 
  • Since August 9th, when the platform first announced its plan, around 14.17 million RLB have been burned, an amount worth about $2.2 million. 
  • In general, buybacks tend to make a token price go up since it makes the asset more scarce, therefore allowing token holders to feel the benefit from the revenues being generated by Rollbit. 
  • The idea of token burns based on performance is not new. Binance’s BNB, which is burned quarterly, used to be burned as a function of the trading volume of BNB itself as well as total trading volumes on Binance, but now the amount burned is dependent on BNB Chain metrics. FTX previously set aside 33% of trading fee revenue to burn FTT. 
  • The progression of RLB burns has been pretty steady since they started the automated burning process. Usually, somewhere between 2,000 and 5,000 RLB get burned an hour, indicating somewhat steady profits for the casino. 

Tip of the DAI-ceberg

Source: The Block

• We talked a few weeks ago about how, broadly, the supply of stablecoins is on the decline. 
  • One stablecoin that is particularly feeling the heat is DAI, who’s supply dipped below 4 billion this weekend for the first time since May 2021. 
  • As a reminder, DAI is a stablecoin in which users can lock up crypto in exchange for a decentralized dollar-peg stablecoin. It is over-collateralized, so users have to lock up more than $1 worth of assets to mint one DAI. The main cryptos collateralizing DAI right now are ETH (or other ETH-pegged assets) and USDC. But Maker DAO, the organization behind the protocol, sometimes invests reserves in some real world assets like short-term treasury bonds, which earn yield and can hedge against volatile crypto prices. DAI currently has a 178% collateralization ratio. 
  • Its supply peaked at just under 10 billion in February of 2022 but faced a sharp drop-off in May of that year after the collapse of UST, which caused many to question the safety of crypto-collateralized stablecoins. 
  • It had since struggled to recover, barring a slight spike in March of this year as people quickly moved into DAI, as an attempt to get out of USDC when it depegged, but has begun declining again with no real sign of a turnaround. 
  • Just this month, though, MakerDAO raised the DAI savings rate from 3% to 8%. Spark is a lending protocol that sources liquidity directly from Maker and makes DAI loans. The increased savings rate will encourage users to lock up their DAI in Maker to earn the lucrative yield and help grant liquidity to Spark. This did cause a surge in Spark’s TVL, sitting around $660 million today, after never exceeding $100 million since its inception in May to August 6th. But it seems that h the DAI being locked up is from its already existing supply, as the recent change in rate has not been met with any growth in DAI’s supply. 
• But a major jolt to the stablecoin ecosystem happened this week, with PayPal announcing its own Ethereum-based stablecoin. 
  • PYUSD will be fiat-backed, more akin to USDT and USDC than DAI, and is connected to one of the largest payments firms in the world. 
  • It was largely considered something that would boost adoption, but many crypto natives were skeptical of the centralized, traditional finance firm getting into the stablecoin market over fears of censorship. 
  • It also received some criticism outside the crypto world, as House Financial Services Committee member Maxine Waters expressed concerns about the move given the lack of regulatory clarity in the U.S. right now. A stablecoin bill has been making its way through Congress this summer, though. 
  • The stablecoin is still sporting no supply on Etherscan, and PayPal said they would be gradually rolling out PYUSD to users, so time will tell how this goes on to impact the broader ecosystem.

APT to the futures

Source: The Block

• From April 1st of this year until the end of July, the daily volume across exchanges for perpetual futures on Aptos’ native token, APT, has exceeded $1 billion 3 times. For the most part, volumes have tended to stay below $500 million. 
  • The layer 1 blockchain launched back in October of 2022 to much fanfare. It was developed by two ex-Meta employees and originated from Facebook’s scrapped blockchain project, Libra. It also utilized the Move programming language, which promised to be more developer friendly than other languages typically used to build blockchains. The L1 also raised $350 million throughout the year from large industry players like FTX Ventures and Jump Crypto.
  • When the token launched, its perpetual volumes were typically coming in over $2.5 billion. But the timing was a bit ill-fated, as the month after launch marked the collapse of FTX, which took a toll on the crypto industry as a whole. Much of the action on the highly anticipated perpetuals died down. 
  • Things picked back up again in early 2023, despite the chain not even breaking the top 30 by total value locked. The main driver was a surge in APT’s price in January, pushing it to an all time high of around $18.50. Since then, though, the token has been largely on the decline, dropping under $10. 
  • With the price decline also came another drought in the APT perpetuals market, with slow volumes coming in through most of spring and summer. 
• On August 9th, things took a turn for the better when volumes shot up to $2.04 billion, the highest they’ve been since March of this year. It was an over 1,800% increase from volumes on August 8th, which came in just under $106 million. 
  • APT’s price did have a small rally on August 9th, too, jumping from $6.53 to $7.82 in about two hours, according to Coingecko. It has since started dropping from that peak but still has stayed above $7.00. 
  • The reason for the jump was the announcement of a partnership with Microsoft, one of the first times we’ve seen Aptos in the news for a while.
  • Together, the companies will explore “innovative solutions” related to asset tokenization, digital payments and central bank digital currencies. Microsoft will also let Aptos use its AI technology to help onboard users and aid development. 
  • The surge in volumes was not sustained, falling to under $1 billion by August 11th and sinking to just $175 million on August 12th and 13th.

Upwards momentum

Source: The Block

• The open interest of ether options on Deribit dropped from $4.76 billion on July 28th to $3.87 billion on July 29th as expiry came up on the monthly options. 
  • The open interest has since recovered to $4.93 billion, already wiping away the end of July drop-off. 
  • On the other hand, bitcoin open interest dropped from $8.12 billion to $6.23 billion on the heels of the expiration and has only climbed back to $7.58 billion so far. 
  • On July 28th, the percentage of open interest contributed by the contract expiring that day was about 26% for bitcoin and 24% for ether, so the impact of the dropoff was comparable for the two. 
  • For both categories of options, the next largest open interest holders are contracts expiring September 29th (the end of the quarter), December 29th (the end of the year), and August 25th (this month’s expiration). For bitcoin, those three options account for 83% of the current open interest, but for ether they only make up only about 75%. The options set to expire in October of 2023 and March of 2024 are much more prominent for ETH than they are for BTC. 
  • The March 2024 contracts are somewhat of an anomaly in the open interest market. They were listed at the start of April after the Q1 2023 contracts expired. ETH options set to expire at the end of next March have already amassed $572 million in open interest, compared to $517 million for those of BTC. This is unusual since the bitcoin options market is so much larger than ether’s, so typically, across all expiration dates, we see BTC tracking more open interest. 
  • ETH open interest also spiked from August 1st to August 2nd, rising by $390 million in one day across all expiration dates. Bitcoin open interest also rose that day (which is somewhat common as people take on new positions at the start of the month), but only by $350 million. It is uncommon for ether options to outpace bitcoin options in growth, as well, another reason ether options have been able to recover from July losses. 
  • That being said, neither bitcoin nor ether has returned back to open interest highs from June, but end-of-quarter contracts tend to accumulate more open interest than monthly ones do, making the drop more significant. 
• The rise in open interest as time to expiry approaches is a trend we see every month, but it is interesting that ETH made back its July dip quicker. It’s indicative of more people moving to trade ether derivatives.
  • The open interest put call ratio for both bitcoin and ether remain at bullish levels (0.45 for BTC and 0.32 for ETH), meaning for both assets, more call contracts, which gives you the right to buy the token at the strike price, are open compared to puts.