Data & Insights Recap - September 11, 2023

No spot for trading

Source: The Block

• It is no secret that we are in a bit of a crypto bear market. While this summer did mark some big victories for crypto on the legal front, and many people have continued to build new products and improve the industry through this year, a myriad of collapses that wreaked havoc in 2022 has hampered broader interest in digital assets. 
  • The fall of UST and the Terra ecosystem triggered a crypto credit crisis, which took out hedge fund 3AC and lending platforms Celsius and Genesis. The bankruptcy of FTX did not help either. 
  • Crypto’s total market cap has been trending around $1 trillion for much of 2023, but it's a far cry from its over $3 trillion valuation at its peak in November 2021. Crypto’s market cap was around $2 trillion at the end of April 2022, ahead of much of the tumult that followed in the year. 
• So it's not surprising that we’ve seen a slowdown in spot volumes in recent months. August came in with just under $423 million in spot volume; the lowest monthly volumes have been since October 2020. The 7-day moving average of daily spot volume fell to $9.01 billion on September 10th, falling below the $10 billion threshold for the first time since November 2020. 
  • The biggest loser of volumes seems to be Binance. While the exchange is wrapped up in lawsuits from both the Commodities Futures Trading Commission and the Securities and Exchange Commission in the U.S., mounting regulatory pressures across the globe, and a slew of executive departures, the main driver of Binance’s slipping volumes seems to be their updated fee policy. 
  • Binance’s volume exceeded $280 million every month from January 2021 to April 2023 (often by a lot), but from May of this year to now, volumes have not exceeded $240 million. April happens to mark the month that Binance stopped its zero-fee spot bitcoin trading promotion, which seemed to wipe out a lot of volume for the exchange, as its top trading pair at the time, BTC/USDT, was no longer free to trade. 
  • Traders on Binance now had to be more cautious and started scaling back trades as each trade ate into profit margins. This decision did not help spot volumes, which were already likely to decline, given market conditions. Binance still remains the largest spot exchange even after the volume cut, though. 
  • Even exchanges that didn’t have a specific reason to see volumes fall off have seen tepid activity this year, like Coinbase. Coinbase posted $55 billion in volume in January of this year but only $26.6 billion in August. 

Supply Curve

Source: The Block

• We have talked a lot this summer about stablecoins, mostly because they are a pretty hot topic. Many people view stablecoins as one of the most clearcut use cases for crypto, helping with international money transfers and fiat conversions. 
  • And a lot has been happening in the space recently. Coinbase took an equity stake in USDC-issuer Circle and PayPal came out with their own Ethereum-based stablecoin, PYUSD. And this was just in August. 
• One area of stablecoins we talk about less frequently is the crypto-collateralized stablecoins. One of the big reasons is the fact that their market caps are much lower than those of their fiat-backed counterparts. 
  • The two largest stablecoins, USDT and USDC, both backed by US dollars and equivalents, have supplies exceeding 25 billion, whereas the largest crypto-backed stablecoin, DAI, has a supply below 4 billion that is continuing to decline (although it is currently the third largest stablecoin overall after overtaking BUSD, which can only be burned). 
  • The total supply across all types of stablecoins has been declining, but crypto-collateralized ones have had a particularly difficult time rebounding after UST fell apart, which caused some to lose faith in stablecoins that are backed with assets as volatile as crypto. The supply across crypto-backed stablecoins fell from 15 billion in May 2022 to just over 6 billion this month, a 60% drop.  
• But there is a newcomer that has been gaining some traction. It is Curve’s crvUSD, which launched back in May (twice, really, after it was redeployed due to an error in the deployment script). 
  • Its supply, defined by the mint and burn events of the stablecoin on-chain, surpassed 700 million at the end of August, launching it into the position of the second largest crypto-backed stablecoin.
  • The stablecoin does take an interesting variety of assets that users can post as collateral, including Lido’s Wrapped Staked Ether and Staked Frax Ether, along with ETH itself and some bitcoin derivatives. 
  • The way mints seem to work for crvUSD is that the stablecoin is minted in accordance with the cap of any newly added market. For instance, this transaction, which minted 50 million crvUSD and also created the market for tBTC, which has a debt ceiling of 50 million (which means only 50 million crvUSD will be issued using tBTC as collateral). When people deposit tBTC to “mint” crvUSD, they will be tapping into this supply of 50 million. This minting strategy is part of why the supply on-chain has been able to grow so quickly. There is about 107 million crvUSD that is actually being loaned out right now, which is still a decent size for a project that launched four months ago. 
  • crvUSD does have the brand of Curve (the second largest DEX on Ethereum by volume) attached to it, which could be helping to solidify its name in the stablecoin space. 

Nearing my peak

Source: NEARBLOCKS

• The 7-day moving average of transactions on NEAR hit a new high of 1.64 million on September 10th. The number of transactions on the network seems to have been rising since mid-August. 
  • The 7-day moving average of new addresses on NEAR also picked up to 337.58k on August 29th, which was the second-highest peak, but new addresses have come back down to a normal level recently. 
• There have been a couple of exciting things happening and about to happen in the NEAR future in the ecosystem.
  • For one, USDC will be making its way over to NEAR this month as part of the stablecoin’s expansion goals that it announced at the end of August. USDC is the second largest stablecoin by supply, so it could be beneficial for NEAR to have access to one of the most prominent and trusted dollar-pegged assets within its ecosystem. 
  • One of the network's most popular protocols, Sweat Economy, is also set to launch in the U.S., bringing its wallet (and native token SWEAT) to a whole new batch of users. Users have until midnight tonight (UTC) to opt in to claim any SWEAT tokens.
• But one thing that will cause a surge in metrics quite like one of the world's most famous YouTubers, Mr. Beast. 
  • The Creator League ran a promotion where you can get a free box of Feastables (Mr. Beast’s snack line, primarily consisting of chocolate bars) if you purchased a Creator League community pass before September 9th.
  • And while the Creator League has made it very clear that these passes “are not considered NFTs or a token launch”, they do use NEAR to validate data and store community pass-related information. 
  • Buying these creator passes was actually suspended after September 5th, as the fact that the league was using blockchain technology put them at the center of controversy as people complained that it was not disclosed, but enough hype seemed to still pour in beforehand to get activity on NEAR pumping. 
• While NEAR is the 37th largest blockchain by total value locked, it still seems to be a chain that is actively getting picked for new opportunities. Fees on the network are very cheap, which could make it an attractive option for projects that need to interact a lot on-chain.

Base's growing user base

Source: Block Scanners

• It seems as though people are still excited about Coinbase’s new optimistic rollup, Base. It has come up a few times before in this newsletter, as its launch this summer was highly anticipated and added a new competitor into the scaling solutions sphere.
  • Base launched to the public just over a month ago on August 9th, but even before then, it was garnering traction as people bridged over using a proxy portal contract or other third-party sources. 
• Base has seen a recent sustained uptick in new addresses on the network. Since August 26th, the layer 2 has been gaining over 720,000 new addresses a day, putting its total number of unique addresses over 15 million.
  • On the other hand, the 7-day moving average of transactions on the network has been dipping. It peaked at just under 900,000 at the end of August and has now sunk down to 367,000. That being said, Base still remains comparable to Arbitrum and Optimism in terms of transactions. 
  • The social platform friend.tech, one of Base’s breakout protocols, saw its metrics taper off last week but had a rebound over the weekend, with the protocol posting over 400,000 transactions on Sunday. 
• But the number of new addresses on the network seems to be staying consistently high.
  • This could, of course, be a sign of a steady flow of new users interested in using Base. As an Ethereum scaling solution, it offers faster and cheaper transactions as opposed to mainnet, which in itself looks attractive. It’s also built by Coinbase on the OP Stack, two familiar names that help it gain traction. 
  • Base was also running an “On-Chain Summer” promotion that encouraged people to interact on Base with some exclusive NFT mints with the likes of Coca-Cola. 
  • But one thing that always comes along with a new platform is also people looking to farm airdrops. Coinbase has been very clear that Base itself will not have a token, but that doesn’t mean protocols on Base won’t have them. The aforementioned friend.tech seems to be a particularly likely candidate, given it’s already airdropping “points.” The potential for an airdrop is something that will typically attract users, even if one isn’t necessarily coming.

Searching up

Source: Pageviews

• The number of pageviews on Bitcoin’s Wikipedia reached 7,830 on September 8th, the highest number of daily views in 2023.
  • It’s not too hard to believe that more people are interested in learning more about Bitcoin these days, although overall page view numbers are still quite low compared to earlier years.
  • For one, both analysts at Bloomberg and JPMorgan are viewing a spot bitcoin ETF as something that is increasingly likely to happen soon. Exchange traded funds are common investment products and the news of a potential for bitcoin has been making its way to more mainstream sources. Intrigue over the possible ETF could be leading people to search up Bitcoin and see what it’s about.
  • This week also saw new accounting rules for bitcoin be put into play, which will let companies report the value of bitcoin on their balance sheets at fair market value. Previous rules only accounted for price drops relative to the purchase price, not allowing anyone to account for gains on bitcoin holdings. Some people believe the previous rules were barring some firms from holding crypto, which means the new rules could see more companies looking to invest. 
  • That being said, the interest was not sustained, with views dropping down to just 5,950 the next day, indicating that this was more of a one-off surge. But there are a lot of reasons that people might be more interested in the Bitcoin Wikipedia page now.