Data & Insights Recap: TON and ByBit grow their share

TONs of fun

Source: TonStat

• It might just be TON summer. The Open Network, or TON, was initially called the Telegram Open Network and was launched by the messaging app popular within the crypto community and boasts over 900 million users currently. However, the blockchain drew ire from the Securities and Exchange Commission, leading the open-source community to continue its development, with Telegram continuing to support the network. 
  • In February of this year, Telegram announced ad revenue sharing, which split profits 50/50 with channel owners. Most importantly, though, the revenue is paid out in TON’s native token toncoin and facilitated through the network. According to Telegram’s CEO, Telegram channels generate 1 trillion views a month, but at the time of the ad-sharing launch, only 10% of channels were monetized with ads. While content creators can cash out of the toncoin they earn, they can also use the token to reinvest in their channels by promoting or upgrading them. In general, the idea behind the plan was to onboard major Telegram users into the TON ecosystem. 
  • Tether also launched its USDT stablecoin on the network back in April, granting TON users access to the largest dollar-pegged stablecoin. The launch proved to be a success, with the supply of TON on USDT already surpassing 500 million this past week, roughly just two months after first starting on the blockchain.
  • The network has more recently seen a surge of activity and users due to the popularity of Telegram-based crypto mini-games that utilize TON. Notcoin, Hamster Kombat, and Catizen are all examples of these tap-to-earn games which allow users to earn in-game currencies which can eventually get converted into real airdrops. We talked about a similar phenomenon with the Tapos game on Aptos, highlighting how strongly these clicker games can grip users who want to earn tokens. 
  • But as TON has grown in popularity and adoption, toncoin has also soared. Toncoin is currently the ninth largest cryptocurrency by market capitalization, with a market cap of $18 billion, more than doubling since the start of the year. Similarly, TON’s total value locked has surged, breaching $600 million earlier this month after reaching $300 million just three weeks earlier. 
  • Many people are bullish on TON since it has such a wide user base to tap into and is easily integrated into the Telegram app. The crypto VC firm Pantera Capital is already raising a second TON fund after the company made its largest-ever investment in the network in May. 
• And we can see TON’s explosive growth in its usage metrics as well.
  • The 7-day moving average of transactions on TON has risen from 645,000 at the start of the year to 5 million now, and the 7-day moving average of active addresses has surged from 26,000 to over 340,000. While there have been ebbs and flows in the trends of these charts, the general direction seems to be upwards. And while it's still early to tell if this level of growth is sustainable, it's likely TON has reached a point where its activity will continue to be higher than levels prior to 2024. 

Having a blast

Source: GrowThePie

• It feels like we talk about airdrops a lot in this newsletter, but many times interesting data arises when users are incentivized to use a platform in speculation of an airdrop, or in the aftermath of a token launching.
  • The airdrop of the past week was from the new optimistic rollup Blast, which launched its mainnet in February after a somewhat controversial early access period that started in November 2023. 
  • For the most part, since its mainnet debut, Blast’s metrics have been on an upward trend. Blast is also already the seventh largest network by total value locked, with almost $1.5 billion in assets. This is not so surprising, as Blast launched with a lot of hype. It had big-name backers and developers, and perhaps most important was its native yield offering on stablecoins and ether. The yield is what made Blast unique and likely contributed in part to its rapid success. 
  • But part of what also could have helped was the idea that Blast could be having an eventual airdrop. This was not a far-fetched idea, given that the protocol was already dishing out “Blast points” even in the early access phase, a typical precursor to tokens. Most rollups also do eventually have an airdrop as a means towards decentralization. 
  • As of mid-June, Blast pulled ahead of OP Mainnet in terms of the 7-day moving average of transactions and active addresses, although it still remains well behind Arbitrum One and Base. But that being said, both metrics have been steadily growing since the mainnet went live. 
  • Can that momentum continue now that Blast has issued 17 billion tokens? There is a real possibility that it can. For one, this was only Phase 1 of the airdrop. Blast has earmarked 50% of its 100 billion total supply for the community and said there would be more airdrops coming within the next three years. And as we have discussed, yield is very attractive to many in the crypto space, so its possible Blast is able to edge above its peers by appealing to users in that regard. 
  • There was not really a huge spike in active addresses or transactions after the airdrop claim went live on the 26th, which can sometimes happen as claimants rush in. But the BLAST token did have the typical airdrop selloff. Its market cap reached $493 million on launch day but has dropped down to just $367 million at time of writing. 
• While there was no surge in activity following the airdrop, there was also not a drop off in action either. Many platforms face a slow down in action after an airdrop goes live or a snapshot has been revealed. 
  • Transactions on Blast have faltered slightly, with the 7-day moving average falling from over 1 million on June 23rd to just 798,000 yesterday, but that’s still quite elevated for the network. Active addresses have also seen a small decline, with 134,000 addresses interacting with the network each day. 

ByBit on the high road

Source: The Block

• The crypto exchange ByBit has been in the spotlight recently as its grip on the spot market has continued to show growth. This month, ByBit is on pace to be the second-largest spot exchange by volume for the fifth month in a row, accounting for 10.6% of volumes across exchanges, its highest market share ever. In September 2022, its share was just 3%.
  • ByBit’s newfound dominance has come from a steady rise, with its market dominance really starting to grow in the middle of 2023, as opposed to there being some catalyst that causes a shart surge. 
  • The CEO of ByBit, Ben Zhou, attributes some of its growth to its ability to help provide an exchange for former FTX customers, allowing users to use crypto for margin trading and also being available in similar regions. 
  • ByBit has taken other victories recently, like the ByBit debit card being supported by Apple Pay this past week and allowing Chinese users who lived outside their home country to open accounts earlier this month. 
  • It has not been all rosy for ByBit in the wake of the FTX collapse, though. Like its peers, the exchange has faced regulatory challenges and exited both the Canadian and UK markets last year. However, Zhou noted that there are other areas of expansion beyond Europe and highlighted Brazil, Turkey, and Africa as future growth areas. 
  • ByBit is now consistently pulling ahead of some of its large Asia-centric peers for the past few months, like Gate.io, HTX, and OKX. But there is still quite a large margin between ByBit and Binance. But Binance’s market share has faced some pressure in recent months as the exchange deals with the fallout of a sizable settlement with the U.S. Department of Justice and a CEO change. Its share of spot volume has fallen from 45.43% in March to only 38.14% so far this month. 
• While ByBit is unlikely to become the most dominant exchange by spot volume any time soon, it does seem to be emerging as the main winner of the FTX fallout. Right after FTX collapsed, many people predicted that an array of exchanges could benefit from its user base. ByBit is definitely the spot exchange that has seen the most sizable growth in dominance since FTX went defunct in November 2022. 

Arbitrum drums up a bit of revenue

Source: The Block, Dune Analytics

• We talked last week about the LayerZero airdrop, which only briefly boosted the amount of messages being sent on the cross-chain communication network as users claimed their ZRO. The airdrop was frequently discussed because of the sybil prevention that went into determining allocations, as well as the $0.10 donation to the Protocol Guild necessary to claim each token. 
• While the launch of the ZRO token didn’t seem to help the LayerZero network recover from the downturn in activity after it was announced the airdrop snapshot had been taken, a different protocol was able to profit.
  • Arbitrum made $3.38 million in revenue on June 20th, the day ZRO airdrop claims began. It marked the rollup’s highest day of revenue ever and a sharp turnaround compared to the typically tens of thousands in dollars the network has been making post-Dencun.
  • As a reminder, the revenue generated by Ethereum layer 2s is the amount of fees paid on these networks. Many rollups have seen a decline in revenue post-Dencun since users are paying lower fees, but profits have actually increased for many scaling solutions since the cost to post data on the Ethereum mainnet has gone down dramatically. 
  • For Arbitrum to have seen fees, this high is indicative of a lot of demand for Arbitrum blockspace, with users willing to pay a premium to get their transactions executed on the network. 
  • This does make sense, given that Arbitrum was the coordination chain for the LayerZero token claims contract. This meant that claims could be processed atomically on Arbitrum, whereas the other networks that you could claim on needed to use a cross-chain message on the LayerZero network to facilitate the claim. 
  • Naturally, as the token went live, many users flocked to Arbitrum to make their claim, causing the median gas price on the network to spike up to 34.7 gwei, up from just 0.01 gwei earlier in the day, which forced transaction fees to skyrocket. It is not uncommon for airdrop claimants to want to receive their tokens as fast as possible, especially if their plan is to sell their allocation. Many tokens, like ZRO, face a sharp selloff after being distributed, which causes a need to claim and sell the token as soon as possible to lock in the best price. 
  • The phenomenon was short-lived, with Arbitrum making just $51,000 on June 21st, back within the network's typical range. But on June 20th, Arbitrum only paid $37,820 to publish data on the Ethereum mainnet, meaning that it got to keep the vast majority of the millions it brought in, helping boost the DAOs coffers. 

Staking at stake

Source: Ethereum Validator Queue

• Ethereum staking has long been known to draw the attention of the U.S. Securities and Exchange Commission.
  • The agency had previously gone after staking services at Kraken and Coinbase, and the spot Ethereum ETF issuers all removed staking from their applications in order to get approval.
  • The SEC also launched an investigation into Ethereum 2.0 after the network made the change to Proof-of-Stake instead of Proof-of-Work. The SEC had been vague about whether it considered ether a security, with the agency sometimes seeming to suggest that all PoS tokens were securities because of the rewards users are expecting to get if they stake their tokens. But the Commodity Futures Trading Commission also believed that ether fell under its purview, further complicating the matter. 
  • The SEC closed its investigation on Ethereum late last month after approving the spot Ethereum ETF 19b-4s, two data points suggesting that the agency might be more comfortable with a commodity classification. 
  • However, the SEC did not let up against Consensys, the software development company behind the popular crypto wallet MetaMask. The agency sued the company, taking issue with both its swaps and staking service. The lawsuit did not come as a surprise, as the company had disclosed it had received a Wells notice back in April, which typically indicates an upcoming enforcement action. What was maybe more surprising was that the suit also named Lido and Rocket Pool’s staking programs as securities. 
  • It is less common for the SEC to go after big name DeFi protocols, although the tides on that have been shifting after the agency sued Uniswap, which some noted as the start of the “war on DeFi.” While the SEC’s stance on staking was well known, its targets had remained centralized staking service providers. 
  • Some are skeptical of the SEC’s argument since MetaMask is non-custodial and open source. MetaMask also doesn’t provide staking itself but rather an interface to interact with liquid staking protocols, which might not make it an actual intermediary. 
• On June 6th, 2023, when Coinbase was sued over its staking program, there was a surge in cbETH burns as users exited the platform over the uncertainty of its future. At the time, it was the second largest day of redemptions, following April 13th, when withdrawals of staked ETH were first enabled with the launch of Shapella. 
  • But it seems as though the broader Ethereum staking ecosystem might be avoiding that fate. There has been a small uptick in the Ethereum withdrawal queue since June 28th, climbing from 4 to 132 validators pending exit by June 30th. But the queue is still quite short; it was at 605 earlier this month. The agency also hasn’t directly targeted any of the decentralized staking providers yet, which could serve as an exit catalyst down the line. It’s still quite early to identify the long-term impacts of a tougher U.S. crackdown on staking.