Data & Insights: Maker’s SKY Transition Boosts DAI and Aptos Sees Transaction Surge

DAI's SKY High Ambitions

• DAI, the third largest stablecoin, is seeing a surge in its supply, hitting 12-month highs. The total DAI outstanding has surpassed 6.2 billion, a level last in November 2022, marking a 40% growth from its March 2024 low of 4.42 billion.
• This resurgence comes as MakerDAO, the protocol behind DAI, rebrands:
  • MakerDAO has rebranded to "Sky," with DAI holders able to upgrade to Sky Dollars (USDS) at a 1:1 ratio.
  • The MKR governance token is upgradeable to SKY at a 1:24,000 ratio, aiming to broaden participation in the protocol's governance.
  • Launch of these new "upgradeable tokens" happened on September 18th, with the hopes of fueling further growth in the ecosystem.
• DAI's mechanics remain unchanged amidst this shift. As a crypto-collateralized stablecoin, DAI is minted when users deposit supported cryptocurrencies as collateral.
  • This structure offers greater decentralization compared to fiat-backed stablecoins but comes with its own set of risks, including potential volatility in the underlying collateral.
• SKY is offering a series of rewards that could be driving up the recent spike in supply: 
  • USDS holders can earn SKY tokens, with 600 million SKY distributed annually.
  • Alternatively, users can opt for the regular Savings Rate, earning interest on their holdings.
  • However, these rewards face some geographical limitations, such as restrictions in countries like the U.S. and the UK.
• However, investors and market participants don’t seem to be fans of the DAI transition, as prices for the Maker (MKR) token have dropped 30% since the news in August and is currently trading around $1375 at the time of writing. 

ETH Stakers on a Slow Burn 

• Ethereum's staker revenue is on a slow descent, with September clocking in at $174 million, down from its March peak of $247 million. This trend mirrors broader crypto market sentiment:
  • Staker revenue has been gradually declining since March, reflecting reduced on-chain activity and lower overall market enthusiasm.
  • September's staker revenue of $174 million dwarfs the $35.5 million generated from transaction fees, highlighting a significant reliance on the block subsidy.
• The validator landscape continues to expand despite the revenue dip:
  • Ethereum now boasts 1.09 million validators, showcasing growing participation in the network's security.
  • This increase in validators comes even as individual rewards decrease, demonstrating continued faith in Ethereum's long-term prospects.
• Ethereum's deflationary mechanism is holding, but there are signs of a reversal:
  • Since the Merge, Ethereum has maintained an annual supply burn rate of -0.06%, effectively removing 861,000 ETH from circulation each year.
  • However, we've observed ETH supply growth since April 2024 as fewer people use the main chain, an observation that might cause the supply to become inflationary. The highest annualized burn rate was recorded on April 5th at -0.38%, and it has been on a steady climb since. 
  • Indeed, the number of active addresses on Ethereum has also decreased, further suggesting less activity on chain. 
• As Ethereum navigates these challenges, the balance between rewarding validators and maintaining an efficient, scalable network will be crucial for its continued dominance in the smart contract platform space.

CEX over DEX futures?

• The share of decentralized exchange (DEX) to centralized exchange (CEX) futures trading volume has slipped to 3.26% in September, down from its February 2024 peak of 5.18%:
  • This metric represents the portion of futures trading volume occurring on DEXs compared to CEXs, indicating a gradual shift back towards centralized platforms.
  • While the current 3.26% is still historically high, the downward trend since February raises questions about the long-term preferences for traders to use DEXs in the futures market.
• DEXs face an uphill battle in the futures market:
  • Hyperliquid emerged as one of the largest DEX perpetual swap platforms, processing $1.23 billion out of $2.8 billion in daily volume at the time of writing.
  • Despite this impressive showing, DEXs collectively still struggle to capture a significant portion of the overall futures market. Looking at Bitcoin futures alone, Binance leads the CEXs with $480 billion of the $1.4 trillion monthly volume. 
• While DEXs offer the promise of true decentralization, they're grappling with real-world challenges that keep traders tethered to centralized platforms.
  • Liquidity remains a key hurdle, with the depth of order books on major CEXs often dwarfing their decentralized counterparts. This liquidity gap can lead to less favorable pricing and increased slippage, particularly for larger trades.
  • Moreover, the user experience on DEXs often falls short of the seamless interfaces traders have come to expect. The complexities of interacting with smart contracts and managing gas fees can be daunting, especially for those new to the crypto space. 
• The path to increased DEX adoption isn't just about matching CEXs feature-for-feature. It's about leveraging the unique advantages of decentralization to create compelling value propositions. 
  • Some interesting areas of development include enhanced liquidity provision mechanisms, more user-friendly interfaces, and cross-chain, composable futures contracts.

Uptos Uptober

• The 7DMA of the number of active addresses on the Aptos blockchain hit a new all-time high of 571,280 on Wednesday, October 9, 2024.
  • This follows what was an impressive, exponential increase in active addresses for the network, as this figure sat at just 135,000 on Tuesday, September 17th.
  • In less than a month, the number of active addresses has more than quadrupled, a testament to the accelerating adoption of the Aptos blockchain.
  • At the current pace, Aptos is on track to set a new monthly all-time high for active addresses. 
  • Meanwhile, on October 8, 2204, the 7DMA of the number of new addresses on the Aptos blockchain also set a new daily all-time high, with the 7DMA reaching 200,000 new addresses.
  • The creation of new addresses, although not a direct 1:1 correlation, is key in evaluating the onboarding of new users onto the network, and this recent spike suggests that Aptos has positioned itself well in this regard.
• Perhaps most indicative of Aptos’ overall growth is the significant increase in daily transactions on the network.
  • At the beginning of August, the blockchain processed just 744,000 transactions per day. By the start of September, this figure had more than doubled to 1.93 million daily transactions. As of October 12, 2024, Aptos has recorded an impressive 2.75 million daily transactions.
• This surge in transactions, coupled with the growth in active and new addresses, points to increased on-chain activity within Aptos. 
• This point is further evidenced by a notable increase in the total value locked (TVL) in the Aptos blockchain, with it recording over $650 million in TVL on October 9th.
  • For additional context, Aptos had a TVL of just $422 million at the beginning of September 2024 and proceeded to grow by 30% over the following month, with a TVL of $549 million as of the beginning of October 2024. 
  • The growth has not stopped since either and has, in fact accelerated, as Aptos’ TVL continued to increase by over 18% in the following two weeks.
• The APT token has also been one of the relatively strong market performers in recent months, currently with a market capitalization of $5.2 billion and a fully diluted valuation (FDV) of $11.3 billion.
  • The APT token grew by over 18% during the month of September, and is currently up over 30% so far during the first two weeks of October.
  • Comparatively, SUI, the token of the Sui blockchain, which is one of Aptos’ direct competitors, has been the one to make headlines in recent weeks as it has nearly tripled its market capitalization since the beginning of September 2024, currently standing at a $6.2 billion market cap with an FDV of $22.4 billion.
  • Market participants might shift their attention to APT in response to this, observing whether it could pull off a similar level of outperformance, considering the similarity of both these projects as competing non-EVM layer 1 blockchains.

Roses red, violets blue, they’re flipping the stock market, and there's a hippo too?

• In the past week, Google search volumes for the term “memecoin” reached a new 2-month high, climbing to a search index value of 43
  • This surge follows a sustained upward trend that started in mid-July when search volumes were lower at 40. The current level, though slightly below the peak of 44 reached two months ago, signals a consistent and growing curiosity about memecoins.
• This resurgence in search interest is reflective of the broader trends seen in the memecoin market itself. 
  • One notable example is the rise of MOODENG, a memecoin inspired by a viral hippo of the same name that captured the Internet’s attention a couple of weeks ago.
  • Launched on Solana with a market cap of just $50,000 on September 10th, MOODENG skyrocketed to a staggering $300 million market cap in just 17 days.
  • This exponential price increase, combined with the meme’s popularity even among non-crypto audiences, fueled heightened social media chatter.
  • The viral nature of both the meme and the token likely drove more users to seek information through Google, contributing to the recent surge in search volumes.
• Similarly, a memecoin called SPX6900, a memecoin play on the traditional US stock market's S&P 500 index, has made rounds in recent weeks.
  • On September 9th, SPX6900 had a market cap of just $7 million. However, following a public endorsement from influencer Murad Mahmudov, as well as mentions during high-profile events such as Token2049 in Singapore on September 19th, the coin saw a dramatic rise in price.
  • As of October 13th, just over a month after Murad’s initial endorsement, SPX6900 now boasts a market cap of $850 million.
• Murad’s involvement likely played a significant role in the overall resurgence of interest in memecoins, both in search volumes and in market activity.
  • His continued endorsements, including the promotion of the idea of a "memecoin supercycle" across various platforms and events, have been met with enthusiasm within the memecoin community. This, in turn, has likely piqued the interest of traders outside typical memecoin circles.
  • With Bitcoin’s price movement remaining relatively stable in recent weeks, many traders seem to be seeking out the volatility and potential for quick gains offered by memecoins.
  • The combination of high-profile endorsements, viral social media movements, and the appeal of fast returns has undoubtedly driven the recent surge in Google searches for "memecoin.”