Jim Franco, DeFi Research Analyst
The Total Value Locked (USD) of the DeFi market across all protocols is currently $55.02b, up around 2.3% from the last week’s market state. Excluding liquid stake at Lido (stETH), MakerDAO TVL’s dominance across all chains is 13.27%, followed by Curve Finance and AAve.
Marker, the DAO behind stablecoin DAI has a $7.3b total value locked as of this writing (increased 2.26% from last week). Curve Finance, famous for its low slippage Stablecoin dex, also has a 10% increase in TVL in the past seven days.
Total DeFi users over time
Which DeFi projects are sound businesses?
Look at the protocols ranked by the highest earnings in the past seven days. Earnings are equal to revenue minus token incentives. If this number is negative, the project spends more on token issuance than it earns in revenues.
Earnings are the lifeblood of any business. Without them, a business would be unable to attract investors. It is the most important and closely studied number in a company’s financial statements. It shows a company’s actual profitability compared to the earnings of its competitors and industry peers.
Now, which tokens are valuable and have room for growth?
In the Crypto industry, Tokens are valued differently from their business entities depending on their Tokenomics. Revenues are essential metrics; However, how much of these revenues are shared directly with the token holders?
I’ve created custom metrics using TokenTerminal based on how I analyze which tokens have value and room for growth.
From the data table, I will first categorize which projects have tokens and which have not. Aside from OpenSea and Metamask, the remaining projects have their native tokens. I won’t go over these projects one by one, but I will cite an example and explain why I think has more value.
LooksRare is an NFT marketplace that has a native token called LOOKS.
It is currently ranked 6th in the highest return from the projects with a native token. 100% of the revenue generated from the LooksRare platform was shared with token holders.
Looksrare has only a $195m fully diluted market cap compared to other projects with $500m–$3b. The lower the value, the more room for growth.
LooksRare has one of the lowest P/S. Price to sales is a valuation ratio that compares a token’s price to its revenues. A low ratio could imply the token is undervalued, while a higher-than-average ratio could indicate that the stock is overvalued.
Note: It is also important to monitor the project’s active users and revenue trends to identify if their tokenomics are long-term sustainable.
What are these metrics?
Revenue is equal to the number of fees distributed to token holders or the treasury of the project.
For dapps, the number of active users equals the number of unique addresses interacting with the dapp’s business-relevant smart contracts.
For blockchains, the number of active users equals the number of unique addresses that have sent transactions.
Fully diluted market cap is equal to the maximum supply of tokens multiplied by the token price.
Price-to-sales (P/S) ratio is equal to the fully diluted market cap divided by annualized revenue. Annualized revenue is calculated as the protocol revenue over 30 days multiplied by 365/30.
Which ones are people paying to use?
The Ethereum network dominates the most daily fees in the whole crypto space at an average fee of $2m in the past seven days. A significant portion of the transaction fees will be burned based on EIP-1559, making ETH tokens a deflationary asset. Read more here.
ETH supply two weeks after the successful merge.
Uniswap, a native DEX to Ethereum, still has the most collected fees at an average of $1.22m in the past seven days. Binance Smart Chain is ahead of GMX and AAVE with more than $500k weekly average fees.
Token unlock Calendar
In crypto, token unlocking events usually cause selling pressure on the market as the token supply increases a token’s value.
Watching these indicators may guide investors and traders on when to buy or sell the token market.
Robinhood enables trading for MATIC on the Polygon Network
Robinhood customers will finally be able to purchase and trade MATIC in the app and take advantage of all Ethereum’s Layer-2 (L2) services, like increased throughput and reduced fees compared to ETH.
According to Polygon’s medium blog:
Today, we’re thrilled to announce that Robinhood, the popular stock and crypto investing app in the US, has launched support for deposits and withdrawals of MATIC on the Polygon Proof-of-Stake (PoS) chain. The move is set to bring all of the benefits of Ethereum’s Layer-2 (L2) solutions to Robinhood users for the first time, including faster transactions and lower fees than Ethereum.
Polygon was a good fit for Robinhood since it allows users to save money on fees and eliminates long confirmation times while enabling them to benefit from Ethereum’s robust security model.
As the leading scaling platform, Polygon helps take the load off the Ethereum mainnet and execute off-chain transactions, offering lower gas fees and higher throughput without compromising on security.
Sushi v2 just launched!
According to their proposals, V2 includes organization restructures and a new features roadmap.
This proposal is the first step to a promising & accountable future for Sushi. The proposal is effectively broken down into three actionable items to be voted on:
- Retaining the talent required to bring Sushi into the future covering the entire functional spectrum of Engineering, Design, Business Development, Marketing, Community Engagement, Shōyu, Operations, and Advisory.
- Establish a formal compensation committee to check for transparency and accountability for all budgetary matters.
- With the proposal’s implementation, a standard executive & leadership search process will commence complementing the team being retained.
As a user, what to expect?
Multi-Chain First Applications — In this chain agnostic future, today, Sushi announced the release of the first phase of Sushi 2.0, features a revamped look to improve the experience for users with swaps, staking, and analytics, all with 15 chains in one place.
Invest: Pools & Farms — Through the new Invest dashboard, users now have the luxury of seeing every pool on each chain in one place. Easy navigation simplifies finding good pools to enter and gives access to expanded analytics for every pair under the Sushi AMM.
Analytics — Having accurate historical and current data is extremely important to any protocol in the space, and Sushi is no different. Equally important is having the ability to see all of this information for each chain in one place.
Link to Analytics: sushi.com/analytics
The highly anticipated Bond Protocol release
Bond Protocol is the next evolution of bonds-as-a-service. Olympus-style bonds have revolutionized the way protocols approach acquiring assets.
In collaboration with OlympusDAO, we have developed an unified bond architecture that allows any protocol to deploy and manage bond markets. We are passionate builders who strive to solve systemic problems in DeFi to create long-term value for protocols and token holders.
Link to website: https://bondprotocol.finance/
Solving problems with treasury dilution and token issuance
1. Project runway, reduce insolvency risks
Most protocols are over-exposed to their native governance token, with most treasuries having <10% diversification. Issuing bonds allows funds for development and investment in strategic initiatives to increase protocol viability and longevity.
2. Acquire liquidity at lower long-term cost
Protocols pay a lot to rent liquidity via inflationary incentives paid in their native governance token. High incentives paid to mercenary capital can create negative feedback loops that destroy value for the protocol and token holders.
Why use Bond Protocol?
Protocol Owned Liquidity — Liquidity ownership reduces reliance on Pool 2 incentives, provides long-term stability, and controls token inflation
Treasury Diversification — Exposure to diversified assets (ETH, Stables, LP Pairs) adds insurance & additional revenue generation opportunities
Strategic Assets — Acquiring governance rights for symbiotic protocols increases long-term viability of project and strengthens cooperation
Cross-chain — Asset accrual and liquidity control allows for easy deployment on other chains to increase TVL and user acquisition
Incentives — Align token holders with long-term protocol success by giving them access to discounted tokens that are vested over an extended period
DeSo’s integration with the leading Web 3.0 wallet effectively turns MetaMask into a full-fledged decentralized social network. It also paves the way for DeSo to become the cross-chain social layer for all Web 3.0.
DeSo, a new blockchain-backed by Coinbase, Sequoia and Andreessen Horowitz, has announced its integration with MetaMask. As a result, millions of Ethereum users can now enjoy one-click access to encrypted on-chain messaging and a full Twitter-like feature set.
According to DeSo Founder, Nader Al-Naji
Existing blockchains cannot store content efficiencies. It costs about $50 to store a 200-character Tweet on Ethereum and about fifteen cents to store it on Solana, Avalanche or Polygon. In contrast, DeSo is one ten-thousandth of a cent, making it the first blockchain capable of disrupting storage-heavy applications like social.
Social media today is controlled by a handful of private corporations — but that could change as wallets like MetaMask expand from handling just money to social identity and social interactions. Having gained a presence in the Ethereum ecosystem, DeSo plans to expand to Solana next by integrating with Phantom wallet.
Almost two weeks after the Merge, Ethereum becomes a deflationary asset and environmentally friendly.
Forget the price; people want to watch the ETH supply burn.
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