Last week we highlighted Tron's comeback. It made me wonder, "hmm, I wonder if there are other older protocols doing well." Our research is showing there are some tokens from 2021 that are having a resurgence. Could this be a new shift in the meta?
Here's what we got today:
Are fundamentals back? The 2021-era tokens are pumping again.
Korean Web3 industry 101. Key takeaways from Tiger Research report.
Around the web. Sony is developing their own Ethereum L2, Magic Eden announced a new token called $ME, and more
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Market
The DeFi Class of 2021
Photo by PhotoMIX Company
This cycle heavily favored memecoins, and other pumpamental-focused narratives. And I'm sure you've heard of the advice to focus on "newer protocols"
We're noticing an interesting trend: Last week, older protocols with solid fundamentals have been the best-performing ones.
What do they have in common?
They were solid projects from 2021.
They had solid "business models". dApps were generating revenue. And L1s had solid ecosystems.
These tokens had unlocked most of their supply. People didn't have to worry about future unlocks dumping on them.
They also had unique catalysts in their favor.
Let's look at some of the projects and their catalysts.
Avalanche (AVAX)
AVAX is up >28% on the weekly.
They had quite a few bullish announcements recently.
Grayscale has launched a new investment trust for AVAX. This is a way for TradFi to invest in AVAX.
Franklin Templeton, a major investment firm, is launching a tokenized money market fund on Avalanche.
Even California DMV is using Avalanche. They're looking to modernize vehicle title transfers.
Polygon
Polygon is undergoing a gigantic restructuring. They began as a sidechain to Ethereum. Right now, they're transforming into an ecosystem of L2s.
In their AggLayer vision, interacting with all L2s will feel like interacting with a single chain. This is one of the most compelling visions in crypto.
One key step in the transformation is the migration of MATIC, their current gas token, into POL. The new token will have more utility than just being a gas token.
This migration is set to happen on September 4. So, it can be a catalyst to pump the token. $MATIC is already up ~25% on the weekly chart.
Polygon PoS is also home to a solid ecosystem. They've been performing fairly well in terms of users and onchain activity:
AAVE
Aave is an example of an OG dApp that performed well. It's up >23% on the weekly.
It is the leading lending protocol. And it has extremely impressive numbers:
It has 68.5% of the active loan market in crypto.
Aave TVL has almost doubled YTD. It is sitting at ~$10B.
Its quarterly revenue has surpassed that of 4Q21, which was the peak of the bull market.
Below is the revenue graph of the protocol for the past year. You can see a steady increase over the weeks.
Source: Token Terminal
They've been doing all of these with few token incentives - these are all based on organic growth.
But we need to check if they are overpriced as well. The 3-year median for the P/S ratio is around 62. The highest in the past year has been 72x. And it's current P/S ratio is only ~32x. So, there's still room to run based on this.
Other projects in this category have also performed well. I'll include Uniswap and Curve as the two top ones.
Even though it didn't perform well this week, Maker has solid numbers as well - they're going through a major transformation called Endgame. It should be on your radar as well. It makes me wonder if so many people are burned out from hype based tokens, and now more fundamental based ones are becoming more attractive. Let's see if this trend continues.
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South Korean's an important Crypto market. Crypto volume in Korea often surpasses that of KOSPI (it's kinda like the S&P 500 in the United States).
All eyes were on South Korean's Crypto market a few years ago. But ehhh...the Terra Luna situation put a huge black eye on the scene. So, what's going on with the space over there? Tiger Research recently released a report on the Korean Blockchain industry. Here are my top 5 takeaways from the report.
#1. The market map of the industry.
In the first pages of the report, they list every major player in the industry in a single image. Just going through it will give an outline of the industry.
Now, I'm not going to go through every player in the above image. A good way to understand the industry is by just reviewing all the major players from the report.
#2. They have a strict regulatory regime
The regulatory landscape of the country will heavily influence the industry.
South Korea previously had an outright ban on the industry, but it's transitioned to a regime of strict rules with a focus on "investor protection". Globally, it is one of the strict regimes.
But they're better than the current USA. They have a regulatory sandbox to experiment with Real Wold Assets, commonly called Security Token Offering (STO).
However, there are more relaxed regimes than in South Korea. Because of this, many projects relocate overseas.
#3 Behavior of Korean investors
A key feature of Korean traders is that they heavily invest in Altcoins. They account for 70-80% of the total trading volume. Bitcoin represents only about 15%. In contrast, Bitcoin dominates the total global trading volume.
Their influence in the market creates interesting dynamics like "Kimchi premium". It describes the price difference between the Korean market and the global crypto market. It's usually around 3% and during peak activity, it can rise to 10-20%.
They also have the phenomenon of Gaduri Pumping, which is basically the Korean version of pump and dumping.
#4 The state of DeFi usage
Rather than DeFi, CEXs dominate in Korea. 68.9% of trading volume is concentrated in CEXes. And only 26.1% of the volume is on DeFi platforms.
There are a few reasons for this:
Frequent hacking of dapps.
The disaster with Terra Luna
The UI/UX of the dapps is not in the native language.
Other common reasons such as superior UX of CEXes.
And within CEXes, Upbit & Bithump control ~95% of the market share in South Korea. Strict regulations are often a barrier for new entrants.
#5 GameFi: A big potential winner
South Korea has a huge potential for GameFi.
It has a good history in game development.
They're the fourth-largest gaming market globally.
SK often has a high Average Revenue Per User (ARPU) for games.
And most importantly, everyone is familiar with crypto.
Many web3 games have already been released. Their major web3 game platforms are Wemix, Marblex, IntellaX, XPLA, Iskra, Trala Lab, and Metabora.
So, many chains are partnering with Korean Game Companies. You might have to keep an eye on some of these.
These are just some of my takeaways from the report. The full report is too comprehensive to cover here. It covers areas like how entertainment & blockchain intersect in Korea, the state of RWA assets, their developer ecosystem, NFTs, and more.
If you want more insights about the Korean market, read it here.
🚀 DeFi Catalysts
Sony is developing their own Ethereum L2 called Soneium. This can be the start of corporations launching their own ETH L2s.
YieldNest launched ynLSDe. It is a Liquid Restaking Token that aims to maximize the returns from staked ETH.
Aave v3 is launching on ZkSync's Era mainnet. They'll be using Chainlink's price feeds.
OKX wallet added support for Sonic SVM. Users can now claim Sonic test tokens from the OKX Wallet and participate in the Odyssey campaign.
Gearbox has decided to implement a fundamental oracle for stETH and wstETH on all deployments. It should give a more accurate value of the assets.
🪂 Airdrop Alpha
Four.meme has announced an airdrop for active users of Pump.fun and BNB Chain in their ongoing incentive program.
Orderly Network has received a grant of 50k $ZRO. Users can earn it by completing quests in their Big O Campaign.
Stride has distributed $STRD for holding $stTIA. The deadline for insta-claiming (with a 30% penalty) the token is August 31st.
🚀 New dApps
Viction launched its DA Network. They'll provide infrastructure that'll ensure data is always retrievable and verifiable.
Magic Eden introduced $ME, a token to power a cross-chain ecosystem. Users have to use the Magic Eden wallet to claim the token.
BetaBorrow,a borrowing protocol on Berachain, announced testnet early access for Big Fat Beras and Honey Jar's Honey Comb NFT holders.
John Wang introduced Dubdotsocial, another platform for memecoin traders that claims it'll make memecoin trading more fair and enjoyable.
Puffer Finance introduced Puffer UniFi. Their vision is to have all L2s seamlessly work as one.
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