What's Driving Token Prices? August 7, 2024

ZKX (-75%) - Starknet-based decentralized derivatives exchange ZKX announced this past week that it would wind down the project including delisting all markets and closing all positions. The founder announced the decision on X stating that they were “unable to find an economically viable path for the protocol”. Interestingly, ZKX only just launched its token at the end of June, coinciding with an announcement that it had raised additional funding. The timing of the funding announcement and the short time between the token launch and the shuttering of the project has led to some critics calling out the project as a “rug pull”.
LDO (-38%) - Decentralized liquid staking protocol Lido announced last week the launch of Lido Institutional, a middleware solution that allows for enterprise-grade staking. Lido has consistently focused on institutional adoption of its liquid staking product which currently captures 28% of the market with $23B in TVL.
ENA (-34%) - During the selloff earlier this week, Ethena’s stablecoin USDe was put to the test as the market was hit with billions of dollars of leveraged liquidations. USDe, which is a pseudo-decentralized stablecoin, is minted in exchange for ETH or BTC. The protocol then takes the ETH and stakes it through Lido to earn staking rewards. Meanwhile, a short perpetual future position is taken out to correspond to that ETH position, and the dollar value is then issued in the form of the USDe stablecoin. The protocol also earns yield on this “cash and carry” trade, which is distributed to stakers in the protocol. Monday’s volatility led to $100M in redemptions for USDe, yet the stablecoin itself only showed momentary weakness, briefly losing its peg and trading at $0.997. Despite the losses, USDe still boasts over $3B in AUM. Additionally, this morning Ethena announced its expansion to Solana via Layer Zero’s OFT standard and would allow for issuance of USDe on the Solana blockchain.
JUP (-21%) - Solana-based decentralized exchange Jupiter passed a vote this past week to reduce its total supply. The vote will bring the total supply of JUP, the governance token for Jupiter, from 10B to 7B, a 30% decrease. This change however will technically only impact the fully diluted value (FDV) of the project since the tokens burned are part of the locked team and community allocations. Still, the change will theoretically bring the FDV down from $8B to $5.7B. The actual burning of tokens will take place over the course of the next 6 months.

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