What's Driving Token Prices? August 2, 2023

Katie Talati
Aug 2, 2023

Join Katie Talati, Arca’s Head of Research, weekly on Wednesday at 4PM EST / 1PM PST as she shares notable token activity over the past week and her insights on what market events drove these token price movements.

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  • CRV (-22%) - Everyone and anyone in crypto is talking about Curve this week. On Sunday, Curve faced an exploit that was caused by a bug in Vyper, the coding language used for their contracts. The hacker performed a reentrancy attack on Curve contracts and drained money from Curve and a number of other DeFi protocols. The exploit itself wasn’t as big as the problem that set it off. Curve’s founder, Michael Egorov, owns a large majority of the CRV governance tokens, and has taken out loans on multiple DeFi platforms that were collateralized with his CRV holdings. When the price of CRV fell following the exploit, these loans became in danger of liquidation which further hurt the price of CRV. It also left protocols, such as Aave and Fraxlend, with a lot of “bad debt” since the CRV token does not have a lot of liquidity. As Egorov attempted to top up collateral on these loans, a number of market participants pulled liquidity in an attempt to "stop out" the loan and cause a liquidation. Egorov then created a Curve pool to exchange fFrax and crvUSD with 100K in CRV rewards, essentially allowing users to deposit stablecoins and take on fFrax (a tokenized representation of one of his debt positions) and earn CRV rewards in exchange. The pool only helped so much and since then, it is rumored that Egorov sold some of his CRV holdings OTC at around ($0.40) to crypto native investors in order to pay down some of his debt. The saga is likely not over, especially as the issues with Egorov’s loans have popped up before.

  • FTT (-0.30%) - On Monday, the FTX Group released a draft reorganization plan for the exchange. The plan discussed different groups of creditors and how they would be paid out. The proposal stated that everything would be accounted for in USD at the time of the bankruptcy filing. In addition, the plan officially stated that FTT and any equity stakes in the company would not receive any claims in the payout schedule. Despite this, FTT rallied 10% on the news of the reorganization but has since settled back to prior prices.

  • CAKE (+2.4%) - Binance chain-based DEX Pancakeswap voted over the weekend to distribute the DEXs revenue to stakers of the CAKE token. Stakers will receive 5% of the overall trading revenue on 0.01% fee pools and 0.05% fee pools. This follows a recent theme in the market starting with Unibot, which shares revenue with token holders. Currently, Pancakeswap has a run rate of $89m in revenue annually(2Q23 revenues annualized) and makes up 6.25% of DEX volumes market share in July.

  • PRIME (+18%) - Parallel, an NFT card-based game, released the Beta of its game earlier this week. This is the first time that users can earn the $PRIME for playing the game. The PRIME token traded up 18% on the launch as people bought specific in-game items such as ‘keys’ for the game.


DISCLAIMER: This commentary is not intended to be investment advice, investment research, or a recommendation. Please consult your investment professional for your own circumstances."

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Disclaimer: This commentary is provided as general information only and is in no way intended as investment advice, investment research, legal advice, tax advice, a research report, or a recommendation. Any decision to invest or take any other action with respect to any investments discussed in this commentary may involve risks not discussed, and therefore, such decisions should not be based solely on the information contained in this document. Please consult your own financial/legal/tax professional.

Statements in this communication may include forward-looking information and/or may be based on various assumptions. The forward-looking statements and other views or opinions expressed are those of the author, and are made as of the date of this publication. Actual future results or occurrences may differ significantly from those anticipated and there is no guarantee that any particular outcome will come to pass. The statements made herein are subject to change at any time. Arca disclaims any obligation to update or revise any statements or views expressed herein. Past performance is not a guarantee of future results and there can be no assurance that any future results will be realized. Some or all of the information provided herein may be or be based on statements of opinion. In addition, certain information provided herein may be based on third-party sources, which is believed to be accurate, but has not been independently verified. Arca and/or certain of its affiliates and/or clients may now, or in the future, hold a financial interest in investments that are the same as or substantially similar to the investments discussed in this commentary. No claims are made as to the profitability of such financial interests, now, in the past or in the future and Arca and/or its clients may sell such financial interests at any time. The information provided herein is not intended to be, nor should it be construed as an offer to sell or a solicitation of any offer to buy any securities, or a solicitation to provide investment advisory services.

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