What's Driving Token Prices? August 2, 2023

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.

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