What's Driving Token Prices? February 8, 2023

Katie Talati
Feb 8, 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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  • RLY (-9%) - Last week, the social token platform Rally announced it was shutting down operations of its sidechain on Ethereum. The project, which allows creators to issue their own social tokens, gave users 1 day’s notice that they would no longer be supporting the sidechain and that any assets on the sidechain were permanently trapped there forever. The company cited macro challenges and headwinds and the high expenses related to running an individual sidechain versus alternative Layer 1 blockchains that exist today. A year ago, SuperLayer, the venture studio backing all RLY-related products, chose to move future products to Solana. The lack of notice and bridging resolutions for creators has left a bad taste in users’ mouths, which has resulted in the down 9% price in RLY over the last week.

  • MARS (-6%) - Mars Protocol, a lend/borrow protocol based in the Cosmos ecosystem, relaunched itself last week and airdropped its token to early users. Mars Protocol is expected to bring a major DeFi primitive (credit/leveraged borrowing) to Cosmos for the first time and could also support the growth of liquid staking and stablecoins. The token became tradable yesterday, and the project already has a $37M market cap.

  • ENS (-4.6%) - Ethereum Name Service, the decentralized issuer of named Ethereum addresses, passed a vote through its DAO to liquidate 10,000 ETH (~$16M) to cash in order to fund the project’s expenses for the next two years.  

  • UNI/BNB (-0.8%/+2.9%) - If you recall, I discussed Uniswap’s potential move to BNB Chain a few weeks ago, and I’m back this week with an update on what has turned into quite the governance drama. Following the vote to launch Uniswap on the BNB Chain, another temperature check vote was held to determine which bridge would be used between Ethereum and BNB Chain for this purpose. In the initial vote, users selected Wormhole as the preferred bridge over the other option, LayerZero. However, after the vote was complete, venture fund a16z announced that they supported the use of LayerZero (which is a portfolio company of theirs) as the bridge and would have used its 15M UNI tokens in custody to vote in favor of LayerZero. In the following vote, a16z used these UNI tokens to vote in favor of the LayerZero bridge, although it appeared that the community favored Wormhole. This raised many questions about DAO governance and if it is truly decentralized.

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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