What's Driving Token Prices? February 28, 2024

Katie Talati
Feb 28, 2024

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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  • BLUR (+13%) - Blast, the Layer 2 project spun out of NFT marketplace Blur, is set to launch tomorrow, unlocking $2B of TVL on the chain. Since launching late last year, Blast quickly attracted millions in ETH deposits in anticipation of the new Layer-2 that promises “real yield” (i.e. yield not paid out in the native token) and a plethora of new applications. While many deposited ETH in anticipation of a Blast token airdrop, there is now the promise of many airdrops in the future from yet-to-be-launched projects in the new ecosystem. 
  • BAT (+15%) - Brave, the creator of the Brave Web 3 browser and the Basic Attention Token (BAT), announced it will move to Solana to make payouts of BAT tokens to users. The Brave browser has built-in blockers for ads and allows users to be paid in BAT tokens for watching targeted advertisements. The migration of BAT payments to Solana solves a huge issue since BAT was previously based on Ethereum. Therefore, payouts were very expensive and inefficient as ETH gas fees were too high for micropayments. Brave requires users to sign up with a custodial partner to claim rewards (and also requires KYC). Now, users can just connect a SOL wallet address to receive their BAT rewards. 
  • AAVE (+19%) - Last week, Gauntlet announced that it would no longer perform risk advisory services to the Aave DAO, a decentralized money market protocol. Gauntlet stated that it received inconsistent guidelines, making it impossible to work with the DAO. Most recently, Gauntlet struggled to push through proposals that would protect Aave from bad debt due to illiquid loans made via the CRV token. In addition, mixed signals from Aave users, including last month when the Aave community pushed back against a distribution proposal for ARB token rewards but overwhelmingly supported an identical proposal for the distribution of OP token rewards. While not stated explicitly, some users have also alluded to the behavior of Marc Zeller, the leader of one of the largest token delegations, as the reason behind Gauntlet’s resignation. Just yesterday, Gauntlet announced it was signing on as a “risk curator” with Morpho, a direct competitor of Aave’s.
  • UNI (+50%) -  The big news in the DEX sector this week came on Friday when the Uniswap Foundation proposed to turn on the fee switch for the Uniswap decentralized exchange. Many groups have tried in the past to activate the fee switch. However, this proposal is unique as it was sponsored by the Uniswap Foundation and not by an outside group of token holders. As a result, it is believed that this proposal may pass. The token initially shot up 50% on the news and sparked a broad-based rally in other Defi tokens. Yesterday, Uniswap Labs also released a browser extension for its wallet product, which previously lived on mobile only, allowing users to use it in the same way they do their Metamask wallet.

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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