What's Driving Token Prices? January 15, 2025

Katie Talati
Jan 15, 2025

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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  • RUNE (-12%) - Cross-chain swap protocol, Thochain, saw issues on its DeFi platform THORFi this past week, which led to an emergency shutdown and mutiny among the network’s nodes. THORFi lending is an interest-free lending product with no liquidation risk for borrowers. When a user deposits collateral to THORFi (BTC or ETH), that collateral is immediately sold and used to purchase Thorchain’s token RUNE off the market. That RUNE is then used to buy the borrowed asset; the difference between the collateral amount (which must be higher) and the debt asset (which is lower) is then burned. This removes RUNE from the circulating supply over time. When the debt is repaid, that RUNE is then sold to buy back the collateral. This model works as long as the price of RUNE to collateral ratio does not go down; if there is a mismatch in the ratio, RUNE is minted to make up that shortfall. As the price of RUNE has declined in recent weeks, redemptions from THORFi have increased the minting of RUNE which has weighed further on its price. This, in turn, has caused the protocol to essentially be undercollateralized, leading to more users redeeming their debt positions, further exacerbating the problem. This downward spiral prompted the Thorchain founder and developers to pause the THORFi protocol for 72 hours while solutions were discussed. In response to this, Thorchain’s network of nodes unpaused the protocol accusing the founder of abuse of power and that the emergency shutdown was a centralization risk. Since this happened, the developers have agreed to remove the emergency shutdown feature and Thorchain’s founder, JP Thorbjornsen, has announced he will be stepping away from the project due to personal matters. A full fix for the protocol has not been created yet but many have come to its defense claiming that THORFi has many additional levers it can pull to avoid a death spiral. 
  • OM (-3.5%) - Mantra, a Layer-1 protocol focused on the Real World Asset (RWA) space, announced a partnership this week with DAMAC, a large broker-dealer group from the UAE. DAMAC will tokenize $1B of its assets with Mantra’s blockchain as part of the deal. Although the OM token has been around for a few years, the protocol has only recently launched with plans to bring assets to its chain. The protocol currently has $3.86M in TVL, but with other partnerships previously announced in the real estate space and with DeFi protocols like Ondo, we can expect this to grow in the near future.
  • SYRUP (-1.5%) - A proposal went live Monday on Maple Finance’s governance forum to initiate a token buyback program. Maple is a lending platform that operates in the “CeDeFi” (not totally DeFi, not totally centralized CeFi either) space, catering to larger institutional borrowers but offering on-chain yield and lending opportunities. The protocol has grown significantly over the past year, with TVL increasing by 470%. The protocol also recently began migrating its MPL token to SYRUP tokens. The proposal argues for using 20% of Maple’s Q1 revenues to buy back SYRUP tokens from the open market and distribute them to SYRUP stakers. Stakers already earn inflation rewards from the protocol and receive governance privileges, so the additional yield (estimated at 5% APY) will be another sweetener. The buyback strategy would also increase the buy pressure on SYRUP in the open market. The proposal will be up for discussion until next week, after which it will be moved to an official vote.
    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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