What's Driving Token Prices? January 24, 2024

Katie Talati
Jan 24, 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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  • ORCA (-17%) - Solana-based decentralized exchange, Orca, implemented a governance change last week that turned on the DEX’s fee switch. For context, most DEXs (which are forks of Uniswap) have a built-in “fee switch” or piece of code that has the ability to siphon off fees from liquidity providers in order to give to the DAO, token holders, or other parties. In the case of Orca, a governance vote was needed in order to activate the fee switch within the 3-year-old protocol. The newly implemented 12% fee will be funneled to Orca’s DAO treasury which is expected to bring in $30M over the next year to the DAO at current levels. 
  • SUI (-3%) - Yesterday, Mysten Labs, the for-profit entity developing the Sui blockchain, announced a set of new features to support SUI ecosystem developers with support from Alibaba Cloud. Specifically, Mysten Labs is developing an AI-assisted tool to help developers write code in the Move programming language using natural language prompts. In addition, Alibaba Cloud will support incubators and demo day events for projects building on Sui and offer full node services on Sui.
  • FXS (+10.9%) - Last week, DeFi conglomerate, Frax, announced the launch of its Frax Bonds (FXB) product. FXBs are zero coupon bonds issued by the Frax project and will be paid out in FRAX stablecoins at maturity. Those who purchase the bonds do so via a gradual Dutch auction design. The protocol plans to use the proceeds from the bonds to invest in a combination of U.S. Treasuries, overnight repo agreements, USD, and money market funds, with a small slice used to invest in various DeFi strategies to enhance the overall yield. FXBs are designed to mirror the rate paid on U.S. Treasuries and should be a more convenient investment tool as FXBs  will be available to use across all of DeFi. 
  • ONDO (+48.5%) - Last week, real-world asset tokenization protocol, Ondo Finance, released a token, $ONDO,  which will primarily serve as the governance token for Ondo DAO. Since its inception in 2021, Ondo Finance has managed to amass $188M in TVL. The protocol’s main business line enables users to invest their stablecoins in tokenized bond products represented by a mixture of U.S. Treasuries, short-duration investment-grade bonds, and high-yield corporate bonds. Users are able to trade these products on-chain while having exposure to the underlying real-world assets. Following the release of its token, ONDO was listed on Coinbase, Huobi/HTX, and Bybit, for trading. Finally, the project announced its expansion plans to the APAC region allowing investors exposure to U.S. securities.

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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