What's Driving Token Prices? July 3, 2024

Katie Talati
Jul 3, 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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  • PENDLE (-28%) - DeFi yield management protocol Pendle saw its token tank over the past few days as $3B (about 50%) of TVL left the protocol. Pendle saw massive growth in 2024 due to the rise of EigenLayer, Liquid Restaking Protocols and their Liquid Restaking Tokens (LRTs). Many of these protocols offered token incentives to users for depositing assets and minting LRTs, which has driven TVL inflows to Pendle. Pendle offers opportunities to maximize yield for users. The outflow in TVL came as many of the markets on Pendle expired last week and many token incentive programs for LRT products are yielding far less with depressed token prices and more participants in the market.  
  • BLUR/BLAST (-11%/-21%) - Last week, the long awaited airdrop for Blast initially disappointed the community. Blast, a layer-2 project created by leading NFT marketplace Blur, was originally considered one of the top up-and-coming ecosystems when it was announced at the end of last year. At the time, the team hinted that Blast would deliver a large number of future tokens to BLUR token stakers. Upon launch, Blast only ended up allocating 0.5% of the overall supply to BLUR stakers, a big disappointment to those who had been staking for 6+ months. The BLAST token has suffered since launch as has BLUR with both tokens down -21% and -11% respectively in the past week. 
  • AAVE (-2.5%) - Decentralized money market protocol Aave has been expanding its reach this past week. First, the protocol announced an initial governance vote to deploy the protocol on Aptos, its first non-EVM chain. The protocol also officially launched its GHO stablecoin cross-chain, launching on layer-2 protocol Arbitrum. Both of these initiatives are part of Aave’s cross chain expansion strategy. This will prepare it for its v4 launch later this year which promises to create a cross-chain liquidity marketplace.
  • DOT (+6%) - Polkadot's Layer-1 protocol made headlines this week following reports that its on-chain treasury has spent $87M in the last 6 months. Additionally, on-chain treasury wallets show the project only has 2 years of runway left at its current burn rate and the entire treasury is held in DOT. Some eyebrow raising expenses included spending $50K on an animated logo for the CoinMarketCap website, $6.8M sponsoring a prestigious soccer club, $1.9M sponsoring race car driver Conor Daly and $1.3M to sponsor e-sports organization HEROIC. While a dwindling treasury might give cause for concern, the DOT token has outperformed with this is the first time the protocol is in the spotlight in well over a year. 

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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