What's Driving Token Prices? July 31, 2024

AVAX (-10%) - Last week, Ava Labs, the for-profit company behind layer-1 protocol Avalanche, saw the departure of its Head of Engineering, Patrick O’Grady. O’Grady is credited with much of Avalanche’s technical work related to consensus upgrades and developer toolkits. In better news, the California DMV launched a chain on Avalanche yesterday to modernize the vehicle title transfer process. The new program promises to speed up the process of transferring car titles, and 42M car titles are already on-chain. The program showcases some of the real-world use cases for blockchain technology.
COMP (+5.1%) - Over the weekend, decentralized lend/borrow protocol, Compound, suffered a “governance attack”. The attack occurred when a large token holder, known as Humpy, pushed through the passage of a governance proposal that allocated $24M in COMP tokens (5% of Compound’s treasury) to a yield-bearing protocol called goldenCOMP that Humpy and a group called the Golden Boys controls. This was the third attempt by the Golden Boys group to acquire COMP tokens through governance, with the first two attempts being shot down during the voting process. The Compound community quickly rebuked the Golden Boys by accusing them of stealing tokens from the protocol and pushing the DAO to implement restrictions limiting such proposals. After much back and forth, the Golden Boys returned the COMP tokens. Since then, Compound’s head of growth has also published a proposal detailing how the protocol can share fees with token holders. COMP traded down -6% on the attack but has since bounced back and is now up 5.1% for the week.
JTO (+8.9%) - Last week, Solana-based liquid staking protocol Jito, announced it would introduce a restaking service. Jito specifically released open-source code for restaking, which can be used by other Solana projects to create a mechanism for projects to set up economic security to any other on-chain application. Although the code has been released, Jito has not implemented it into its mainnet application and expects to do so later this year.
AAVE (+19%) - Decentralized lend/borrow protocol Aave released two proposals in the past week to revise its safety module to cover protocol bad debt and distribute excess revenues from the DAO to stakers. The first proposal aims to create a new system, called Umbrella, which would use a variety of assets to cover “bad debt” in the protocol (when a position is liquidated and the collateral does not cover the cost of liquidation) versus only using the AAVE token to cover bad debt. The new system, therefore, would relieve some of the sell pressure on AAVE. The second proposal simply proposes returning excess DAO revenues to buy back AAVE and distributing it to the ecosystem reserve, with a small amount being distributed to AAVE stakers. While the proposal has community support, critics have pointed out that the excess revenue could be better used if it were retained and put toward future growth initiatives. A temperature check vote began today and is currently set to pass.

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