What's Driving Token Prices? June 12, 2024

Katie Talati
Jun 12, 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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  • LDO (-22%) - Yesterday, Liquid staking project Lido announced the introduction of "Restaking Vaults" as a competing solution to Eigenlayer, which siphoned off TVL from the project over the last several months. Lido partnered with Symbiotic and Mellow Finance to offer these services, which act as the restaking protocol and liquid staking protocols, respectively. While Lido may not directly benefit from this new product integration, Symbiotic will probably benefit as they will have access to $33B in TVL from Lido.
  • OP (-16%) —This week, Layer-2 project Optimism launched Fault Proofs, reaching a significant milestone in its decentralization roadmap. In recent years, Optimism has been frequently criticized for not having a decentralized way of proving the accuracy of transactions on-chain. Essentially, when users deposited assets into Optimism (or any other chain built using the OP Stack framework), they had to trust an external “security council” that their funds would be available to be withdrawn if assets were moved back to Ethereum. Fault Proofs is the technology that allows users to trust that their assets will be sent back to them, without using a third-party intermediary. 
  • MATIC (-13%) —Yesterday, Layer-2 project Polygon announced it would allocate 100M tokens yearly for the next ten years towards a Community Grants Program. These tokens, which will be part of the Polygon treasury, will come from annual inflation introduced as Polygon changes its token from MATIC to POL over the coming months. Already, 35M tokens are available today for builders to apply to. 
  • FRIEND (+26%) - This week, SocialFi project, Friend.tech, announced that it will migrate off of Base, Coinbase’s L2, and build its own chain, Friendchain. The new chain will use the recently launched FRIEND token for gas on the network. The move comes as a surprise as Friend.tech was one of Base’s early successes seeing lots of early traction with its launch last summer. However, activity fell off sharply with the rise of copycats and as the market turned its attention to other narratives. Furthermore, the FRIEND token launch was disappointing, with no ability to trade the token outside the Friend.tech app. 

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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