What's Driving Token Prices? November 8, 2023

Katie Talati
Nov 9, 2023

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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  • ARB (+5.7%) - On Monday, the Arbitrum community voted to implement a trial staking program that allocates 1% of the total token supply to staking over the next 12 months. To date, the Layer-2 project’s token has only been used for governance initiatives but this new program will create a single-sided staking option for token holders likely leading to significant yields denominated in ARB. This comes following a highly publicized grants program that distributed ~74M ARB to community projects built on the L2.
  • APE (+8.3%) - Solana based NFT marketplace, Magic Eden, and Bored Apes Yacht Club creator, Yuga Labs, announced a partnership this week to create an Ethereum based marketplace that enforces creator royalties. The NFT royalty debate has been raging for quite some time with many NFT marketplaces opting to drop creator royalties enforcement and offering zero fee trading in a race to the bottom. Notably, Blur only enforces a 0.5% creator royalty on new collections and charges zero trading fees. Opensea recently got rid of their mandatory 0.5% creator royalty fee in favor of a 0.5% trading fee. While this might set a good precedent for the market to move back to royalties, there are still many other venues that do not enforce royalties or make them optional. More interestingly, Yuga is not choosing to create their own marketplace but are partnering with another company even after raising $450M. 
  • AAVE (+9.2%) - Over the weekend, decentralized lending protocol, Aave, discovered a potential vulnerability in a select number of its v2 contract on Ethereum and its v3 contracts on Polygon, Arbitrum, and Optimism. The protocol paused its markets on these chains while the issue was investigated. Because the vulnerability could impact other projects that are forks of Aave, specifics of the vulnerability were not revealed, only that it was related to “stable rate borrowing mode”. Radiant and Spark, two of the largest forks of Aave, announced that they are not impacted by vulnerability. Today Aave passed a vote to pause all stable borrowing and issue a patch for the vulnerability which should be executed in the next several days.
  • GRT (+18%) - The Graph, a Web3 infrastructure project for developers, announced their New Era roadmap yesterday, which includes the release of new blockchain data services. These services will include AI-assisted querying, verifiable data, and improved tooling. The Graph’s conference, Datapalooza, is also on track to start next week, promising more potential announcements from the project.

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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