What's Driving Token Prices? October 16, 2024

Katie Talati
Oct 16, 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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  • UNI (+5.7%) - Last week, the largest decentralized exchange Uniswap, announced it would launch its own Layer-2, dubbed Unichain. The project claims that it needs its own L2 to effectuate faster block times and, therefore, faster swaps. Creating its own L2 also means that Uniswap can generate fees through gas paid and return these fees to tokenholders in a way that does not run afoul with securities regulations. Many have quickly pointed out that Uniswap is the largest fee-generating app on Ethereum and could further devalue the largest Layer-1 blockchain. Unichain is based on the OP Stack and will be natively interoperable to allow instant swapping across multiple chains. The testnet is already live, and the mainnet is expected later this year. Uniswap is currently the largest DEX by volume and the fourth-largest trading venue behind Binance, OKX, and Coinbase.
  • AVAX (+6.4%) - The Avalanche Foundation announced its plan to repurchase tokens it sold in April 2022 to the Luna Foundation Guard. The repurchase is part of the bankruptcy agreement as Luna unwinds its foundation. The 1.97M repurchased tokens (worth about $54M at today’s prices) will be returned to Avalanche’s treasury which is good for the project as these tokens cannot be dumped on the open market in a liquidation proceeding. Separately, Off the Grid, a shooter game based on Avalanche, has shown some impressive stats in the past week, including becoming the #1 game in the Epic Game store with almost 5M wallets using the game and non-crypto native streamers playing and promoting the game it to their followers. We’ll watch if this momentum continues and spreads to other areas of web3 gaming.
  • ENA (+38%) - Decentralized stablecoin issuer Ethena released a proposal this week to add SOL as a collateral asset alongside ETH and BTC for its USDe stablecoin. As a quick refresher, Ethena allows users to deposit ETH or stETH and receive a stablecoin, USDe in return. Ethena then takes out a short perpetual futures position in ETH (or BTC or SOL), using the ETH deposited as collateral. The difference in funding is collected and used to distribute to USDe stakers. This announcement comes off a larger announcement a few weeks ago, when Ethena revealed it was working with Blackrock to issue a new stablecoin, UStb which shares of the Blackrock BUIDL fund will back.

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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