What's Driving Token Prices? October 16, 2024

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.

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