What's Driving Token Prices? October 30, 2024

Katie Talati
Oct 30, 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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  • SNX (+2%) - Decentralized synthetic trading protocol Synthetix released a governance proposal yesterday to acquire Kwenta, the largest DEX utilizing the Synthetix protocol. Synthetix is best known as one of the pioneering DeFi projects and was the first to use yield farming to bring users to its platform. The project has not seen much usage in recent years with the rise of dYdX and now Hyperliquid (it accounts for about 2% of all decentralized derivative volume). However, it recently underwent a governance overhaul (the “Synthetix Reboot”) to streamline the project’s operations and released a new roadmap that promises a redesign of the SNX token. Kwenta was originally incubated and spun out from Synthetix in 2020. According to Synthetix’s blog announcement, the operational overhead of maintaining Kwenta separately has become too burdensome, leading to yesterday's acquisition proposal. Synthetix has proposed swapping 1 KWENTA token for 17 SNX, valuing the protocol at $13.2M, and Kwenta will eventually rebrand to Synthetix. 
  • JTO (+8.3%) - Solana’s largest liquid staking provider, Jito, introduced a governance proposal last week to route 3% of all MEV tips collected by the protocol to the DAO treasury and node participants. MEV (maximum extractable value) refers to the extra gas fees (or “tips”) that nodes earn when they route or prioritize high-value transactions at the top of a block. As Jito operates multiple nodes as part of its liquid staking business, MEV is a large part of its revenue. Funneling revenues back towards the DAO would be good for the JTO token long term (which currently is only used as a governance token). However, the DAO only makes about $8M annually based on this plan, a figure highly dependent on SOL price and the continued high usage of the Solana blockchain. 
  • GNO (+11%) - Prediction market and DeFi product suite Gnosis announced last week it would launch a venture fund seeded with $20M of capital from Gnosis and another $20M from outside LPs. The fund will invest in real-world assets, crypto infrastructure, and payment rails. Gnosis made 60 investments beginning in 2019 using its sizable ICO proceeds, so its newly formed GnosisVC will not be a totally new venture. 
  • GRASS (+17%) - DePin project Grass airdropped its long-awaited GRASS token on Monday. The airdrop was fairly widely distributed, with over 1.4 million wallets claiming 10%  of the token supply allocated to early network users. Grass allows users to sell unused internet bandwidth for web scraping in exchange for Grass Points (now issued as GRASS tokens). Companies traditionally buy this type of web scraping information in bulk or acquire it without paying consumers, so Grass rewards end users for opting in. The GRASS token will be used for governance, staking to provide network security, and eventually to pay for transactions. Initially, the token traded down to $0.60 after listing on Monday morning but has since traded back up to $0.95 and is up 17% for the week.

    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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