What's Driving Token Prices? (August 3, 2022)

Katie Talati
Aug 3, 2022
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.
 

  • GLMR (+4.5%) - Early this week, the Nomad bridge was exploited for $150M, in what appears to have been a fairly unsophisticated hack. The Nomad bridge connected Ethereum to Moonbeam, a project built on the Polkadot network. The Nomad bridge used a “peg” mechanism to facilitate the transfer of assets that was vulnerable to an attacker draining funds on one side of the bridge, leaving assets on Moonbeam essentially unbacked. The attack initially began with one attacker draining funds through a loophole in the codebase. As others saw this loophole, they also began draining funds from the smart contract.
  • AAVE (+8.9%) - Borrow/lend protocol Aave earlier this week voted through a proposal to establish GHO, a stablecoin native to the Aave protocol. GHO will be pegged to 1 USD and backed by a basket of cryptocurrencies that users deposit on the platform. If users choose to borrow GHO from the Aave protocol, the Aave DAO will earn interest payments on these loans creating another business line for Aave. Although Aave TVL is the third largest in the industry at over $6B, it has very little revenue and its token trades at ~250 P/E. The introduction of GHO will hopefully increase revenue to the DAO. The AAVE token traded up 11% on the news.
  • CHZ (+27%) - Sports and entertainment crypto project Chiliz announced a $100M investment in Barca Studios, the digital content creation arm of FC Barca. The investment buys Chiliz 24.5% ownership and they will be developing Barca's web3 initiatives through this entity such as its NFT and metaverse strategy. FC Barca has been a close partner of Chiliz’s for over two years starting with the launch of their fan token $BAR back in 2020 (today the $BAR token has a $16M market cap and trades ~$18M of volume per day). CHZ jumped 18% on the announcement.
  • ETC (+23%) - Ethereum Classic, a fork of Ethereum created during the 2016 DAO Hack, has been making gains the last few weeks as many speculate that Ethereum PoW miners will switch over to the ETC network following the ETH 2.0 Merge. This was compounded last week when Antpool, a large Ethereum mining pool, announced a $10M investment to support the Ethereum Classic ecosystem. Currently, miners on Ethereum use GPU mining machines and therefore in order to continue generating profits they must switch to a PoW network that supports GPU machines such as Ethereum Classic. Antpool is the largest pool so far to confirm that they will make the switch but hashrate (the measure of mining power) on ETC has been on the rise since mid-July.
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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