What's Driving Token Prices? (Feb 16, 2022)

Katie Talati
Feb 16, 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.

  • UNI (-12%) - This week Uniswap (UNI) had a governance proposal introduced to create a fund to research “the fee switch” (for those that don’t know, “the fee switch” would take a portion of the 30bps trading fee paid to liquidity providers on Uniswap and divert some of it to token holders). The research would include how it would impact Uniswap’s market position and how it would impact LPs. Currently, Uniswap owns about 50-60% of the DEX trading volume across multiple chains with annualized revenue of $1.25bn. UNI would become a very valuable token for holders if a portion of this revenue was diverted to them.
  • MANA (-4.4%) - Decentraland (MANA) is an Ethereum based metaverse that has just begun to attract brand name businesses to open virtual storefronts. Yesterday, JP Morgan opened its Onyx Lounge in Metajuku which is Decentraland’s version of Tokyo’s Harajuku district. The lounge features a free-roaming tiger, a portrait of JP Morgan CEO Jamie Dimon, and a display for users to hear about discussions on the digital assets markets. The financial giant also released a whitepaper that details the metaverse opportunity set, valuing it at over $1t.
  • LUNA (-3.3%) - The Washington Nationals announced a partnership with Terra resulting in the Nationals’ premier club space behind home plate at Nationals Park club being named after Terra. In addition to some social media education initiatives, there are talks of using UST (Terra’s native stablecoin) for in-park purchases.
  • BNB (+0.4%) - BNB is Binance’s exchange token and gas token for its smart contract platform (Binance Smart Chain). Yesterday, Binance announced that it would rename Binance Smart Chain, to BNB Smart Chain (BSC). While BSC has tried to compete with Ethereum on speed, it has sacrificed decentralization. One improvement that will be made to BSC is that it will expand node validators from 21 to 41 (for context, Avalanche, another large PoS network, has over 1200).


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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