What's Driving Token Prices? (Jan 26, 2022)

Katie Talati
Jan 31, 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.

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  • SOL (-27%) -Solana, one of the top Layer 1 protocols, experienced frequent unstable network conditions last week during the market sell-off, which reduced transactions per second (i.e., network speed and throughput), delayed transactions, and, in some cases, stopped transactions altogether. Several users took to Twitter to complain about their inability to top up margin in their Solana-based trading accounts, which caused a number of cascading liquidations. Meanwhile, supporters of Solana, such as FTX CEO Sam Bankman-Fried, reminded everyone that these protocols are early, and we need to be patient as they work out the kinks.

  • SUSHI (-25%) -Sushiswap, a decentralized exchange, underperformed the broader DEX sector; its volumes were up 30.8%, while competitors like Uniswap saw their volumes increase 74.3% WoW. WAUs also fell -24% WoW to 27,351 unique users. Last week, Sushi re-released limit orders, overhauled the farming UI/UX, and is currently in talks with Optimism to launch on the L2 solution. All 3 governance votes based on Arca/Frog Nation’s restructuring proposal passed on Monday, paving a future path for Sushiswap to become a part of Frog Nation and find valuable synergies with its other projects (TIME, MIM, SPELL). This merger should be incredibly beneficial to Sushiswap, which struggled with infighting and lack of leadership the last few months. For more context on Sushiswap, see our involvement.

  • MKR (-10%) -MakerDAO, a decentralized lending protocol based on Ethereum, saw massive liquidations last Friday as the market fell roughly -8%. Maker’s Founder, Rune, flagged on Twitter that the protocol would potentially market sell $600m of Ethereum unless the owner of the vault added collateral. This tweet further panicked the market, with Ethereum falling -9% before the vault owner topped up their collateral and prevented further liquidations. Notably, Maker outperformed last week, likely due to the extra revenue earned via protocol liquidations.

  • GRT (-17%) -The Graph, a decentralized data indexer, sometimes called “the Google of Blockchains,”  announced it raised $50m led by Tiger Global, Blockwall Digital, Fenbushi Capital, FinTech Collective, and Reciprocal Ventures. Tiger Global has recently been particularly active in the digital assets space with` investments in Serum, Livepeer, MoonPay, FalconX, and many others.
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.

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