What's Driving Token Prices? (June 29, 2022)

FLEX (-83%) - Centralized exchange CoinFlex was the latest hit in the crypto unwind, announcing last week that it would be pausing withdrawals as a user (reportedly not 3AC) had failed to top up the margin in their account, resulting in negative equity. In response, CoinFlex announced it would issue a new token (it already has an exchange token, FLEX) to cover the $47M shortfall. “Recovery value USD” (rvUSD) will offer a 20% APR incentive. If the user does not repay the liabilities within 15 months, CoinFLEX will repay the rvUSD tokens with USDC off their balance sheet or FLEX tokens (rvUSD holders can choose). We are unsure how this will play out—it is unclear how CoinFlex will generate this 20% APR and whether anyone will indeed purchase the rvUSD token.
SOL (-0.1%) - Layer 1 protocol Solana announced the debut of a mobile phone through its Solana Mobile division. The phone, called Saga, will be an Android phone for web3, integrated with the Solana network, which will make it easier to manage tokens and NFTs. Users can preorder the phone now with a $100 deposit toward the $1,000 total price. The launch also introduced the Solana Mobile Stack, which is a framework for Android that allows developers to create “rich mobile experiences for wallets and apps on Solana and create a ‘Secure Element’ for private key management.”
AXS / RON (+3.9/+25%) - Yesterday, Ronin—the Axie Infinity L2 bridge—went back online after being frozen for the last 3 months. The Ronin bridge was frozen following an exploit in March where $625M of user funds were drained. Axie also announced last week they would start reimbursing victims of the Ronin hack, although the amount to be reimbursed is only worth $230M based on lower asset prices, representing a 63% decline.
MKR (1.8%) - Decentralized stablecoin issuer MakerDao announced a $3M buyback of its governance token MKR using its stablecoin DAI. Despite the small buyback relative to market cap (0.3%), the market received this news very favorably. In addition, a governance vote to institute an “Oversight Core Unit” that would serve as a de facto executive board was rejected. As Maker has so many different core units with differing agendas, a vote was proposed to establish this board to have a united oversight piece. However, it is believed the bulk of the rejection vote came from the now-defunct Maker Foundation, which believes Maker should value decentralization above efficiency.

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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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