Whilst DeFi governance tokens remain firmly in bearish territory, investors get a glimmer of hope this week, as blue chips rally in a strong uncorrelated move up ~+20% against the broader market.
Amongst all the bearish sentiment, small parts of the sector continue to show flashes of activity. While the majority of mid to small cap projects resemble ghost towns, a handful of DeFi projects on Ethereum are establishing signals of persistent adoption.
Demand for higher yields and high risk appetites continues to inflate activity on low fee chains like the side chain Polygon. A key question is whether activity on Polygon is fueled by actual value settlement, or is it dominated by many small transactions from a limited number of users who are otherwise priced out of the main-chain?
This week we explore recent market conditions covering:
Activity on Ethereum and finding uncorrelated returns,
The last 7 days have seen DeFi governance tokens catch a notable bid. Many of the blue chip tokens have rallied 50%+ on the heels of mostly sideways movement in BTC and ETH. The chart below demonstrates how on the way down, the entire move was correlated strongly to BTC and ETH. On the recent relief rally, DeFi tokens are finally printing some uncorrelated returns, even finding a hint of strength against ETH.
While these uncorrelated moves are positive for DeFi, DeFi is far from out of the woods on under-performance. Even the best performing governance tokens remain firmly in bearish territory relative to ETH, a trend we explored in this analysis piece.
Correlated moves across all assets without repricing blue chips against the benchmarks generally signifies that the market is satisfied with the pricing of DeFi assets. On the otherhand, a strong uncorrelated move can mark an interest in repricing these assets against the benchmark; with such moves typically lead by changing fundamentals and narrative shifts.
Major stablecoin pairs on Uniswap V3 for example are now seeing >$50M daily volume while Curve currently ranges between $75-$150M total daily volume on average days. This is despite Curve having more liquidity than any project in the space ($10B+) – a reminder that liquidity does not always translate to volume.
The price rise in blue chip DeFi tokens shows no correlation to inflated gas fees. Instead, the recent spike over the last few days in gas has been the cause of Shiba launching a range of Uniswap clones. Their Shibaswap and rewards showing 5,000% APY at launch, but not without heightened risk and concerns over smart contract security being raised by devs across DeFi. We’ve also seen an additional player show up on the gas consumption radar as Axie Infinity, an experiment in community-owned gaming, sees rapid growth.
Note in the following table that 6 of the 16 highest gas guzzling contracts of the past few days were related to Shiba products.
Liquidations on-chain remained calm amidst rising token prices. Users with lots of borrow in assets that rally 20% (such as borrowed short positions) can face liquidations if the value borrowed exceeds their collateral. Most were able to add collateral, close positions, and overall keep lending markets healthy (<$500k in 7 day liquidations).
Rates have remained flat since May, settling at the 3% mark for borrowers. Yields contracting is generally a bearish signal; it shows a lower appetite for borrow and risk. If DeFi continues its move upwards we may see a tick up in interest rates. For now, rates remain uninspired during this leverage-limited move.
Notice how in the early days of SNX, SUSHI, and AAVE (and most other DeFi blue chips), the tokens saw similar pricing behavior against beta (ETH), but quickly repriced as the narrative shifted into the second half of 2020 (‘DeFi summer’). At the time of moving into top 100 tokens by market cap, they showed strong uncorrelated returns against ETH as they were actively repriced to match TVL and usage metrics.
Into the price correction of May/June, we’ve seen prices recouple and experience high beta to ETH. In the past 7 days we’ve seen hints of DeFi reclaiming ground, somewhat decoupling from beta, however one week remains too short a time-frame to be conclusive on whether this is a new trend.
Perpetual Protocol is one such asset of the last few months that has seen its governance token reprice upwards alongside bullish fundamentals. The governance token has spiked 375% in the last 14 days. It has been a standout in activity growth over the last 90 days but has calmed down over time. As trading volume approaches a cumulative $20B, the perpetual contracts stand out against competitors in the on-chain derivatives space, even placing it in the middle of the pack relative to smaller spot DEXs.
Note that this trading volume is carried by a relatively small user base of less than 400 daily active addresses. Daily fees accrued by the protocol is consistently breaching $100k, and the project is currently working on a renewed reward structure for token stakers to receive these fees in the recently announced v2.
Polygon Activity Peaks
On Polygon, cheap gas fees continue to drive activity. Users find their way to chains like Polygon for the significantly reduced gas fee friction, and heightened prospect of reward, although usually at the expense of heightened risk. Currently about 110k unique addresses are sending transactions on Polygon daily, approaching an all-time-high.
The most active DEX on Polygon is Quickswap, continuing to grow users at a parabolic rate. But are users translating to liquidity and volume?
With $1B in liquidity and $115M in 24h volume, Quickswap comes in first by liquidity and usage metrics on Polygon. Note that while volume and actual value settled on Quickswap is trending down, liquidity remains strong. Incentives via yield farming across the Polygon ecosystem remains strong, and Quickswap’s liquidity remains a primary beneficiary of these incentives.
Sushiswap comes in a close second at $600M in liquidity, and $40M 24h volume. While Quickswap growth is interesting, Sushiswap is especially interesting as the second largest DEX on Polygon because of its fragmented liquidity across L1 Ethereum and Polygon.
Many projects have been going multi-chain, bringing their projects over to Polygon and elsewhere to expand reach. It’s interesting to compare the relative growth achieved by participating projects on each chain. Sushiswap, for example, saw strong growth on Polygon in its early days (June launch). This was during a period of extremely high liquidity mining incentives.
As rewards calm down however, total Sushiswap volume on Polygon has correspondingly trended lower, despite Sushiswap volume on Ethereum remaining strong.
While Polygon continues to experience an increased number of transactions and users, large value settlement remains firmly on the Ethereum main-chain. Additionally, liquidity remains much stickier on Ethereum; on Polygon, liquidity shows next to no loyalty, rotating to whichever pool it perceives as short-term profitable. It becomes quickly evident that short-term thinking is dominant on Polygon, while many long-term oriented traders and investors inhabit L1.
0x Labs noted an interesting piece of data on average transaction size. While in many cases Polygon transaction count can exceed that of Ethereum, the size of trades is dwarfed by Ethereum. The average trade size on Polygon currently sits at $755 while Ethereum sits at about $19,000 on 0x protocol.
While growth by total users and transaction counts remain strong on Polygon, total value settled remains relatively insignificant against the main chain.
It will be fascinating to see how fragmented liquidity becomes when Optimism, Arbitrum, and other L2 solutions come fully online. Will Polygon liquidity stay on Polygon? Will Ethereum liquidity further fragment to L2? Or will new scaling solutions predominantly compete with the likes of Polygon and Binance Smart Chain? For now, it’s evident that there is demand from users for lower cost transactions and higher risk appetites, but it’s not clear significant value settlement will take over on Polygon any time soon.
This is our weekly segment that briefly discusses some of the most important developments of the prior and upcoming week.
Never a dull week in DeFi. Lots of product releases and announcements as L2 season continues to heat up.
Barnbridge launches Smart Exposure. The tranched products darling continues to innovate, adding “Smart Exposure,” their tranched product for liquidity provision. They additionally launched their products on Polygon.
Sushiswap integrates Archer DAO. Archer DAO is one in a number of new products looking to protect traders against blockchain externalities like sandwich attacks. Sushiswap traders can now optionally use protected orders via their Archer DAO integration.
Alchemix and Ruler Finance partner up on liquidity incentives. The two projects announced a partnership for order book liquidity mining with alUSD. Similar to Alchemix, Ruler boasts non-liquidatable loans. They differentiate themselves with fixed-rate, time based loan repayments.
Abracadabra continues to innovate. Spell added leveraged yield positions for their lenders. The platform allows borrow/lend of popular Yearn yvVault positions. Now added leverage and flashloans as they continue to add features to their platform.
Aave Pro gets a rough release date. The institutionalized Aave has a date set for its KYC product in July. It will start with BTC, ETH, AAVE, and USDC.
Fixed-rate products remain hot as Element launches. Element launched their fixed-rate AMM. More and more fixed rate products continue to come to market as investors speculate on future growth of DeFi through more consistent yields. While most degens bias towards variable rates due to their higher risk/higher reward, some are betting that the less risk-on investor will be fond of fixed-rate products for their predictable yield.
Balancer launches on Polygon. Yields have been high on the early days of Balancer pools launching on Polygon. It will be interesting to see how liquidity continues to fragment as more projects launch on Polygon and Optimism + Arbitrum come online in coming months.
Perpetual Protocol announces their V2 on Arbitrum. The token popped on the rumor and news, sitting now at $9 from $4 lows in late June. Their decentralized perpetual contracts remain a hot corner of DeFi.
Disclaimer: This report does not provide any investment advice. All data is provided for information purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.
4X growth in revenue since the seed fundraise with customers spread across 50+ countries
Series A funds raised from Sequoia Capital India
San Francisco, 21st July 2021: Multi-channel sales engagement platform, Outplay today announced its $7.3M series A fundraise from Sequoia Capital India. Outplay will use the funds raised to invest in technology and hiring exceptional talent across the globe.
Businesses today rely on a combination of inbound and outbound sales models to drive revenues. While the inbound sales process has rapidly evolved over the last 10 years, outbound sales hasn’t. Outbound sales teams typically use high-volume tactics to drive revenue. But this approach is not scalable and the revenue eventually becomes a function of the size of the outbound sales team. This is because outbound sales teams don’t have a data-driven approach for targeting prospects that are most likely to convert and end up spending time emailing or cold-calling hundreds of prospects hoping to convert a few.
Launched in 2019, Outplay is on a mission to change this by bringing predictability to outbound sales and help every salesperson talk to the right prospect at the right time through the right channel. The platform helps outbound sales teams plan, execute, track, measure and optimize interactions between companies and their prospects across multiple channels like email, phone, SMS, social media as well as live chat.
Laxman Papineni, CEO of Outplay commented, “Outbound sales teams are truly the dark horse of the sales organization – the targets are high, but the methods aren’t scientific. Outplay is committed to making outbound outreach data-driven, so that sales teams are talking only to the warmest prospects at any given point across multiple channels, optimizing time and resources. The continued partnership with Sequoia Capital India is a testament to the fact that the sales engagement space, which is poised to be a$5.59B market by 2023, is a huge opportunity for Outplay.”
With Outplay, sales managers can create data-backed sales playbooks to coach their team members and help them achieve their sales targets. The platform’s combination of automation and personalization helps teams start genuine conversations at scale, enabling them to stay on task by using multiple channels through a single interface to drive more meetings. Sales reps are thus able to build a multi-channel outreach plan for their prospects across email, phone, SMS, LinkedIn, Twitter and chat.
For example, Outplay helps sales teams engage with warm prospects by notifying them when their prospect visits their business website. Enabled by Outplay’s industry-first outbound live-chat feature, Magic Outbound Chat, the rep can initiate live chat and have a contextual conversation with the prospect. Customers have been able to qualify prospects faster and grow their pipeline by 300% using the tool alongside inbound chat.
“We continue to be very excited by Outplay’s mission of making every sales rep perform like the best rep on the team. Outbound sales needs are evolving rapidly and reps now need personalized, automated and contextual tools to drive sales which Outplay is successfully enabling. Sales reps spend an average of four hours per day on Outplay, demonstrating the effectiveness of the product which has category-leading customer reviews. Additionally, rapid digitization due to COVID has been a significant accelerant for the business and we believe these tailwinds will continue as outbound sales becomes more digital.” Harshjit Sethi, Principal, Sequoia India
Outplay also offers support to ensure software adoption across customer teams is done within days, not weeks or months. Since the seed fundraise – USD 2 Mn from Sequoia Capital India’s Surge early this year, the company has grown 4X in revenue, 3X in team size and has customers from more than 50 countries. Outplay was a part of the Surge 04 cohort.
Outplay is a multi-channel sales engagement platform that ensures outbound sales teams deliver the most powerful message at the perfect time in the buyer journey through the right channel. With features like dynamic sequencing, magic outbound chat and detailed analytics, Outplay gives sales development representatives (SDRs) and business development representatives (BDRs) the right signals so they only work on the warmest prospects across multiple channels like email, phone, SMS, LinkedIn, Twitter and Chat.
Back in September 2017, JPMorgan Chase CEO Jamie Dimon ridiculed Bitcoin, calling it a fraud “worse than tulip bulbs.” For the uninitiated, he was referring to the 17th century Dutch tulip market bubble, one of the craziest bubbles in recorded history. Fast forward a few years, JPMorgan and other banking giants have been dipping their …
Back in September 2017, JPMorgan Chase CEO Jamie Dimon ridiculed Bitcoin, calling it a fraud “worse than tulip bulbs.” For the uninitiated, he was referring to the 17th century Dutch tulip market bubble, one of the craziest bubbles in recorded history.
Fast forward a few years, JPMorgan and other banking giants have been dipping their toes in the blockchain world. Blockchain enables the untrusted parties to securely transact without middlemen that add to the cost and slow down the transaction speed. Thanks to the self-executing smart contracts, it offers a simple and secure way to establish trust in a transaction.
Can’t afford to get left behind
It’s not just network efficiency or cost savings that attract banks to blockchain. Blockchains can dramatically improve the security of digital transactions and remove the potential for errors, confusion, and fraudulent transactions.
Blockchain and the distributed ledger technology (DLT) are disintermediating the key services that banks provide such as payments, clearance & settlement systems, fundraising, borrowing, lending, customer KYC and fraud prevention. They help simplify the movement of money and sensitive data across the globe.
Large banks have now become far less hesitant to experiment with blockchain. According to a Global Blockchain Survey conducted by Deloitte, more than 95% of the participant banks said they would make at least some investment in blockchain or DLT.
Blockchain today is a lot like the Internet of the 1990s. Organizations reluctant to understand and exploit its capabilities will likely be left behind. It is disrupting almost every industry, including banking – just like the Internet disrupted many in the 1990s.
A growing number of banks have joined blockchain consortiums such as the Hyperledger project and R3 to advance the global blockchain adoption.
Banks joining different consortiums highlights the facts that there is no standardized implementation of blockchain technology.
There are hundreds of public, private, and consortium blockchains deployed around the world. Even if a bank is part of a consortium, it won’t be able to communicate or exchange information with banks outside the consortium.
Today, blockchains exist in isolation. They might not gain mainstream acceptance until users are able to seamlessly access value and utility across the entire ecosystem. End users cannot be locked into a single blockchain or standard.
Cross-chain bridges would drive the future adoption
Cross-chain platforms provide interoperability between two relatively independent blockchains. They allow the siloed networks to speak to one another and exchange information.
Given that banks are building their Dapps on different blockchains, they would rely on cross-chain platforms to talk to one another. Projects like Wanchain have been building cross-chain bridges to connect the different networks to help blockchain reach its full potential.
Earlier this year, Wanchain launched the world’s first BTC-ETH direct bridge. It already offers decentralized bridges connecting Bitcoin, Ethereum, Wanchain, EOS, Binance Smart Chain, Litecoin, and XRP Ledger.
Wanchain’s cross-chain bridges use unified decentralized collateral pools maintained by its Storeman Group. When a user initiates a cross-chain transaction, the Storeman Group locks the original asset on the origin blockchain before minting a new token, pegged 1:1 to the original asset, on the destination chain.
Any blockchain – whether public, private or consortium chain – can easily integrate with Wanchain to establish connections between different ledgers and perform low-cost inter-ledger asset transfers.
Wrapping it up
The number of blockchain projects is growing rapidly as developers keep coming up with innovative ways to leverage blockchain’s capabilities. There are a wide variety of blockchain ecosystems such as Ethereum, Cardano, Polkadot, Solana, and others – each with their own set of advantages. It’s highly unlikely that there will be a single perfect blockchain platform that all the world’s banks could use to build their Dapps.
Cross-chain interoperability solutions like Wanchain enable the transmission of the world’s digital assets and data between various isolated blockchain networks in real-time. Truly decentralized and open finance must be connected to make banking services fast, secure, and affordable.
The crypto space was flowing through immense negative sentiments in the past couple of weeks where many assets plunge with a massive margin. The constant rejections of Bitcoin prices at $40K initially and later at $35K had shaken the space. Therefore other popular tokens like Litecoin price, XRP price, MATIC price, etc also suffered more …
The crypto space was flowing through immense negative sentiments in the past couple of weeks where many assets plunge with a massive margin. The constant rejections of Bitcoin prices at $40K initially and later at $35K had shaken the space. Therefore other popular tokens like Litecoin price, XRP price, MATIC price, etc also suffered more than 60% drop from yearly highs. While the other assets follow an unhurried race, Polygon price takes a gigantic long jump.
The MATIC bulls entered the ring right in time and ease the accumulated selling pressure. The price has experienced an extreme drain off in the last trading day, that it was on the verge to mark the lowest levels that the mid-may crash. However, the asset retraced like a giant accumulating more than 30% gains.
The price was following a descending channel where-in each attempt to break the channel resulted in lower lows. The extreme sell-off that initiated since the beginning of July compelled the price to break the lower support levels. However, the fresh surge kept the hopes of a notable surge above $1 alive.
As mentioned in the chart, the Polygon price needs to clear the upcoming barriers at $0.85, $0.97 and finally at $1.06. This would confirm the uptrend into a substantial bullish trend which may also push the price above the ATH. With a notable rebound, the targets remain unchanged or can say escalated. A popular analyst, CyrilXBT predicts a $15 target for MATIC price by EOY.
Despite early gains, the selling momentum is strong; BNT/USDT bars are aligning along the lower BB as the two bands diverge, suggesting volatility.
Unless otherwise there are series of higher highs countering the primary selling trend accompanied by a significant uptick in trading volumes, confirming today’s gains, BNT sellers may search entries on pullbacks targeting $2.5—the 78.6 percent Fibonacci retracement level of the H1 2021 trade range.