Dec 23, 2022

[On-chain Weekly] MC and FDV, Uniswap NFTs, APE Staking

Xangle Intern

Chart of the Week - Higher FDV ≠ Higher Drawdowns

  • MC (Market Cap) is often sought out as the standard metric when evaluating a token’s true value. However, one cannot totally rely on MC as it does not include the value of a token’s future circulating supply.
  • Some critics claim that it would be more reasonable to include the value of all tokens to be released in the future when evaluating a token's value since sell pressure may increase as a token releases more of its locked supply. Therefore, FDV (Fully Diluted Value) is often referred as a superior metric to MC.
  • However, our analysis of the correlation between MC/FDV ratio and MDD of 150 tokens has found that tokens with lower MC/FDV ratios did not suffer from significant MDD: the correlation was near to zero.
  • To put it simply, an FDV higher than MC doesn't necessarily foretell a rapid decrease in value in the near future.
  • Even when projects were split into separate groups (i.e., DeFi, Mainnet), the correlation between MC/FDV ratio and MDD remained low.
  • One can attribute the above results to the overall market situation. The industry as a whole saw a huge drawdown, while valuations were driven more by momentum and narratives than fundamentals.
  • The argument that FDV is superior to MC as an evaluation tool is an arbitrary assumption because there is no guarantee that the entire supply will be put into circulation.
  • The counter argument is that MC is more practical since it only counts current circulating supply, allowing the market to determine the value of each project.
  • Further research on evaluation methods for crypto assets will be needed.

Weekly On-chain Statistics

Uniswap on NFTs

  • Uniswap, the No.1 DEX, launched its own NFT aggregator on the last day of November.
  • The launch attracted much attention as the announcement took place after it acquired Genie back in June.
  • However, NFT trading volume on Uniswap did not pick up as anticipated. The Defi behemoth is still trailing behind its competitors after a week.
  • Moreover, charts are not showing significant growth trends, as seen in the above graph.
  • Many NFT marketplaces were launched during the previous bull market, yet most failed to take down OpenSea, the de facto monopolistic enterprise of the NFT world.
  • Contending NFT marketplaces deployed incentives in the form of token distributions, but not been able to overcome OpenSea’s established network. Uniswap, still struggling to garner a userbase, might see even worse outcomes as it has not deployed any incentives except its one-off USDC airdrop to previous Genie users.

APE Token Announces Staking Rewards

  • On December 13, Yuga Labs announced APE staking. 6.5M APE, or 18% of the APE supply, were funneled into staking pools.
  • Currently, there are four pools available for APE staking. Users who stake Yuga Labs NFTs alongside are entitled to higher APE rewards.
  • The APE token has limited utility at the moment, but it might see wider adoption when Yuga Labs releases its metaverse platform Otherside.

NFT Lending is Here to Stay

  • Demand for NFT lending has surfaced as bluechip NFTs saw a significant increase in value, sometimes amounting to the millions.
  • After the Terra-Luna explosion, demand for liquidity has surged, forcing bluechip NFT owners to seek out for lending platforms that will take their NFTs as collateral. Since then, NFT lending has been a go-to solution for bluechip NFT holders.
  • The boom in the NFT lending market was soon met with new contenders like X2Y2, which launched its lending service in October.
  • X2Y2 took a significant portion of marketshare from incumbents, BendDAO and NFTfi, now accounting for almost 20% of all lending volume. The momentum is building up with X2Y2's recent weekly lending volume surpassing BendDAO's.

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