Research Summary
The report discusses the recent developments in the cryptocurrency market, including the impact of Grayscale’s lawsuit win on Bitcoin ETFs, the rise of Friend.tech in the SocialFi space, the growth of Base in the L2 ecosystem, and the increase in DAI supply due to the rise in DAI Savings Rate. It also covers the volatility in the crypto market, the downturn in the NFT market, and the advancements in the DeFi sector.
Key Takeaways
Grayscale’s Lawsuit Win and Bitcoin ETFs
- Boost in investor confidence: The favorable U.S. court ruling on Grayscale’s lawsuit has renewed investor confidence and may influence future SEC decisions on spot Bitcoin ETFs, potentially mainstreaming digital assets.
- Market optimism: Despite the volatility in the crypto market in August, optimism returned at the end of the month due to Grayscale’s lawsuit win, raising prospects for a successful ETF conversion for the Grayscale Bitcoin Trust.
Emergence of Friend.tech and Base
- Friend.tech’s rise and slowdown: Friend.tech, a new entrant in the SocialFi space, saw a significant rise in metrics mid-month but has since slowed down. The entrance of notable non-crypto personalities is a key factor to monitor.
- Base’s leadership in L2 ecosystem: Base has emerged as a clear leader among the latest additions to the L2 ecosystem, with a highly visible marketing campaign, memecoin trading, and a surge in interest in the decentralized social network, friend.tech.
DAI Savings Rate and Supply
- DAI supply increase: The increase in the DAI Savings Rate has driven demand for DAI, resulting in a 19% increase in supply, with 5.3 billion units in circulation.
- Impact of Enhanced DAI Savings Rate: MakerDAO’s initiation of the Enhanced DAI Savings Rate (EDSR) temporarily increased the DAI Savings Rate (DSR) from 3.19% to 8%, stimulating the growth of DAI.
Volatility in Crypto and NFT Markets
- Crypto market volatility: Crypto markets experienced volatility in August, with a sharp fall in total market capitalization. All of the top 10 coins, including memecoins like DOGE and SHIB, ended the month in the red.
- Downturn in NFT market: The NFT market experienced a significant downturn, with all-time lows in trading volume for the year. Rarible’s decision to support creator royalties and stop aggregating orders from other platforms sparked controversy and drew criticism from creators.
Advancements in DeFi Sector
- Surge in EigenLayer’s TVL: EigenLayer’s TVL surged to $245.2 million, an increase of over 200%, following its cap raise in liquid restaking, highlighting strong market demand for restaking products and the protocol’s expanding role in the sector.
- DeFi market performance: DeFi markets fell by 5.5% MoM, with Ethereum, Tron, and BNB Chain retaining the top spots. TVL across chains, including Ethereum and roll-up solutions, experienced declines, while BNB Chain saw a 13% decrease due to an orderly liquidation on the Venus lending protocol.
Actionable Insights
- Monitor the influence of Grayscale’s lawsuit win: Keep an eye on the potential impact of Grayscale’s lawsuit win on future SEC decisions regarding Bitcoin ETFs.
- Track Friend.tech’s performance: Follow the performance of Friend.tech in the SocialFi space, particularly the involvement of notable non-crypto personalities.
- Investigate the potential of Base: Explore the growth and potential of Base in the L2 ecosystem, given its strong adoption and marketing campaign.
- Assess the impact of DAI Savings Rate: Evaluate the effects of the increase in DAI Savings Rate on DAI’s supply and demand.
- Understand market trends: Stay updated with the volatility in the crypto and NFT markets to make informed decisions.
