Written by Karim AbdelMawla and Z
August 2021
Key Takeaways of the Month
August saw Bitcoin pick-up on its momentum despite a milder ROI (13%) when comparing it against its July performance (18%). The network’s onchain data implied that the transactional activity demand for Bitcoin is still much lower than the first quarter of the year, whilst whales have unceasingly been accumulating over the past few weeks. On the flip side, Ethereum has been going on a tear with its burning mechanism — hitting more than half a billion dollars since the network’s EIP 1559 upgrade activation on 5th of August. Ethereum’s burning rate has been spiraling in conjunction with the skyrocketing gas fees heavily induced by the NFT frenzy, unlike the first quarter where it was led by DeFi summer and doge-inspired tokens.
As previously alluded, the escalating demand for Ethereum in hosting the array of newly launched NFT and DeFi projects have debilitated the blockchain and made it practically unserviceable for the average retail user, as a simple swap on the network can cost up to $70 — levels not seen since the May market crash — while more complex transactions such as minting collectibles can range from $200 — $300 at peak times. This in effect has pivoted investors’ interest towards the competing layer 1 blockchains promising higher network speed and trivial gas costs — as it should be if crypto is to play its aspired role in fostering financial inclusion.
Cardano showed the way amongst the so-called ETH killers as it returned 180% on the back of anticipating the smart contract functionality set to be released on September 12th — finally allowing for the operability of DeFi and NFT protocols on top of the network. Terra, on the other hand — chalked up a tantalizing 530% since the last week of July driven by the excitement surrounding the columbus-5 mainnet upgrade, admitting Lido’s Ether wrapped-staked version on Terra — as collateral on the anchor platform — and finally the swelling demand pressure on LUNA as a direct result of the token’s burning mechanism to stabilize the UST stablecoin.
Conversely, Solana’s equally impressive 400% rally since mid July was prompted by a wave of exciting news. First was the Mystifying Ignition event — initially thought as a major token burning event — until divulged as a global hackathon event aimed at setting off further ecosystem development much akin to the previous Solana summer hackathon. Another pertained towards the launch of the NFT project SolAPE. Finally, the oracle service — PythNetwork — went live on Solana’s mainnet last Friday aggregating data points on crypto assets, commodities and stock prices — while utilizing Jane Street’s assistance as their market maker.
It’s noteworthy to realize that aforementioned rallies haven’t purely been driven by speculation this time as was the pattern with what was seen developing chains back-then. Onchain data now corroborates that investors and DeFi users are increasing their deposits into onto these base layer to interact with the multiplicities of newly launched smart contracts — by scrutinizing the swelling of the total value locked on the most active L1 networks shown below
Other Layer 1s announced large scale incentives to boost Defi ecosystems this month. Amongst them include SushiSwap’s $180 million scheme on Avalanche and Fantom Foundations $250 million incentives in airdrops for DeFi cDai and Avalanche bridge users. The announcement was shortly followed by a 71.6% run on FTM in just 24 hours. On-chain data indicated the Total Value Locked on Fantom doubled this month to $600 million.
Phone-focused blockchain Celo also launched a $100 million fund for education initiatives, grants and incentives. Celo founder Rene Reinsberg said that their goal was to bring ‘ one billion new people to Defi’ in the next five years. PoolTogether, Aave, Curve and Sushi will also launch a combined $34 million in incentives with Celo.
NFTs
Building on the latest trend in institutional uptake on NFTs, Visa bought CryptoPunk 7610 for around $150,000 USD this month. Visa’s head of crypto, Cuy Sheffield believes that NFTs are an intersection of culture and commerce and will play an important role in the future of e-commerce. Budwiser is also taking a slice of the NFT pie, they bought beer.eth for $95,000 declaring that NFTs would be a ‘long-term business play’. Sotheby’s, the world’s largest broker of fine art, announced that for the first time in their 277 year history they will be launching a Bored Ape sale on September 2nd.
To top it all off, multiple collections broke their all time high floor prices this month, with Crypto Punk floor hitting 140 eth and BoredApeYC at 500 eth for their all time high sale. The rise in NFT activity is clearly depicted on on-chain data with OpenSea recording $69.9m in protocol revenue, only third behind Axie and Ethereum, and ranking the highest on the Eth burn leaderboard, more than doubling that of DEX Uniswap.
The NFT boom seems to have also overflowed into other Layer 1s, with some accrediting the recent surge on Solana to the launch of projects like Degenerate Ape Academy. With several highly anticipated drops coming up on Solana and Ethereum alike, NFT growth shows little signs of slowing down.
This Month In Amun Tokens
The returns of Amun’s DeFi tokens vs BTC & ETH vs DeFi top 100 index over the last month were as follows → BTC (13.36%), ETH (35.36%), DFI (27.41%), DMX (28.9%), DeFi (36.03%), SPY (2.97%), and QQQ (4.21%), .
