Money Laundry: The Rise of the Crypto Sock Market

Pat Doyle
Pat Doyle
Jun 5 · 5 min read
No, we did not mean “stock market.” Source (Uniswap Twitter)

What Is Uniswap?

Uniswap is a decentralized exchange that facilitates the exchange of tokens on the Ethereum blockchain. It does away with the concept of order books, replacing them with an automated market maker mechanism that incentivizes liquidity providers.

Uniswap has been experiencing explosive growth. Source: defipulse.com

The Mechanics of SOCKS Trading

At the Fluidity Summit in NYC this past May 9, the Uniswap team announced limited edition, dynamically priced socks. These socks are represented on the Ethereum blockchain by redeemable ERC-20 tokens (SOCKS). Only 500 SOCKS tokens will ever exist.

Bonding curve governing SOCKS price. Source (Uniswap Twitter)
unisocks.exchange is changing the meaning of the term “wash trading”. Source(unisock.exchange)

Why Is This Cool?

SOCKS may be tongue-in-cheek, but it’s an early example of the use of bonding curves as a price discovery mechanism for physical goods. Any limited edition item (from sneakers to concert tickets) could be priced this way.

Breaking Down the Best Sock Traders

We broke down the most performant sock traders by the following categories:

Visualizing ROI

We looked at all wallets that have purchased SOCKS tokens from the Unisocks.Exchange and sold the same amount back to the exchange at any point in time. We wanted to analyze those wallets that have no current position in SOCKS and how well they performed. Our analysis found that there were some very performant SOCKS traders and others that did not trade so well.

Source: FRST

Our Best-Performing SOCK Traders:

  1. 0xd1ccfbf0a0dc2a9ed8a496b07e81dd8ecd7cb00e
  2. 0x8e5d30f161ba3ebb09dc3c1f06515656af34baa1
  3. 0x02e5349a7c92e0384426a77db78232dd591cf76a
  4. 0x2b75ec32d07a5ac429b1d8b5209ab92049a06cca
  5. 0xe2f35b376461e7fdd2f2e45248e4c3cd9626a933
How about a hand for our most performant SOCK traders 👏 👏 👏

Our Worst-Performing SOCK Trader: 0xf3f23c88fc9eeef0aa353bb5c891864e48c25984

Purchased 1 SOCK for .31 ETH and had a -28% loss on their investment in SOCKS. Better luck next time, 0xf3f2…

Wallet With the Highest ETH Return: 0x4fffbb9905d14794cb18d192e8056c6aa7cba3c4

In the image above, we have an obvious outlier. This wallet bought and sold 50 SOCK tokens. This wallet bought the 50 SOCK tokens for a total of ~7.12 ETH and sold all 50 for a total of ~12.61 ETH, bringing the wallet’s total ETH profit to ~5.49. This was a 77% ROI — Not bad.

Source: FRST

Wallet With the Longest Long SOCK Position: 0x91d6e260a5965a3c33d5bc4bf4adcf96c449ed2e

This address is very long SOCK tokens right now. They are currently holding 66 SOCK tokens at an average purchase price of ~0.25 ETH. This means that the wallet is currently up 0.04 ETH per SOCK token.

Source: FRST

What other tokens are SOCKS traders using?

Source: FRST

And What Are They Doing With Those Tokens?

Force directed graph of SOCKS market maker activity. Source: FRST

Now What?

We’ve identified three distinct SOCKS trading strategies:

  • low volume, high return
  • high volume, low return (including front-running 🧐)

Tell Me More About FRST

Gladly! The FRST platform was built with professional traders, data scientists, and blockchain researchers in mind. Our current customers include major digital asset exchanges, hedge funds with dedicated crypto desks, venture capital funds, audit/compliance/KYC functions within institutions, and university and government research efforts in the blockchain space.

FRST

Financial Resources, Statistics & Technologies for Blockchain Applications & Trade

Thanks to Will Price.

Pat Doyle

Written by

Pat Doyle

Data Scientist at FRST. Building actionable blockchain analytics.

FRST

FRST

Financial Resources, Statistics & Technologies for Blockchain Applications & Trade