Huobi Research
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Huobi Research

Weekly Industry Report 【April 25,2022】

Authored by Eno Zhang, Fubing Yang, Researcher at Huobi Research Institute

Abstract

This week, we focus on the following events: 1) The ongoing impact of STEPN’s Twitter; 2) US$200 million debut sales for Moonbirds NFTs; 3Investments in blockchain games would be prospected — 2022 Q1 DappRadar x BGA Games Report

Recently, Nirvana, a new algorithmic stablecoin project that ignited market sentiment, created a new type of AMM mechanism to solve the liquidity problem of algorithmic stablecoins. The following is a brief introduction and analysis of Nirvana, its innovation model and market performance.

1. Industry overview

I. Overall market trend

Influenced by macro factors such as accelerated pace of Federal Reserve rate hike and Russian-Ukraine War, the overall market value of the cryptocurrency market is not optimistic. As of April 22, 2020, the total market value of the cryptocurrency market decreased to US$1.88 trillion, down by 0.66% over the last week. Average daily volume is US$98.08 billion, up by 1.45% over the previous week. BTC’s market value accounted for 41.2%, and ETH’s market value accounted for 19.3%.

Last week, most of the top 100 cryptocurrencies by price were down, with only several up. The graph shows top 10 cryptocurrencies ranked by 7-day percentage increase of price, with STEPN achieving the greatest percentage increase. STEPN, a Web3 lifestyle app with Social-Fi and Game-Fi elements, gained wide attention during the week before last on Twitter, and the impact is still ongoing. According to CoinGecko on April 18, the market cap of the stablecoin Terra USD (UST) exceeded Binance. As a result, Terra UST became the third largest stablecoin by market value, and Terra crypto LUNA increased with maximum growth of 19.25% in the last week. Furthermore, the Ox protocol announced its partnership with Coinbase, which led its Token Ox (ZRX) to surge more than 50% that day.

II.NFT

In terms of NFT, Moonbirds trading volume increased significantly last week. Its trading volume reached US$55,549,157.96 in 24 hours on April 22. Since Moonbirds officially made its debut on April 16, its market cap has increased to US$250,998,276.61.

III.DeFi

IV.Layer2

2. Market news

I. Industry news

The Ethereum Foundation: The Ethereum Foundation held more than US$1.6 billion in treasury assets, more than 80% of it on ETH

On April 18, the foundationdisclosed that as of March 31, it held US$1.61 billion worth of treasury funds. About US$1.29 billion (about 80.5% of its treasury assets) was held on ETH, and US$300 million (about 18.8% of its treasury assets) was on non-crypto assets and investment. The remaining , about US$11 million, was invested in other cryptos. In addition, the Ethereum Foundation spent a total of US$48 million, including US$21.8 million on Layer-one research and development, US$9.7 million on Community development, US$5.9 million on developer platform accounted, US$5.1 million on internal operations and support, US$3.6 million on applied Zero-Knowledge (ZK) research and development, and US$1.9 million on Layer-two research and development.

Fashion NFT: Louis Vuitton to release new NFTs to celebrate the brand’s 200th birthday within its app Louis: The Game

In August 2021, Louis Vuitton (LV) launched the game, Louis: The Game, which allows users to dressup the main character, Vivienne, through a virtual world in search of exclusive postcards of the brand that are actually NFTs. On April 17, according to Vogue Business, LV aimed to educate players on its 200th birthday and randomly distributed a total of 10 new NFTs that featured Vivienne as a reward. The style of the NFTs has not been revealed but was created in collaboration with Beeple’s firm Wenew Labs and sibling company Possible. The style will be minted from LV’s Ethereum wallet. Since its birthday is on August 4th, this NFT project will be closed shortly after that day.

Cryptocurrency popularization: AMC Theaters mobile app accepts Dogecoin, Shiba Inu, and other cryptocurrencies

AMC Theaters is the largest movie theater chain in the United States. On April 16, the CEO of AMC officially announced on Twitter that itsmobile app will be accepting online payments using Dogecoin, Shiba Inu, and other cryptocurrencies. The method is simple that users can select BitPay to achieve payments by cryptocurrencies.

NFT Sales: Moonbirds NFTs made US$200 million in debut sales, but came under controversy

Since Moonbirds officially made its debut on April 16, its NFTs has beenpopular in the market. Moonbirds is a collection of 10,000 pixel art birds minted on Ethereum. This collection of 10,000 PFPs (profile pics) had been sold for 69,000 ETH, which was approximately US$207 million. As of April 22, the floor price dramatically increased to 31.2 ETH from 2.5 ETH. However, this project’s mint had some disputes. PROOF Collective, a private community led by Rose and Ryan Carson, came under fire that project leaders bought up rare editions using insider information.

II. Investment and Financing

Investments in blockchain games would boom at end 2022: Q1 2022 DappRadar x BGA Games Report

On April 20, according to the DappRadar x BGA Games Report — Q1 2022, it revealed that investors are building genuine interest bypouring capital into blockchain games and metaverse projects, surpassing US$2.5 billion in investments Ifthiscontinues, investments in blockchain games byend 2022 will grow 150% over last year. Specificallyin March, blockchain games attracted 1.22 million UAW, accounting for 52% of the industry’s activity.

SPAC Aura FAT projects completes US$115 million SPAC IPO on Nasdaq

On April 20, Aura FAT Projects Acquisition (NASDAQ: AFAR), a special purpose acquisition company (SPAC), raised aUS$115 million IPO. Aura FAT has an avid interest on new technology start-ups in sectors such as the Web3, blockchain, cryptocurrency, digital ledger, e-gaming and other new financial technology and services industries.

Spruce complets US$34 million in financing, led by a16z

On April 20, Spruce, an open-source and decentralized identity company, raised US$34 million in a Series A round. The lead investor was a16z, and other participants include Robot Ventures, Okta Ventures, OrangeDAO and SCB 10X.

Mintbase completes US$7.5 million in financing, led by Coinbase Ventures, and others

On April 20, Mintbase raised US$ 7.5 million in the series A round. Investors included Coinbase Ventures, Libertus Capital, Sino Global Capital, Animoca Brands, Woodstock Fund, Fundamental Labs and others. In addition to this round, the non-profit NEAR Foundation, which is responsible for contracting protocol maintainers and funding ecosystem development on the NEAR protocol, would award up to US$5 million to support Mintbase’s grants programme.

BlockApps completes US$41 million in financing, led by Liberty City Ventures

On April 19, BlockApps raised US$41 million, with Liberty City Ventures actingas the leading investor in a series B round , with participations fromMorgan Creek Digital, Eldetic Ventrues, and Givic. The funding aimed to enlarge the team size and bring more real assets, such as agricultural and energy products, to its blockchain. BlockApps develops blockchain platforms for more transparency and traceability to corporations. It relies on STRATO blockchain product which is compatible with Ethereum.

Framework Ventrues completes US$400 million in financing, with half of the new funds deployed to gaming blockchain

On April 19, Framework Ventures, a crypto-focused venture capital firm, raised a new US$400 million fund. According to Framework Ventures, about US$200 million will be dedicated to investments in blockchain gaming.

Flipside Crypto completes US$50 million in financing, led by Republic Capital

On April 19, Flipside Crypto, a research firm for crypto companies to provide blockchain analytics and data insights, raised US$50 million at a US$350 million valuation. The leading investor is Republic Capital, and other investors are True Ventures, Galaxy, Terra, Dapper Labs, M13 and Blockchain Coinvestors. Flipside Crypto previously completed a US$7.1 million financing round in September 2019 at a US$32 million valuation. Currently, the company has 66 staff members and expects to grow to 85 by end 2022.

The Sandbox completes US$40 million in financing

On April 19, the Sandbox, a blockchain-gaming company, raised US$40 million at a US$4 billion valuation from both new and old investors. This fund-raising comes less than 6 months after the last financing round where the Sandbox raised US$93 million in a Series B round led by SoftBank Vision Fund 2 on November 2, 2021. According to Crunchbase, it included old investors such as True Global Ventures, Square Enix, Galaxy Interactive, and Angelhub.

Solana DeFi Protocol Delta One completes US$9.1 million in financing, led by Alameda Research and DeFi developer collective Ship Capital

On April 19, Solana-based decentralized finance (DeFi) protocol Delta One raised a US$9.1 million seed round led by Alameda Research and DeFi developer collective Ship Capital. Other participants included Solana Ventures, Solana co-founder Raj Gokal, investment firms Electric Capital and AlleyCorp and Race Capital co-founders Chris McCann and Alfred Chuang. The funding aimed to support the protocol’s core development and ecosystem expansion. SaidPaul Sengh, one of the founders of Delta One, “Delta One is considering creating a stablecoin to help purchasers earn sustainable yield across the vaults without having to enter the site. It would be integrated with Solana Pay.”

Gold House launches US$30 million venture capital fund to Asian and Pacific Islander founders

On April 19, Gold House, a nonprofit organization, proposed to initiate a US$30 million venture capital fund which would be directly investing in Asian and Pacific Islander (API) business founders. This fund is possible because of anabundance of investors, such as API founders and executives at brands like Binance Labs, YouTube, Twitch, DoorDash, Credit Karma, Zuora, Zola, FiscalNote, Honey, Guitar Hero, MyFitnessPal, XO Groupe, Opendoor, GOAT, NYX and Crunchyroll.

Indian crypto exchange CoinDCX completes over US$135 million in financing

On April 19, according to co-founder and CEO Sumit Gupta on Twitter, Indian crypto exchange CoinDCX raised over US$135 million in Series D funding. The funding would lead to an increase of CoinDCX’s valuation to US$2.15 billion from US$1.1 billion following a Series C funding in August 2021. For this round, the leading investors are Pantera Capital and Steadview Capital Management, with participation of Kingsway, Draper Dragon, Republic, Kindred, and etc.

WonderFi Technology acquires Canadian crypto exchange Coinberry for CAD$38.5 million (pprox. US$30 million)

On April 18, WonderFi Technology, a Vancouver-based decentralized finance platform, acquired Toronto crypto trading platform Coinberry in a CAD$38.5 million. Since WonderFi acquired Bitbuy in January, WonderFi would have 2 Canadian licensed crypto platforms out of 6 licensed crypto platforms in Canada in total. This deal also brings WonderFi to a market leaderposition in Canada.

Aura Network gets US$2.5 million seed financing from Coin98, GBV, Kucoin, and others

Aura Network, a layer-1 blockchain based on Cosmos ecosystem, received a US$2.5 million seed funding round on April 18. Backers included some prominent blockchain partners, such as Coin98 Ventures, GBV Capital, Impossible Finance, Kucoin Labs, Kyber Ventures, GUILDFI, Avalanche, MEXC Pioneer, TPX Ventures, Redline Dao, OIG, Vanda Capital, Deo Network, Ahamove, Ecomobi and Pencil Group. The company announced that they would use the new funds to create a universal framework with maximized interoperability for NFTs and strengthen the connection of community that supports Aura Network’s vision in long term. It also claimed that “it will release Testnet at the end of Quarter 2 of 2022, and itsMainnet will be launched in Quarter 3 of 2022.”

Wombat Exchange raises new funds in strategic round investment led by Shima Capital

In March, Wombat Exchange, a hyper-efficient multichain stableswap backed by Binance, successfully raised US$5.25 million in a series A funding. Investors included Animoca Brands, Hailstone Ventures, BNB Chain, TPS Capital, GSR, Zokyo, Lunar Station, Eureka Trading, Silverstone, Unanimous Capital, and CryptoWesearch. In addition, on April 18, Wombat received capital support from Shima Capital as the leading investor with participation of Jump Crypto and Wormhole. The investors have a very positive perspective on the company. Saurabh Sharma, Partner and Head of Venture at Jump Crypto, said, “Wombat is a next-generation stable swap exchange that introduces elegant design principles such as invariant curve and asset-liability management for computational efficiency and improving liquidity. Furthermore, leveraging Wormhole’s generic message-passing protocol, Wombat offers seamless native swaps across multiple chains.”

III. Supervision

Russian tax authority proposes using crypto as payment tool for foreign trade contracts

On April 20, according to Russia’s tax authority proposal, legal entities are allowed to pay for goods, works, services under foreign trade contracts and receive revenue from foreign persons in digital currency, Meanwhile,the Ministry of Finance had previously stated that the use of digital currencies as a means of payment on the territory of the Russian Federation will continue to be prohibited.” This event provided an opportunity to dismiss this prohibition with a clause that states the ban is valid “unless otherwise provided by this law.”

IV. Security

A rug Pull happened in MaxAPY Finance;official team suspected of running away

On April 20, according to PeckShield’s Twitter, PeckShield tweeted that a Rug Pull occurred on the automatic pledge protocol MaxAPY Finance on BNB Chain, and the token Metal dropped by 67% in a short time. It has now deleted its official Twitter account and Telegram group, MaxAPY The contract owner has transferred 1042 BNB.

Hackers steals US$182 million of cryptocurrency from Beanstalk Farms

On April 17, Beanstalk Farms, an Ethereum-based stablecoin protocol, was appealing to the hacker to returnaround US$182 million of cryptocurrency that it stole from them. PeckShield, a blockchain analytics company, initially reported this incident through Twitter and revealed the US$182 million loss. Further information demonstrated that the attackers stole over 24,000 in Ethereum and 36 million in BEAN, the company’s stablecoin. This caused BEAN to drop by more than 80% withinminutes. According PeckShield’s Twitter, the hacker exploited through a “flash loan-assisted (immediate) pass of BIP18, which was submitted one day ago.” Since last October, BEAN had been trading at about US$1, but it is now trading at about US$0.062.

3. Trending Project Analysis — Nirvana

In the past few days, a project called Nirvana has attracted much attention and caused extensive discussion in the crypto community.

According to website data, in the past week, ANA market price has soared from US$3.6 to US$20, with a maximum increase of 455%, and the current price remains at US$15.7; ANA floor price has also increased from US$1 to US$5.62. At present, the ANA supply is 1.711 million, the Market Cap is US$26.77 million, with APY reaching 222.13%.

Figure 6. Nirvana Price Curve (Source: CoinMarketCap)

I. FAQ in one minute

What is Nirvana?

Nirvana is an algorithmic stablecoin protocol on the Solana chain. The Nirvana protocol has two different purpose tokens, NIRV and ANA. Among them, ANA is an algorithmic metastable token in this protocol, which is used as a store of wealth; the NIRV token generated by ANA mortgage is a super stable currency, which is used as a store of value.

What is ANA?

ANA Token is an investment vehicle designed by Nirvana Protocol for sustainable returns and high APY, with high volatility (risk).

Why should I buy ANA?

After obtaining ANA tokens, users can click on the “Stake & earn” function to pledge ANA to obtain income. The current annualized rate of return is close to 230%; the pledge rewards are in the form of special tokens: pre-ANA or prANA.

What is prANA?

prANA is a special financial instrument option with a dynamic strike price, i.e. the prANA token gives its owner the right to buy ANA at the current floor price. To put it simply, the current market price of ANA is $15.7, and the floor price is $5.62. Holders of prANA can pay 1 prANA plus $5.62 to get 1 ANA (Note: The protocol will then destroy the prANA token), netting 15.7–5.62 = $10.08, which is exactly where the mining revenue comes from.

What is NIRV?

The NIRV token is the Nirvana protocol stable currency, also known as the super stable currency, whose value is backed by the ANA reserve price. As long as the agreement can guarantee that ANA can eventually be recovered at the reserve price, NIRV lending will never trigger liquidation, and the price of NIRV will not fluctuate. Therefore, it is officially said that the Nirvana protocol is a zero-liquidation risk loan.

II. Nirvana’s innovative model

Nirvana is a fully decentralized, trustless, autonomous protocol. The core of innovation is the Virtual AMM mechanism in which the protocol itself has liquidity. The virtual AMM uses the rising reserve price of ANA as the centralized liquidity of the protocol, and automatically ensures that every ANA token in circulation can be repurchased at the reserve price.

How do I know if the protocol has liquidity?

Nirvana’s Protocol-Owned Market, POM (Protocol-Owned Market), is where unused ANA tokens are not locked in traditional AMM pools, but virtual ANA is held. If someone buys ANA, POM will promptly mint ANA tokens. If someone sells ANA, the POM is burned and ANA is removed from the supply. This POM model has the greatest capital efficiency. Unlike traditional “constant product market maker” AMMs, where funds must be locked for both tokens at all possible prices, Nirvana’s POM does not require ANA, nor does it require liquidity above ANA’s current market price. POM concentrates liquidity only at a price lower than ANA’s current spot price, providing an exit for those who sell back to ANA.

Changes in ANA floor price

The funds entering the Nirvana reserve are divided into two parts, one part is used to support the reserve price of ANA, and the other is used to maintain the liquidity of ANA. The allocation ratio of the reserve fund between the two is determined.

Regarding the ANA floor price , one point needs to be emphasized: an agreement stipulates that the floor price will continue to rise with time and will never fall. The floor price rise needs to meet the following conditions: Before raising the floor price, the minimum liquidity around the current market price must be guaranteed — the liquidity must reach 30% of the total reserve assets; when the liquidity threshold that supports the price is reached, some of the reserves will be redistributed to increase the floor price, thereby reducing the liquidity supporting the price to 25% of the total reserve value andso on, continuously increasing the floor price. To sum up, the total reserve must not only meet the floor price recovery conditions, but also meet the minimum liquidity of the current market price.The remaining reserves will be taken out to increase the floor price.

Nirvana vs. traditional models

In the traditional model, the protocol keeps its tokens liquid by incentivizing market makers. This liquidity is deeply tied to the pool’s funds, and once the capital is moved elsewhere, the liquidity of the token may dry up, causing token holders to sell tokens only under high slippage. This situation is a major obstacle to the long-term sustainability of new projects.

Nirvana designed the mechanism in which “protocols have liquidity”. Every ANA token in existence is backed by an intrinsic value, which is called the ANA floor price. The realization of this intrinsic value is to deposit the liquidity value of its floor price into the protocol as a reserve before generating new ANA tokens. Similarly, only when the reserve value is enough to support the new ANA floor price, its floor price will rise.

The advantage of this is that the value of ANA has a bottom support, which can ensure that there is enough liquidity to sell tokens at a low price, avoiding the problem of excessive slippage in token exchange after the loss of funds in traditional LPs.

III. Market performance

Nirvana has continued to be popular since its launch, though its popularity has declined recently. According to Dune Analytics data, Nirvana’s hourly trading volume has leveled off after several spikes. At the same time, according to CMC data, the price of ANA has also declined after a rapid surge, but it is still at a high level.

With the growing demand for ANA, the floor price of ANA continues to rise, and more transactions are required to drive up the price of ANA.

For early ANA participants, the sooner they participate in the staking, the greater the dividend. With the FOMO of ANA by the community, the market price of ANA has reached a position of more than 4 times the reserve price.

Figure 7. Nirvana each-hour Transactions

In general, the Nirvana protocol is a good innovation in the current DeFi market. The high yield provides a good place for the funds on the chain. At the same time, the liquidity of the AMA is guaranteed through the design of the virtual AMM mechanism, and the stability of the NIRV token is supported by a basket of stable coins. More importantly, as a completely decentralized project, the team promises that ANA tokens are completely autonomously generated by the market, and the team does not receive any distribution.

4. Calendar of future popular asset events

I. NTF mint Calendar

II. Token Airdrops

About Huobi Research Institute

Huobi Blockchain Application Research Institute (referred to as “Huobi Research Institute”) was established in April 2016. Since March 2018, it has been committed to comprehensively expanding the research and exploration of various fields of blockchain. As the research object, the research goal is to accelerate the research and development of blockchain technology, promote the application of blockchain industry, and promote the ecological optimization of the blockchain industry. The main research content includes industry trends, technology paths, application innovations in the blockchain field, Model exploration, etc. Based on the principles of public welfare, rigor and innovation, Huobi Research Institute will carry out extensive and in-depth cooperation with governments, enterprises, universities and other institutions through various forms to build a research platform covering the complete industrial chain of the blockchain. Industry professionals provide a solid theoretical basis and trend judgments to promote the healthy and sustainable development of the entire blockchain industry.

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Disclaimer

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