Kujira & Cosmos have garnered plenty of attention over recent weeks, primarily due to the launch of Cosmos 2.0 & Kujira’s value proposition to create a Layer 1 that provides cost efficiency & constructive integration within the broader Cosmos ecosystem.
The platform consists of four blocks: Orca, Fin, Blue & Finder. The first three are DeFi platforms, while Finder is a blockchain scanner.
Token: $KUJI & $USK
Comparables
Bullish Fundamentals:
Bearish Fundamentals:
2. Premia
While Arbitrum already has options protocols in the form of Dopex & Jones DAO, Premia is the only DEX to offer American options as its core line of products. It offers peer-to-pool trading with options that are fully collateralised.
Its pricing mechanism is ultimately determined by the supply & demand of the pool’s capital leading to various pricing discrepancies between the pool & the oracle. This is advertised as the rate below/above market value & allows for a wide range of opportunities between Premia and other option providers both on CeFi & DeFi.
Token: $PREMIA
Comparables
Bullish Fundamentals:
Bearish Fundamentals:
Closing Remarks
Kujira & Premia are two examples of continued innovation & development during this bear market. Integrating projects within a broader blockchain ecosystem is necessary for the long-term sustainability & activity of decentralised finance. Kujira is not the first, nor will it be, the last to provide this solution to the market. Premia has provided a niche service to traders who prefer to exercise their option products before expiration. This is an interesting case of how elementary ideas from traditional finance are still early in their execution across DeFi.
References
CoinGecko. 2022. Cryptocurrency Prices, Charts, and Crypto Market Cap | CoinGecko. [online] Available at: <https://www.coingecko.com/> [Accessed 26 September 2022].
CoinMarketCap. 2022. Cryptocurrency Prices, Charts And Market Capitalizations | CoinMarketCap. [online] Available at: <https://coinmarketcap.com/> [Accessed 26 September 2022].
Docs.kujira.app. 2022. Grown-Up DeFi - Kujira Docs. [online] Available at: <https://docs.kujira.app/introduction/readme> [Accessed 26 September 2022].
Docs.premia.finance. 2022. Overview - Premia. [online] Available at: <https://docs.premia.finance/> [Accessed 26 September 2022].
Web 3 Crypto Hub. 2022. The Babylonians. [online] Available at: <https://thebabylonians.notion.site/Web3-Crypto-Hub-d9b4f86131a9455887758b28e35935b8> [Accessed 26 September 2022].
Important notice and disclaimer
This presentation has been prepared by Greythorn Asset Management Pty Ltd (ABN 96 621 995 659) (Greythorn). The information in this presentation should be regarded as general information only rather than investment advice and financial advice. It is not an advertisement nor is it a solicitation or an offer to buy or sell any financial instruments or to participate in any particular trading strategy. In preparing this document Greythorn did not take into account the investment objectives, financial circumstance or particular needs of any recipient who receives or reads it. Before making any investment decisions, recipients of this presentation should consider their own personal circumstances and seek professional advice from their accountant, lawyer or other professional adviser. This presentation contains statements, opinions, projections, forecasts and other material (forward looking statements), based on various assumptions. Greythorn is not obliged to update the information. Those assumptions may or may not prove to be correct. None of Greythorn, its officers, employees, agents, advisers or any other person named in this presentation makes any representation as to the accuracy or likelihood of fulfilment of any forward looking statements or any of the assumptions upon which they are based. Greythorn and its officers, employees, agents and advisers give no warranty, representation or guarantee as to the accuracy, completeness or reliability of the information contained in this presentation. None of Greythorn and its officers, employees, agents and advisers accept, to the extent permitted by law, responsibility for any loss, claim, damages, costs or expenses arising out of, or in connection with, the information contained in this presentation. This presentation is the property of Greythorn. By receiving this presentation, the recipient agrees to keep its content confidential and agrees not to copy, supply, disseminate or disclose any information in relation to its content without written consent.
Users continue to flow into the Arbitrum ecosystem as more projects develop & migrate onto the network.
Arbitrum’s popularity comes as no surprise to the markets as the upcoming merge of the Ethereum network has been anticipated since July. For the first time, the ETH token economy is set to move into a new deflationary era with improved throughput & cost of transacting.
This fortnight, we will highlight three projects that have benefited from the attention across Arbitrum & offer various products ranging from options, a stablecoin money market fund & yield aggregation.
Jones DAO is an Arbitrum-native options protocol. The protocol’s key features are two-fold:
Vaults:
-The primary vaults seek to generate yield through option strategies focused on covered calls. These vaults cover multiple assets, are actively managed, and optimised. These vaults also allocate 5% towards hedging.
-The auxiliary vaults seek to utilise more aggressive & directional options strategies through various spreads.
jAssets are yield-bearing tokens that aim to provide capital efficiency & liquidity by utilising locked assets across options strategies. They are minted & burnt upon deposits & withdrawals. Users primarily use their jAssets for:
The native token of the protocol, $JONES, has several key characteristics: Liquidity Incentives: Rewards for the lending & liquidity pools Fee Accrual Governance The protocol also uses the Curve model in which $veJONES can be used to vote on emission rates for vaults & pools while accruing a portion of the protocol’s fees & additional $JONES rewards.
The protocol’s revenue is composed of:
Bullish Fundamentals:
Bearish Fundamentals:
2. Plutus DAO
Plutus DAO is a governance aggregator which enables holders of specific tokens on external protocols to earn additional rewards.
It began as a project that wanted to be aggregated within the Dopex ecosystem at the beginning of the year to now, where it has partnered with Jones DAO & GMX.
Its main features are its vaults:
Plutus Vaults: Builds on top of protocols like Dopex & GMX to offer higher returns than traditional staking.
For instance, 1 $plvGLP should always have a higher value than 1 $GLP. This is enabled by:
Dollar Maxi Vaults: Strategies integrated with Dopex & Jones DAO that increase yields but increase risk of impermanent loss (IL).
This is enabled through a 10% performance fee split into:
Bullish Fundamentals:
Bearish Fundamentals:
3. Sperax
Sperax is a stablecoin project native to the Arbitrum ecosystem.
$SPA is the governance token for the protocol. The stablecoin is $USDs.
$USDs is essentially a money market fund with a portfolio of other stablecoins.
The collateral behind $USDs is farmed to earn a return where:
Currently, the collateral is allocated between the Core Vault, Aave, Stargate & Curve.
Bullish Fundamentals:
Bearish Fundamentals:
References
Arbitrum (ETH) Blockchain Explorer. 2022. Arbitrum Unique Addresses Chart | Arbiscan. [online] Available at: <https://arbiscan.io/chart/address> [Accessed 9 September 2022].
CoinGecko. 2022. Cryptocurrency Prices, Charts, and Crypto Market Cap | CoinGecko. [online] Available at: <https://www.coingecko.com/> [Accessed 9 September 2022].
CoinMarketCap. 2022. Cryptocurrency Prices, Charts And Market Capitalizations | CoinMarketCap. [online] Available at: <https://coinmarketcap.com/> [Accessed 9 September 2022].
Docs.jonesdao.io. 2022. Protocol Overview - Jones DAO. [online] Available at: <https://docs.jonesdao.io/jones-dao/> [Accessed 9 September 2022].
Docs.sperax.io. 2022. USDs (Sperax USD) - Sperax. [online] Available at: <https://docs.sperax.io/> [Accessed 9 September 2022].
Jones DAO. 2022. Jones DAO. [online] Available at: <https://jonesdao.ghost.io/> [Accessed 9 September 2022].
Medium. 2022. PlutusDAO – Medium. [online] Available at: <https://medium.com/@plutusdao.io> [Accessed 12 September 2022].
Plutus Docs. 2022. Protocol Overview. [online] Available at: <https://plutusdao-1.gitbook.io/plutus-docs> [Accessed 12 September 2022].
Important notice and disclaimer
This presentation has been prepared by Greythorn Asset Management Pty Ltd (ABN 96 621 995 659) (Greythorn). The information in this presentation should be regarded as general information only rather than investment advice and financial advice. It is not an advertisement nor is it a solicitation or an offer to buy or sell any financial instruments or to participate in any particular trading strategy. In preparing this document Greythorn did not take into account the investment objectives, financial circumstance or particular needs of any recipient who receives or reads it. Before making any investment decisions, recipients of this presentation should consider their own personal circumstances and seek professional advice from their accountant, lawyer or other professional adviser. This presentation contains statements, opinions, projections, forecasts and other material (forward looking statements), based on various assumptions. Greythorn is not obliged to update the information. Those assumptions may or may not prove to be correct. None of Greythorn, its officers, employees, agents, advisers or any other person named in this presentation makes any representation as to the accuracy or likelihood of fulfilment of any forward looking statements or any of the assumptions upon which they are based. Greythorn and its officers, employees, agents and advisers give no warranty, representation or guarantee as to the accuracy, completeness or reliability of the information contained in this presentation. None of Greythorn and its officers, employees, agents and advisers accept, to the extent permitted by law, responsibility for any loss, claim, damages, costs or expenses arising out of, or in connection with, the information contained in this presentation. This presentation is the property of Greythorn. By receiving this presentation, the recipient agrees to keep its content confidential and agrees not to copy, supply, disseminate or disclose any information in relation to its content without written consent.
The ever-changing landscape of DeFi has cycled from its early innovative years spear-headed by the likes of AAVE, UNI and COMP to food tokens attracting billions of dollars into a burgeoning eco-system. Rife with highly experimental and untested platforms, culminating in the liquidation of many institutions throughout the industry due to over-exposure and over-reliance on DeFi and leverage.
With The Ethereum Merge kicking off, two major crypto narratives have started to pick up steam, namely;
1. Ethereum’s Merge narrative and distributed ledger technology projects that benefit from the switch.
2. DLT projects accrue more positive cash flow to its holders than inflationary emissions. They pay out such revenues in stables or blue-chip cryptocurrencies.
As we approach the merge, we find a considerable influx of trading volume in the DEX space, with $UNI leading the charge and $dYdX coming in second in trading volume.
Now that it’s #RealYield season, this fortnight’s piece will be delving into the various DLT projects and compare revenues along with valuations of a few prominent decentralised perpetual exchanges that readers should consider analysing as we come closer to the ETH merge.
Most leveraged trading occurs through popular centralised platforms that provide the best UX and UI. The question then arises, what are the benefits of decentralised trading platforms?
The main benefits and factors are the same as for most dApps:
The second quarter of 2022 has brought market uncertainty, dwindling interest in the ecosystem, and myriad repercussions in the market. Despite the turmoil in cryptocurrency and traditional asset classes, users would still trade and invest.
Users will still come despite the market cycles, and investors may still be able to profit through their activities on trading platforms. This source of demand is the prime driver of any trading platform. Whether trades are placed directionally or not, an investor could profit by investing in tokens related to said trading platforms.
Hence, we will compare three tokens within said space, namely $dYdX, $GMX, and $GNS.
dYdX
dYdX is a decentralised exchange specialising in derivatives trading, as suggested by its name.
Bullish Fundamentals:
Bearish Fundamentals:
What you can do with your $dYdX:
UniSwap Link:
https://info.uniswap.org/#/pools/0xd8de6af55f618a7bc69835d55ddc6582220c36c0
dYdX Vote Link: https://dydx.vote/delegate
Trading Fee Discounts: $dYdX holders enjoy a trading fee discount for any trades on the platform. This is another utility the token provides for community members who wish to trade in a low-fee environment on their platform.
GMX
A competitor to dYdX, GMX is a DEX that goes a step further and offers a decentralised order book.
With low swap fees and zero price impact trades, they support a unique multi-asset pool that provides liquidity providers and $GMX token holders fees from market making, swap fees and leverage trading.
Comparing this to centralised exchanges, DEXs hold less than 2% of the market share, which could rise as we see more activity on-chain due to the Ethereum Merge.
Bullish Fundamentals:
Multiplier Points:
Multiplier points are a way to reward long-term holders without inflation. Staked GMX
receives multiplier points every second at a fixed rate of 100% APR.
This, in turn, allows holders to receive protocol-generated fees in the form of ETH/AVAX as
each MP gives the right to a holder equal to a regular GMX token.
esGMX:
Once users receive esGMX via staking their GMX or GLP tokens, esGMX could be instantly
staked, representing the same reward mechanics as staked GMX - essentially entitling the
staker to ETH or AVAX rewards from platform fees.
Also, esGMX could be vested to unlock as GMX in one year. This is possible if a user locks their
GMX/GLP positions. The vested esGMX then unlocks linearly over one-year post-vesting.
Unstaking GMX or esGMX will mean a proportional amount of multiplier points are burnt,
incentivising holders to stake for longer to avoid losing their MPs. “For example, if 1000 GMX
is staked and 500 Multiplier Points have been earned so far, then unstaking 300 GMX would
burn 150 (0.3 * 500) Multiplier Points”.
Both these tokenomic factors provide “sticky” incentives for holders to stake their GMX for the
long term since the only way to acquire multiplier points is to accumulate them over time. This
also deviates from inflationary tokenomics as applied by many other dApp governance
tokens, whereby token supply gets inflated over time to liquidity providers/stakers such as
$AXS and various inflationary farm tokens that came up in 2021, such as $BUNNY, $CAFE
and even $CAKE.
With just 5% in Liquidity Pools and 10% in circulation not staked, some evidence shows a high conviction for holders to hold for the long term instead of selling.
Bearish Fundamentals:
GNS - gTrade Platform
Gains Network offers decentralised trading with unique innovations such as decentralised oracles & zero funding fees. Its token supply is a function of traders’ success rates, now at 7.93%. The token essentially supports traders winning and will get burnt when they lose to balance out inflation & deflation.
Bullish Fundamentals:
The protocol also plans to add features such as copy trading & trading competitions to appeal
to its large retail-focused community.
This is relatively competitive as we compare the fee structure to $dYdX, which was reasonably
surprising as a smaller platform. Their fee structure may be attractive even when compared
with centralised exchanges such as Binance and FTX.
The platform also advertises that “by building a big DAI vault (with trading fee incentives),
every trading pair listed on our platform benefits from bigger position sizes and less slippage.”
This means the platform only requires DAI liquidity for ALL tradeable pairs.
Bearish Fundamentals:
Closing Remarks
There are many different paths to development, both for how the exchanges function and how valuable their tokens will be. Web3 and the digital asset space is an ever-changing landscape, and it is impossible to conclude that $dYdX, $GNS and $GMX have reached their true potential and final form.
The development will continue, and their tokenomics will evolve as we progress over time. Nonetheless, the analysis above provides insight into these protocols, what users could expect and potentially do with these tokens, and how the ecosystem is ever-changing.
References:
App.gmx.io. 2022. GMX. [online] Available at: <https://app.gmx.io/#/dashboard> [Accessed 16 August 2022].
CoinMarketCap
Cointelegraph. 2022. Core Ethereum developer details changes to expect after the Merge. [online] Available at: <https://cointelegraph.com/news/core-ethereum-developer-details-changes-to-expect-after-the-merge> [Accessed 16 August 2022].
dYdX. 2022. Blog | dYdX. [online] Available at: <https://dydx.exchange/blog> [Accessed 16 August 2022].
Gains-network.gitbook.io. 2022. Fees, Spread & Example - Gains Network. [online] Available at: <https://gains-network.gitbook.io/docs-home/gtrade-leveraged-trading/fees-spread-and-example> [Accessed 16 August 2022].
Gains-network.gitbook.io. 2022. Home - Gains Network. [online] Available at: <https://gains-network.gitbook.io/docs-home/> [Accessed 16 August 2022].
Gmxio.gitbook.io. 2022. GLP - GMX. [online] Available at: <https://gmxio.gitbook.io/gmx/glp> [Accessed 16 August 2022].
Medium. 2022. Gains Network – Medium. [online] Available at: <https://gainsnetwork-io.medium.com/> [Accessed 16 August 2022].
Reddit.com. 2022. [online] Available at: <https://www.reddit.com/r/GainsNetwork/comments/r6izao/introduction_to_gains_network_for_traders_and/> [Accessed 16 August 2022].
Important Notice & Disclaimer
This presentation has been prepared by Greythorn Asset Management Pty Ltd (ABN 96 621 995 659) (Greythorn). The information in this presentation should be regarded as general information only rather than investment advice and financial advice. It is not an advertisement nor is it a solicitation or an offer to buy or sell any financial instruments or to participate in any particular trading strategy. In preparing this document Greythorn did not take into account the investment objectives, financial circumstance or particular needs of any recipient who receives or reads it. Before making any investment decisions, recipients of this presentation should consider their own personal circumstances and seek professional advice from their accountant, lawyer or other professional adviser. This presentation contains statements, opinions, projections, forecasts and other material (forward looking statements), based on various assumptions. Greythorn is not obliged to update the information. Those assumptions may or may not prove to be correct. None of Greythorn, its officers, employees, agents, advisers or any other person named in this presentation makes any representation as to the accuracy or likelihood of fulfilment of any forward looking statements or any of the assumptions upon which they are based. Greythorn and its officers, employees, agents and advisers give no warranty, representation or guarantee as to the accuracy, completeness or reliability of the information contained in this presentation. None of Greythorn and its officers, employees, agents and advisers accept, to the extent permitted by law, responsibility for any loss, claim, damages, costs or expenses arising out of, or in connection with, the information contained in this presentation. This presentation is the property of Greythorn. By receiving this presentation, the recipient agrees to keep its content confidential and agrees not to copy, supply, disseminate or disclose any information in relation to its content without written consent.