Week in Review | Week #14, 2021
The market had a busy week with BTC and ETH briefly breaking $60K and $2100 respectively. The legal drama around Ripple continued to unfold. The question of regulatory clarity is of great importance to the industry, which makes the case particularly important. There were plenty of updates and announcements both at the ecosystem and dapp level, and of course, there was plenty of excitement around NFTs. All in all, this was another busy week in the world of dapps.
InstaDapp announces a token
One of the major retail-facing DeFi projects, Instadapp, will have a governance token. This is a significant step for the portfolio management project, that aggregates access to major DeFi applications under one roof. It may also increase speculation over which major project without a token will be next to follow suit.
However, Instadapp, which has $2.4B TVL, will be adding more than just the INST token. The project will also introduce the DeFi Smart Layer protocol, and utilize L2 solutions. DSL will enable “extensions” such as flash loan, layer 2, and automation. The optimizations may make the DeFi sector more accessible and retail user-friendly, which is very important for the sector to get greater awareness and adoption.
The Fei Protocol debacle
The industry continues to show interest in algorithmic stablecoins, despite the challenging history of many of the previous implementations. The latest instance is the Fei Protocol, which is a complex algorithmic stablecoin, that introduced Protocol Controlled Value (PCV) and implemented penalties for withdrawing liquidity.
The protocol launched with an impressive $1.3B worth of Fei tokens minted off of a 639K ETH commitment but quickly broke its peg. According to DeFi Lama, the project’s TVL also took a hit, in what has been a tumultuous launch. Furthermore, a vulnerability in the protocol was discovered, but it has already been addressed.
The industry appears to remain interested in the subject of algorithmic stablecoins, despite questionable results and regulatory uncertainty. Interestingly, MakerDAO’s Dai continues to be one of the few ongoing success stories, despite being one of the earliest implementations and suffering through challenges of its own.
Ethereum rivals not slowing down
With the launch of the Rainbow Bridge, Near Protocol is now connected to the Ethereum ecosystem. The technology allows for bilateral asset flow between Near and Ethereum and may incentivize developers and users to give Near a try.
The Polkadot ecosystem will be welcoming USDT. The stable coin is expected to appear on both Polkadot and Kusama, something that may help the growth of both chains. Stablecoins have become an important element of the DeFi sector, and USDT has been, by far, the biggest stablecoin in the industry to this point.
TON Labs had a $6M funding round to continue developing the Free TON ecosystem. After the much-anticipated Telegram Open Network was shuttered, Free TON emerged to take the torch and continue the work. With Telegram out of the picture, the excitement around Free TON is not the same as it was for TON, so the path to adoption may be a lot more challenging.
NFT prices take a step back
It looks like NFTs have retreated from the February high, despite the growing excitement around crypto art and collectibles. Individual NFTs are still capturing headlines with impressive sales figures, but the market as a whole appears to have quieted down a bit, and there could be several reasons for that.
Liquidity and price discovery can be more challenging for NFTs. Projects like NFTX and Very Nifty are trying to address this, but their liquidity pools are most useful for assets near the price floor of different collections. As such, NFTs may be subject to greater price volatility than fungible assets.
The market could also be suffering from a bit of exhaustion. Not only are there lots of NFTs, but there are a lot of very similar NFTs. Crypto Punks alone have seen several projects get inspired and or replicate the idea in some form. The Picasso Punks, which have fetched five-figure prices, are just one example of that.
Big brands are looking to utilize NFTs
NFTs continue to attract the attention of traditional market players with opportunities for new revenue streams and greater audience engagement. NFTs have been particularly popular when it comes to sports, with NBA Top Shot and Sorare being number one and number five respectively when it comes to NFT all-time sales among collectibles projects. Now it looks like Major League Baseball is looking to get in with the trend. NBA Top Shot and Sorare have proven that there is demand for digital sports collectibles, so it would not be surprising to see other major sports leagues and teams try to take advantage of NFTs.
Playboy will also be experimenting with NFTs, as the company has partnered with Nifty Gateway. It looks like Playboy will be cooperating with artists as well as trying to leverage its archives. The latter is part of a growing trend of traditional companies trying to find ways to turn past content into collectibles using NFT technology.
It remains to be seen whether the strategy will prove to be sustainable in the long run. As mentioned previously, the market is potentially dealing with some exhaustion as it is. If companies simply try to resell older content in the form of NFTs, the demand for these collectibles may start to subside.
It is worth noting that Nifty Gateway continues to solidify itself as the platform for launching premium NFT items. The NFT platform landscape is getting more competitive, but it looks like Nifty Gateway has separated itself, if only for the moment, as the platform for high-value digital collectibles.
The information provided here is for informational purposes only. This is not investment advice and should not be treated as such. Strategic Round Capital and/or the author of this article holds a position in BTC, ETH, AAVE, USDC, YFI, COMP, Hashmasks, NCT, Axie Infinity NFTs, SLP, Sorare NFTs.