Ethereum liquid restaking drove DeFi TVL to $100B in first quarter

April 19, 2024 Coin Telegraph

Ethereum price data casts doubt on the strength of ETH’s support at $3K

April 16, 2024 Coin Telegraph

Defi’s Total Value Locked Hits $80 Billion in a Dramatic Turnaround Since 2022

February 25, 2024 Bitcoin.com

Ethereum Rival Soars Over 40% in a Week As the Crypto Project’s Total Value Locked Hits Record High

January 12, 2024 The Daily Hodl

Ethereum price rallies toward key resistance but is ETH’s strength sustainable?

December 1, 2023 Coin Telegraph

blast

Ethereum’s price rally toward $2,100 is driven by new developments in the layer-2 space and investors’ anticipation of a spot BTC ETF.

Ether (ETH) is trading higher on Dec.

*Ether 12-hour price index, USD. Source: TradingView*

However, the current positive momentum is supported by several factors, including applications for spot ETFs and the expansion of Ethereum’s ecosystem, driven by layer-2 solutions.

ETH benefits from ETF expectations and negative news related to competing blockchains

A pivotal development occurred on Nov. Securities and Exchange Commission (SEC) initiating the review process for Fidelity’s spot Ether ETF proposal, filed on Nov.

Despite analysts predicting the SEC might delay its decision to early 2024, interim deadlines for applications by VanEck and ARK 21Shares on Dec.

The Ethereum network's growth, especially in transaction activity and layer-2 development, is noteworthy.

This growth is reflected in Ethereum's total value locked (TVL), which recently hit a two-month high of 13 million ETH, spurred by a 13% weekly gain in Spark and a 60% increase in Blast user deposits.

*Ethereum network top DApps by TVL. Source: DefiLlama*

In contrast, Tron, another leading blockchain in TVL terms, witnessed a 12% decline over the past ten days. Recent high-profile hacks linked to Tron's founder Justin Sun have also swayed investor confidence toward Ethereum.

Layer 2 networks hit $13B TVL, but challenges still remain

November 15, 2023 Coin Telegraph

Layer 2 networks hit B TVL, but challenges still remain

Coin Telegraph

Data from L2Beat shows that layer 2s are seeing greater adoption than ever before as users continue to desire lower gas fees.

Ethereum layer-2 networks reached a new milestone on Nov. 10, reaching $13 billion of total value locked (TVL) within their contracts, according to data from blockchain analytics platform L2Beat. According to industry experts, this trend of greater interest in layer 2s is likely to continue, although some challenges remain, especially in the realms of user experience and security.

According to L2Beat, 32 different networks qualify as an Ethereum layer 2, including Arbitrum One, Optimism, Base, Polygon zkEVM, Metis and others. Prior to June 15, all of these networks combined had less than $10 billion of cryptocurrency locked within their contracts, and their combined TVL had been declining since April’s high of $11.8 billion.

But beginning on June 15, layer-2 TVL growth turned positive. And by Oct. 31, these networks had reached a new high of nearly $12 billion combined TVL. From there, investment in layer 2 apps continued to climb, passing the $13 billion TVL mark on Nov. 10 and continuing to nearly $13.5 billion at the time of publication.

This rise in TVL is even more dramatic when compared with the rate that existed during the bull market of 2021, when overall crypto investment was much larger than it is today. On Nov. 12, 2021, when the market cap of all cryptocurrencies reached an all-time high of $2.82 trillion, layer 2s had less than $6 billion locked within their contracts. Today, the total market cap of cryptocurrencies is a more modest $1.4 trillion, according to CoinMarketCap, yet the TVL of layer 2s is greater than ever.

In a conversation with Cointelegraph, Metis CEO Elena Sinelnikova proposed a theory for why layer 2s are growing in spite of the continuing bear market. According to her, Ethereum’s high gas fees during the bull market left an indelible impact on users, leading to a desire for alternatives when demand started to come back, as she stated:

“At the time of [the] bull market, Ethereum at peak times was very nonscaleable, which meant that transactions were slow and very expensive because of the bull market. It would be hundreds of dollars just in transaction fees for one transaction, so therefore it was not sustainable.”

According to Sinelkova, another reason that layer 2 networks have thrived in the bear market is because of the successful marketing efforts of their development teams, which has led to high user activity and, therefore, high yields. “They are deploying capital to attract new users and to attract new business into DeFI [decentralized finance],” she stated. “DeFi people from all ecosystems, they always go where there are big yields, [...] and this is just naturally happening, and is [...] the nature of business.”

However, Sinelkova warned that layer 2s still face challenges in the realm of user experience. Optimistic rollup networks require users to wait seven days for a withdrawal to be processed, which can lead to frustration. On the other hand, newer zero-knowledge (ZK) proof networks can process withdrawals instantly, but they are still in an early stage of development and tend to crash more often than older networks. The Metis CEO claimed that her team is working on a “hybrid” layer 2 network that will combine the best of both worlds, giving users the option to withdraw using either an instant ZK prover or a seven-day optimistic process.

Kelsey McGuire, chief growth officer for layer 1 network Shardeum, told Cointelegraph that layer 2s face another serious challenge that is often overlooked: centralization. “While layer-2 solutions have gained popularity for their scalability enhancements over the last year, they often introduce a trade-off in decentralization,” she stated. She continued:

“At the execution layer, where transactions are processed, centralized sequencer nodes are employed, raising concerns about potential censorship or government interference. This centralized aspect in layer-2 implementations challenges the core principles of decentralization and trustlessness that have underpinned the blockchain space.”

McGuire expects competition from layer 2s to spur improvements to layer 1s, ultimately leading to higher throughput for the foundational layers themselves. As she stated, “There may be fewer and fewer new L1s, and we’ll start to see a refocus on true scalability (as in high TPS paired with low gas fees) at the foundational layer as opposed to relying solely on L2s to provide scalability.”

In addition to their TVL increasing, the number of layer 2s also continues to rise. On Nov. 14, crypto exchange OKX announced that it is building a layer 2, and there have been rumors that Kraken is building one as well.

Solana price hits a new 2023 high — What’s behind the SOL rally

November 10, 2023 Coin Telegraph

Coin Telegraph

SOL hit its highest price since May 2022, possibly due to an uptick in DApp use and a few other key factors.

Solana's native token (SOL) experienced an impressive 22% surge on Nov. 10, breaking past the $54 mark for the first time since May 2022. Notably, this surge occurred amid the continuous selling of SOL tokens by FTX's bankruptcy estate. The Delaware Bankruptcy Court approved the sale of the failed exchange FTX assets, which included 55.75 million SOL in September 2023.

Investor enthusiasm for SOL's price increase may be attributed to the fact that some of the tokens from the bankruptcy proceedings are either vested or locked. Furthermore, there's a weekly sale limit of $100 million imposed as part of the FTX liquidation plan. In essence, the initial fear of asset liquidation has transformed into hope as investors realize the limited impact of the sales.

FTX has been selling between 250k-700k $SOL every day for the last 2 weeks while price has either been going up or sideways.

so far its been getting absorbed like a champ and at current rate their unlocked tokens should be depleted within a week.

once this seller is gone i can… pic.twitter.com/AtnTqz3uxG
— Bluntz (@Bluntz_Capital) November 9, 2023

As trader and independent analyst 'Bluntz' aptly described the situation, SOL's resilience during the FTX bankruptcy token dump is impressive. The post on X, (formerly Twitter) adds a bullish case for SOL, stating,

"Once this seller is gone, I can only imagine how hard it's gonna pump."

SOL price has been fueled by solid demand for leverage longs

SOL's substantial 39% weekly gains have pushed its futures open interest to $745 million, the highest level since November 2021 when SOL achieved its all-time high of $260. Still, in futures markets, leverage longs and shorts are constantly matched, so it's crucial to examine SOL's funding rate for a more nuanced perspective.

A positive funding rate indicates that longs (buyers) demand more leverage, while the opposite occurs when shorts (sellers) require additional leverage, resulting in a negative funding rate.

*SOL futures average funding rate, 8-hour. Source: CoinGlass*

SOL's current futures funding rate represents a 0.5% weekly cost for leverage longs, which is not excessive given the prevailing bullish momentum. Yet, this is a significant shift from the funding rate levels observed three weeks earlier when leverage shorts were paying for leverage use.

While it could be argued that SOL's rally was primarily driven by derivatives markets, there's solid evidence indicating growth in terms of deposits and the usage of decentralized applications (DApps) within the Solana ecosystem.

Beyond derivatives, Solana's ecosystem shows solid growth

Solana's total value locked (TVL), which measures the amount deposited in its smart contracts, has reversed its declining trend after six consecutive weeks.

*Solana network total value locked in SOL terms. Source: DefiLlama*

Solana's DApps deposits have seen a 10% increase in the last three days. While the current 11.1 million SOL level is still below the 30 million SOL prior to the FTX exchange bankruptcy, this recent trend suggests that the worst period for the Solana network may be behind us.

To confirm that this movement isn't solely driven by a few large holders inflating TVL, it's essential to analyze the number of users employing active addresses as a proxy.

*Total DeFi active address in 30 days. Source: DappRadar*

Solana now ranks as the fourth-largest blockchain in decentralized finance (DeFi) TVL, accompanied by a 28% growth in the number of active addresses. Interestingly, this surge in activity occurred while competitors experienced declines, with market leader Ethereum facing a 22% drop in DeFi active users, according to DappRadar.

On one hand, SOL token bulls benefit from the increased network activity and higher TVL, while on the other hand, Solana's current market capitalization of $22.8 billion has surpassed Polygon's $7.8 billion by nearly threefold, despite both networks having comparable DeFi TVL. This has prompted investors to question the sustainability of SOL's bull run above $54.

Additionally, Solana protocol's accumulated 30-day fees amounted to $1.9 million, compared to Polygon's $1.6 million, according to DefiLlama. However, these figures pale in comparison to BNB Chain's $9.1 million, raising doubts about the valuation after SOL's recent rally.

As of now, there is no evident reason to bet against the trend, as there is no excessive leverage demand observed in SOL derivatives contracts. Nevertheless, the fundamentals hint at limited room for further upside.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Solana price corrects as recent (SOL) rally factors come under question

November 6, 2023 Coin Telegraph

Coin Telegraph

SOL price has started to cool off as investors potentially question the reasons for the most recent double-digit rally.

Solana (SOL) experienced a notable 36.6% increase in value between Oct. 30 and Nov. 2. However, SOL’s failure to breach the $44.50 mark resulted in a 10% correction down to $40 on Nov. 6. This movement has left many investors pondering whether the ecosystem growth and network activity support Solana’s present $16.9 billion market capitalization.

Solana's peak at $44.50 on Nov. 2 was the highest it had reached since August 2022, and coincided with the Solana Breakpoint 2023 global conference held in Amsterdam. The price hype during this period even prompted BitMEX co-founder Arthur Hayes to admit to being a "degen" and invest in SOL, despite referring to the token as "just a meme."

During the Breakpoint conference, the Solana Foundation unveiled the testnet launch of Firedancer, a new client aimed at enhancing speed, reliability, and reducing hardware requirements for validators, addressing a longstanding criticism of this layer-1 blockchain that offers parallel computing for smart contracts.

Additionally, on Oct. 31, the Solana Foundation announced the availability of its network dataset on Google Cloud BigQuery, a serverless data warehouse solution with built-in machine learning and artificial intelligence. This enables developers and companies to access archival data and analytical insights transparently and securely.

On the development front, the Solana Foundation has maintained a consistent level of activity. This includes the approval by validators in September of the v.1.16 update, which introduced confidential transactions for SPL tokens on the Solana network using zero-knowledge (ZK) proofs.

However, not all news has been positive for Solana despite its token's price performance. For example, on Oct. 17, the decentralized liquid staking protocol, Lido Finance, announced its decision to cease operations on the network, citing unsustainable financials and low fees, which led to a community vote sealing the service's termination.

The central question that lingers is whether the on-chain activity and metrics related to decentralized applications (DApps) support the SOL price hike. Thus, one should analyze how Solana's on-chain data and ecosystem growth compares to its competitors.

Solana’s reduced total value locked and activity pose considerable risks

Solana's primary DApp metric began showing weakness in September as the network's total value locked (TVL), measuring the amount deposited in its smart contracts, reached its lowest levels in over 2 years on Nov. 5.

*Solana network Total Value Locked, SOL. Source: DefiLlama*

Notably, Solana's DApp deposits experienced a 30% decrease in 30 days at 9.83 million SOL. As a point of comparison, Ethereum's TVL in ETH declined by 2% during the same period, while BNB Chain saw an 8% decrease in BNB terms.

Furthermore, Solana's low fees and continued development after the FTX-Alameda Research collapse have not necessarily translated into a large number of active users. Solana's largest decentralized exchange (DEX), Raydium, recorded only 17,380 active addresses in the past 30 days. Similarly, Solana's most widely used game, Star Atlas, had 12,420 unique addresses during the same period.

In contrast, BNB Chain's DEX, PancakeSwap, boasted 513,060 active addresses in the last 30 days, and its Stargate game had 106,400 users. Meanwhile, Avalanche's DEX, Trader Joe, garnered 54,130 active addresses, and its leading game, Galxe, had 32,040 unique addresses.

Perhaps more concerning is the fact that Solana's DApps' volume reached $609 million in the last 30 days, as reported by DappRadar. This number pales in comparison to BNB Chain's $11 billion, Polygon's $5.3 billion, and Avalanche's $727 million in DApps volume.

*DApps volume ranking, 30 days, USD. Source: DappRadar*

In addition to these issues, criticism has arisen regarding the need for Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements to become a network validator, as highlighted by user StakeWithPride on a social network.

To add to the concerns, X social network user arixoneth revealed that out of 1,997 validators, 1,818 received delegations from the Solana Foundation or Alameda, accounting for nearly 90% of all validators.

2/ I wrote a script to get precise numbers and here is what I got:

Out of 1997 validators 1818 received delegations from the foundation & Alameda.

In total they have delegated 106M SOL, 73M from the foundation and 33M from Alameda. pic.twitter.com/Il3eyabeZ8
— arixon.eth (@arixoneth) October 3, 2023

These participants effectively delegated 106 million SOL from these two entities, raising questions about centralization and dissatisfaction among SOL token holders, both concerning the validators and development subsidies as well as the comparatively small DApps user base in relation to other networks. Ultimately, Solana’s on-chain activity contradicts the recent price surge and does not support further price increases.

Polygon (MATIC) rally comes to an end as competitors devour market share

October 10, 2023 Coin Telegraph

Arbitrum

MATIC price has retraced a majority of its recent gains. Cointelegraph explores why.

Polygon’s native token (MATIC) experienced a 16.4% rally that coincided with the launch of Polygon 2.0 Goreli testnet on Oct. 4. However, the resistance at $0.60 proved stronger than anticipated and was followed by a 10.6% decline over the six days leading into Oct. 10.

This decline was exacerbated by negative news regarding the departure of a key co-founder and weak activity in Polygon’s zero-knowledge rollup (ZK-rollup) subnet.

*Polygon (MATIC) 12-hour price in USD. Source: TradingView*

MATIC’s price has wiped out previous gains from the early October rally, erasing the bullish momentum driven by the expectations of the protocol’s upgrades.

Rallies tend to follow mainnet and protocol updates

Polygon 2.0 is a network of ZK-based layer-2 chains unified via a novel cross-chain coordination protocol. Polygon’s 2.0 scaling technology was unveiled in June 2023 as a plan for a scaling ecosystem consisting of four layers: staking, execution, interoperability and proving. Each of these layers contributes to creating an interconnected ecosystem of chains that facilitate secure, fast and highly cost-effective transfers.

Among the benefits of Polygon 2.0 are enhanced security and privacy through ZK-proofs, full compatibility with the Ethereum Virtual Machine (EVM) and instant cross-chain interactions without requiring additional security or trust assumptions. It’s worth noting that the project is continuing to develop its Zero-Knowledge Scalable Transparent Argument of Knowledge-based layer-2 solution, Miden.

One could argue that the recent 10.6% retracement merely reflects an adjustment to the overexcitement triggered by the testnet launch. However, other factors may have contributed to investors’ worsening sentiment toward Polygon. For instance, Polygon’s ZK subnet, zkEVM, has lagged behind competitors in activity and deposits.

Network data shows Polygon losing steam as new competition emerges

*ZK networks daily active and transactions. Source: artemis.xyz*

Metrics from Artemis, an on-chain data provider, reveal a significant disparity between Polygon zkEVM’s 6,210 active addresses compared to StarkNet’s 154,390 and zkSync ERA’s 239,810. A similar discrepancy exists when analyzing the number of daily transactions, with Polygon’s ZK-rollup also trailing competitors.

Taking a broader perspective on the total number of transactions and deposits in the Polygon network yields suboptimal results. For example, Polygon’s total value locked (TVL) stands at $756 million, according to DefiLlama, which is less than half of Arbitrum’s layer-2 scaling solution.

*Total value locked (TVL) in USD. Source: DefiLlama*

It’s noteworthy that despite being launched much earlier than most Ethereum layer-2 solutions in June 2020, Polygon is now facing direct competition from Optimism and Base.

The departure of Polygon’s co-founder, Jaynti Kanani, on Oct. 4 after six years with the project also triggered some degree of discomfort among investors, given the project’s proximity to the crucial completion of its improved multiple-layer scalability solution. Interestingly, this decision follows the departure of Polygon Lab’s CEO, Ryan Wyatt, in July 2023, not long after joining the company in February 2022.

Further impacting MATIC’s performance was a decline in the number of active addresses using the Polygon network’s decentralized applications (DApps).

*Polygon network DApps active addresses, 30-day change. Source: DappRadar*

On average, the top 12 DApps on the Polygon network experienced a 17% decline in the number of active addresses over the last 30 days. This issue was particularly concerning in the NFT and decentralized finance markets, notably affecting applications like Uniswap, OpenSea and Move Stake.

Regardless of the reasons behind MATIC’s token surge earlier in October, the recent 10.6% negative performance can be attributed to reduced network activity, the departure of a co-founder during a critical upgrade phase and stiff competition from other ZK scaling solutions.

Ultimately, there is enough bearish news flow to justify this correction, although the team has been consistently delivering the necessary updates and improvements to the Polygon network. Investors should closely monitor the project’s progress in addressing these challenges and capitalizing on the innovations of Polygon 2.0.

3 reasons why Solana (SOL) price is up this week

October 6, 2023 Coin Telegraph

Coin Telegraph

Solana price staged a double-digit recovery since September and a portion of the move was caused by improving fundamentals.

Solana (SOL) price experienced a 20% gain between Sept. 28 and Oct. 6, but is the rally a tandem move with Bitcoin (BTC) price or is it being driven by other factors. Prior to the price breakout, or perhaps, it’s recovery, SOL faced a turbulent period after a U.S. court approved the sale of $1.3 billion in SOL from the bankrupt exchange FTX.

*Solana daily price index, USD. Source: TradingView*

The bankruptcy court has taken measures to ensure that the liquidation of FTX assets won't become a burden for the crypto market, demanding the sale to occur through an investment adviser in weekly batches in accordance with pre-established rules.

Following the initial impact, which drove Solana's price down to a 2-month low of $17.34 on Sept. 11, some degree of confidence among bulls emerged as it re-established the $20 support on Sept. 29. This movement coincided with a successful upgrade to version 1.16, boosting the SOL token by 16% over the next 7 days.

Solana's rally was also supported by growth in decentralized applications (Dapps) usage and increased nonfungible token (NFT) volumes. Solana's price is now attempting to establish a $23 support and consolidate its position as the fifth-largest cryptocurrency (excluding stablecoins) by market capitalization, surpassing Cardano's $9.22 billion.

Solana’s DApp and NFT market activity surges

When analyzing networks focused on Dapp execution, the number of active users should be a top priority. Therefore, one should begin by quantifying the addresses involved with smart contracts, which serve as a proxy for the number of users.

*Solana Dapps active addresses, 7-days. Source: DappRadar*

Notice that the increase in activity was consistent across all sectors, including NFT marketplaces, decentralized finance (DeFi), collectibles, social, and gaming. Furthermore, Solana's active addresses engaging with Dapps exceeded those of Ethereum in the same period, which were capped at 55,230.

Solana has been gaining traction in the NFT market due to its cost-efficient and scalable solution, as data is compressed and stored off-chain. This allows for more viable production in larger quantities, as they require lower minting fees, enabling creators to reach wider audiences.

*NFT sales per blockchain, 7-days. Source: Cryptoslam*

Over the past 7 days, the Solana network surpassed Polygon (MATIC) in NFT sales, accumulating $6.8 million in value according to Cryptoslam. In September, the situation was reversed, with Solana totaling $23.9 million, while the Polygon network achieved $31 million in NFT sales.

Network upgrade enhances privacy and eases the stress on validators

A potential driver behind Solana's recent 20% price gains was the network upgrade to version 1.16 on Sept. 28, which introduced a "gate system" to ensure the gradual activation of new features on the network. This process helps maintain network stability and prevents issues caused by sudden changes.

Another notable change in this update is "confidential transfers," which use zero-knowledge proofs to encrypt transaction details, enhancing user privacy. The release also includes improvements in RAM usage for validators, resizable data accounts, and a mechanism to identify corrupted data.

Overall, this update brings improved efficiency, privacy, and security to the Solana blockchain, marking a significant milestone in its development.

Stiff competition from Ethereum layer-2 solutions

Despite Solana's competition with other blockchain networks, there is no doubt that Ethereum layer-2 solutions have gained more traction in terms of total value locked (TVL) and activity. For instance, Arbitrum holds $1.73 billion in TVL, and Optimism holds another $637 million, both vastly superior to Solana's $326 million, according to DeFiLlama.

Even as Solana continues to make progress in terms of privacy, scaling, and security, external factors are at play beyond the FTX bankruptcy drama, making the $23 resistance harder to breach than anticipated.

Ultimately, investors remain largely focused on the Ethereum ecosystem, as it remains the leader in terms of developers and consolidated decentralized applications.

TVL

ETH benefits from ETF expectations and negative news related to competing blockchains

SOL price has been fueled by solid demand for leverage longs

Beyond derivatives, Solana's ecosystem shows solid growth

Solana’s reduced total value locked and activity pose considerable risks

Rallies tend to follow mainnet and protocol updates

Network data shows Polygon losing steam as new competition emerges

Solana’s DApp and NFT market activity surges

Network upgrade enhances privacy and eases the stress on validators

Stiff competition from Ethereum layer-2 solutions

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