Weekly Wrap: 1st May - 8th May

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The memecoin $PEPE stole the show this week busting the $1 Billion USD market cap barrier less than a month after lauching. It truly is a spectacle what a bunch of committed degens can achieve with a dream and a coin that offers absolutely zero utility.

Binance listed it under the "innovation" section. The innovation?

“PEPE has no token utility or value support mechanism.”

This triggered a wave of new memecoins to be spun up in a game of hot potato clogging the Ethereum network and raising gas fees to a one year high. Some are calling this Memecoin Season, although it could just as easily be called Memecoin mania. Either way, it has made it's impact and it will be interesting to see the fallout in the coming weeks. If you want to get involved, check out this recent post.

- @nuconomist

Crypto Market Cap: 1.23 Trillion Dollars 🔻-1.6% (Was 1.25 T)

Bitcoin Dominance: 45.1% 🔺+0.07% (Was 45.07%)

Ethereum Dominance: 18.48% 🔺-1.09% (Was 18.28%)

Other Crypto (excl. BTC & ETH): 36.42% 🔻-0.63% (Was 36.65%)

Comments:

Crypto seems to be oscillating within a price range at this level. One of the most notable things observed this week is the increase in gas fees on the Ethereum network as people continue spending huge amounts on gas while trading memecoins. Increased gas fees mean more Ethereum is burnt and at the time of writing this newsletter the suppy of Ethereum has reduced by 58,954.75 ETH during the last 7 days. Before the merge, the supply would have grown by 22373.8 ETH over the same period meaning that is effectively 81,328.55 ETH less liquidity than there would have been previously. With this effect over time Ethereum becomes more scarce and it is expected this will cause the price of Ethereum to rise even with a steady demand flow. However, when deman starts to grow in a bull market this impact is likely to compound and lead to faster price appreciation. You can see the latest stats on this phenomenon here.

NFT Market Cap (ETH): 7.9 Million 🔻-2.45% (Was 8.1 Million)

NFT Market Cap (USD): $14.82 Billion 🔻 -2.88% (Was 15.26 Billion)

30 Day NFT Volume (ETH): 531k 🔻-16.38% (Was 635k)

Comments: If last week was holding steady in USD terms, this week is... not. The value of ETH is down, the total value of NFTs is down, volume is down. Not a great look here from a financial perspective. While things have been on a downtrend for a while here, one factor that could have led to the acceleration for this week is the increased gas fees as memecoin mania continues. When it costs $20 USD in gas to claim a "free NFT" or $200+ for more complex trades, volume on low cost collections will inevitably fall. There is a strong argument for low value NFTs to trade on layer two networks but as of now the liquidity still isn't there.

DeGods was the one of the first crypto native NFT projects to gain major traction on an alternative Layer 1 (Solana) and that bridged over to Ethereum for increased liquidity, and y00Ts from the same company moved to Polygon (an ETH L2) but hasn't found anywhere near the volume as collections on the primary Ethereum chain. The top ETH collection saw 14,293 ETH of trades over the past week, while Yoots, the top collection on Polygon only saw 543,666 Matic Volume (~279 ETH). To put it another way, the top collection on Polygon saw approximately 98% less volume than the top collection on ETH,

1. Azuki: 14293 ETH 🔺+89.71% (Was 7534 ETH)

2. Mutant Ape Yacht Club: 10267 🔻-12.65% (11755 ETH)

3. Wrapped Cryptopunks: 9625 🔺+184.59% (Was 3382 ETH)

4. Bored Ape Yacht Club: 9275 🔺+40.53% (Was 6600 ETH)

5. Milady: 4505 ETH

Comments: This week saw the long awaited Blur update and yet again, they have shown their ability to paint the charts here. While there is no trait bidding as I had expected hoped for, they instead came out with an NFT lending product called Blend for three collections where you can get loans with interest as low as 0%. Unsurprisingly these three collections have seen a large boost in volume and are now part of the top five including: Azuki, Wrapped Cryptopunks and Milady. They have also continued the double points for bidding on many other collections so we still haven't seen what will happen to the floor prices of these top projects without incentivised bidding in exchange for blur points.

1. Milady: 1357 ETH PnL (Was 291 ETH PnL PnL)

2. Redacted Remilio Babies: 640 ETH PnL (547 ETH PnL)

3. Azuki: 499 ETH PnL

4. MONGS: 498 ETH PnL

5. Otherdeed Expanded: 426 (Was 315 ETH PnL)

Comments:

With Milady being included as one of the three collection eligible for Blend borrowing, they have well and truly regained momentum and made gains in both floor price and profitability taking the top space this week. Being the lowest cost collection eligible for Blur lending has likely encouraged more people to trade this asset. Coming in hot on their heels is their secondary collection Redacted Remilio Babies with a 527% rise in floor price over the past month. This shows the power of having a secondary lower value collection for people to enter your ecosystem. Azuki jump back onto this list continuing with the renewed Blur volume. And MONGS comes out of nowhere following Memecoin mania with a related token and jumping 10x in a week. And finally the migrated Otherdeed collection continues it's run after the launch of decoupled Kodas and the introduction of Vessels.

1. Moonbirds: -713 ETH PnL (Was -1143 ETH PnL)

2. Otherdeed for Otherside: -274 (New Entrant)

3. Mutant Ape Yacht Club: -363 PnL (Was -274 ETH PnL)

4. CloneX: -338 ETH PnL (Was -438 ETH PnL)

5. Doodles -132 ETH PnL (Was -814 ETH PnL)

Comments: Once again, the falling angels make their appearance here: Moonbirds, Clone X and Doodles continue their descent. Notably the losses for all collections have slowed. Is this a sign that they are running out of sellers or is it just another symptom of the high gas fees on Ethereum, only time will tell. With Otherdeeds joining MAYC, there are now two Yuga collections making a dent in the market leader's reputation for always being a good bet.

Interestingly, Otherdeeds made it into both the most and least profitable list this week. The less profitable one is the pre-migration contract which is holding a higher floor price (1.14 ETH). This is likely due to sellers locking in losses instead of migrating to new contract (0.7 ETH Floor) and instantly losing even more ETH if they were forced to sell at floor value. To make matters even worse for those selling at a loss, the new contract enforces royalties at 5% while tokens on the old contract can be sold with a royalty as low as 0.5%. It certainly looks like the market places a premium on fungibility with the low fee options trading ~38% higher before even considering the additional 5% fees enforced on the collection with a lower floor.

The "truth" about ETH Founders split and "Crypto Google" - CoinTelegraph

The UK is developing specific guidance to simplify DeFi Lending tax - CoinDesk

Memecoin Speed Run Goes Viral - Decrypt

Bitcoin Network Congestion causes Binance to Pause Withdrawals - CoinDesk

Pepecoin's bewildering rise turned $263 into millions - CoinDesk

Comments:

If you're tempted by the flames of Memecoin mania, you may want to read this thread from @Zeneca setting some expectations on what you're likely to encounter.

9th May - Web3 Marketing Summit

9th May - $ROOT Bridging Event (L1 linked to Fluf World and Cool Cats)

15th- 29th May - RTFKT CryptoKicks IRL Un-Hubbing

18th May - Veecon 2023

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