The Big Fundamentals in Crypto: Uniswap, Crypto Up ~27%+, GokuStats on Twitter

Market Update 📈

7/24/2022 Artemis Weekly Crypto Comps

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Some observations 👀

ETH is up nearly 40% in the last 30 days and BTC is up 8%

• ETH and BTC are still down ~67% from their ATH as of July ‘22.

Among these major liquid tokens, the average token in our comp set is up broadly 27%

• AVAX is up 31%
• MATIC is up 57%
• Lido (LDO) is up 206%
• CRV is up 66%

It begs the question — is it a great time to start deploying?

• It would’ve been great for new liquid token funds to deploy in the recent bear market rally — but a key question is how much this will sustain.
• Global Interest Rates (h/t The Tie) are rising

• Kalshi (global prediction market) is pricing in a likely >0.3% CPI hike in July ‘22

Trueflation has rates at >10% in July ‘22

→ Inflation and rates really affects crypto and capital allocators decision to move money into risk on assets like crypto or risk off assets like treasuries where a 10 year treasury bond now yields ~ 2.91%.

→ Staking ETH right now yields roughly 4.09% in ETH (note on nominal terms) and staking SOL right now yields 5.63%— at what point does it make sense when a risk free asset like bonds can yield ~3% and a capital allocator doesn’t have to take price risk?

The Big Fundamental Update - Uniswap 🦄

For the readers, I’m a huge basketball fan. So if we’re covering fundamentals in crypto, we have to give a shoutout to the one and only Tim Duncan aka the Big Fundamental (our team cringed when I made this meme ).

This week we do a mini-dive into Uniswap ($UNI) Let’s go.

Uniswap 🦄

Price Action: Uniswap’s governance token UNI is ~$6.95 up ~50% from their lows in late June. Some potential drivers of this:

• Crypto is up more broadly (see crypto market update above)
• Uniswap continues to maintain its dominance at DEX leader
• Uniswap daily volume ~ Coinbase (see below)
• $UNI was added to Robinhood
• It’s worth noting that Uniswap Labs team is ~100 employees up 3x YoY and added nearly 21 employees in June ‘22. Clearly they’re adding talent to their team
• Uniswap hired Will Rubin (ex-Coinbase senior direct PM) as VP of Product.

Key Metrics

• DEX Marketshare: 64% (Source: Dune)
• Protocol Revenue: $0 (no fee for token holders or the DAO) (Source: Token Terminal)
• LP Revenue: ~$453m annualized revenue (7 day avg fee * 52) (Source: Cryptoinfo)

• TVL: $6.16B (up 28% from lows in mid June ‘22) (Source: Defilama)
• Volumes (ETH, Polygon, Optimism, Arbitrum): down slightly MoM (partial month as volumes below only show up until July 24th (vs full months for previous months). (Source: Uniswap)

• Uniswap ~ Coinbase daily volume now 👀

The 80/20: Fee Switch Revenue?

• Currently $UNI is a governance token. For $UNI holders to participate in the growth in Uniswap, there has to be some sort of protocol fee that accrues to token holders.
• Uniswap governance token currently doesn’t collect a fee for $UNI token holders like Sushi Swap which takes a 0.05% fee for users

• Uniswap’s docs state that a 0.05% fee could be turned on in the future, primarily taking 1/6th of the fee that currently go to LPs.

The protocol fee is literally written into the Uniswap V2 contract that’s open source on Github

It’s been fascinating to read through the “Fee Switch” governance forum occasionally to keep tabs on the conversation

• An argument from Leighton that I found interesting was turning on fees for a limited set of pools and experimenting and seeing what the DAO could do with the fees beyond rewarding token holders. Some ideas that were laid out include funding grants and developers, public good funding, etc. The argument is primarily about starting somewhere and collecting data on seeing how LPs react.
• Arguments against turning on the “Fee Switch” currently.
  - Regulatory concerns in the US that could make $UNI tokens look a lot like securities and thus checking the boxes of the The Howey Test.
    - The existence of an investment contract
    - The formation of a common enterprise
     - A promise of profits by the issuer.
     - The use of a third party to promote the offering
  - LPs potentially moving their liquidity to other pools as their revenue decreases from 30 bps to 25bps

It’s worth noting a temperate check on Snapshot of the proposal resulted in ~100% yes but largely driven by an individual monetsupply.eth with their 3.5m U 0.16%↑ NI.

Product Updates 😎

👉 We added Avalanche DEX Volume! Interesting to see TraderJoe continue to dominate the AVAX DEX market with 87%+ market share.

…And NFT Volume/Traders! NFT volumes starting to heat up on AVAX because of https://joepegs.com/. Interesting to watch new daily NFT buyers grow in July ‘22 because of Joepegs.

Thanks for tuning in! See you all next week,
Jon Ma
@jonbma