Crypto Fundamentals #005

note: all analyses in this document created using the Artemis Sheets plug-in ✌

its officially December which marks the start of the holiday season! all i want for christmas is for you to subscribe to our weekly updates 🎄

Overview:

The crypto ecosystem appears to have stabilized in recent days with an average price increase of 2.6% over the past week, led by Optimism (up 14.7% WoW) and Polygon (up 8.1% Wow). TVL has stabilized in the system with net average inflow of ~2.3% over the past 7 days (it’s still down ~25% this past month tho).

In this edition of our weekly analysis we have added Arbitrum to the L1 dashboard! Although a token hasn’t launched yet we have added fundamental data so that Artemists can compare the health of that ecosystem vs. other blockchain platforms.

Largest fundamental metric movers this week include BSC and Solana, with daily active addresses up 28% and 57%, respectively. Overall ecosystem comps saw a median decline of ~1.7% over the same period.

DCG drama appears to have stalled in the near-term, but Ryan Selkis reports in a Messari document regarding potential outcomes for the crypto behemoth. TLDR: DCG likely requires some form of recapitalization in order to make-whole Genesis creditors and prevent bankruptcy at the DCG and/or Genesis level.

Elsewhere in crypto, Mr. Novogratz is picking up pieces from the Celsius bankruptcy, specifically the GK8 custody platform. Seems like Galaxy is still well capitalized and able to benefit from the carnage happening in the markets.

https://www.coindesk.com/business/2022/12/02/galaxy-digital-to-buy-gk8-from-bankrupt-crypto-lender-celsius-bloomberg/

ecosystem highlights below

Arbitrum! vs. Optimism

Welcome Arbitrum to the weekly newsletter! This week we see that Arbitrum TVL and Stablecoin Volume is almost double that of Optimism (TVL of $977mm on Arbitrum vs. $537mm on Optimism, Stablecoin Volume of $1.0bn on Arbitrum vs. $535mm on Optimism).

Arbitrum also boasts almost 2x as many daily active transactions and users as Optimism🤔🤔. How much of it is real activity vs. bots trying to set up for the ARB airdrop? Guess we’ll find out when a token is launched…

Also worth mentioning there is significantly more CoreEco work being done on the OP side (53 weekly active core eco devs, 834 weekly commits) vs. the Arbitrum side (26 weekly active core eco devs, 492 weekly commits).

Solana

Signs of life from the Solana ecosystem! TVL saw an inflow of ~$20mm (~7% WoW increase) over the last 7 days, while weekly commits and weekly active developers increased 15% and 5%, respectively. Daily active addresses spiked 57% vs prior week (??!?!) - we tryna figure out what the heck happened there.

Stablecoin volume continues to dip, with a 7D drawdown of ~$130mm (~6% week over week change). The slowdown in bleeding and reversal in TVL / dev activity has appeared to have no impact on price - Solana was still down 7.1% WoW despite generally positive usage statistics.

Cardano

As part of our regularly scheduled programming, we are checking in on our favorite chain Cardano. This week, a shocking new revelation: Cardano sees a daily transaction / daily active address multiple of ~1.0x, indicating that every active address basically conducts just 1 transaction per day. This compares to the median and average of its peers of 6.6x and 11.5x, indicating that virtually all ecosystems see substantially higher per user activity than Cardano does.

Interestingly, we see relatively low daily transactions / daily active user multiples for Ethereum and BNB as well (2.5x and 2.8x, respectively), but imagine there could be a case where a small proportion of users make up vast majority of transaction activity. We shall do some more work 🤗

Correlation Data

This week we have added a correlation analysis to our comps table. Across the fundamental metrics we currently support, price is definitively the most correlated variable to TVL with a median correlation of 0.929 (!!!) between the two metrics over the last twelve months.

It appears that most of the highest activity blockchains, i.e. ~1mm+ daily transactions - have consistently high correlations between price and TVL. This list includes ETH, BNB, AVAX, MATIC and SOL, and all of these blockchains show 0.90+ correlations between price and TVL.

Meanwhile, we see one of the lowest correlations re: cardano price <> TVL at 0.21 - this appears to be another indicator that fundamental data such as TVL is not translating into price action for this specific asset, and that it is primarily a speculative investment asset. Meanwhile, NEAR interestingly sees -0.28 correlation between price <> TVL - the only negative correlation in the entire comp set. On the flip side, its price action is much more correlated with weekly active devs (~0.70) vs. the median of its peers at ~0.50. What other correlations would you like to see?? We’re going to build upon this analysis to see more correlations between assets and metrics to see what other interesting things there are to find!

Wrap.

And that’s it folks! We at Artemis continue on our mission to provide slick, best in class data for all participants in the crypto ecosystem. until next time artemists