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The BTC halving is this month, but the market is looking forward to more tokens.
Hayden
April 01, 2024
GM. It is officially Q2.
While the market was broadly mixed over the weekend–ETHBTC bounced off its lows (despite more ETH ETF delay chatter) and the memecoin meta rages on (cat coins, mostly)–the market is anticipating a big TGE week. Ethena and Wormhole are expected to airdrop W and ENA, respectively, adding an anticipated ~$3.5B to the total crypto market cap.
Ethena is a synthetic dollar protocol backed by delta-neutral positions. Essentially, USDe is minted against a trading strategy in which the protocol uses perps to short spot ETH and LST (stETH, for example) reserves at a 1:1 ratio. Yield drop farmers earn shards, which are currently trading around $0.0016 and redeemable for ENA tomorrow. Based on the pre-market price of $0.65, we are expecting an injection of around $500M (5% of total supply).
Wormhole is a cross-chain messaging protocol, effectively enabling users to transfer assets from chain to chain. Backed by some of the biggest VCs in crypto, pre-market W is trading at around $1.7, putting the FDV at roughly $17B. And with 17% of the supply allocated for the TGE, the market is getting injected with roughly $2.9B. For more information on Wormhole, check out this in-depth Blockworks Research by Boccaccio.
It is worth noting that a lot of the W supply is getting unlocked on Solana, which has generated more attention looking toward more Solana DeFi airdrops. The market is expecting airdrops from Kamino, MarginFi, Drift, and Parcl to name a few (soon). Perhaps Q2 is setting up to be a big quarter for Solana DeFi.
One of the challenges for Ethereum is the growing risk of centralization at block-construction. This means only a few entities dictate which transactions get included in blocks before proposers include them on-chain. These market structures have created conditions in which it is advantageous for builders to create channels for private order flow. Obviously, with the goal of decentralization, there is a concerted effort toward disintegrating these market structures and mitigating the rise of vertical integration.
Above is a chart of Titan’s block flow through their new relay. As you can see, Titan is basically only sharing their blocks with themselves, compared to the distribution of shared blocks from ultra sound relay (below).
While this looks like further centralization, the Titan Relay will be completely open-source, so anyone will be able to run it, including other builders. Plus, Titan is a neutral builder, which means they do not share order flow or compete against other searchers–they simply build the best blocks. They have additional products and services, such as a bundle tracer, which are designed to even the playing field between searchers and integrated builder-searchers.
Will Titan’s dominance lead to even more centralization? Or is Titan a positive force against potentially mal-aligned vertical integration? I am personally bullish on Titan and neutral infrastructure in general, but, nonetheless, it will be very interesting to follow these MEV developments.
In terms of market implications, I speculate that, assuming a baseline level of on-chain activity and mindshare, over time chains that are more sufficiently decentralized accrue more value. Hence, following the direction of MEV markets will be increasingly important.
The Hivemapper Network represents a new model for building, updating, and monetizing global map imagery and data by leveraging the power of community coordination through token incentives.
Parallel Colony is the first major implementation of AI agents in gaming in crypto. The incorporation of AI distinguishes it from other crypto games that have historically been more focused on farming simulators and derivatives of existing games. Furthermore, the co-launch of Wayfinder, a new AI agent framework, introduces a new token sink for Parallel’s native token, PRIME. We recommend closely watching the Parallel over the next six months.
Plus, Ethereum’s blobs get the inscriptions treatment and Kevin Hart sells his Bored Ape
Elsewhere, Bitfarms is hiring a new CEO and Tether is staffing an AI division
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The insights, views and outlooks presented in the report are not to be taken as financial advice. Blockworks Research analysts are not registered broker/dealers or financial advisors. Blockworks Research analysts may hold assets mentioned in this report, further outlined in the Firm’s Financial Disclosures.
