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đź’Ł Will Arbitrum Outperform Everything?

GMX increases fee share | Render upgrades to Solana | Coinbase earnings

A weekly recap of the largest crypto events and narratives, with an extra dose of insight.

Here’s what we have for you:

  • Arbitrum outperformance

  • GMX increasing fee share

  • Render upgrades to Solana

  • Aave scare

  • Crypto stocks?

  • CoW Swap fee switch

Gm. New week, new bulla. Who’s ready?

On the back of SBF being convicted guilty, FTX claims have risen substantially in value. At the bottom, those claims were probably trading at 10 cents on the dollar. These days, they’re trading closer to 50 cents on the dollar. Claims trading is actually a surprisingly large business, and you would have made an easy 5x had you bought those claims at the bottom. Distressed opportunities are always an interesting play.

Everything is outperforming to be honest, especially Arbitrum native tokens like $GRAIL. That’s because Arbitrum STIP grants have begun streaming to various recipients. I firmly believe that Arbitrum tokens continue to outperform throughout the next months as 50M ARB gets distributed. 

Similarly, it seems as though the Arbitrum staking proposal will pass its Snapshot vote. The proposal will result in 1.75% of the total ARB supply being distributed to ARB stakers throughout a one year period, with individuals staking for a longer period receiving a proportionally higher share of the rewards. This has the potential to be an immense supply sink for ARB that could further bode well for the token.

-RektRadar

Perp DEXs are going to be one of the largest winners of the next cycle. DYDX by itself probably made $500M in fees in the last bull market, and if the next bull market is larger than the last, we can expect many of the existing perp DEXs to outperform and drastically increase their fees collected.

THE OG perp DEX has been making a come back. After a lackluster 2023, GMX finally unveiled its long awaited V2, and since then, its share of fees across all perp DEXs has slowly been increasing from the lows. At the bottom, GMX was only generating ~7% of all perp DEX fees, however recently, that number is much closer to 50%. And with ARB incentives from Arbitrum STIP, that number is poised to go even higher.

Render upgrades to Solana

  • Render network, a distributed GPU rendering service, has completed its upgrade to Solana. With the upgrade, the protocol’s core infrastructure has migrated from Ethereum to Solana and is poised to take the project to the next level.

  • RNDR holders can now migrate their tokens over, and the Render Foundation has allocated up to 1.14M RNDR to help migrate the token over. This token migration also plays well into OpenAI’s dev day taking place today.

Aave has a scare

  • I’ve always been of the thought that blue chip DeFi protocols have a very very low smart contract risk. I guess I was wrong. Aave recently implemented a wide range of cautionary measures after finding some issues within the protocol.

  • This includes pausing the Aave V2 Ethereum market, pausing certain assets on Aave V2 on Avalanche, and freezing certain assets on Aave V3 on Polygon, Arbitrum, and Optimism. Nothing is truly safe in crypto.

Brevis propelling Uniswap to data-driven experiences

  • Ever wished you could be a VIP trader on Uniswap and get lower fees? Well, soon that could be a possibility. With Brevis and hooks, one could potentially compute LPs’ and traders’ historical transactions.

  • I think more and more protocols will have such mechanisms that favour power users. If power users generate a large amount of volume and fees for your protocol, it makes sense to pander to them and decrease fees a little bit for them so they stick around.

Crypto stocks?

Coinbase. It’s one of the only crypto equities out there.

They just announced their Q3 earnings last Thursday, and they came in relatively tame. Transaction revenue was down 12% QoQ, with trading volume being down 17% QoQ. Institutional transaction revenue was down even more QoQ at 18%. TLDR: volume is down. Take into account that this doesn’t include the large BTC rally that occurred in October, so that could potentially lead to a much better Q4 financial performance from the company.

Subscription and services revenue was flat on the quarter, with most categories such as blockchain rewards, interest income, an custodial fee revenue being down. However, one category that outperformed was other subscription and service revenue, which increased by 10% QoQ. What falls into this other category? Coinbase One and prime financing products.

This is the first time that subscription and services revenue is more than transaction revenue, and that could be a significant thing to pay attention to as the company grows. Perhaps Coinbase will transition to a larger services business rather than simply offering trading products.

IMO, Coinbase is a fantastic index bet on all of crypto. It’s a bridge, an exchange, a staking service provider, an L2, an infrastructure platform, and more.

CoW Swap Fee Switch?

Protocols wanting to make money? That’s crazy. Imagine that.

After Uniswap turned on its interface fee switch, it seems like many other protocols are following suit.

In a recent forum post, CoW Swap contributors have proposed a few fee models.

  1. Quote improvement fees: charging a fee on the “extra” amount received by a trader

  2. Surplus fees: charging a fee on surplus

  3. Volume-based fees: charging a small % fee on the total trade amount

  4. Fixed fees: charging a fixed amount for every trade

Protocols ultimately need to make money, especially for DEXs. You can’t just generate a huge amount of volume, pay that all to liqiudity providers, and not get any of it. Eventually, devs need to get paid. More of this to come in the bull market.

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