Bobby Ong (co-founder, CoinGecko), Zhong (head of research, CoinGecko), and the rest of the research team came together to discuss where the cryptoverse is heading next! The team covered the crypto market outlook (plus some insights from our new Q2 2022 report!), key learnings and takeaways from Terra and 3AC's bust, Ethereum rollups, the Merge, stETH and liquid staking, the NFT and DeFi landscape, and more!
Hello! It's good to have everyone here. So today we are hosting our state of crypto markets and CoinGecko's Q2 crypto report. So start of first time we're hosting the Twitter Space with me today is Zhong, our head of research and also a few of our crypto market analyst. We have WinWin, we have Shaun, we have Ben and we have Dillon as well. Yeah, maybe Zhong you wanna introduce yourself a little bit over here, and kind of the, the overall agenda, what we are talking about for today?
[00:00:34] Zhong:
Yeah. Thanks, Bobby. Hi guys. Welcome again everyone, to this Twitter Spaces. So what we are gonna do is really, we are just gonna, chit chat a bit among the research team, and with Bobby as well, obviously about where the market is and sort of take a lot of questions, from the audience, if, if you guys have any. So, I think when we released the Q2 report, I think two a week ago, now it it's only been a week, a lot seems to have changed, right? So, you know, quite interesting that the market seems to have gone on a run since we, since we published the report. A lot of the outlook, and I think a lot of the mood has, has sort of changed around the space a bit. So I think we, we really wanna talk about what, what would the sort of the latest things that were happening. What we are gonna do is we'll tackle, you know, each of the, the areas that we have in the report sort of part by part. So we'll probably go with a broad market outline. We'll talk a bit about Bitcoin and Ethereum, probably should talk a bit about Terra and 3AC, I'm not sure if everyone's just tired of talking about them already, but you know, that's, that's, there's still things to talk about, I guess. And then we'll talk about DeFi, and we'll talk about NFT because there there's sort of, specific areas or, or specific things that can be covered. And like I mentioned earlier, we'll sort of pause in between each section and then, you know, allow time for people to put up their hands and, and ask questions. So if you have questions that you want answered, feel free to put up your hand and then I'm sure our host will bring you up as well. So, let me sort of get started. I think, we can just get started. Bobby, I think it's quite interesting. We published a report and then it was all down market, right? We said it's like 55% down from Q1, 70% down from November all-time high. But market has sort of gone on a pump for, for the last week or so. Not sure how you're feeling you know, have, have you been participating , in this? Do you worry or you you're just watching from the sidelines and, and eating popcorn, like, some of us?
[00:02:26] Bobby:
Yeah, I think, I think a market is in... I mean, we kind of need this correction. It's been way overdue, right? I think Bitcoin hitting $69k or 67k I think. And then everything was very, very richly valued. And I think it's just a matter of time before everything starts correcting. So I kind of saw a bear market happening. Just don't know when in fact half my time was kind of expecting last year to be kind of in a bear market. I think we sort of saw some correction towards the end of the year. I mean this year was kind of like the, the year when things started correcting massively. So yeah, I, what surprised me was how some people found this correction and caught them by surprise in the sense that it they were unprepared and, and traditionally in the, in the crypto market, like. corrections typically last, anywhere between 12 to 24 months. And, I mean, it's very volatile, very cyclical industry goes up periods of extreme exuberance and it goes through pure extreme, like period where nobody cares for things. I mean, everything goes up trading model goes up everything goes well, but then the opposite happens during the bear cycle. So, I mean, it surprised me how some of the largest exchanges largest T marketplaces we're pretty much unprepared for, for this bear cycle, which, pretty much, every OG in a crypto space knows is gonna happen. Yeah, I think, obviously like what triggered the drawdown differs every cycle this time round is mainly macro driven, obviously, which is a bit different from the previous cycles where we didn't really happen with a macro drawdown this time around a broader interest rate, rising and, and quantitative tightening happening at the same time. Obviously Terra was the main reason for the current drawdown. And then there was a contagion effect. 3AC obviously had zero risk management and went basically levered long Every cycle as well, we saw a crypto fund blowing up, I think last cycle we saw a fund blowing up as well. I can't remember the fund name now, but it was run by Mura if I remember correctly and, and some of the guys also very smart guys, but seem to blow up, but yeah. I saw tweet yesterday from Qiao where he was talking, every bear market people spend the first 25% of the bear thinking it's up, which was kind of what we saw from January to June or so maybe January to March or April or so. The next 25% debating, if we are in a bear maybe last quarter, Q2, the next 25% realizing we are indeed a bear, and last 25% trying to short for tiny gain instead of building a multi-year long positions for 100x. So I thought that's kind of quite apt. Are we near the bottom? I don't know. I mean, things have been going up in the past one week, so maybe be good to hear your thoughts Zhong, so what's your take on this?
[00:05:02] Zhong:
Yeah, I do think that, you know, the, the way you break down 25%, 25%, 25% is kind of interesting. I think when, when it sort of came down quite quickly, right? Especially given that, you know, Terra sort of blew up in the middle everyone was sort of still shell shock, right? That it all came, down quite quickly. And I guess that caught a lot of people, you know, off guard and a whole bunch of people got liquidated, I guess. And sort of then, you know, they, you go from disbelief to, oh, we really are in bear now. And then we're at this stage, I guess, where I see a lot of people are just sort of making very, very small trades, trying to play at the margins, you know, playing the one day pumps when news is good and then try to get out before the market turns again. Obviously this one week has been very interesting, I guess, from, from a macro perspective, because I think, you know, when we release our article two days ago, just on the markets, we essentially told our premium subscribers, like, you know, nothing has changed in the macro environment right? It's actually gotten worse. That didn't seem to be anything if you just looked at it, you know, from the numbers perspective, quantitatively, nothing has changed. And it's getting worse, you know, with Europe struggling and Japan starting to struggle as well. China is still not out of COVID, and that's not talking about the US right? So it, it does feel like there is some ways to go, but there's a lot of exuberance in the last couple of days you know, even the crypto fear and greed index has sort of started creeping up. So it really tells you, right? Like the crypto guys, or the crypto bros, or the degen folks are, are really like, sort of grappling for any sort of hopium that comes a along.
[00:06:37] Bobby:
Yeah, I think yesterday as well, someone was tweeting. I think I saw the news, Netflix loss I think a million subscribers, but share price went up. So I think kind of what you mean, what you said as well, like markets are down, but, but, but financial markets are up. I mean, actual numbers are down, but share markets are up also this guy, @Route2FI, I think he talked about how he had some decent scalp trades on ETH last week then he realized his PNL will be just better if he just held ETH from $1,020 without doing any work. So, yeah, sometimes one of those better things to do is just buy and hold, but I guess, trading's one of those things where a lot of people find it itchy and just wanna like, feel like they're doing something and just buy and sell. But sometimes the best thing to do is just not do anything.
[00:07:15] Zhong:
Yeah, itchy fingers. I can tell you some of our research fellows down there all got fingers this week when you know, all our chart started showing green, right? It's like, oh wow. Maybe it's time to jump in the game. I guess speaking of like, you know, buy to hold, I'm not sure if you saw the latest news that just broke, I guess, last night. Tesla started selling. So they sold about a billion worth of, well, a billion dollars worth of Bitcoin. A billion dollars was sold of like their buy price, right? And sort of it came out in their report yesterday. Elon has sort of said that it's sort of like a cash conservation sort of thing, right? Like they, they needed cash. They just wanted to make sure that they have cash flow, so they have temporary, sold Bitcoin and, he says Tesla will buy again in, in the future or whatnot. I'm not sure if you, you saw the news, you have any thoughts around that, you know? Is Elon really like the, like a true believer in, in this crypto thing? Is he really diamond hands? Well, he's not now he's just so ld, or what's your perspective on this?
[00:08:13] Bobby:
Yeah, I mean, quite surprising that Elon so ld. I thought he would be holding on. I mean, I saw of headlines, sold a billion dollars, I don't know if he, if Tesla has liquidated the entire stash in the, the entire Bitcoin stash but, just one of those classic examples of buy high sell low, right? Paper, hands...
*laughs*
I mean, I guess the, the classic case would be seeing if El Salvador would diamond hands their Bitcoin holding, or they would chicken out and change calls and I don't know, change their currency. Pressure by IMF into selling their Bitcoin holdings and all, but that's probably gonna be a big indicator. And well, I hope that doesn't happen, but I think Michael Saylor's the other big holder. If Michael Saylor starts selling their thing we're gonna be in trouble obviously.
[00:08:52] WinWin:
Yeah. I think, I think if so, like 75% of their busy holding, so I have a feeling he's still kind of like hoping that 35% is like gonna go back up or something. Yeah.
[00:09:06] Zhong:
So make all back in one trade.
[00:09:09] Ben:
I, I just wanna chime in that there is a running joke that you know, he's being sued for by Twitter. So he might be liquidating to protect himself, you know, but more likely than not, it's just probably some corporate restructuring because the market downturn, you know, generally these public list ed companies have to take, take care of their assets, you know, even though he might want it to haul, he'll be forced to sell by his CFO or his other financial advisors.
[00:09:37] Shaun:
Yeah. I mean, that makes sense. Considering that Tesla also pause hiring and they've been laying off people as well. So it could be just a way for them to just have more funds than treasury for the expected choppy market.
[00:09:50] Zhong:
Yeah. So those people that you just heard is like Win, Ben, and Shaun, in, that order, they are all our researchers right? So like, I said, if you guys have any questions, feel free to, to sort of raise your hands and, and we'll take questions, but yeah, I think with Elon I guess the funny thing with the us sort of accounting methodology is, you know, for, crypto in particular, you can mark , you need to not, you can, you need to mark your losses. So, so it hits your books directly, but you can't actually mark your gain. So even if it goes up, you don't get to mark it up in your balance sheet. So I, I would imagine if the diamond hand threw out and it went down by 50%, it, they take a big hit to their books and profitability. So yeah, I imagine Tesla's CFO was, was sort of making a big case to Elon that he needs to sell.
[00:10:41] Bobby:
Oh yeah. I think, I think you brought a good point that that's exactly. I. Probably one of the reasons as well. I, what we've seen as well in the last six months was there was a compression of multiple, so PE multiples have compressed pretty significantly. I think I saw a chart from a 16, Z seven months back about, I mean, a couple of weeks back, few weeks back about how FinTech PE has gone from about 15, 20 PE at the start of the year to about less than 10, five to seven these days. And I think next six months, I guess the, the, the biggest worry for everyone in stock market is we've seen a earnings compression, you know, a multiple compression, but if we do enter recession, then they will be an earnings compression and revenues probably gonna go down for all the other companies as well. And, and that probably has. Has an effect. So yeah, and Bitcoin being a risk on assets will probably kind of trip relatively close to that. But, I think that's, that's not quite a little bit about Ethereum, right? Ethereum, there's a lot more interesting things happening. The merge is happening projected to take place in September. There was a lot of drama on the Eth and St. People were saying it's it's a peg, but it's not really a peg it was, Celsius was liquidated. I mean, not liquidated. I mean, they had a lot of st ETH which I think so to Alameda and Alameda had some sort of shot and because stETH is traded against the USD on FTX, if I remember correctly. And I think Lido, Lido's probably one of the biggest standout in the last one week, it's got a lot of momentum being one of the largest liqiud staking providers for ETH also some people saying that they probably have too much centralization on their end because they control a lot of st ETH so yeah. Thoughts, our researchers, anyone wanna check, chime in on, on ETH the merge, and so on.
[00:12:21] Zhong:
I think , we can talk through it. I think the merge, frankly, quite bullish, it's sort of like seems like it will happen. Right., I think , the, ETH devs sort took their time, right they pushed back the difficulty bomb earlier as well to sort of give them another three months sort of time to make sure that everything, was sort of done properly. You know, Kiln went well. Sepolia went well as well. I think it's, it's really at the last stage now, I think listening into the call devs call and, you know, reading , all the transcripts that came off that it really is, you know, the last minute tweaking of all the clients. Right? So if, if you're running some of these clients you'll know that they've, they've been trying to sort of finalize the client config and stuff like that. I mean, we, where sometimes you, you read some of this and you realize that, oh my God, it's, there's just like a million, configs a million configs that they need to get right. And sometimes someone just did it wrong config, so it doesn't work properly. But, you know, I think they, I think it sort of figured out bearing any more surprises, Goerli should merge mid August right. And then we'll see the main net much month after that in, in mid-September. Frankly, it's sort of been the news that has been driving all the prizes up over is one of the significant piece of news that, that we think has been driving the, the, the sort of the whole market up last week. Right. Bobby you know, Ethereum bumping anything vaguely related Ethereum also pumping like the whole DeFi sector has been going up. And you know, all the other Alt L1s have also been going up, I guess, because that's just positivity, right. There's just positivity around the market. With Lido and staked ETH actually, I'm interested to hear your thoughts because I, I know you have concerns over Lido or at least the, the share of liquids staking that Lido controls. I mean, from, from my perspective is sort of, you know, winner takes all right, and well, not, winner take all, but sort of, you know, the, the market decides, right. If which provider does it want to go with, and you know, there are other providers out there, right? Rocket pool with Stake Wise and a few others have sort of come to the market, but I guess Lido being the, sort of the first mover and, they were there earlier, they sort of captured most of the imagination of the people. I tend to think that stETH is one of the great primitives that have come out of this. Right. And personally, quite bullish about this, but yeah. I mean, like curious to hear your thoughts you know, do you really feel that there's, sort of risk there with Lido controlling a lot of this?
[00:14:41] Bobby:
Yeah. I mean, generally anything that, I mean, in crypto, we shouldn't rely on centralization. Anytime somebody has about 20, 20, 20 5% market share. I think that's kind of like the. When it creeps closer to 40, 50%, that's when a massive centralization risk happen. And at the end of the day, we are sort of still trusting Lido to not screw up. I mean, I don't know if many of you remember, but, but when Lido launched about, I think a year and a half ago, maybe December, 2020, if I remember correctly or maybe 2019, I can't remember now. There was also this other pool. I mean, we have Rocket Pool right now, but there's also StakeHound and StakeHound is also another ETH liquid staking, ETH provider in fact, they also go by their term for their liquid Stake Hound ETH liquid token. And in fact, they had a smart contract bug and and Celsius, if you remember, they actually put in quite some money into their Stake Hound liquid contract and because there was a smart contract error, I think they lost one of their private key or so, and they couldn't retrieve all those ETH so that's those if were kind of lost permanently, and that obviously created a massive hole in Celsius's books, but also everyone else who has taken in a Stake Hound pool, but that could technically have periodically that could happen as well. But I mean Lidos, pretty well tested. I hope by now, I guess the key thing is we don't really know until the whole thing unlocks. Right? And that will only happen sometime in, I think it's six months or a year after the merge sometime along that line, so, I mean, merge, we have been talking about a merge for the past two years. I guess we finally have some firm dates. We know the, if devs have sort of postponed the merge several times now, so I think this thing has always been a bullish factor. I mean, this merge must happen. Otherwise can be in deep trouble for ETH and everything else, but yeah. But let's see. I mean, anything that has more than 40% generally is a negative indicator for me.
[00:16:38] Zhong:
Yeah, I think there, there were a lot of talks actually about you know, I think some of the Ethereum community have actually asked them to come out to self censor. Right, so means that, you know, once you hit like 20% or 30%, I guess you are supposed to just stop your project from taking more, ETH in which sounds like a bizarre solution, I guess, to me you know, it's kind of strange that we're gonna have to depend on people to, to self censor. And frankly, I don't know if you have any thoughts, whether there are better ways of doing this because it's just weird at this point in time.
[00:17:11] Bobby:
Yeah. I think it's similar to the Bitcoin mining pools. The, there was, I mean, a bunch of times in Bitcoin history where a mining pool kind of got almost 40% and then people were just encouraging everyone else to move to different pools and then sort of regulated itself . . And there was a proposal from people to kind of self censor, and then they put this proposal out to the governor's forum have voted upon, but then, Hey, the Lido holders say, why should we self censor? Why should we limit our own profits? And obviously that proposal, maybe not so obvious, but I mean, surprisingly that proposal was voted down and then that those chatter disappeared. So I guess the people making noise are probably not Lido token holders or small minority of token holders, large token holders prefer to wanna hold onto to their leading position in the space.
[00:17:56] Zhong:
Yeah, and I think it does sort of. Go against the ethos of crypto to a certain extent I feel like, you know, if you're asking Lido to self censor, okay, then the next guy that comes along also needs to self censor right, then it sort of becomes a cartel almost. And, that's a strange place for the crypto market to be, because cartel means like, you know, you gotta trust each other and to not like screw each other over. And you just need one guy. Like we've seen in the past, right. Cartels don't really work. You know, even with like the big old traditional ones, like OPAC, right? With, with the all production numbers, you just need one guy to break the cartel and then, you know, everything goes, so I there needs to be a, either a technical solution to this or a market solution to this. I find that asking people to self censor is, is frankly quite bizarre. Let's, let's talk about something else that's happening on Ethereum. Sort of interesting. I mean, we, one of the things that sort of came up yesterday and sort of this two days is, you know, rollups right. So rollups are, and L 2s are sort of the, the next big things, and yesterday and today we got two announcements. So one was Polygon. Yesterday I think they announced what's called ZK EVM. It's sort of their zero knowledge. Let me get it right, it's sort of their zero knowledge EVM compatible roll up that they are deploying, right. It's supposed to go directly onto ETH as well. So it's gonna compete, I think, directly with, you know, people like Z Ksync and stuff like that. They say it's test net's gonna come up soon and then, you know, hopefully it will go live probably later in the year or early next year. The other big thing is Z K Sync right? One of the original people working on ZK rollups on Ethereum has been added for a while now. Not sure if it was just like a direct response to polygon launching ZK EVM, they sort of just told people that in a hundred days they're gonna launch as well. Right, so it's quite funny in that sense. But theirs is main net, right? So they're gonna launch their mainnet in a hundred days. Thoughts on rollups you know, what do everybody think? I know some of our researchers have also been playing around with some of this roll ups Arbitrum, Optimism you know, certainly welcome people's views questions on this.
[00:20:11] Ben:
I guess I'll chip in first. So it's quite interesting that you mentioned rollups cuz I just had a podcast with D Y D X just over last week. And it's interesting, right? You, they talk about how because D Y D X exactly using ZK sync, I think for now or Starkware and yeah, they decided that, oh, you know, the throughput of this rollout is not sufficient. We need to migrate to Cosmos and that's what they're doing. I mean, they've announced it everywhere. You kind of dived a little bit into what and why they're planning to do that, but it's ultimately for them it was to build better product. And I think it's also part of a larger trend you know there are more rollups coming, but the trend that people are not really keeping track of is actually dApp chains right? So basically protocols having less and less incentives to join rollups and other main net s I think more protocols are wanting to have control over what they do and what they wanna build. And that is kind of what everyone is moving towards, or maybe more protocols are starting to do that, which is why Cosmos is quite popular and, you know, but ZK is also another thing, right? The, the other aspect of that is privacy as well. So privacy in itself, it's becoming quite hot and zero knowledge, proof chains or rollups are becoming quite popular because of that. So there is a huge, I think this will be a big trend in the future for maybe other chains and L 1s because you know, it's a big narrative, privacy. So Secret Z K like before we had the zero knowledge proof, we had Secret who was actually doing like hardware based private servers or computer software that helps contain the privacy or manage privacy of the blockchain. But before that, we also had Z cash and Monero. So I think this are just some of my thoughts on ZK and rollups as well, I guess.
[00:22:15] Zhong:
Yeah. I think that's an interesting point. I mean, like, you know, even with the rollups, even though I know Arbitrum, Optimism and all sort of more generalized rollups, but at the same time, I guess we have sort of ImmutableX right. That really created their roll up and sort of positioned it as sort of, you know, the gaming and, NF T sort of place to be, right. They try to position themselves to capture that space. So I'm not sure if, that will work as well. But certainly I think that, you know, if you can build out that community, then you know, the network effects will help that to grow. But certainly, you know, it's quite interesting. I mean, we're seeing all of this pop up and I guess it's sort of a factor of, you know, all this sort of growing you know, the sort of the crypto ethos as well, right. Everything is open source. You can always fork everything. So we are gonna try everything and, you know, it, it feels like, I think, you know, if they all survive and we get to the next bull cycle, that's gonna be, I don't know, 10 rollups or something on Ethereum or 20 rollups or something and they all will be competing for transactions, right? Yeah. Not sure if there's any other thoughts. I mean, when you've been playing around with some of this quite a bit, you know, trading and DeFi and stuff like that, have you got a view, like which one is sort of doing better, which one's of, you know, not doing that well, or, you know, from a performance perspective.
[00:23:31] WinWin:
I think like, in terms of like rollouts and L 2s right? Like, so far Arbitrum, Optimism it's pretty good. It's been well. So like a lot of people have actually gone on and tested, especially during the earlier part of last year when there was like, literally nothing else to do. So like people like testing, Arbitrum, Optimism early, and when they already launched was pretty good. And like, I was also playing around with the Stark net test nets. And at the moment it's still a pretty, it is not optimal. Let's just say, and yeah but it's pretty decent so far. Like I'm pretty sure it'll improve over time, but yeah, I think it'll be interesting to see how like different rollouts react to like specific niches cause I think it's under my belief that eventually chains will start moving towards certain niches or certain rollups like you mentioned, IMX has like soft position themselves as the place for games and like for Game Fi to be right. So I, I think eventually there will be like chains that will centered around specific sectors. I think recently there was an L1 that was DeFi-centric called Canto. They were release their sort of like testing phase, if you will. Yeah. So I think in time we were start seeing those sort of things kind of like occur for different rollups of where there be different roles. So eventually, like all of them will see some form usage, but for different things, I suppose.
[00:24:57] Zhong:
Yeah. I think that's so interesting. I guess from an apps perspective, which ones are sort of like are more popular now?
[00:25:05] WinWin:
In terms of popularity, I'm pretty sure, like, especially after the Optimism one, it's sort of like died down a bit. I'm still seeing some sort of usage as well, like from, you know, existing apps have already been there, like GMX and also you know, treasure from the old derivatives. But you know, these other like newer ones, like ZK, ZKSync the old ZKSync with ZigZag and even like some of the newer rollups testing, seeing more of them getting usage over time, but it'll be hard to see like what their role is as of yet, because there's like, so yes of, you know, especially now when, ETH is also so relatively cheap to use at the moment and almost all the dApps are there. So it'd be hard to see the usage again, like, unless they're more like the apps, they are native to that specific roll up kind of like catch on and gain popularity, then we'll start seeing like some influence toward big change yeah.
[00:26:09] Zhong:
So that was an interesting point back then, which is, you know, if Ethereum is already so cheap then, you know, is there a point of all this existing? Right. And, so I think that, that's an interesting question that, people started asking themselves during this bear market and you know, not just the roll ups, right? Like we have, you know, a ton of other EVMs as well. And, you know, they all sort of were initially built on the assumption that Ethereum was always gonna be too expensive. It was not scalable and stuff like that. So I'm interested to hear as well. I mean, Bobby and whoever else, like chime in and we were all very heavy Ethereum users, you know? Do you think that, you know, okay, so the gas fees are not gonna come down right after the merge, right. So let's kind of get that rumour out the door. And you know, the improvements to throughput only comes, you know, later, right. Further down the road, so interested to hear, like what you guys think you know, is it going to be a problem for rollups if Ethereum continues to be cheap, I guess,
[00:27:05] Bobby:
Yeah. I mean, this whole thing, this, that we are seeing a proliferation of layer one chains out there, smart contract platforms, mainly because in the previous bull cycle in 20 20, 21 Ethereum gas fees were just too expensive. I mean, when I started using DeFi, I mean, pretty much it was like now, like a transaction on Unisawp which has cost like some, a few cents, like less than a dollar, for example. But during the bull season, I mean, a simple swap on Uniswap or Sushi Swap would cost anywhere close to 50 to $70 on up to a hundred dollars for example, or to make a swap. And I mean, it becomes a chain that only whales could use. I mean, you need to swap at the very least $10,000 or more on Ethereum to make it worthwhile you are, if you are trading anywhere less than $10,000, like the gas fees from all the transactions is just too high to make it worth it. I think CZ had a tweet long time ago, like your transaction fee is my opportunity and that's pretty much the basis for why BSC was launched. Your margin is my opportunity, which what Jeff Bezos used to say as well for Amazon. So Ethereum just, they had a scalability plan with 2.0 and the merch and I mean, sharding, rollups obviously play a role, but I think it was just way too slow in that the market just cannot wait and, and no retail, no beginners going come in and, and spend a hundred dollars to make a trade or to learn DeFi, for the matter. I think during this period, like, I guess the question now is like, in this current bear cycle like can Ethereum grow and add on all this L two solutions such that it will eat into the launches of all the other L one competitors like Avalanche, BSC and the rest. We don't know yet, but, but it doesn't look very promising but then again, like it's also, we can also argue that like the space has grown such that it can support multiple chains. And also there was also an argument saying that the more capacity that we add to in terms of block space, the more that we can support apps in the space. This is kind of at a similar argument to the internet and the internet bandwidth space. I mean, who would've thought that we would need like so much internet bandwidth and storage space who would've thought that we would need so much storage space on our phone, or how much- do we need so much bandwidth on our internet? I mean, just 10, 20 years ago. I mean, if you tell somebody like you get a one gigabyte of hard disk space and someone would be super happy about it, right? But this day you say one gigabyte, like, you know, we can't do much with it, and because we have very cheap storage, very cheap bandwidth it allows for proliferation of all these different apps things that we don't have to be efficient and certain things we can be inefficient and certain things and, and support all these things. So kind of the similar argument, I can't remember who told me this before, but I kind of heard this before, as we add more block space and it could be on Ethereum, it could be on layer twos on Ethereum. It could be on other competing layer ones. It could be a subnet on Avalanche. For example, it could be many different ways, transaction fees will go down. And when transaction fees go down we allow for more applications to be added and supported on the blockchain. And at least on Ethereum, like maybe some of these things may not be supported, but all the other games that more things can be supported and this allows for more innovation and more apps to be built on top of things. So yeah, I'm kind of the view that app specific blockchains will proliferate in the future. Every app that kind of grows to a, kind of a significant size will probably be at some point, looking to launch their own chain, for example we've seen it with the B AY C community, the ApeCoin and they did coin and they wanted to do a Ape chain. I won't be surprised if a large app such as STEP N for example, they obviously take up a large portion of Solana's transition volume and daily active users as well. They may, I wouldn't be surprised they launch their own, I mean, their own chain and we've seen them moving all their, their trading from Orca to their own DEX. We may see them. I mean, it is a prime candidate to launch a subnet or Avalanche or their own chain or, or Cosmos or whatever right. Similarly we've seen like, I mean, D Y D X moving to Cosmos, so I kind of see more and more of these things happening, I guess the question is if you launch your own chain, like how do you build an ecosystem around that chain and, how do you kind of keep it decentralized? That's kind of the question that, that nobody really knows, I suppose, at this point in time.
[00:31:21] Ben:
I just wanna chime in here and, you know, raise the question about fragmented liquidity, which is one of the big things about, you know, everyone building their own chain or your app or whatever. And I guess the other issues also, how much of this genuine community activity or transaction activity on this other chains are real? Because I think we all can safely assume that 90% are there for liquidity mining or air drop farming or whatever. And after a few months when rewards run dry or when everyone figures out the game, they abandon the chain and go back to, you know, the, the real chains. And I mean, I think we can say if we say ETH is a real chain, but there are also a couple more rail chains propping up. And you know, if we look at our Q2 report I, I did the exchange volume slides. And one of the things that we see is that DEXes with a lot of real activity, that's actually coming up to the top 10 appearing on Binance and Solana so on. So I guess you say that these chains are also becoming more legit, has genuine communities and real liquidity, but yeah. What are your thoughts on fragmented liquidity and, you know, agile farming or incentive reward, farming, whatever you wanna call it.
[00:32:41] Bobby:
Yeah. I think the part about fragmented liquidity, I kind of view it as a solvable problem in the sense that I look at it. It's kind of similar to how we have various DEXes on Ethereum, we have Uni Swap Sushi Swap and so on, and then you have a DEX aggregator like One Inch or Matcha and then whenever you make a swap, you go to all these DEX aggregator and then it just aggregates the liquidity across all these different DEXes. Theoratically speaking, you can sort of imagine a DEX aggregate, a multi chain DEX aggregator, so a One Inch or a Matcha but for the various chains. So you go to this, maybe One Inch inch or Matcha could be the candidate. So instead of just finding liquidity on Ethereum, it finds liquidity on Ethereum, BSC and so on it does all the bridging and swapping and gets it all done. So you can sort of imagine One Inch plus Cellar or One Inch plus CoinX and then kind of combine them together to source liquidity. Obviously, at this point in time, most of the liquidity comes from from ETH so it probably doesn't make sense to find on BSC, but there could be hedge cases where it could be on BSC or Solana for certain tokens. It could be, I mean, the fees could be much higher as well as you take into consideration some of these bridging as well. I think for the second question on incentivize trading. So I think that two points to this right. One is. Yes, obviously any layer one or any apps that have incentivized liquidity mining incentivized trading, for example, we see inflated volumes and when the, when the incentive disappears, then we will know what is the real demand. I kind of read it similarly to how I, I guess a lot of them are also viewing this similarly to the, the Uber model where you sort of discount the rides significantly enough. And then people start using it and then they get hooked and then eventually they can't leave. Obviously that's not really the case in crypto. There's always a new app and that will pop up and sort of try to do a vampire attack on some of the other chains. So, I mean, we all talk about how crypto we have network effects. I guess the question is, will the network effects take one app one chain, or will the network effect continuously move from one to the other? Right. So that's kind of the worry, like where we stay or will it kind of move around. It's fleeting in a sense, I think one example, and I think this is where we can segue it bit to some of the reports that you prepared Ben. And I kind of am continuously surprised at this fact, Uni Swap is the first DEX in the market and they barely ran any liquidity mining incentive. So they've started with a hundred percent market share, almost a hundred percent market share in the DEX market. And then Sushi Swap came about with of vampire mining liquidity mining incentive, vampire attack, and try to take over the thing. But all the years, like we still see, I think at this point in time from report like Uni Swap still has a pretty large market share and the, mode that UniSwap has is pretty strong. So I think slight 39, I think Uniswap V 2 and Uniswap V 3 so I think like, that's probably at least 55, 56 percent of the market share for Uniswap so, and that's very strong and Uniswap so has been slow to go to the other chains, but, but the chains that they have gone onto such as Polygon, they do have some leadership in that chain as well. Yeah. I mean, thoughts on that, if you wanna share a little bit more on, since you look into the data at that point in time.
[00:35:59] Ben:
Yeah. So I, if I'm not mistaken for June, the total domination by Uniswap was 65%, which is insane, but that's across all chains including V3 and, you know, you talk about Uni swap being dominant, right. But one interesting contender has come up in the last month or so, which is actually Curve finance. And, there could be a few reasons for that one being that they're specialized in stable coins, And the bear market, everyone flees to stable coin markets. So people just want stable coins. But you know, curve grew by 390% over the quarter and they are now like 14% of the market share, which is pretty insane for the month of June. And you know, another big thing that no one is really talking about is actually Curve V 2, I think Delphi just wrote an article on it over the last day or two, but it's pretty interesting because you talk a lot about how you know, Curve V two is actually pivoting towards non packed assets, basically assets like ETH and you know, so they're not doing stable costs alone anymore. So, and they did some calculations with some studies and they found that it's actually quite efficient. As in, you know, it gets better price quotes than uni swap in certain cases, apparently 65% of time. And I think, you know, we talk about, you start doing the dominant figure, right. But curve with all their complex contracts and, you know, the smart people behind this, I think this could be a real content for the next steps. So yeah. Just throwing it out there
[00:37:38] Zhong:
Win, you wanna chime in?
[00:37:40] WinWin:
Yeah. Thing just to add on to what Ben mentioned about the report. Yeah. It's. It turns out it's actually quite interesting, whereas like the quoted prices are actually better, like 65% of the time compared to Uniswap so, but in the end, most people still use Uni swap, particularly on ETH because of like basically the main reason is just gas cost. Whereas like. I don't know if you guys ever notice this, but like if you use Curve as opposed to using Uniswap. So like they do incur a bit more heftier gas cost even more so, especially during times of times of duress when everyone is like fleeing to stables and stuff like that. But on like cheaper chains, like Arbitrum cheaper and faster chains, you can actually see that Curve is actually getting more usage. I think up to 80% up to on like Arbitrum if you to compare purely from like, swapping ETH for example, on Uni swap and on Curve, like on Arbitrum you'll see that Curve is like actually having both better prices and like better like more people using it as opposed to if so, ultimately it boils down to like, I think just the gas cost optimization. Think as we go to a more like cheaper chains, we'll start to see that Curve actually gets more volume there, like me personally, I don't tend to use Curve on ETH but on chains that where Curve are available at Polygon and even Avax, like if I want to do certain stable coin swaps then that would be my go to place. But yeah, it's, it's interesting to see that they're actually pivoting to like non, non stable coins. So they're staying to actually eat into like Uni swap's lunch, and also with the recent you know, the recent like Frax base pool and Curve. Like they're just increasing like even more like, you know, incentives for like, for people to actually provide liquidity for like weird stable coins, be able stable coins, or even like just regular old collateralized stable coins. So, yeah interesting to see how this will play out in the coming, you know, in the near future.
[00:39:47] Zhong:
Yeah, go ahead.
[00:39:47] Dillon:
I was just gonna comment that and since we're on the topic of like, you know, fragmented liquidity, just wanna point out that, you know liquidity flowing about from one ecosystem to another, from one protocol, another as, you know, people or farm wherever is providing the best APY. This probably has been like around since, you know, since pretty much the beginning of by summer. Right. And, and, and people have like come up with solutions or rather attempted solutions to come and Solve this problem. Right? We've got like protocol on liquidity. We've got V token and we've got lock drop as well. And in my opinion, like we don't really have the perfect solution. Like what Bobby mentioned about like addressing liquidity gap, I do believe that there is a, like a solution out there that could help us retain liquidity and like a solve problem. Right. But we don't really see that version out there in the market. And all of these, like so-called solutions have sort of like become a narrative by themselves, right? Like you all remember how like protocol on liqiud dity was like the biggest thing back in end of 20, 20- 21. And then V token came about, but like at the end of the day, Ultimately how you retain liquidity comes right down to whether or not the protocol is useful to the users, whether or not there's any true utility. Right. In my opinion, like all of these solutions are just ways of sort of like delaying the inevitable, which is like liquidity flowing out of your ecosystem or protocols. If you can't deliver eventually like long drop for example, share, you can lock up the liquidity for 12 months or three months or whatever, but what's gonna happen after that. Right. And yeah, that's just something that I think protocols should you know sort of like, think about like, not just in the short term, but like in the long term as well what exactly is your value? It's not just, if your, if your entire value proposition surrounds you know, one of these three models or any other models without any other true utility, that's just gonna happen eventually. So, yeah, I think it's just interesting to, point out.
[00:41:38] Bobby:
Yeah, I think want, take this opportunity to say that if anyone has any questions, feel free to raise your hand and can invite you up on stage to ask your question as well. Shaun, I think you wanted to say something, right?
[00:41:48] Shaun:
Yeah, so I just wanted point out, like yeah, liquidity is not sticky, so it doesn't really stick to change if, especially if there are no incentives, once incentives run out, the liquidity tends to leave but there's something interesting from layer zero, the, the founders of Stargate the cross chain bridge. So they're working with Sushi swap to implement a cross chain swap sort of function whereby let's say on Ethereum and you want to migrate funds to polygon, but in a different currency, From the one you hold on Ethereum so you can take the Ethereum and basically swap it on Stargate itself for USDC or Poly gon. So I think that's quite interesting, yeah.
[00:42:33] Zhong:
Were there people that, that wanted to ask question? I think we brought up Matt and Pink, not sure. Not sure if you guys have questions.
[00:42:41] Guest 1:
Yeah. Hey, what's up everyone. Great spaces. Thank you for the info, really appreciate it. I think that my question would center around a little bit on regulation as folks who are sort of privy to a lot of on chain information, how do you all see, the current regulatory environment sort of affecting crypto with all of the stable coin incidents that we've had. Do we see like a stagnation in innovation in those places is, is regulations scaring people in terms of innovating? Yeah. I just want the, a general picture on regulation and where we stand for people. Thank you.
[00:43:22] Zhong:
Okay. Thanks for that. Maybe I'll take that since I came from a regulatory background. I think it's going to be very different going across different markets. Right. It's important to always remember that, you know, regulation is, is, is, is specific to, to, to, to each country, right? So each country has, its own sets of regulations and, and sets its own regulation, and even though there are standard regulatory standard setting bodies that go across globally, such as, you know, IOSCO, C PMI and stuff like that. You know the details often left up to the countries themselves, to the country, regulators, themselves to figure out. So I really do think it's, it's really going to depend on each country, how they decide to approach this. I think from, from previous experience, I, I really feel like, you know If the regulations that you set finds the right balance and finds the right finds the right balance between innovation and risk, then you can have sort of the best of both worlds because I think one of the key issues, or, or one of the issues that, that has always been the problem with crypto is that there's just too many scams and too many Ponzis and too many mechanics that you know, anybody with, you know, any sort of knowledge of finance would already tell you that it's not gonna work. Right. So if you find the right balance and regulation helps weed, all of this out. That's good. Right. Then, you know, we'll have a cleaner space, we'll have less projects going up. We'll have less investors losing money. I think that's good for the market. Unfortunately if you go too far to being too strict, then yes, there's a risk that, you know, that's, that's, that's less innovation. And then you know, we sort of end up with a sort of stifled market, but I mean, to be honest, that risk is sort of, I think sort of the thing that people talk about just to tell regulators that, you know, you need to be more lax because, you know, guess what, like, if, if one country's regulation is strict, some, you know, the dApps are just gonna go to a different regulation that is less strict and then they'll set up there and then, they'll sort run it out of a different jurisdiction or, you know, they'll just decide not to get regulated at all and sort of just live like, an on, and you can't catch me la la la I create a DAO. Right. And, and stuff like that. So yeah, I, I think, you know, it really depends on which country to country and, and depends on how each country handles sort of the new ones and sort of how they improve sort of this regulation. But yeah, I mean, there is a balance that can be found. I certainly believe that there is a balance that can be found between managing innovation and so risk. Yeah, not sure if anybody else wants, wanted to chime in.
[00:45:52] Ben:
Yeah. I have a point and I just like to raise that, you know, cryptos one, the first industries, I think like, I would think that in the world where it is almost, it is impossible for regulators to actually fully regulate industry, right? For them to exert control because of nature, how blockchain works, it's impossible. And I think till today, a lot of regulators do not realize or understand that implication that if they do not join or, you know, allow innovation or, you know, willing to take a more risk, they're gonna be left behind. And like Zhong mentioned, you know, the easiest is to go to another country that is more lax because unlike regular industries, you know, it's not a supply chain issue. There's no production issue. You are all online. You can do anything from anywhere on the internet. And I think that is what is really powerful and really scary about crypto for regulators. You know, China bans Bitcoin. So what this used VPN, anyone can do anything anywhere. And the other scary part is also the fact there's anonymous or pseudo- anonymous. However you wanna call it, depending on your settings or how you keep track the person. But my point is that they don't need to be regulated either. So I think a lot of regulators don't realize that, that they can just ignore whatever your regulations say and work from anonymous basis online. And really from regulator's point of view, they need to think about, okay, how do I attract people to be willing to be regulated under my jurisdiction rather than, okay, I'm just gonna invoke a, a ban or, you know, I control you, stifle you, it's not really gonna matter in the long run because they're just gonna move somewhere or just work anonymously.
[00:47:39] Zhong:
Yeah, I think certainly they can make it difficult for you to operate in a specific jurisdiction. And I guess there are very large markets that, you know, you sort of don't want to be locked out off. So that's why the US views so much influence. Right. So, you know, US regulations impact everything else because you know, US is the largest market and everyone sort of wants to correct the US market. Yeah, that's just economics, right. It's not so much, you know regulatory arbitrage, but yeah, I mean, you know, it's, it's tough for regulators when you know, the world is completely virtual and it's is pretty fluid yeah. Thanks for that question. Maybe Matt, you had a question?
[00:48:14] Guest 2:
Thank you for allowing, can you hear me? I don't know, seems laggy for me. Thank you. Yeah, so I have a question kind of our thinking about like crypto and then the key is like to, to gain like the potential we needed to go with to go mainstream. And I'm thinking, I have a question in your opinion, what will bring that mainstream? Like adoption? Is it like the crypto world or like NFT world so that we have like two big main technologies, like the blockchain allow us to have. And I'm curious to have your opinion about that.
[00:49:05] Zhong:
Dillon you wanna speak to NFTs or Bobby?
[00:49:07] Bobby:
Yeah. I mean, we haven't really covered much on NFTs today, so I think let's talk a bit about NFTs before before we end the session today. Right? So, I think there's two areas where we will see large scale users coming into crypto. I think the we will start seeing them coming in from NFT and from games. So NFTs are interesting , because it encourages a certain group of people who are not interested in crypto before this. So we got people who are, we got a creative folks interested, we've got artists, we've got musicians it's a more open community. We got more females participating in crypto NFTs. Games will bring crypto to the next level as well. Games are obviously one of the most popular apps on the apple and the play store. It's got billions of, of daily active users. And I think the mechanics of how games are designed can be made beneficial to the gamers and not extractive in nature, obviously how that's to be done is still uncertain at this point in time. There is no model that could work right now. Everyone's still trying to figure out, but yeah, in general, I think NFTs and game fi are probably the area where we have to crack this to kind of have large scale crypto adoption. I think Dillon, you wanna speak more on NFTs? .
[00:50:19] Dillon:
Yeah, sure. So the way I see it is that there's no really one sort of like highway into crypto, right? Ultimately it comes down to like what exactly the mass or user interest is. And obviously like what Bobby said NFT has like sort of allowed people to understand crypto a little bit more, or rather even get into crypto without understanding in a way it sort of like puts a phase for crypto, right? Like instead of you know, using a DeFi protocol where. You don't see much except for numbers and you have to really dig deep to understand what exactly is going on and whether or not you're gonna lose money. And I think it's just a lot easier to understand because you see a picture and you know that it's on chain and that's pretty much all you need to know if you like the picture you buy it. I mean, at least that's the surface level for a lot of people who are first starting out right before you branch off, like deeper into other topics. And and, and understanding what exactly NFT entails as well. And it's an interesting question, right? Like you know, even between me and my friends, like we're always talking like how exactly would crypto look like what we go for a mass adoption and how exactly is this gonna happen? And there's another way since we sort of like touched our regulation a little bit, so that's a very interesting way to look at this from a regulation perspective is so like and everyone's talking about like, you know, I mean, we we've been in space for quite some time. We know how like, the spirit of crypto is how it should be decentralized and regulation should never touch it. But another way to look at it is that regulation could actually provide sort of like an avenue for mass adoption as well. The way that crypto is right now a lot of people who are not in crypto, they still think of it as as a scam, something that they don't understand and having the backing of regulation, having like a regulated blockchain, sort of like serving as an on ramp for people to get into crypto and having like governments putting their stamp of approval for, you know, their own very centralized version of blockchain, helps people to put a little bit more trust into the technology before eventually they start branching up, you know, from there. So, yeah. There's, I just think that that's another interesting way to look at how regular should, could actually be good for crypto's massive option. Of course, let's not touched on like, you know, what exactly version of crypto is that, and we don't know if that's something we want, but you know, it's, I do believe that it's something that could get more people into the space of, so, yeah, I'm not sure if you guys have any thoughts about that as well?
[00:52:38] Zhong:
Yeah. I mean, it's sort of. A bit of a catch 22, I think, you know regulators or central banks or governments, don't like things that they can't control fully right. So it's unlikely that they'll ever release something that, you know, they can't ever pull back or maintain control over. So to see if they are gonna issue like I don't know ERC 20 tokens or, or ERC 7 21 NFTs on say Ethereum main net is sort of, I think, quite far off and need quite a few leaps of faith right. For governments and regulators and stuff like that. It's more likely that they do stuff with like private blockchains and enterprise blockchains. I think those are two, not favorite terms by a lot of people, but I, I still think, there's use cases there. And I know people definitely were looking at those things. Yeah. Thanks Matt. For that question. We have Jonathan next. Who also has a question?
[00:53:28] Guest 3:
Hey, appreciate you guys at CoinGecko for actually doing this for this Q2 analysis. Love the analysis. Quick question. You guys have been doing a lot of educational components, big fan of the books you guys have putting out there. I've actually got the, how to DeFi and how to NFT curious if get, has any other educational resources coming in the horizon? That's my question to you guys.
[00:53:48] Zhong:
I think Bobby, you wanna talk about Learn?
[00:53:49] Bobby:
Yeah sure! So I think one of the things that we'll be doing is we'll be ramping up. So there's a couple of things, so we'll be ramping up content production. So if you haven't subscribed to our YouTube channel, like do subscribe to our YouTube channel, we are producing about five videos a week right now. And we'll be talking about basically educating community on anything that's happening in the crypto space. The second thing that we are going to be doing as well is to start writing more content on coingecko.com/learn. So again, similar stories basic educational content on crypto, but more importantly, and that's where our research team is here. We have a lot of alpha that we share on our premium subscription. So CoinGecko .Com / premium. So our team here basically goes through all the crypto market and basically kind of shares some of our insights that we see on the newsletter. And also, we do share articles and also we do publish a premium newsletter twice a week that has quite some interesting insights on, on the market. Especially some of the, the newer protocols that are launched I find it hard to stay up to date as well. So I do rely on our research team to kind of stay up to date in the market and find out what's the latest protocols that are launching. And, and usually one of the things in crypto is that whenever you see new protocols launch, one of those things that you, if you have the time do try out, you learn some of the new narratives. And also a lot of these protocols don't have the tokens and they do usually reward early users, for using the protocols with the airdrop later on. So yeah. Those are some of the resources that we have in crypto. Obviously we have the reports as well that we published about couple of weeks ago. And yeah, those, those are some of the things that we do to educate the community.
[00:55:27] Zhong:
Thanks for that, Bobby. I don't have much to add, hope that answers your question, Jonathan. Yeah, I think for the rest of the people in the group, if you have any more questions, why don't you just raise your hand? And then, we can sort of bring you up, like we've done for, for the previous view. I just wanted to sort of move on a bit to talk about DeFi and sort of maybe you both Win and Shaun, can jump in with, you know, sort of what's going on in defi. There's all this Curve war thing that's going on. And I think it's sort of quite interesting, like it's sort of seeing a resurgence now, whereas like, you know, just a couple weeks ago, it, it was pretty quiet.
[00:55:59] WinWin:
Yeah, carrying on earlier from what I mentioned well, the Frax pools yeah. There's really been some. Quite some development regarding like the incentives around Frax, Curve and Convex, like making their relationship stronger, aligning more incentives. And, but particularly I think something more interesting came up, which is like Balancer also doing their VE program for VE bell. So it's through a protocol called, Aura, where it's kind of like the Convex of Balancer in a sense. So that has been doing particularly well, so far even though like rewards are kind of like not as high as it used to be like for Convex in the same time period, but it's been pretty interesting. So, and I think the whole like market regarding like bribing for votes and stuff, like hidden hand redacted those kind of where like people get more out of just like locking up their CVX or CLV. That that's quite interesting as well, even though like the whole of like the different market kind of seeing a downturn like these, like protocols are still building and yeah , we'll probably see like more innovative, like stuff that comes out this particularly, I think that's a few that seen so far, like mostly regarding like combination of DeFi and NFTs, like NFT lending and as well, I think like more recently something more interesting, like using protocol, future earnings, as like collateral for dApps. Yeah. Is something called dApp down. So yeah. Can check that out. It's quite interesting. Cause a lot of it is like mirroring like stuff in traditional, like the traditional loan markets like factoring. So yeah, it'll be kind of interesting to see like what comes next or different market. Shaun you have anything to say?
[00:57:47] Shaun: Yeah, I mean, so lately over the past year or so, we've been actually seeing the defi market cap drop quite a bit. And instead centralized exchanges and basically any centralized protocols start gaining more popularity, such as like, block fi or, celsius, et cetera. But I think now with a lot of these these companies running into trouble, like, especially since you can't really track them on chain. So especially all losses going on there and people, tons of people have lost funds over there. I think we'll see a resurgence in defi where, protocols are more comfortable since everything's on chain. And they say not, not your keys, not your crypto right. So, we should be seeing a resurgence in all these lending protocols, et cetera. And, such as our Aave, Compound, simply because this centralized protocols can't be trusted, like fully, especially people's money as we have seen over the past few weeks.
[00:58:42] Zhong:
Win, you wanna talk more about, I think there was some stuff around, you know, CVX being unlocked and then I think we all thought that they were gonna get dumped on the market, but that sort of didn't happen. And, there was a lot more positivity, I guess, around CVX after that sort of happened and the market didn't dump pretty much.
[00:59:00] WinWin:
Yeah, like I think like a lot of like surprises, like Frax like since now they're to like lock CRV. So there's no like, and they've always been locking Convex so that's no surprise there. And like, I think more surprising is like I don't know if like people still remember this, but Terra actually did acquire CVX, like in preparation for their. Four pool, which is now probably not gonna happen anytime soon. But the thing is, the CVX has actually remain locked. Like it hasn't removed. And also like bigger players. They said they were gonna dump it were like won der land, but so far, like the effects haven't been that bad. Like people are saying that sifu is like shorting CVX in preparation for like the dump by Wonderland. But so far it didn't really like affect the CVX price much. But yeah. I think generally the perception was people are scared because like leading up to the unlock, like, you could see that like the price was kind of like grinding down, but like, I think the past week we've had it sort of like contacted the entire move. But yeah it's I would say it's kind of like, not efficient in a sense for people for protocols to sort of dump it considering a lot. You have to understand that like a 16 week log, like I think four months ago, like Convex was trading much higher. So like, I think most people would say that it's not like will fit in a way to like, kind of sell it now, especially at this price. And like, and for people who do like, that's actually like a fairly small minority of those, like paper hands or like panic sellers, whatever you wanna call them, like that may need the liquidity due to like the downturn in the market. So yeah, definitely didn't play out the way that most people would've expected. But then again, like I think, for the really like smart people, like I think they were expected like more recently, like they had the LOOKS unlocked as well looksRare where, like a pretty significant supply was unlocked. And ultimately didn't really do much like most of the, people who actually got like their investments, like percentage tokens, like actually relocked it. So yeah. That has been particularly well for Looks. But yeah, it's not entirely like, applicable to every protocol. It kind of depends on like what people expect from them. So it's kind of evident that people are sort of like still expecting like some good things to come out of, like Looks and even CVX.
[01:01:23] Ben:
I just wanna segue into a point about tokens because you brought up LOOKS right. And, you know, defi as a whole has had a lot of valueless governance tokens, basically tokens that do not do anything other than value to vote. A lot of people have been describing value to these tokens. So a great example is uni swap because the, you know I, have exposure to Uniswap they make a lot of revenue, but until today, the revenue does not flow to the governance to the token holders. So I think a lot of protocols are realizing that more and more people are waking up to the fact that, Hey, you can't just air drop a token or you can't just create a token that has no use case, even though we still do see a lot of that. And I think that's part of the reason why defi as a whole has been with stifle in innovation, because on top of that, there's been a lot of protocols that build out a lot of the core infrastructure and which is why it's very interesting because when, you know, Win raise the, the point about LOOKS, LOOKS, one of the rare protocols, which actually gives you ETH rewards for staking in the ecosystem. So it's kind of like dividends for stocks and it's on a rolling basis. So it just happens by how long you stake and which is quite interesting, right? Because to my knowledge, there's quite a few, there's only few protocols to actually give you the flow of revenue and it is not, they are more of their own tokens. So LOOKS is one which gives you ETH and Looks and the other one I can take of is exactly GMX, which also gives you ETH and GMX based on the trading volume. So yeah, just wanted raise the, the point of where no more protocols might be taking up this model or maybe are actually giving to us this model.
[01:03:14] Zhong:
Yeah. I mean, Bobby, I dunno if you have thoughts on some of these tokens. I mean, we list all of them for sure. But you know, a lot of them seem to just do voting that's I guess with Uni there's always like this, this promise or this hop ium that, you know, they will eventually turn on the fee sharing, right?
[01:03:29] Bobby:
Yeah. I mean, I guess the question is, I mean, does it look like a security? It does look like a security, right? If they start giving out dividends, how, how is that structured obviously, keen for that, but, well, yeah, I think, I think the boys have, have shared most of their thoughts earlier.
[01:03:43] Zhong:
We got a, a person asking a question to maybe you wanna ask a question,
[01:03:47] Guest 4:
Hey guys, good to see you and good to see you, Bobby. Just I just wanted to comment on the LooksRare tokenomics cuz we're actually building an NFT marketplace as well too. We've been building it since September is the main focus of our team. I've been in the crypto space quite a while and there's one really important thing on, on tokenomics here LooksRare gives a good APY, but they made the same mistake that meat we made when we launch energy, which is if you give a high APY, if you don't lock it up, what happens is you have enormous sell pressure. So LooksRare hit a 1 billion market cap in their first month. But if you have a hundred percent APY on a 1 billion market cap, it means essentially there's a billion dollars of new coins entering the market. And if you don't have enough buy support to protect that, then what's gonna happen is the price is gonna come down. So I just wanted to make a comment on the tokens. High APIs are really good, but you also have to have a lockup mechanism. So I just mentioned that cuz there's still a lot of teams out there that. Fine tune their tokens. I think LooksRare is a really good platform in terms of usability, but they kind of miss that on the tokenomics and, they still have very high sell pressure because of that reason.
[01:04:54] Zhong:
Yeah. I think I do agree with you in that sense. I think a lot of the token launches that we see, they sort of like tried to do the, well, how should I put it? Let me just say it. They tried to do the liquidity doping method, right. Which is sort of promised crazy rewards upfront and sort of then try to taper it off up after that. And you hope that when there's, high rewards upfront, it sort of helps you quickly gather a community and users and stuff like that. And I don't really think it has worked that well. And, and it really does feel like if, if you don't have, you know, proper product to hold people there it's sort of hard. Like, you know, once the outside incentives sort of just run out, then, you know, there's no more reason for people to use your platform. Right? Like, you know, Dillon and Win can probably speak to the fact that, you know, last quarter we were just looking at, you know, and both X2 Y 2 and Looks right. So a lot of volume, but they burn up already Dillon maybe.
[01:05:50] Guest 4:
Yeah. What did you say at the end? I didn't catch the last bit.
[01:05:52] Zhong:
Yeah. Dillon, go ahead.
[01:05:54] Dillon:
No, I was gonna say that. Yeah. I mean, like I was not mentioned like we, we've seen how like X2Y2 and LooksRare. They provide these insane incentives right, which kind of ties in with the topic that we had earlier about how, like you're providing incentives. What happens when it runs out? Right. But in the case of the LooksRare and X2Y2, I mean, yes it's kind of obvious that they're trying to hook people in with their incentives right now. But at least from what we can see right now, people aren't really staying, and people are leaving after the incentives run dry, which is kind of perplexing when you think about it, If you look at a fee structures alone OpenSea takes like a 2.5% cut. Whereas, X2Y2 is, offering something like a hundred percent rebate. If I'm not mistaken, once this gets removed, they're offering 2% cut and same for LooksRare as well. Like as a user, it just makes more financial sense for you to use X2Y2 and LooksRare. But for some reason, people still prefer OpenSea. And that really speaks a lot about the dominance of OpenSea and peoples like sort of like their comfortability and familiarity with using OS and so much so that they are still sticking with it, even though they could potentially benefit financially from using LooksRare and X2Y2 right. Yeah, nothing much to add on except to point out, you know, this interesting thing that we've sort of seen like in the past quarter, as well as in quarter one. And we're just wondering, like, you know, how, and when people will eventually realize this and when will they start switching over or will they not switch over because, you know, OpenSea is simply that much better than use and OpenSea will eventually come up with something that's gonna keep these people on the hook even longer.
[01:07:27] Zhong:
Yeah, thanks for that. I think we're coming up to one and a half hours, so I think this is a good time to wrap up. So just wanted to say thank you everyone for joining in for listening to our first Twitter spaces. I think this has been quite interesting. We'll obviously take a look again to see if it will continue to do some of this. Just a shout out to, you know, the research team that's here from CoinGecko if you want, like Bobby mentioned earlier, if you want alpha, if you want to keep up to date with the latest news and happenings and all this analysis that we talk about do followers on @ gecko insights. I know it's not in this group somehow, we couldn't get the handle into the group, but do follow us there and, you know, subscribe to CoinGecko premium. And that's where you can find all the offerings that we bring to the table. Yeah. So thank you very much, everybody for, for joining us this morning or if you're in the US tonight and we hope to speak to you guys again. Thank you so much.
[01:08:24] Bobby:
Thank you everyone for joining us. Have a good day ahead!
[01:08:27] All:
Thanks everyone.
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