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SushiSwap To Redirect 100% Trading Fees To Treasury

While the DeFi market has continued to mirror the crypto market rally, more innovations have been introduced to the ecosystem. In today’s news, SushiSwap, the sixth-largest decentralized exchange (DEX) by 24 hours trading volume, has passed a proposal to relocate 100% of its trading fees to the SushiSwap treasury for maintenance and expenses.

Related Reading: SushiSwap Head Chef Suggests Cooking Up New Token Model – Will The DEX Survive 2023?

SushiSwap Introduces New Update

This new update comes after CEO Jared Grey voiced warnings that the exchange treasury stability is numbered as it has “only 1.5 years of treasury runway left,” despite having cut down the annual operating expenses from $9 million to $5 million during the ongoing crypto winter.

According to a presented governance proposal by the developers of the SushiSwap decentralized exchange, which was passed on January 23, the SushiSwap exchange will now extend the usage of trading fees by redirecting them to the exchange’s treasury to enhance the operation and maintenance of the exchange over the next one year. 

The proposal noted, “Revenue to the treasury will be 50% ETH and 50% USDC, with a projection of ~$6m being earned over the next year if this proposal were to pass.” In another proposal passed the same day, approximately 99.85% of voters voted in favor of “clawing back” 10,936,284 unclaimed SUSHI ($14.8 million) tokens to be rewarded to early liquidity providers during the DEX’s launch in 2020.

SushiSwap Painful Loss And Recovery 

Undoubtedly the crypto winter hit most projects in the industry, including DeFi platforms such as SushiSwap. Last December, SushiSwap CEO Jared Grey revealed that the DEX experienced a $30 million loss over the past 12 months on incentives for liquidity providers (LPs). 

To counter that loss and initiate recovery, Grey revealed plans to refine SushiSwap’s tokenomics so that LPs are no longer bankrolled with emissions and redesign the complete model of bootstrapping liquidity on the exchange. 

The “Kanpai” governance proposal, which aims to relocate trading protocol fees to the treasury, was also referred to by Grey when illustrating the plans to update the SushiSwap exchange. 

“Put simply, it (Kanpai) allows the protocol to rebuild its cash reserves to continue to pay competitive wages, pay for critical infrastructure, & to diversify its Treasury with funds collected in the base pairs of assets, like ETH, stablecoins, etc. Kanpai is a temporary solution,” Grey stated.

Speaking of SushiSwap, the protocol’s native token, SUSHI, has been in a rally, following the rest of the DeFi sector. 

SUSHI price chart on TradingView

SUSHI has surged by over 40% in the last 30 days; meanwhile, at the time of writing, SUSHI trades at $1.34, down by 1.4% in the previous 24 hours and with a trading volume of $58.6 million in the same period.

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GMX Generates More Fees than BNB Smart Chain and Bitcoin

GMX, the perpetual trading decentralized exchange (DEX) allowing up to 50X leverage, now generates more trading fees than the BNB Smart Chain (BSC) and Bitcoin.

GMX Is The Third Most Active Platform

According to statistics, GMX’s 1-day fee on January 19 was around $589,000, while BSC and Bitcoin on-chain fees, over the same period, stood at $524,232 and $328,935, respectively. 

GMX Crypto Fees

Ethereum and Uniswap are the only two major protocols more active than the perpetual trading decentralized exchange, per the above data. During this time, the total Gas fees accrued in Ethereum exceeded $5 million. In Uniswap, it was over $2.1 million, roughly 4x GMX’s and BSC’s daily fees.

GMX supports trading various coins, including BTC, ETH, and AVAX. As of writing, GMX had $96,802,651,673 in total trading volume with open interest, that is, the number of opened positions, long and short, of $207,102,720. Meanwhile, over 208,000 active traders were using the platform to trade on Arbitrum and Avalanche. GMX launched on Arbitrum and Avalanche, considering their scalability and low fees versus Ethereum.

Arbitrum is Ethereum’s layer-2 platform permitting scalable and low-fee trading fees. On the other hand, Avalanche is scalable and boasts the fastest settlement time in crypto. By launching on these two platforms, GMX says it allows users to save on costs by entering and exiting positions with minimal spread and zero price impact. 

Traders take the profits of selling positions in USDC and the quote token when they go long. GMX prices are based on Chainlink’s decentralized oracles to prevent price manipulations.  

Trading Fees As A Measure Of Activity

Trading fees generated by a dApp or on a blockchain are a crucial activity indicator. Despite the tendency of users to opt for protocols offering near-zero fees, the decentralized nature of blockchains means validators or entities securing core infrastructures must be compensated. 

In decentralized finance dApps like Uniswap and GMX, trading fees generated from swapping activities are distributed to liquidity providers (LPs). There are also governance tokens that are distributed. Anyone can be an LP.

In September 2020, Uniswap distributed UNI to users who had, in one way or another, used the protocol to swap tokens before the airdrop distributing date. Currently, UNI trades at $6.1.

Uniswap daily price

Interestingly for GMX, the 1-day trading fee of $589,000 posted on January 19 exceeds the total average amount accrued over the past trading week of $565,682. The same trend can be observed in the top-5 most active platforms. Making extensions on this could point to renewed interest from users and traders using the protocol in one way or another.

In GMX, it could mean more traders are posting traders, aiming to clip the market and turn in a profit. Coincidentally, the upswing in trading fees is recorded when the cryptocurrency market appears to be bottoming up after losses. At least, this was the trend in 2022. 

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How Arbitrum and Optimism Made Millions in 2022

Arbitrum and Optimism raked millions in profit despite the extended bear market that hammered decentralized finance (DeFi) activities and Ethereum (ETH) valuation in 2022.

Arbitrum And Optimism Win Big

Per on-chain data shared on Twitter, Arbitrum, and Optimism, general-purpose Ethereum layer-2 platforms, made 2,906 ETH and 2,086ETH, respectively. In USD terms, it translates to around $4.6 million and $3.3 million for each protocol.

Based on user activity and the number of dApps launched on Ethereum, solid statistics show that developers prefer the first smart contracting over competitors. Since launching, the network has become a hub of activity, spearheading exciting innovations in decentralized finance (DeFi), NFTs, metaverse, and gaming. 

Trackers in mid-January 2023 state that the total value locked (TVL) in Ethereum stands at $26.88 billion, representing more than half of the assets locked across DeFi. The drop in TVL mirrors the fall in ETH prices in 2022.

Ethereum price action 2022

In essence, Ethereum dominates with DeFi activity over the Binance Smart Chain (BSC), trailing at less than a quarter of the TVL of the leading platform, at $4.65 billion.

Despite this dominance, Ethereum’s scaling problem directly impacts Gas fees. As demand picks up, Gas fees fluctuate, leading to as much as $50 on this blockchain to post a simple transaction. Deploying smart contracts cost much more, sometimes upwards of $80, when the network is congested. As an illustration, the average transaction fees on Ethereum stood at $0.63 on January 17. However, on May 1, 2022, this figure stood at over $23.

Ethereum layer-2 protocols are part of the scaling attempts made by developers to relieve the mainnet. By routing transactions off-chain, layer-2 solutions can help scale Ethereum but, most importantly, reduce Gas fees by several magnitudes. 

In Ethereum’s layer-2 realm, Arbitrum and Optimism dominate. According to L2Beat statistics, Arbitrum and Optimism had TVLs of $2.52 billion and $1.45 billion, with a market share of 52% and roughly 30%, respectively. 

Popular Ethereum L2s by TVL

Riding on Network Effects

Although associated fees in Arbitrum, Optimism, and all other layer-2 networks are negligibly low, these protocols can profit based on activity. For every transfer or smart contract execution of Arbitrum and Optimism, there is an associated fee. 

Arbitrum and Optimism charge $0.11 and $0.23 for simple transfers, payable in ETH. If a smart contract is deployed, the fees rise to $0.30 and $0.35. They make more fees as more users deploy smart contracts or initiate transfers. Accumulating these amounts over months translate to a tidy profit for the protocol operator. 

In 2022, Ethereum layer-2 TVL fell roughly 40% from $7.45 billion to $3.3 billion in July 2022. Outflows were lower compared to layer-1 DeFi. As the market recovers, layer-2 operators may likely post higher revenue as users move assets to dApps launched on these scalable and low-fee protocols.

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Aave Price Surges As V3 Cloud Upgrade Draws Near

Amid the ongoing rally in DeFi TVL, we’ve seen positive news and innovation popping up from the ecosystem. As the Aave protocol V3 cloud upgrade draws near, its native token, Aave, has skyrocketed since the beginning of this year, reaching higher highs for the first time in the last few months. 

Aave is an open-source liquidity protocol and its upcoming V3 cloud launch is just one of the protocols pending plans yet to be initiated. An Aave supporter with the Twitter handle @0x4Graham disclosed the upcoming upgrade launch. 

According to crypto reporter Collins Wu, the V3 upgrade will introduce cross-chain asset functions, community contribution tools, and a gas optimization model on the Aave protocol.

Aave Price Surges Nearly 37% In 7 Days

As the v3 cloud upgrade draws near, Aave’s native token has spiked in price by 36.5% in the past 7 days, following suit with other crypto and DeFi tokens surging in the market. Besides that, the past few weeks have seen Aave printing a bullish trend, in which the chart indicates anticipation before a significant move. 

AAVEUSDT price chart on TradingView

Aave began the year with a ranging price of $50, and so far, the token has spiked to above $80 following the disclosure of the v3 cloud upgrade. Moreover, not only is the Aave token surging, but the protocol’s TVL has also done some significant rallies to the upside over the past weeks. 

Currently, Aave protocol has a cumulative TVL of $4.5 billion, up by 21% in one month. The protocol has always been one of the leading contributors to the whole DeFi ecosystem TVL, with Lido Finance at the top then MakerDAO as the second.

Though Aave has been climbing since the beginning of the year, it is still far from its all-time high of $661, seen in 2021. With the ongoing disbelief in the crypto market among investors, it is still uncertain whether the v3 cloud upgrade will be a good enough catalyst to drive its value beyond or closer to its peak.

The V3 upgrade is said to introduce community contribution tools, cross-chain asset functions, and a gas optimization model on the Aave blockchain. The optimization model is supposed to cut down transaction costs on the blockchain by up to 25% and make the Aave protocol more efficient and ready for other upgrades. This information comes along with the V3 upgrade details released by the Aave team towards the end of Q1 2022.

The initial V3 upgrade was introduced in March of last year and was described to be a groundbreaking protocol. According to the developers at Aave, the V3 upgrade provides various new features that include Portals, High-efficiency mode, Isolation mode, Gas optimization, L2 designs, Community, and Risk management.

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DeFi Begins Recovery As TVL Exceeds $45 Billion

Decentralized Finance (DeFi) has always been the most evolving sector in the Web3 space. With new innovations and protocols popping up in the DeFi industry, the ecosystem total value locked (TVL) continued to increase until the bear market stepped in. 

The bear cycle caused a lot of downturns in many sectors of the We3 industry including DeFi. However, following the ongoing so-called ‘mini bull run,’ we’ve seen DeFi TVL start to recover from the lower lows and surge by nearly 20% since the beginning of the year. 

DeFi TVL Surges Nearly 20%

According to data from DeFiLlama, DeFi TVL has exceeded $45 billion — its highest point in the past two months. Major DeFi protocols such as Lido Finance and MakerDAO played a significant role in the DeFi TVL rise. Lido has amassed double-digit gains over the past week, adding $8.4 billion to the DeFi ecosystem since its lower low late last year. 

Though the TVL rise appears to be mirroring the crypto rally as most of the underlying DeFi tokens have also followed suit in the bullish trend, one thing worth noting is that DeFi TVL is still very far from its all-time high seen in 2021. 

Notably, Liquid staking protocol like Lido Finance is the accelerator of the DeFi ecosystem surge, having the largest DeFi market share with 14.75% dominance and leaving the former king of DeFi, MakerDAO, behind with a share of 13.25%, according to DeFiLlama.

As reported by NewsBTC, the reason behind the rapid increase in the momentum of Lido is the Ethereum Merge, which triggered the popularity of liquid staking protocols such as Lido Finance. Following the merge, the total ETH stake in Lido increased 10% from 4.43 million ETH on September 15, 2022, the date of the merge, to over 4.8 million ETH today.

Other Accelerator Of The DeFi TVL Rise

Aside from Lido’s aid in the DeFi TVL surge, the high-throughput layer-1 blockchain network, Algorand, has also been an assistant following its 123% spike over the past week. It currently has $176 million in TVL, with five of the top six leading DeFi protocols on the network having done significant percentages in gains over the past 7 days.

AlgoFi is up 121% in the last 7 days. Folks Finance is up 490%, Pact 136%, and GARD 202%, driving massive momentum into the ecosystem. 

Aave and Uniswap have always contributed greatly to the DeFi ecosystem TVL, with Aave recording over 10% in gains in the last 7 days and Uniswap recording nearly 7% in gains over the same period. Regarding blockchain, Ethereum is still the top dog with the largest share in the DeFi TVL.

Ethereum has a DeFi market share of over 50%, with a TVL of $27.16 billion. ETH has amassed significant gains in its value in the past few days amid the global market rally. 

ETHUSDT price chart on TradingView

ETH finally broke the $1,300 zone and has climbed to a higher high above $1,500. Though ETH is still far from its peak, the second-largest crypto by market cap is striving to reach its ATH and beyond.

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Solana Begins To Recover As On-chain Activity Rises

With the recent hype and increase in meme coins on Solana over the past weeks, the network has gained a significant amount of momentum, pushing it to an uptick both in on-chain activity and trading volume. 

Solana has begun to show recovery signs from the FTX scandal following a recent spike in momentum. Even the network’s native token SOL joined in on the momentum and reached a two-month high amid the ubiquitous rally in the global crypto market. 

Solana Recovering Back To Pre-FTX Levels

So far, SOL’s on-chain activity shows signs of recovery after the recent plummet. According to analytics platform Messari, transaction volumes and active accounts of the Solana network have skyrocketed back to pre-FTX levels. 

The analytics platform tweeted earlier today that SOL might not be dead, as the fundamentals show otherwise. Adding that, the number of active accounts has spiked to roughly 240,000, returning back to October levels.

“While tweets and meme coins may have been the cause for recent activity, it is difficult to pinpoint the FTX collapse by looking at these metrics,” Messari tweeted. 

Not only has Messari proved the recovering traction in SOL’s volume, but block explorer Solscan has also shown some favorable data depicting the network revival. According to Solscan, the Solana network throughput is around 3,735 transactions per second (TPS), and so far, there have been an accumulated 132 billion transactions on the network.

SOL NFT And Trading Volume Spikes

On Wednesday, Solana’s NFT insights page, SolanaFloor, reported that the total floor value of its NFT ecosystem is worth more than $470 million — a relatively high amount compared to the cumulative total floor value seen in recent weeks. 

Solana (SOL) total floor value

With positive data like these indicating Solana’s recovery, the motivation for more increase in volume could be what the network needs to recover fully. Coin98Analytics, recently showed that SOL is fourth in terms of active addresses over the past week, rising to 3.16 million. 

It was ahead of Ethereum, which came in fifth position, then BNB Chain, which came out first as it tops the list with nearly 6 million active addresses in the last seven days. Fantom also wasn’t a failure as it emerged in second position with active addresses of 5.81 million, then Polygon as third with 5.55 million active addresses in the past seven days. 

Overall, the spike in Solana volume seems to be due to the recent hype that surrounded the largely airdropped meme coin BONK. The token remarkably surged in price, spiking by over 2,000%. However, as all meme coins always eventually end up losing hype and falling, BONK plummeted drastically by over 80% in a week. 

SOLUSD price chart

SOL, on the other hand, following its recent rally, has jumped by nearly 50% in the past 10 days. The asset went from ranging below $10 late last year to currently trading above $16, reaching a two-month high.

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Balancer’s Native Coin BAL Resilient Amidst Security Emergency

Balancer’s native token, BAL, appears to be holding up despite the platform’s ongoing security issues. On Friday, Jan. 6, the DeFi project tweeted a statement asking liquidity providers on its platform to withdraw their tokens from certain pools valued at $6.3 million. 

Via their official Twitter handle, the decentralized exchange stated there was a security risk that could not be resolved by the platform’s emergency DAO. Thus, they advised LPs to immediately remove their assets from all affected pools. 

BAL Token Holds Its Ground For Now

Earlier today, Balancer confirmed that 85% of the assets in those pools had been moved while still urging LPs to withdraw the remainder as they attempt to resolve the issue at hand. Interestingly, amid the ongoing problem of the decentralized exchange, several investors appeared to have retained their faith in the platform’s native cryptocurrency BAL. 

In the last 24 hours following Balancer’s warning, BAL has appeared unaffected, decreasing in value only by 0.13% based on data from CoinMarketCap. At the time of writing, the ERC-20 token is exchanging hands at $5.35, with its market cap value set at $248,354,921, representing only a 0.11% negative change over the last day. 

BAL trading at $5.34 | Source: BALUSD chart on Tradingview.com

While it is still too early to determine the effect of the Balancer security problem on BAL’s market performance – especially with the details still unknown – these early signs show that BAL may pull through this period, and investors need not panic. 

Is Balancer Experiencing Another Crypto Exploit?

Like every coin in the cryptoverse, there is no given certainty on market patterns. While Balancer has not revealed the nature of the security risk and has assured the public of full disclosure after a successful mitigation, much speculation is still flying around the crypto community. 

Many suspect a smart-contract exploit as it won’t be the first the Ethereum-based DEX would fall victim to such. In August 2020, Balancer was hacked, leading to the loss of $500,000 worth of ETH. 

However, compared to 2020, when Balancer was still a budding crypto project, the DeFi protocol currently ranks as the fourth biggest decentralized exchange with a TVL value of $1.49 based on data from the DeFi analytics platform Defillama.

If the current fears of exploitation are confirmed, the consequences may be quite drastic for a crypto market that is currently trying to recover after the crash of the FTX exchange late last year. 

In November 2022, FTX, formerly one of the biggest cryptocurrency exchanges, collapsed, causing the crypto market to lose billions of dollars. The crash was due to heightened leverage and solvency concerns about FTX’s trading arm Alameda Research, leading to many investors trying to withdraw their assets from the exchange simultaneously, which resulted in a liquidity crisis and, ultimately, bankruptcy. 

Featured Image: ICOnow.net, Chart from Tradingview.com

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Lido Token Spikes, Are Whales Actively Accumulating LDO?

Following Ethereum whale interest in the Lido Finance token, LDO has gained massive momentum over the past week, up by 20%. Whalestats recently reported LDO was one of the most used smart contract tokens among the top 5,000 ETH investors.  

While the reason for the token adoption may be quite glaring, its recent spike has begged questions from individuals wondering if whales are actively accumulating the Lido Finance token.

Whales Accumulating LDO?

According to on-chain data, whales are interested in LDO. LookOnChain reported earlier today some investors received a massive amount of LDO tokens. As on-chain data reveals, 3.5 million tokens were received by an investor, and almost half a million were sold on the market at an average selling price of $1.37.

Though the sum was large enough to move the LDO market, given the token is not the most liquid asset, LDO survived the massive sell-off, remaining at a solid price.  

Related Reading: Lido DAO Shows Strength To Breakout; Will The Downtrend Line Be Invalidated?

Aside from that, the rapid increase in trading volume is also a point worth noting on the accumulation of the liquid staking token. LDO trading volume has gone from $9.3 million at the beginning of this year to $85 million at present. 

LDO Gaining Momentum

Just a few days ago, Lido Finance TVL (total value locked) overtook Maker DAO emerging as the largest DeFi protocol in terms of total value locked. The Liquid staking protocol’s TVL went from a ranging $5 billion to $5.99 billion. Alongside the protocol TVL increase, Lido’s LDO token also surged amid its TVL rise up by almost 20% in the past week.

The reason behind the rapid increase in the momentum of Lido is the Ethereum Merge, which triggered the popularity of liquid staking protocols such as Lido Finance. Following the merge, the total ETH stake in Lido increased 10% from 4.43 million ETH on September 15, 2022, the date of the merge, to 4.9 million ETH today.

LDO and Crypto Market Overview

As of now, the momentum on LDO still seems to be solid, sitting at a trading price of $1.39 with a trading volume of $83 million. Regardless, LDO is still down from its historical all-time high of $11. 

LDO Price Chart From TradingView.com

Overall, LDO is not the only token in the market gaining upward momentum. Major cryptocurrencies like Bitcoin and Ethereum have also gained a few percent to the upside. 

As of the time of writing, Bitcoin is currently trading at $16,819, with a 24-hour trading volume of $15 billion. In contrast, Ethereum currently trades for $1,251, up by 0.25%, with a trading volume of $4.9 billion in the past 24 hours. 

Featured image from iStock, chart from TradingView