DeFi & L1L2 Weekly: 🚀 Ethereum Gas Fees Surge Amid The Rise of ERC-404

Ethereum gas prices surge to 8-month high amid the popularity of ERC-404. Ethereum’s Dencun upgrade is set to go live on 13 March. Avalanche launches its Durango upgrade on the Fuji testnet.

Weekly DeFi Index

This week’s market cap index was positive at +9.31%, while volume and volatility indices were negative at -7.90% and -43.70%, respectively.

Chart of the Week

On 9 February, Ethereum network gas fees hit an average peak of 70 gwei (equivalent to ~US$60 for an average transaction), reaching as much as 272 gwei or an eight-month high. 

The recent spike in gas prices coincides with the growing popularity of the new ERC-404 token standard. ERC-404 is an unofficial Ethereum token standard introduced by the Pandora project, which aims to bind ERC-721 NFTs to ERC-20 tokens, allowing for fractionalised NFT ownership. 

Since launching on 5 February, the PANDORA token has recorded over $47.36 million in sales volume, with its price going up to $17,341 (+315%) today. Additionally, the trading volume of the over 600 deployed ERC-404 tokens on decentralised exchanges has reached $1.25 billion. To further promote adoption and integration, the team’s developers are working to reduce gas costs by 300% to 400%.

TVL of Top Chains

Top DEX by Chain

News Highlights

• Ethereum developers set a target date of 13 March for the Dencun upgrade, following successful testnet deployments.
• Avalanche has launched the Durango upgrade on the Fuji testnet, which introduces Avalanche Warp Messaging (AWM) for trustless communication across EVM chains. The upgrade also includes improvements for the C-Chain and P-Chain, such as native transfers and smart contract compatibility with Ethereum’s Shanghai upgrade.
• On 7 February, Wormhole announced the launch of its native W token, and that 17% of the 10 billion supply will be airdropped to its community. Ahead of the token launch, the cross-chain messaging protocol reported that it has surpassed one billion cross-chain messages and facilitated nearly $40 billion in cross-chain transfers since its inception in September 2021. 
• Aptos Labs introduced a new passkey authenticator on its Layer-1 blockchain Aptos that eliminates the need for passwords and enables users to sign transactions with their passkey. The authenticator allows users to store the private key for a passkey account directly on their device and sync their private key with their backup provider. It aims to mirror the ease of use of services like Apple Pay or Google Pay.
• Restaking protocol EigenLayer experienced a $4.3 billion influx following the removal of its staking cap. This led to a surge in TVL, which stands at $6.91 billion as of writing.
• Starknet Foundation announced that it will airdrop its STRK token on 20 February, with around 1.3 million wallets eligible to receive it.
• Over $11 million in liquidity  was removed from various pools associated with the cryptocurrency project SafeMoon. Blockchain security company Cyvers Alert flagged unusual activity linked to SafeMoon, which triggered speculation about a possible connection to SafeMoon’s ongoing bankruptcy proceedings.
• HectorDAO investors are demanding control of the protocol’s remaining funds after the team ceased communication following a hack that resulted in a $2.7 million loss. The protocol had planned to dissolve itself and return assets to investors, but the hack occurred just before the scheduled payments, and the investigation into the incident is ongoing.

Recent Research Reports

• Alpha Navigator: Quest for Alpha [January 2024]: Fed signals rate cut in March unlikely. Asset class performance was mixed in January, with crypto and equities up slightly.
• Research Roundup Newsletter [January 2024]: We present to you our latest issue of Research Roundup, featuring trending market insights in January, charts of the month, and our deep dive into the world of crypto ETFs.
• Crypto ETFs: This report explores what crypto ETFs are, providing an overview of the current crypto ETF market and looking into how they work as investment vehicles. Plus, we explore their features, significance, advantages, and drawbacks.

Recent University Articles

• What Is NEAR Protocol (NEAR)? How It Works and How to Buy NEAR: NEAR protocol is designed to incentivise a network of computers to operate a platform for decentralised applications, utilising sharding for more efficient data retrieval and scaling.
• What Is Bitcoin (BTC) Dominance?: In this beginner’s guide, learn the ins and outs of BTC dominance — what it means, and what happens when BTC dominance goes up or drops.
• Crypto Market Makers vs Market Takers — What They Are and How They Influence: Crypto market makers provide liquidity by placing buy and sell orders, while market takers seek immediate execution of their orders. Here’s how they interact with each other.

We’re all ears.

Your feedback has always helped us provide insightful crypto market trends. Tell us how we can improve this newsletter further by taking a quick survey below (it will only take less than a minute). Thank you!

Author

Research and Insights Team

Disclaimer

The information in this report is provided as general market commentary by Crypto.com and its affiliates, and does not constitute any financial, investment, legal, tax, or any other advice. This report is not intended to offer or recommend any access to products and/or services. While we endeavour to publish and maintain accurate information, we do not guarantee the accuracy, completeness, or usefulness of any information in this report, nor do we adopt nor endorse, nor are we responsible for, the accuracy or reliability of any information submitted by other parties.

This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of, or located in a jurisdiction, where such distribution or use would be contrary to applicable law or that would subject Crypto.com and/or its affiliates to any registration or licensing requirement.

The brands and the logos appearing in this report are registered trademarks of their respective owners.