A Review of August’s Cryptocurrency Market and Data Analysis

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Data Analysis

1. Market Performance in the top 10 Cryptocurrencies in Terms of Market Value in August

Source: Santiment

In August, the digital currency market showed an overall upward trend. Bitcoin is still the number one cryptocurrency in market capitalization, with approximately $918.05 billion, accounting for 48.71% of the total market capitalization. Positioned in second place is Ethereum, which has a market value of approximately $378.559 billion and a total market share of 20.09%. ADA settles for third, with a market value of approximately $91.807 billion and a total market share of 4.87%.

2. Spot Trading Volume on the Centralized Exchange in August

Source: The Block

3.3. Bitcoin and Ethereum’s Volume of Futures in August

Source: The Block
Source: The Block

Bitcoin futures holdings have officially recovered all the declines caused by the sharp drop of 5.19. The current holdings have returned to the level of May 14th. The rapid rise of the market in August shows that the overall participation enthusiasm has risen. The momentum is very clear.

The rise of Ethereum contract holdings has slowed down, but it has also reached a high level since the 5.19 drop. The attitude of Ethereum contract participants “holding currency to rise” has been further verified.

4. Bitcoin and Ethereum Volume of Options in August

Source: The Block
Source: The Block

Bitcoin and Ethereum options trading volume rose further in August. Compared with futures contracts, which are more difficult to control risk, options have shown quite high attractiveness in the current fierce competition between long and short markets.

5. Bitcoin’s MVRV in August

Source: Glassnode

Market Value – The value of the exchange price and the amount of coins in circulation, the market value of the market.

Realized Value – this calculates the total value of the coin in circulation based on the market price at which the last single UTXO transaction is moved.

MVRV- MV/RV – when the value is low, this generally indicates that the market participants make little or no profit, and the higher MVRV value generally indicates that the asset holder is profitable.

6. DeFi ‘s Gross Value Locked and Net Value Locked

Source: DeFi Dashboard

After the market crash in May. On August 31, the total lock-up value (TVL) of the entire DeFi ecosystem reached US$166.8 billion, a record high since May 11.

7. Decentralization Exchange volume in August

Source: The Block

8. NFT Marketplace Monthly Volume in August

Source: The Block

The trading volume of the NFT market in August is currently $2.3 billion, breaking the previous peak of $3.15billion in March and setting a record high. Among them, OpenSea contributed $2.23 billion and became the dominant market for NFTs. In other NFT markets, SuperRare’s August revenue exceeded $23million, higher than July’s, approximately $6 million, but lower than its March historical peak of $29.5 million. Nifty Gateway rose from $7 million in July to $27.3 million in August, but it was also below its March high of  $143.5million. Most of the NFT trading activities come from NFT art and collectibles, CryptoPunks, Art Blocks, Bored Apes Yacht Club (BAYC), etc.

9. Bitcoin’s Miner Total Miner Revenue in August

Source: The Block

During August, the income of Bitcoin miners was approximately $1.41 billion, an increase of 45% from the previous month. In terms of revenue composition, most of the revenue in August (98.58%) came from block rewards (miners received 6.25 BTC for each block created), while transaction fee revenue accounted for only 1.42%, declining for 4 consecutive months.

10. Ethereum’s Miner Total Miner Revenue in August

Source: The Block

The income of Ethereum miners is not much different before and after the EIP-1559 upgrade, about $180 million. In terms of quantity, according to Etherscan data, as of August 29, the total number of Ethereum miners mined this month is about 61,000, which is a significant decrease from the previous month (91,000 in July). The main reason is that after the EIP-1559 upgrade, the previous part belonging to The miner’s Ethereum was destroyed.

Review of Events and Market Quotations in August’s Cryptocurrency Market

NFT Summer

The NFT market in August can undoubtedly be called the “NFT Summer”. Both the trading volume of the NFT market and the market value of collectibles set new records. OpenSea generated a total of $3.3 billion in transactions in August. Except for Axie Infinity and the activities that took place on Ronin’s sidechain, 97% of NFT sales are based on Ethereum. As NFT sales soared, OpenSea became a direct beneficiary of this craze. In August alone, OpenSea’s transaction volume exceeded $3.3 billion, an increase of 743.5% from the previous month, accounting for 75% of the platform’s historical sales. From less than $1 million in August 2020 to more than $3.3 billion in August 2021, OpenSea’s market transaction volume increased by as much as 3,600 times year on year. At the same time, collectibles such as CryptoPunks and Bored Ape Yacht Club (BAYC) are regarded as a store of value, with their respective market values exceeding the $1 billion mark.

Originator NFT: CryptoPunks

On August 23, the payment company Visa announced that it had bought the CryptoPunk avatar numbered #7610, which was one of 3840 female CryptoPunks avatars, at a price of approximately US$150,000. Within 24 hours of this news, CryptoPunks was under fire. A total of 200 buyers bought 288-pixel NFT avatars, with an average transaction price of US$254,000, many of which were sold for more than 200 ETH.

CryptoPunks can be called the originator of the avatar NFT. In 2017, co-creators John Watkinson and Matt Hall released 10,000 punks, all of which were generated procedurally and received for free (recipients only need to pay a small casting fee). Although it is one of the earliest NFT projects on Ethereum (even a few months earlier than CryptoKitties). Within a few days after its release, fewer than 30 people claimed CryptoPunks. At present, the total sales of CryptoPunks reached $1.12 billion, of which August sales reached $625 million, accounting for 55.8% of total sales. The weekly sales of CryptoPunks reached $376 million, and the floor price of CryptoPunks reached 143.98 ETH.

On the one hand, CryptoPunks has gradually become a status symbol. Holding CryptoPunks means: you are either an NFT/Ethereum OG (Veteran) or a part of history. Owning a Punk is not only a symbol of the status of a veteran in the crypto market but also a passport for high-end investors. CryptoPunks has gradually become a representative of the cultural level of Ethereum, becoming a closer community with a high degree of internal recognition. The high price is not a limitation for the development of such NFT projects, but a threshold for joining this elite community.

On the other hand, CryptoPunks has become a kind of narrative reflexive asset. Reflexive assets refer to the fact that once an expectation of rising prices is formed, the purchase behavior of investors will push the price of assets to rise, which in turn strengthens the expectation of rising prices.

Club membership: Bored Ape Yacht Club (BAYC)

On August 28, Curry bought Bored Ape Yacht Club (BAYC) at 55 ETH and changed it to Twitter’s profile picture, and wrote BAYC in his Twitter profile. At the same time, he also joined the Discord of the project. Under the influence of Curry’s “carrying goods”, BAYC’s popularity increased sharply, with sales exceeding 16,000 ETH on the day, setting a record for BAYC’s highest single-day sales. “Curry’s Avatar” also sparked a discussion boom on Tiktok and quickly reached the top of the Tiktok Hot List.

Bored Apes Yacht Club (BAYC) is unique in that it has successfully created a unique large-scale community that has attracted many stars including Stephen Curry of the Golden State Warriors.

Holders of Bored Ape NFTs can not only use their apes as their Twitter avatars but also as a status symbol. At the same time, these holders have also received many additional privileges: join the Discord chat group to chat with other Bored Apes holders (including NBA star Steph Curry); only BoredApes holders participate in goods (such as streetwear brand The Hundreds) Costumes co-branded with BAYC); and additional NFTs provided by BAYC to Bored Apes holders free of charges, such as Mutant Apes Yacht Club (MAYC, Mutant Apes Yacht Club) and Bored Ape Kennel Club (BAKC, Bored Apes Kennel Club).

Bored Apes and other NFT collections (including Pudgy Penguins, Weird Whales, Gutter Cat Gang, etc.) feel like membership clubs, which are flourishing around the “community”. Such projects are driving the second wave of NFTs purchases.

A Typical Example of FOMO Sentiment and Participation of Speculators: EtherRock

EtherRock is an early NFT project launched in 2017. EtherRock is issued based on Ethereum, and the total number is fixed at 100. EtherRock takes the pet rock as the theme. Each EtherRock displays a still image of the pet rock. They are exactly the same in shape and design, with only differences in color. EtherRock has just launched that only its creators and a very small number of players have participated in this project. The first EtherRock was sold at a price of 0.099 ETH in December 2017. In the following months, there were more than a dozen purchase transactions. The transaction price was concentrated between 0.06 and 0.49 ETH. Combined with the ETH price at the time of the transaction, it was approximately $45 to $300.

In the following three years, EtherRock only had two purchase transactions in February 2019. From March 2021 to July 2021, affected by the increasing popularity of the NFT market, the popularity of EtherRock’s projects also suddenly increased, and it began to receive more attention and favor from NFT players. The transaction price showed a clear upward trend, rising from 0.3 ETH to 1.4 ETH. After entering August 2021, more than 140 transactions occurred in just one month, and EtherRock completely broke out. The influx of a large number of players caused the transaction price of EtherRock to climb straight, from 1.2 ETH to 420 ETH. Among the many participants of EtherRock, including some well-known figures, their participation has further increased the popularity of EtherRock trading. Currently, the cheapest EtherRock for sale has a listing price of 750 ETH, which is approximately 2.3 million U.S. dollars. The price is staggering. In the past month, the price of EtherRock has increased 350 times in ETH, and the increase in US dollars has exceeded 400 times. The reason why the price of EtherRock has increased significantly in the short term is worthy of in-depth study.

The EtherRock project itself has not changed significantly. The shape, design, and color of the 100 EtherRocks are exactly the same as before, and as a still image form of NFT, there is no improvement in performance or user experience. Therefore, the price increase of EtherRock has little to do with the project itself and is mainly affected by external market factors.

Due to the participation of a large number of speculators, the trading volume of NFTs has surged. The continuous influx of new funds has caused the NFT’s secondary market prices to continue to rise, and this wealth-making effect has attracted more new speculators and funds to enter the market. Many newly-launched NFT projects have been very successful, and speculators will sell them at a higher price in the secondary market after buying them. In addition, the entire cryptocurrency market is also on an upward trend. Calculated from the low point of market capitalization in July, the total market value of cryptocurrencies has risen by more than 50%, and cryptocurrency participants still maintain confidence in the market. The increase in the price of cryptocurrencies such as ETH has also boosted the price of NFT to a certain extent.

In addition, FOMO sentiment is also an important reason. The total amount of EtherRock is fixed at 100, and some early EtherRocks may have been lost, which will give participants a scarce expectation. In addition, the total amount of EtherRock is smaller than many NFT projects, which makes participants believe that it is more scarce. When the price of EtherRock ranges from a few hundred dollars to tens of thousands of dollars, to more than one million dollars, this gives speculators more room for the imagination of the price of EtherRock. This FOMO sentiment led to a substantial increase in EtherRock’s transaction volume and further increased the price of EtherRock.

DeFi Summer

On August 31, the Total Lock Value (TVL) of the entire DeFi ecosystem reached $166.8 billion, which has risen to the peak level on May 11. Ethereum is still the unquestioned king, with its on-chain TVL exceeding $114.7 billion, occupying 74.6% of the entire market. Solana’s on-chain TVL reached $3.33 billion, an increase of 428.5% from the $630 million in early July. Since March 2021, the network’s TVL has increased by 1364%. Avalanche’s on-chain TVL has exceeded $2 billion, an increase of 1032% compared to the previous month. Terra’s on-chain TVL exceeded $7.59 billion, an increase of 74% compared to July.

With the arrival of another summer of DeFi, the Ethereum network reached full capacity, and the transaction fees on Ethereum remained high. Ethereum fees increased by 845% over the previous year. Since January 2020, the average block capacity of the Ethereum network has increased from about 70% to a continuous level of 98%, and ecological projects have begun a major migration from Ethereum to Layer 1 & Layer 2. The new blockchain network has opened a huge ecological incentive arms race, and the public chain sector may usher in a new round of reshuffles.

Polygon: $100 million DeFi Fund

The Ethereum Layer 2 expansion plan Polygon fired the first shot of this round of ecological incentive competition. In April this year, Polygon announced the launch of a $100 million DeFi fund to promote ecological development. The fund will focus on decentralized products and platforms that integrate users into the ecosystem, and the empowerment plan will last for 2 to 3 years.

Polygon’s goal is very clear, is to attract more users and funds to enter. In the case of Ethereum network congestion and high gas fees, as the native Layer 2 of Ethereum, Polygon can allow the DeFi protocol on the first layer of Ethereum to easily complete the migration. In just a few months, well-known protocols such as Aave, Curve, Sushiswap, and 1inch have all been deployed on Polygon.

With the support of the DeFi Fund, the Polygon ecosystem has grown rapidly. On August 31, Polygon’s total locked-up value (TVL) reached $5.32 billion, an increase of 6738% from the $77.8 million in early April.

Avalanche: $180 Million Liquidity Mining Reward Program Avalanche Rush

On August 18th, Avalanche, which was in the early stage of network development, also joined this incentive competition. The Avalanche Foundation announced the launch of Avalanche Rush, a $180 million liquidity mining reward program, to encourage more applications and assets to join the Avalanche DeFi ecosystem. According to the plan, Avalanche will integrate Aave and Curve, two DeFi protocols with higher total lock-up value, and provide their users with 3 months of network native token AVAX rewards.

After the release of Avalanche’s incentive plan, AVAX rose from $23 to a maximum of $59 within a week, an increase of 156.5%. The total lock-up value on the chain has also increased from $222 million on August 18 to $1.92 billion today, an 8.6 times increase in less than half a month.

Fantom: 370 Million FTM Incentive Plan

On August 30, the smart contract platform Fantom also launched an incentive plan, announcing that it will invest 370 million FTMs to better adjust the incentives between users, builders, and the network. If an agreement team can maintain the agreement’s TVL for a long time above the time-weighted average of $5 million or $100 million, it can apply for an award from the Fantom Foundation.

Celo: Aave, Curve, SushiSwap-DeFi for the People

On August 30, a consortium composed of leading DeFi agreements such as Aave, Curve, SushiSwap, etc. announced an inclusive financial plan called “DeFi for the People”. They jointly invested 100 million US dollars to promote the blockchain the development of the Celo ecosystem.

Solana Summer

In August, the Solana Ecosystem ushered in a collective outbreak, and its market value jumped to the sixth place on the crypto market value list, and its currency price rose from $140 to $221.The Solana fan community on Twitter spread a loud slogan: Solana Summer. On Twitter, #solanasummer# even has its own hashtag with a Solana logo popping up on it. Many fans have this totem in their profile pictures. Here we briefly analyze why Solana broke out in August.

Solana is a Blockchain with NASDAQ Speed

Solana has the advantages of high throughput, high scalability, low latency, and low transaction costs. Bitcoin can process about 7 transactions per second (TPS), while Ethereum’s TPS is 30 (not significantly improved until Eth 2.0). Solana’s throughput can reach 50,000 TPS, up to 65,000, the block generation time is about 400 milliseconds, and the number of global nodes exceeds 300. Currently, the cost of a transaction on the Bitcoin blockchain is about $3, the transaction cost on Ethereum is about $8-40, but the cost of a transaction on Solana is $0.0001.

SBF and a16z

Once Solana was live, Anatoly went back to SBF. He brought a demo: Break. In 15 seconds, sent 80 real transactions through Solana. All 80 transactions had been processed in an average of 4.02 seconds. The page points out that I only used 0.011% of Solana’s capacity, whereas the same load would have eaten up a third of Ethereum’s capacity and 15% more than all of Bitcoin’s capacity.

SBF was impressed and announced: “Solana is the most performant blockchain.”In July 2020,  Solana hit its first major turning point: crypto trading platform FTX announced that it was going to build its DEX, Serum, on top of Solana. 

If SBF helped Solana build early momentum, a16z helped solidify its legitimacy. In June, two days after Solana Season ended, the company announced that a16z and Polychain capital were leading a $314.159M token sale.

It seems counterintuitive to raise money from a VC when you already have a publicly-traded token and a market cap over $10 billion, but raising money from a16z, Polychain, Alameda, and other well-respected names in the space was essentially marketing, in the same way, that traditional startups raise from top VCs partially to help attract talent, partners, and customers.

SBF and a16z provided crucial votes of confidence and served as catalysts that have helped Solana break out from a crowded pack.

Solana Hackathon and the Rapid Maturity of the Solana Ecosystem

In November 2020, Solana hosted its first hackathon, with over 1,000 developer registrations and 60 projects built. 

In February, Solana held its second hackathon, the Solana x Serum DeFi Hackathon, with 3x the number of registrations (3,000) and nearly 2x the project submissions (100) as the first. In April, the Saber team re-visited Solana and chose to build there because the ecosystem, developer tools, and support had all taken off. By May, when Solana held its third hackathon, Solana Season, developer interest had exploded. 

Solana received over 13,000 registrations and 350 product submissions, increases of 425% and 350%, respectively, in just three months. Speakers and judges for the event included from across the crypto ecosystem, signifying increasing industry acceptance of Solana as a real contender. 

Solana ecosystem currently has 338 projects, including wallets, tools, browsers, oracles, DeFi, Dapp, NFT, GameNFT, funds, and other different matrices. The DeFi ecosystem is the most prosperous, which has 106 projects. And the followed one is Dapp, which were 82 projects, and then there are NFTs and so on. This also shows that Solana has grown from a purely technical public chain to a fertile soil that supports the development of various mainstream encryption industries, and has begun to build its own moat.

At present, Ethereum is still the king among the public chains with a TVL of $114.7 billion, but Ethereum will not be the only one, and multiple chains will coexist in the future. The rise of new public chains such as BSC, Solana, and Avalanche cannot be underestimated. The network performance of these latecomers is generally better, and they are good at using the advantages of latecomers to quickly cultivate the ecology, which is expected to usher in a period of rapid growth. Different from the previous round of public chain wars, today’s public chains are not only competing for performance, but also competing for developer ecology, application innovation, and the ability to capture new hot spots such as NFT and Metaverse.