The Week Ahead - W/C 16/10/23

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TLDR;

• Radiant Capital (RDNT) launches on the Ethereum Mainnet on 15th October and we believe this move could add $2.75bn-$7.15bn in TVL to the protocol. Overall, this move will make the protocol more accessible to a wider audience and open up a larger pool of assets, making it a significant opportunity for Radiant Capital to grow its user base and TVL.

• Floki has pre-announced news dropping on 17th October. These events have a large tendency to mean-revert so we expect volatility over the coming week.

• Yearn Finance, a decentralized finance (DeFi) platform, will launch its veYFI token on October 19th, 2023. veYFI is a locked version of YFI that gives holders more voting power, boosted rewards, and potential access to exclusive features in the Yearn Finance ecosystem.

• Apecoin ($APE) unlocks 4.23% of the circulating supply, equal to $17.47 million on October 17th.

SEC Will Not Appeal Grayscale's Bitcoin ETF Conversion, But News Fails to Spark Price Rally

The big news from last week was that the SEC will not be appealing a court decision on Grayscale's GBTC conversion. This means that Grayscale is now free to proceed with its plan to convert its Bitcoin Trust into a spot Bitcoin ETF.

For background, on August 29th, the U.S. Court of Appeals for the District of Columbia ruled in favor of Grayscale Investments in its lawsuit against the SEC. The court found that the SEC had not adequately justified its decision to deny Grayscale's application to convert its $16.2 billion Bitcoin Trust into an ETF.

The deadline for the SEC to appeal this decision was October 13th, and the fact that they let this come and go without an appeal paves the way for the first long-anticipated spot Bitcoin ETF.

Despite this positive news, Bitcoin failed to sustain a meager 1.37% rally, which many participants believed would be the catalyst for the next bull market. This kind of news failure tends to be significant and shows just how weak the demand for risk-taking within cryptocurrency is. Volumes remain close to all-time lows, and participants continue to leave the space for traditional markets.

Amongst this soft backdrop, there are several upcoming catalysts this week to focus on:

Radiant Capital (RDNT) launches on Ethereum - 15th October

Radiant Capital is an omnichain lending protocol that allows users to lend and borrow assets across multiple blockchains, including Arbitrum and BNB chain. Their primary goal is to consolidate the fragmented liquidity dispersed across the top ten alternative layers, and they are set to roll out the protocol on Ethereum during the week commencing 15th October.

At present, the project is mainly active on the Arbitrum blockchain. Arbitrum represents just 3.29% of total chain TVL compared to 56% native on Ethereum. This native liquidity dwarfs its Layer-2 counterpart and is made up of over $55bn in stablecoins - the majority of this is currently not utilized to generate yield or earns less than US treasuries.

Radiant’s decision, therefore, to target this huge market could be a major turning point for the project. We estimate the Ethereum main net launch could add between $2.75bn-$7.15bn in TVL to Radiant Capital’s asset base, placing it in the top 5 protocols on Ethereum, and directly benefitting RDNT token holders through a number of channels:

• Increased staking rewards: The protocol uses a dynamic liquidity provisioning (dLP) model to incentivize users to provide liquidity to the protocol. This model rewards liquidity providers with RDNT tokens, and the amount of rewards is based on the amount of liquidity that is provided. As the TVL increases, the amount of liquidity that is provided also increases, which means that the staking rewards also increase.

• Increased demand for RDNT tokens: As the TVL increases, the demand for RDNT tokens also increases. This is because RDNT tokens are used to pay for fees on the protocol, and they are also used to participate in governance. As the demand for RDNT tokens increases, the price of the token is also likely to increase.

• Increased utility of RDNT tokens: The RDNT token has a number of utilities, including:

  • Paying for fees on the protocol

  • Participating in governance

  • Staking to earn rewards

  • Using as collateral to borrow assets

Overall, this move will make the protocol more accessible to a wider audience and open up a larger pool of assets, making it a significant opportunity for Radiant Capital to grow its user base and TVL. That said, given the release has been well-known for weeks, we fail to believe it’s not already priced into the RDNT price in the short term.

Floki Annoucement Teaser - October 17th

Floki is a community & utility-driven cryptocurrency project that is inspired by Elon Musk's Shiba Inu puppy of the same name. The Floki Inu team is ‘committed to building a strong ecosystem that empowers its community and gives back to the world’, which is another way of saying the project has zero ultimate utility.

On October 12th, the team released a teaser on ‘X’, and pre-announced a release scheduled for Tuesday 17th. Since this tweet, the market has front run any news, with $FLOKI currently trading up 8% against ETH. These moves have a strong tendency to revert around the announcement dates, and volatility is likely to be elevated in the coming week.

Yearn Finance veYFI launch - October 19th

Yearn Finance, a decentralized finance (DeFi) platform, will launch its veYFI token on October 19th. veYFI is a locked version of YFI that gives holders more voting power, boosted rewards, and potential access to exclusive features in the Yearn Finance ecosystem. This is designed to incentivize long-term holding and participation in the governance process. We believe the launch of veYFI has the potential to be a major catalyst for YFI for several reasons, including increased demand for YFI, improved governance, increased rewards, and network effects.

APE unlock - 17th October 01:00 UTC

Apecoin ($APE) unlocks 4.23% of the circulating supply, equal to $17.47. The last major unlock saw 11.02% of circulating supply hit on 17th September, and since $APE’s inflation rate began to tick higher, the token has underperformed significantly. To put the performance into perspective, $APE is down over 80% against Bitcoin YTD, and whilst the unlocks continue to provide supply to the market, we anticipate the volatility to continue,

Remainder of the Month

• Worldcoin Market-Maker Agreement Expiries. Market-making agreements signed on the $WLD USDT-Perp launch are set to expire at call prices significantly higher than the current price. This provides a massive incentive to push the market higher into the agreement expiry date - October 24th.

• Axie Infinity ($AXS) unlocks 11.26% of the circulating supply, equal to $65.41m

• CyberConnect ($CYBER) unlocks 11.43% of the circulating supply, equal to $6.57m.

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