With the recent DeFi surge, a pullback has now taken place…a true test of your conviction
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DeFi Slate Fam:
The markets are in a sea of red today and its really no bueno. But, could you have seen this coming?
Maybe, maybe not.
We aren’t here to time the markets and trade – we prefer fundamental investing for years on years as an outlook but if you did want to identify trends, Dune Analytics is right where you’d want to look.
In this piece we break down identifying trends using the platform, and making second & third order conclusions from the data.
– Andy
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Master It Monday: Using Dune Analytics to identify trends
Dune Analytics is by far my favorite crypto data platform, especially for DeFi. First of all, its free. You can get access to more than enough data to identify trends after you make a free account AND you can create data sets yourself too.
So go ahead, and make an account on Dune Analytics then let’s get to identifying some trends!
Trend #1: Bullish on Total # of DeFi Users
There is no doubt that DeFi blew up in the last 12-18 months. This trend is about as bullish as it gets, up 5x since January this year in terms of total users (or unique addresses). It makes sense that we are seeing heavy blood hit the streets now, that curve right there is about as ‘parabolic bubble’ as it gets. We should see this continue to rise over the next 6-12 months and this is a great marker for how much action is happening in DeFi.
If you want to know if/when ‘new money’ is entering the space, monitor this chart and make your assumptions based off it.
Trend #2: VERY Bullish on Bitcoin on Ethereum
Wow. This chart is insane. At a price of $10,400 today there is approximately $1.125B of Bitcoin on Ethereum right now. Wrapped BTC or wBTC and renBTC are leading the way in terms of total BTC on Ethereum. So, what conclusions can we make of this?
Well first, we think this is bullish for Bitcoin because it ~theoretically~ reduces the supply of BTC on the markets – less supply & same or increased demand = a bullish case for BTC. What else?
Well the Ren Protocol & REN token gets its value from the amount of transactions that happen on the RenVM. If the above data is any tell, the amount of renBTC being minted is accelerating dramatically – thus, more fees for REN darknode holders and a higher revenue for the protocol, more TVL thus a higher price of REN.
This is a forecast based off data, remember there are so many other factors at play including: market sentiment, tokenomics, announcements, team, whales etc.
Trend #3: Unfortunately, Neutral-Bullish on ETH Gas Prices
This is just plain ol’ yuck for traders, investors, farmers, LPs and everyone in between. Gas is just too damn high! Or is it…? We might not have seen anything yet. The median gas price in Gwei since April 2020 has gone up exponentially. We may even see a median of 1000 Gwei at some point.
This is unfortunate but can be seen as a good thing. Obviously we’re seeing way more DeFi users than ever before (per Trend #1), and with this comes a massive increase in congestion on Ethereum. So, what conclusions can we make of this?
There is a large continued demand for ETH to pay for gas for all types of transactions (Increased demand for ETH?)
L2 solutions that solve the gas problem for these types of transactions will probably pick up massive traction (xDAI, Loopring)
Other L1 blockchains that can build their own versions of similar products like we have on ETH will become slowly adopted and used over time (Solana, Tron, Cosmos, Polkadot)
Gas optimization platforms that offer yield farming for smaller farmers will gain TVL over time (Harvest.finance & yearn.finance)
There are even third layer conclusions that can be made from this as well -> looking at assets on the L1 solutions that we mentioned. Looking at projects that integrate xDAI from the get-go.
Dig deep. Few understand…
There are many trends available on Dune Analytics & we recommend every crypto investor and DeFi user to make an account!
⚠️DISCLAIMER: Investing into cryptocurrency and DeFi platforms comes with inherent risk including technical risk, human error, platform failure and more. We are strictly an educational content platform, nothing we offer is financial advice. Please refer to our blog for more on mitigating your downside when using these protocols!
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Check out some previous interviews:
Last week in review:
Master It Monday: Farming $FARM On Harvest Finance
Tap In Tuesday: DeFi By Design EP #7: Interoperability & Cross-Chain Future with Ren Project
Wiretap Wednesday: The genesis of fair launches with $YFI
Thursday: DeFi By Design EP #8: L2 Scaling & zkRollups with Loopring
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