2019 May 06 - Volume.3 Issue.13

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2019 May 06 - Volume.3 Issue.13

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DApp Volume Highs, But New Deployment Trends Downwards

Ether transacted in April on Decentralized Application (DApps) pipped out December's All-Time-High by a tiny margin. The new high, in both Ether and US Dollar value, sets a 4-month growth trend in on-chain volume. At the same time, however, the number of newly deployed DApps have mirrored the exact opposite direction hitting a 15-month low.


776k Ether was transacted on DApps last month turning on-chain activity higher than the previous period for 4-months in a row. This year is the most prolonged period of growth in terms of transacted volumes DApps have witnessed, ever.

Nearly $132Mn was transacted on DApps, mainly Decentralized Exchanges (DEX) and gambling applications, also marking a 4-month in a row growth and an 8-month high. Versus March, this was a 46% increase and a whopping 186% in comparison to volumes seen at the start of the year when they hit an all-time low (Diar, 28 January).

|| NOT ALL ROSY

New DApps going on-chain, however, is marking the lowest point nearing 2017 levels (see chart). Ethereum remains the platform of choice seeing almost 60% of all newly deployed applications run on the 'supercomputer' this year according to statistics from State of Dapps that tracks over 2600 projects.

April closed off the month with a mere 88 Decentralized Application (DApps) being deployed hitting levels not seen since the start of 2018. Last month wraps up a continuous declining trend in deployment since September 2018, bar a flurry of new DApps that went on-chain at the end of last year which marked the peak of development to date.

|| LURKING GROWTH?

Developer interest though has hardly waned. The Truffle Framework which has become a core tool for programmers to build on top of Ethereum has seen downloads hit an all-time high this year with a sustained quarter-on-quarter growth (see chart).

The likelihood however that developers are focusing on token-based projects might be slim despite the attention given to coins due to monetary value sparking speculator gains - and losses (see story below)

|| WHERE TO FROM HERE?

Developers will likely continue hitting roadblocks with infrastructure still far from scale and a user experience effectively in their first iteration on Ethereum. And with new blockchains coming online, developers may begin to split their focus.

Decentralized Organizations platform Aragon, who have been staunch Ethereum supporters, saw their community vote against the exclusive focus on the largest smart-contract platform allowing for the venture into Polkadot. Other are likely to follow.

Monthly ETH DApp Volumes Hits All-Time-High


New DApps Added Across Multiple Platforms


Truffle Framework Downloads Hits High 1Q19


Sources: Dapp RadarState of Dapps, Truffle Framework


Bitcoin Blocks Fill to the Brim, SegWit Keeps Fees at Bay

Average Bitcoin transactions fees shot up a near 200% in April versus March as the blocks reached well above the 1Mb limit hitting a new high. SegWit though has also reached a usage high keeping fees suppressed. 


Bitcoin miners earned themselves a cool $291Mn in April, nearly 30% higher than March as the price of the cryptocurrency continued on its ascent (see chart 1). But the reward isn't the only earner with fees also rising by 250% last month versus March raking in nearly $14Mn (see chart 2).

On-chain volume still heavily used for ramping on and off exchanges has been the main culprit as traders look for an opportunity with the price of Bitcoin rising 43% during April resulting in full blocks (see chart 3). But SegWit, the scalability solution that addresses the issue has also hit a high with the percentage of blocks using the mechanism averaging 35% alleviating fee pressures. 2018 average SegWit usage was only 26% and only 11% at Bitcoin's peak highlighting the continued adoption by major players.

The number of transactions on-chain is also just shy of the all-time-high of December 2017. Since hitting a low in February of last year, month-on-month growth for the number of transactions has been clearly evident (see chart).

Real volumes though remain off the mark, though, have shifted back into growth (Diar, 30 April).

|| ESTIMATING APPLES FOR APPLES

Currently, 1-2 block confirmation times are 84% lower than seen at peak, though, Bitcoins moved on-chain is still 1/3 of peak (see chart 6).

Diar estimates that at current SegWit usage levels, fees could go up as high as 300% should on-chain movement of Bitcoins resemble that seen in at the end of 2017.

Still, fees would be more than 55% cheaper than that seen in December 2018 when fees hit nearly 500 Sat/byte indicating the technology behind SegWit is working as intended with it being put thoroughly to the test.

 

1: April Bitcoin Miners Revenues Near $300Mn...


2:...With Miners Earning Nearly $14Mn From Fees Alone


3: And While Blocks Are Becoming Full, SegWit % Rises...

4:...Keeping Fees 84% Lower Than All-Time-High (Sat/Byte)....


5:...As April 2019 On-Chain Transactions Nears Record # of Txs


6:...And Real Bitcoin Volume also Trending Upwards

Sources: Diar Calc., Blockchair, Blockchain, P2SH, TokenAnalyst


Smart Contract Creations Halves, Still Holds Above 2018 Levels

Smart Contract Created

Contribution of Gas Spent on Transfer and Smart Contract Calls

Source: Bloxy


Kraken Opportunity as Bitfinex, Tether Convolute Prices

Tether, the contentious stablecoin whose reserves have been slashed by 26% has come back from the dead once again just shy of its intended Dollar peg at press time. Arbitrage opportunities reached as high as 5% for traders willing to jump a few hoops entering and exiting their Tether positions on Kraken, one of the only exchanges to have a USDT/USD pair.

wdt_ID Date USD -> BTC (Kraken) BTC -> USDT (Bitfinex) USDT -> USD (Kraken) Diff. per BTC ($)
1 25-Apr 5413 5462 5471 58
2 26-Apr 5147 5380 5227 80
3 27-Apr 5165 5398 5256 91
4 28-Apr 5172 5473 5332 161
5 29-Apr 5156 5467 5348 192
6 30-Apr 5203 5529 5463 259
7 01-May 5306 5616 5562 257
8 02-May 5363 5703 5617 254
9 03-May 5619 5974 5882 263
10 04-May 5690 6035 5956 267

SIX Swiss Exchange Eyes Digital Arm Extention

SIX, Switzerland's principal stock exchange is set to open up a new trading arm primarily focused on the tokenized of traditional assets from stocks to structured products.

|| NO REALLY...IDO....

Thomas Zeeb, Head of Securities and Exchanges at SIX tells Finews that "ultimately we want to be able to tokenize existing securities – equities, fixed income, funds. Maybe the token will eventually replace the share one day" with the anticipated launch of Initial Digital Offerings (IDO) by 2021. Mr Zeeb said the exchange may very well conduct its own IDO.

While the need for a blockchain is pointless without other exchanges participating in the network, it's easy to see why SIX is venturing into tokens. Any resemblance of the current global trading ability cryptocurrencies offer is a certain win for exchanges.

And as one of the first in Europe to offer exchange-listed cryptocurrency products, SIX continues driving the Blockchain bandwagon after having found it's Bitcoin, Ether and Top Cap Basket Exchange Traded Products (ETP) by Amun trade as their top performers only to be surpassed by crude oil.

Bitfinex: Rinse & Repeat
Bitfinex is eyeing a $1Bn raise through an Initial Exchange Offering (IEO) with a minimum buy-in of $1Mn, according to Zhao Dong, a Bitfinex shareholder. The tokens, representing $1 each, effectively emulating a stablecoin, isn't the exchanges first go at issuing tokens to clear itself from financial mishaps (Diar, 30 April). Following the 2016 hack, the exchange issued BFX also representing $1, but traded well-below that price before the exchange announced it had bought back all the tokens effectively clearing it from its debt at a discount.
Fidelity Attempts Spin
Major investment firm Fidelity who launched their Digital Assets arm last October is set to begin trading Bitcoin for select clients Bloomberg reports. The firm released a survey last week indicating that institutional investments are likely to increase over a not-so-short 5-year period pushing demand well beyond the middle of the next decade. Concerns of custody remain despite multiple insured facilities on the market. And less than half the respondents "appreciate that digital assets are an innovative technology play" highlighting a cautious take of the asset class.
Stability Fee Unstable
Maker holders once again voted for the 8th time in two months to increase the Dai Stability Fee in an effort to reach US Dollar parity. Outstanding Dai though remains unaffected with supply decreasing a mere 1%. The likelihood of more increases in the stability fee are high as the ether-backed stablecoin is still unable to reach a consistent dollar-peg across exchanges. While Dai has now been thrown off its peg for the better part of 2019, the stability fee is working incrementally, although slowly. DeFi options to borrow Dai remain cheaper than CDPs.
STOs Quiet Surge
The Financial Times reports that Security Token Offerings (STO) raised $442Mn in 2018, up 1800% versus the year before as start-ups look to raise funds through regulated means. Nearly $200Mn has been raised by tokenized securities platforms with backing comings from major US-based cryptocurrency exchanges that saw an Initial Coin Offering (ICO) missed opportunity as regulators amped up their scrutiny (Diar, 8 October 2018). Still, STOs are likely to replicate the current status-quo allowing only for accredited investors to partake.

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