Climate forecast
The altcoin market has recently gained momentum following the approval of exchange-traded funds (ETFs) for Ethereum (ETH) in the United States. In May, the overall market capitalization of altcoins increased by around 20%, with Ethereum responsible for half of this growth.
The upcoming airdrops, which will distribute billions of dollars of project tokens to decentralized finance (DeFi) users, have the potential to generate more excitement in the altcoin market. By the end of Q2 2024, major release events for multi-billion dollar projects such as LayerZero, Etherfi, Blast, and zkSync are expected.
analysis
Pendle Finance benefited from the growing hype around the liquidity reconsolidation in May. Pendle is a cross-chain protocol for interest derivatives that allows users to separate yield-generating token assets into principal and yield components.
PENDLE’s price and total value locked (TVL) increased by 58.6% and 50.5%, respectively, outperforming other major DeFi projects. As of June 3, Pendle had a TVL of $6.28 billion. It has surpassed Uniswap’s TVL of 6.12 billion and now ranks sixth among the largest DeFi protocols.
Liquid storage tokens are currently the most deposited assets on Pendle and make up the top five buckets with the highest TVL. Etherfi’s weETH pool alone represents $1.4 billion of the total TVL value.
Users can split productive assets such as Renzo’s ezETH on Pendle to create a yield token (in this case, YT ezETH) and a primary token (PT ezETH). The PT token represents the principal of the underlying asset, while YT entitles you to future returns.
Every PT and YT has a due date. The points, which generally trade at a discount, can be exchanged for the underlying asset after this date. As for YT, it continues to generate returns until maturity, after which YT no longer has any value. Additionally, YT ezETH holders are eligible for Airdrop allocations from the underlying asset.
On the other hand, PT holders will not receive any airdrop tokens. YT and PT are tradable and liquid.
Airdrop producers have been incentivized to drop off their LRTs at Pendle since point multipliers were introduced via cash replenishment protocols. These multipliers increase streaming allocations when the asset is held in a DeFi protocol, compared to when it is in a wallet.
For example, Renzo Protocol currently offers a 4x multiplier on its Pendle pool – on top of the already inflated exposure to YT token airdrops. By purchasing YT tokens, you can obtain 117 times the number of Renzo Airdrop points compared to purchasing the underlying asset.
The process of maximizing future airdrop allocations is called leverage point farming. The dual stimulus aims to expand the utility and adoption of LRT tokens within DeFi. All major LRT protocols have a Pendle score multiplier ranging from 2x to 4.5x. This multiplier applies to both liquidity providers and YT holders.
It is worth noting that Pendle’s reliance on LRTs for its locked value means high exposure to idiosyncratic risk. Pendle’s TVL saw a strong outflow of $1 billion in late April. This 25% drop in TVL value is mainly due to the arrival of airdrop allocations from Etherfi, Ethena and Renzo.
Once the potential distribution is distributed, the incentive to use the redistribution protocol decreases and many users withdraw their funds. However, the aforementioned projects have already announced second seasons of their airdrops to maintain their TVL.
Another exception in the current market environment is Notcoin (NOT), the native token of the decentralized Telegram Mini application (DApp) called Notcoin created by Open Builders. NOT experienced a significant price increase of over 400% from May 27 to June 3.
Mini DApp is a lightweight application integrated with major social media platforms. Notcoin can be run in Telegram without downloading additional software, significantly lowering the barrier to entry. Players can earn tokens in-game, not just by tapping the screen.
With its simple monetization model and mini-dapp design, Notcoin has already attracted over 35 million users as of May 16, with 6 million daily active users before the token was listed. Notcoin distributed 78% of NOT to users at launch, and the rest was allocated for strategic development of the Notcoin ecosystem.
This wide distribution means that the community is not treated as a memecoin for the open network ecosystem. As of May 30, there were 1.6 million NOT onchain holders, which is more than other high-value memco holders such as Shiba Inu (SHIB) (1.4 million), Bonk (BONK) ( 721,000) and Pepe (PEPE) (235,000). .
The recent rise in NOT prices remains speculative. This may be due in part to the emergence of more applications in the TON ecosystem, which has increased community awareness of NOT. There is a collaboration between Notcoin and a cat herding game called Catizen, which does not support in-game purchases.
Catizen became a leading app during the third season of The Open League, an event organized by the TON Foundation to motivate TON users. With nearly 2 million daily active users, Catizen acquired 50 million NOTcoins in three days and burned 10% of NOT on May 22. Additionally, Notcoin also burned 6.9 million NOT on May 30.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research before making a decision.
