Memecoin mania hits DegenChain

April 01, 2024

Reading time: 5 minutes

MATIC holders face losses as TVL dips, Napoli upgrade offers ray of hope

Key points:

  • Less than 45% of the total holders were found to be in a profitable position.

  • As the Napoli upgrade approaches, there is a possibility of MATIC's price witnessing an uptick.

News - Data from IntoTheBlock revealed that MATIC’s price declined significantly, resulting in considerable distress for holders.

Moreover, the crypto analytics platform indicated that 50% of MATIC holders were experiencing losses. Conversely, 44% were witnessing profits, with the remaining 6% managing to break even.

Some hope for the bulls - On 27 March, Polygon announced the upcoming "Napoli upgrade," aimed at enhancing Polygon's network consensus. This upgrade entails integrating improvements in parallel execution and new operational codes for the Ethereum Virtual Machine (EVM).

Consequently, the Mumbai Testnet, part of the Proof-of-Stake (PoS) network, will be phased out in April, making way for the Amoy Testnet. As with past upgrades, this development could potentially boost MATIC's price, especially if buying pressure continues to rise, possibly pushing it towards $1.30.

Problems in the DeFi sector - Although MATIC holds bullish potential, Polygon encountered challenges, especially regarding its Total Value Locked (TVL). In 2021, Polygon's TVL soared, nearing $10 billion. However, current data from DeFiLlama indicated a stark decrease to just $1.07 billion. TVL gauges the value of assets locked or staked in a protocol, reflecting market participants' liquidity contributions and the overall health of the network. A decline in TVL could impact MATIC negatively in the long run.

ETH supply plummets to record lows amidst bullish surge, spot ETF speculation

Key points:

  • Only 11% of Ethereum's overall supply remained accessible for active trading purposes

  • Investors exhibited decreased readiness to let go of their ETH holdings.

News - Starting impressively in 2024, with a nearly 57% year-to-date (YTD) gain and the looming possibility of a spot ETF, ETH emerged as one of the hottest assets in the current crypto market landscape.

However, the main challenge for the leading altcoin wasn’t demand but supply. According to AMBCrypto's analysis of Glassnode's data, ETH reserves on exchanges have plummeted to unprecedented lows. Presently, only about 11% of the total supply is available for active trading, a significant drop from 15.8% at the same time last year.

This downward trend persists into 2024, despite ETH's substantial 57% YTD increase in value. Should this decline continue, it would exacerbate the supply crunch even further.

How will the declining supply impact ETH? Usually, such scarcities tend to support long-term price strength, assuming demand remains high.

Although evident supply shortages occurred throughout 2022 and 2023, ETH still struggled due to uncertainties induced by the bear market.

However, with improving sentiment surrounding cryptocurrencies, along with ETH's potential bullish drivers such as spot ETFs, the desire to acquire the second-largest digital asset is likely to intensify.

Analysing whale behaviour - Whales appeared optimistic about ETH’s future. According to AMBCrypto's examination of Santiment's data, transactions involving whales, valued at over $100k, grew recently despite a price correction.

This surge in transactions has contributed to an increase in the number of wallets holding between 1,000 to 10,000 coins.

Meme coins on Degen Chain thrive as the new Layer 3 platform accumulates millions

Key points:

  • Degen Chain, a newlayer-3 blockchain, garnered massive attention and transaction volume since its launch on Thursday.

  • Since its inception, its native DEGEN token has skyrocketed by 500%.

News - The surge of capital, fervently seeking meme coins across various networks like Solana and Base, has now shifted its focus to Degen Chain. This layer-3 blockchain, commenced operations just last Thursday.

In the past 24 hours alone, data indicates that this network, which is only four days old, has recorded transactional volumes nearing $100 million, spanning over 272,000 unique transactions. On-chain analysis revealed that since Thursday, over 7,500 contracts and 2,300 tokens have been introduced on the network. However, a significant portion of these tokens are suspected to be rug pulls or scams.

A closer look - The most significant token in terms of capitalization was Degen Swap (DSWAP), a native token for an exchange on Degen Chain. It was valued at over $14 million as of Monday morning. Meanwhile, the non-serious token Degen Pepe (DPEPE) held a higher valuation at $23 million, but it was essentially a meme coin without any utility beyond speculation.

Numerous tokens on the network have a market capitalization below $1 million, primarily functioning as speculative investments. As of Monday, the network didn’t support stablecoins, and users were able to transact or trade only using the native DEGEN tokens.

Prisma Finance reels from $11.6M security breach, hacker demands transparency

Key points:

  • Prisma Finance incurred an $11.6 million loss due to a security breach.

  • $540,000 remained vulnerable due to unsecured accounts linked to a compromised contract.

News - Prisma Finance, a decentralized borrowing protocol, was contending with the repercussions of a substantial security breach at the time of writing, which led to an $11.6 million loss incurred last week.

According to disclosures from the protocol, approximately $540,000 of funds remain at risk, attributed to 14 accounts that have yet to revoke a compromised smart contract.

Hacker makes demands - Taking a bold stance, the hacker, claiming to be a "white hat" ethical hacker, rebuked Prisma Finance for failure in due diligence. The hacker has set forth precise conditions for the restitution of the funds.

These conditions entail a public forum where the Prisma team must reveal their identities, admit to oversights in auditing the smart contracts, and outline strategies for improving security measures.

Prisma reacts - In response to the crisis, Prisma has laid out a plan to protect more reserves and try to get back the stolen assets. A proposal introduced on 1 April suggests taking liquidity from POL and vePRISMA staked revenue as part of these recovery efforts.

Did you know?

  • In 2010, a bug in the Bitcoin code accidentally created 184 billion Bitcoins. This was thankfully caught and fixed within hours, but it highlights the potential for critical errors in the early days of cryptocurrencies.

  • In 2014, the internet went wild over a video of a New York City rat dragging a whole slice of pizza down the subway stairs. Inspired by this viral sensation, a programmer created a cryptocurrency called "Trashcoin" (TRASH). While initially intended as a joke, Trashcoin gained some value and even got listed on a few cryptocurrency exchanges.

  • There are cryptocurrencies designed to appeal to survivalists and preppers. These coins aim to be a hedge against economic collapse or societal unrest. Examples include "PrepperCoin" (PREP) and "Survival Coin" (SURV). Their value is debatable, but they highlight the sometimes unusual motivations behind certain crypto projects

Top 3 coins of the day

Bitcoin (BTC)

Key points:

  • BTC reclaimed the $70,000 mark, inspiring optimism amongst traders.

  • The percentage of short positions taken against BTC grew to 51.01%.

What you should know - The volatility showcased by Bitcoin over the past week caused massive speculation and uncertainty across the market. After reaching its all-time high (ATH) at $73,750.07, the price of BTC fell by 16.67% and tested the $61,445 level. Well, the king coin has tested the $70,000 level multiple times in the last few days, which could indicate the weakening of this resistance level. If momentum around BTC remains high, it could soon re-test its ATH in the future. However, the technical indicator CMF (Chaikin Money Flow) noted a decline. This indicated that the money flow had fallen. Hence, the declining CMF may pose a threat to BTC’s rally.

dogwifhat (WIF)

Key points:

  • WIF becomes 3rd largest memecoin in terms of market cap.

  • The coin surged by 54.70% over the last week.

What you should know - WIF has gained the most from the recent market surge. It has managed to surpass its competitors such as PEPE, FLOKI and BONK in terms of market cap. Since the beginning of March, the price of WIF has grown by 283% - surging from $1.13 to $4.37. When the price rallied, the daily chart exhibited multiple higher highs and higher lows, indicating a bullish trend. However, in the last 24 hours, WIF fell by 7.20%. Well, the price decline wasn’t significant enough for a trend reversal. The RSI (Relative Strength Index) also declined from 70 to 57, implying that the price had left the overbought zone.

Fetch.ai (FET)

Key points:

  • Fetch.ai’s FET fell by 7.17% in the last 24 hours.

  • This correction was emblematic of the state of the AI token sector.

What you should know - Due to the rising popularity of AI coins, the price of tokens such as RNDR, FET and TAO grew in March. However, over the last 24 hours, the prices of all of these tokens fell considerably. FET took the largest hit as it fell by more than 7%, the highest decline in the AI token cohort. Consequently, long positions worth $1.06M were liquidated in the past 24 hours. Moreover, the OBV (On Balance Volume) fell, a declining OBV suggests less buying pressure, potentially indicating a weakening trend and a future price drop. However, the CMF (Chaikin Money Flow) registered an uptick, which could suggest a spike in money flow for the token.

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