🧘♂️Beginner’s Whale Tracking Guide
Market Meditations | May 18, 2022
In last week’s instalment of our yield farming series, we demonstrated how to find yields on safe-haven assets. However, there are more methods to protect your crypto assets.
The market has no favourites and whilst big moves impact everyone, it can be beneficial to analyze what the top crypto investors are doing with their funds.
Using Nansen we are able to consider specific yield farming pools to understand exactly who is participating. When market conditions get tougher, you need to play it smarter. Nansen is a powerful way of levelling up.
- Using Nansen For Whale Watching
- Big Updates From Twitch
- Even More Peg Issues
With Nansen’s On-Chain data, you get an edge over everyone else by tracking the behaviour and on-chain activity of prominent wallet addresses.
- Exciting New Opportunities. Follow Smart Money, identify new projects, and trace transactions down to the most granular level.
- Perform Due Diligence. Get more information on projects or tokens before you invest.
- Defend Your Positions. Create real-time custom alerts and get notified when and where a wallet has been moving its funds.
- Track The Biggest NFT Traders. See what the most profitable NFT wallets are investing in.
⏰ Top Headlines
- Do Kwon puts his Terra revival plan to the vote
- Ethereum’s main testnet set for proof-of-stake merge in early June
- Magic Eden, Solana’s most popular NFT marketplace, attracted 15% more wallets as demand for Solana-based NFTs keeps growing
- Polygon partners with Orbs and DeFi.org to launch an accelerator program
✌️ Whale Hello There
The first tool we are able to use within Nansen is “top depositors”. This allows us to track exactly who is depositing specific assets into specific yield farms.
To take an example, let’s look at Lido Finance’s new ETH pool on Curve Finance. Lido is a project that allows you to stake ETH, earning yield but also receiving stETH in return which you are able to use in the DeFi ecosystem:
- There is a total of $512m stETH in the liquidity pool.
- Three Arrows Capital is the top smart money liquidity provider, with over 9,724 stETH ($19m) deposited.
- None of the top 6 smart money liquidity providers have had any outgoing transactions showing that they have not withdrawn any stETH from the pool.
Diving Deeper into Three Arrow Capital’s Position
We are also able to dive deeper into Three Arrow Capital’s wallet, to see all movements of stETH from that wallet:
Nansen.ai: 18/05/2022 – Incoming and Outgoing stETH from Three Arrows Capital Wallet
- This shows that there has been 9.72k stETH sent to this wallet with 100% of that then being deposited into the curve pool.
Where there is reward, there is also risk – especially in crypto. For yield farming, risks include volatility of any assets used (even if these are supposedly stable) and smart contract vulnerabilities. A full breakdown can be found in part 1 of our yield farming series.
Following whales is also a risky endeavor. Previous success is not an indication of future success. Additionally, smart money will have large portfolios and any opportunity will be assessed against their own strategy. This means that what might be a good opportunity for a whale, may not translate to a good opportunity for a retail investor.
?️ Son of a Twitch
One of our streaming forefathers has stepped off the spectating sidelines to go all in on the metaverse. Twitch co-founder Kevin Lin’s Web3 gaming and entertainment company, Metatheory, has raised $24 million in a Series A funding round which concluded on Monday.
- The round was led by prominent venture capital firm Andreessen Horrowitz (a16z). Previous investments claiming a16z investments include OpenSea, Roblox, Figma, and Axie Infinity.
- Other investors included respected names like Pantera Capital and FTX Ventures.
- Metatheory got off the ground last November, when the Twitch co-founder revealed on Medium his pursuit of creating the gaming company in addition to a blockchain game called DuskBreakers.
- Kevin Lin is not the only former Twitch visionary to venture into NFT gaming. Another co-founder of Twitch, Justin Kan, is behind Fractal, an NFT marketplace focusing on gaming tokens.
- While blockchain games increasingly claim headlines, mainstays in the conventional gaming world seem to be warming up to the idea. Industry giants like Square Enix and Microsoft have revealed intentions of moving further toward NFT integration for the foreseeable future.
Play-to-Earn (P2E) games represent a valuable use-case for blockchain technology. Secondary marketplaces like Ebay possessed considerable markets for digital game goods until policy was enacted due legal complexity associated with the sale of in-game items in 2007.
Curious about gaming NFTs? Take a look at our examination of Gaming NFTs here.
? Broken Pegs
In what has been a catastrophic week for stablecoins, two more stablecoins have lost their peg.
- The stablecoin fUSD fell as low as 0.69 with DEI falling to 0.52. The de-pegging event led to a lending protocol on the Fantom network known as SCREAM to incur $35 million in bad debt.
- Whales noticed the protocol was still valuing the depegged fUSD and DEI at $1, so they deposited large amounts of both.
- Then they withdrew stablecoins that were still in peg, such as USDT, FRAX, DAI, MIM, & USDC, draining the pools and leaving other depositors unable to make withdrawals.
- The defi lender has already lost 50% of its TVL.
- The problem was brought to light because of the de-pegging event but the protocol had hardcoded the prices of the stablecoins to $1. They also set the fUSD deposit limit to infinity.
- The SCREAM team announced a solution that involves them hardcoding the price of fUSD to 0.81, a move that will lead to liquidations of borrowers with otherwise healthy loan-to-value ratios.
- It also leaves many asking why the price is being hardcoded again instead of using oracles. According to the announcement, The Fantom Foundation will be releasing a liquidation mechanism that is currently under audit which will restore the fUSD peg to $1. The primary lender of DEI has agreed to repay the borrowed debts and the Deus Finance DAO has proposed treasury bond sales to restore the peg of DEI.
The SCREAM protocol is not available for US residents, but these de-pegging events and bank runs will undoubtedly fuel the fire that is already ablaze in the minds of US regulators.
- 1/ There was a compromise of the Mee6 bot which was installed on the main Axie server. The attackers used that bot to add permissions to a fake Jiho account, which then posted a fake announcement about a mint.– Axie Infinity
- This proves the opposite, which is that USDT is redeemable, in size, for USD.- Zhu Su
Many people were ambushed by the collapse of the Terra network.
Few people saw it coming, so when it happened, not many of us had exit strategies in place. As confusion and misinformation spread, the bleeding continued.
Even now, the future of Terra is uncertain. No one knows if the moon will ever rise again.
What do we need? Probably a summary of the main events that have unfolded, the big interpretation of those events and what the powerful lessons we can learn are.
Good thing that’s exactly what we will be sharing in tomorrow’s newsletter.
Not financial or tax advice. The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision. See our important security disclaimers here.
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