Market Watch #1
FTX Bankruptcy Flows
Nearly a year after FTX's shocking bankruptcy, the bankrupt exchange has finally obtained court approval to start its asset liquidation process. Galaxy Digital has been entrusted with liquidating the assets, with a weekly $50M sales limit that will gradually increase to a maximum of $200M.
Our analysis of FTX's financials shows crypto assets amounting to $2.3B comprising multiple tokens. $SOL takes the spotlight, representing a staggering $1.1B.
Selling this much $SOL may pose challenges due to its extremely low liquidity and trading volume. However, not all of the $SOL tokens are available to be sold — a considerable amount is still subject to a lock-up period.
A closer look at FTX's $SOL Unlock Schedule shows that these tokens will slowly make their way to the market via linear vesting until 2028 and a large cliff unlock in March 2025.
Currently, about 24% of these tokens have been unlocked, amounting to a total of ~$300M:
Galaxy Digital's mandate is to maximize returns for FTX's creditors while ensuring market stability, so it is unlikely they will execute aggressively. Spreading sales across a longer time period, combined with OTC sales can help minimize market impact.
$BANANA Presale Overview
Telegram trading bots have been all the rage this past quarter, with $UNIBOT being the face of it all. Its meteoric rise led to an abundance of bot projects seeking to emulate its success.
While most have failed, Banana Gun has not. Gaining prominence in July and August, the protocol went neck-and-neck with Unibot, matching its on-chain trading volume at almost 1:1 by September.
Last week, the project conducted its 800 $ETH presale. While it seemed like a steep ask to some, the token sale was a resounding success, selling out by the third round with zero allocation left for Round 4 participants.
A total of 810 wallets participated in the event, with most users depositing 1 $ETH.
Round 1 of the presale saw the highest participation of whitelisted wallets. Of the 560 participants, 278 were eligible NFT holders, leaving the remaining 282 wallets to likely be comprised of Helpers and Key Opinion Leaders.
With an impressive 800 $ETH raise, the Banana Gun team decided on a “Liquidity Upgrade”, seeding the pool at 38% liquidity/marketcap ratio, a 56% increase from its previously planned 25% ratio. After liquidity was seeded, $BANANA traded at 10x of its presale price of $0.65 for over an hour.
Due to the absence of a presale token vesting, the notable increment in pool liquidity could have been seen by some participants as an opportunity to exit their $BANANA positions early with reduced slippage.
When the token contract went live, only 159 of the 810 wallets who participated in the presale sold their allocations. Due to complications in the contract, the team pulled liquidity from the pool within two hours of going live. Affected users have since received a refund, and an audited version of the token has been relaunched.
Besides the presale, Banana Gun has allocated 100k $BANANA for a future airdrop. Price impact should be minimal as only 4.8% of liquidity/marketcap ratio will airdropped. Based its presale price, eligible wallets should obtain an airdrop worth $5 to $95.
While it has been a quiet few weeks in crypto, Telegram trading bots have continued to gain popularity with user metrics nearing all-time-highs. As revenue can only be derived from actual usage of these trading bots, any bot developers worth their salt will continue to expand the utility of their bots; a clear step in that direction would be supporting trading on the largest number of chains.
A primary concern in this category is security as users need to give the bot access to their wallets. The newly-integrated TON wallet by Telegram could be the answer that a security and privacy-conscious user seeks. If bot service providers make the integrated wallet an option, they could potentially increase user base on their platform and make bots a viable trading alternative.
The $SYN Selloff, a Lesson in Thorough Governance
Synapse, one of the most reliable bridge protocols during the first DeFi summer saw its governance token decline 25% in price in a matter of minutes early last week.
9M $SYN were market sold on-chain by a single wallet in two transactions, spaced a minute apart. At an average price of $0.26, the entity received 2.34M $USDC from the sale of its $SYN tokens.
This wallet was funded with the tokens by 0x450F8, which received it from a Synapse Executor address on April 5th 2023.
During the course of the day, $26M of stablecoin liquidity was also drained from Synapse’s TVL, with $USDC and $USDT being a majority portion of the flow.
With the above information, the crypto community was quick to link the selloff to Nima Capital, a family office fund voted in on SIP-21 to provide $40M of active stablecoin liquidity to the protocol for 12 months.
In exchange, they would receive all $SYN emissions for the year along with 33% of bridge and swap fees for the duration of the term.
Specifics on treatment of the $SYN grant seemed to have eluded SIP-21 and the discussion proposal that preceded it as there was little to no mention of how and when the tokens would be distributed or handled.
Additional context from Synapse Labs a day after the selloff cemented the likelihood that the $SYN tokens were granted entirely upfront with no vesting conditions.
On top of the obscure treatment of the $SYN grant, chatter on its social media channels revealed unresolved concerns from the community as the proposal entered into the voting stage, achieving quorum and gaining sufficient support from the votes of just two entities.
It is interesting to note that the snapshot vote for the proposal began only two days from when the discussion proposal was posted. Dated on the 17th and 15th March respectively, the short time between discussion and voting left little room for the community to rally up to piece together a more comprehensive proposal.
Since the selloff, Nima Capital has closed itself off from the public, leaving everyone to speculate if it was a VC rug pull or if the fund is undergoing liquidation.
Regardles of the outcome, this $SYN selloff stands as a reminder of how integral thorough discussion and examination of governance proposals are to safeguarding a project’s well-being.