Overview
- L2 narrative gaining traction
- Markets bounce back from the dead 😱
- Authorities calling on Terra Labs
- Ethereum Merge on Track
L2 season may have snuck upon us.
Good morning Banter Fam,
That was some pretty dicey price action yesterday evening, huh?
We’ll get to that later.
To begin, I want to drop some alpha.
With promising signs of an upcoming Ethereum Merge in the next couple of months, I thought it wise to begin exploring the Layer-2 landscape. It’s a sector of crypto seldom talked about on significant stages. Still, the Layer-2 season could be a narrative that sticks with the blossoming ecosystems and token airdrops on the way (Optimism, Arbitrum, ZkSync).
Exploring L2s will take more than one issue to cover, consider it an ongoing newsletter topic for days when the news cycle fails to produce.
The Major L2 networks
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According to L2Beat.com, the networks with the largest L2 market share are Arbitrum 53%, dYdx 21%, Optimism 8%, Loopring 5%, and Metis Andromeda 3%. An additional 15 networks share the remaining 7% of the TVL share.
Layer-2 Total Value Locked (TVL) Growth outdid all of Ethereum!
First, the total crypto market TVL has suffered since Sept 2021 and fallen by $57 billion, or -66%. The Terra collapse, a major event for overall market TVL, had minor effects on Ethereum TVL when measured by ETH. For those reasons, the study did not compare the overall market with Ethereum or L2s. (Chart below)
Source: DefiLlama
The Total Value Locked across all L2s currently sits at 2.56m ETH, accounting for 3.5% of all TVL in crypto. The small percentage highlights the genesis of the sector.
Source: l2beat.com
Small L2 sector onboards BIG numbers
Despite its youth, the sector’s TVL growth percentage outperformed the overall Ethereum TVL growth percentage since the launch of Arbitrum. Since early Sept 2021, L2 TVL has grown more than 11x (1100%) from 231k to 2.56m A gain of 2.34m ETH of value. (chart above)
Meanwhile, in the same timeframe, the Ethereum TVL market struggled and only grew 9.2% (34.56m ETH to 37.76m ETH).. A value of 3.2m ETH. (chart below)
Source: DeFiLlama
Now, younger ecosystems tend to grow faster than large markets like Ethereum, but L2 ecosystems have managed to stay in an uptrend despite the current bear market, an aspect that doesn’t hold true in any major Ethereum protocols.
On the one hand, you have a down trending ETH market TVL trend that only managed to onward 3.2m ETH worth of value since Sept 2021. If you subtract the 2.34m ETH the L2s have collected, it’s roughly 800k ETH growth in ALL sectors of Ethereum in nine months.
Comparing the numbers, L2s have onboarded more TVL liquidity than ALL of Ethereum since Sept! (2.34m ETH vs 800k ETH) Impressive. So, if you think the L2 season may become a booming narrative, TVL numbers are proving it may already be upon us.
Market update 🌍
While US Americans were celebrating Memorial Day, bitcoin (BTC) ran 7.69% in 24 hours, finishing the day at US$31,757. It broke its cozy range (28.7k-30.8k) that it entered nearly three weeks ago and sparked relief rally hopes along the way. However, the 30.8k resistance now flips into support, and the next major obstacle becomes the downward trend line near the 36k level (Blue line).
Source: Trading View
Friday’s Close:
| US markets close | Gain |
| S&P 500 | -0.63% |
| Nasdaq | +0.31% |
| Dow | -0.11% |
| VIX | +2.27% |
Notable Gainers:
| Protocol (Coin) | Price ($) | Gain (%) |
| Waves (WAVES) | 9.64 | +107 |
| Axie Infinity (AXS) | 26.68 | +41 |
| Helium (HNT) | 9.51 | +25 |
| Aave (AAVE) | 199.12 | +19 |
| Near Protocol (NEAR) | 6.38 | +18 |
| CoinMetro (XCM) | 067 | +68 |
| Celsius Network (CEL) | 0.77 | +39 |
| Xido Finance (XIDO) | 12.34 | +21 |
| Origin Protocol (OGN) | 0.28 | +35 |
| Coin98 (C98) | .079 | +32 |
| Acala (ACA) | 0.44 | +16 |
| Bitcoin Fear and Greed Index | 16 Extreme Fear |
| “Crypto” Google Trends 90d | 31 |
| “Bitcoin” Google Trends 90d | 23 |
Newswatch 📰
Estonian crypto exchange buys the Eurovision trophy. The crypto exchange WhiteBit has bought the Eurovision trophy for 500 ETH. The Ukrainian-based Kalush Orchestra won the Eurovision music contest and auctioned off the winner’s trophy and several other items to help support the war effort in their home country.
Terraform Labs team summoned. Korean prosecutors have reportedly summoned the Terraform Labs team after launching an official investigation into the Terra UST crash. Prosecutors are digging into claims that employees knew the concerns behind the UST/LUNA pair after the crash wiped out an estimated US$50 billion in value.
News Tidbits:
- Waves (WAVE) protocol jumps over 100% in price days after the Waves DeFi Revival Plan release.
At the protocol level ⛓
Ethereum Merge is one step closer. The longest-standing PoW Ethereum testnet Ropsten will begin its merge to PoS on June 8 after the new beacon chain launched today. After Ropsten, only two tenets (Goerli and Sepolia) remain to merge into Proof-Of-Stake (PoS) before the mainet makes the transition. After today’s update, an August mainnet merge appears plausible.
Protocol level tidbits:
- SushiSwap (SUSHI) joins KaveRise incentive programs with a $14m allocation.
- DeFi Saver is now live on Arbitrum and Optimism (OP).
- Dune Engine v2.
- Immutable (IMX) protocol fees go live, staking soon to follow.
- Mirror Protocol continues to be exploited, and devs are nowhere to be found.
NFT & metaverse update 🐵
Prada NFTs. Clothing Luxury brand Prada is entering the NFT space through the Timcapsule program it began in 2019. The program allows the purchaser access to a weekly physical item through the brand’s online website. In addition, Timecapsule holders will earn access to a June 2 NFT drop and future NFT drops in the following phases.
Banter’s take
Back from the dead!
After lulling investors to sleep, the crypto market appears to be returning to life. Sound the bells. Call your friends and quit your job again!
Hold on….
Before investing our remaining life savings, remember the market takes the route of max pain before bottoming out. So, does sentiment feel like max pain yet?
Not for me. I still haven’t ripped the bitcoin sticker from my car in disgust yet. (I’ll let you know when I do)
The recent move feels like a liquidity trap—a move to onboard market liquidity before the actual bottom. Of course, nobody knows where the market will head in the short term, but you should create a plan and stick to it. Don’t get caught up in the hype too early; always be wary of the initial rise after weeks of boredom.
Thanks for reading!
Gabri
Disclaimer: I am not a financial advisor. Everything on this report is merely opinion. Please consult your financial advisor before participating in crypto.
