Crypto Index Tracker: Smart Contract Platforms Down The Most
- By Bilal Hafeez and Dalvir Mandara
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- 3 min read
Crypto markets have been volatile as investors digest hawkish Fed minutes, inflation coming in hot again (9.1% for June), and the ongoing crypto credit crunch (Celsius is the latest lender to file for bankruptcy). The macro backdrop is still bearish with elevated recession probabilities alongside more rate hikes expected at the next fed meeting at the end of the month.
As for the performance of our various indexes, performance is mixed (Charts 1 and 2). Our DeFi and Privacy Indexes are up just 1% over the past seven days. Meanwhile, our Bitcoin, Smart Contract, and Metaverse Indexes are all down between 4% and 6%. Prices have started to recover over the past 24 hours with bitcoin and ethereum trending up since this morning.
Our Privacy index replaces our DeFi index as the most correlated to bitcoin at 89% (Chart 3). Our Metaverse Index remains least correlated to bitcoin at 85% (this is up 9pp compared to last month). On macro markets, bitcoin’s correlation to tech increases compared to last month. Meanwhile, its correlation to Oil has come down (Chart 4).
- Smart Contract Platform Index: All coins in this index are down. Avalanche (AVAX) is down the least at 3%. Terra (LUNA) is down the most at 18%, followed by Polkadot (DOT) at 8%. Ethereum is down 4%.
- DeFi Index: Aave (AAVE) is up the most at 28% followed by Uniswap (UNI) at 22%. Terra (LUNA) is down the most at 18% followed by Maker (MKR) at 10%.
- Metaverse Index: Phantasma (SOUL) is up the most at 12% and Gala (GALA) is down the most at 13%.
- Privacy Index: Beam (BEAM) is up the most at 38% and Dusk Network (DUSK) is down the most at 10%.
- Bitcoin: this is down 5%.
What Are in the Four Indices?
Here are the indices in more detail:
- Bitcoin: the OG of crypto markets deserves its own category and is in many ways the true benchmark for any other crypto market.
- Smart contract platforms: after bitcoin, the big innovation was to have blockchains that were more programmable. These could host smart contracts or decentralised applications and have allowed the emergence of the metaverse and defi. Ethereum (ETH) is the most popular version of a smart contract platform. As well as ethereum, we also include some key competitors. The constituents of this index are: Ethereum (ETH), Cardano (ADA), Avalanche (AVAX), Solana (SOL), Fantom (FTM), VeChain (VET), Terra (LUNA), EOS (EOS), and Chainlink (LINK). We also include Polkadot (DOT) which allows interoperability between blockchains and the use of smart contracts via parachains.
- Metaverse: coins associated with the creation of a virtual space/digital world on the internet using a combination of augmented reality, virtual reality, and social networks. The constituents of this index are Axie Infinity (AXS), The Sandbox (SAND), Decentraland (MANA), Enjin Coin (ENJ), Aavegotchi (GHST), Terra Virtua Kolect (TVK), Ultra (UOS), Phantasma (SOUL), RedFOX Labs (RFOX), and Gala (GALA).
- Decentralised Finance (DeFi): financial services built on top of blockchain networks with no central intermediaries. This can be a broad category, so we narrow this down to platforms that focus on lending/borrowing, yield farming, automated market making and decentralised exchange tokens. The constituents of this index are: Aave (AAVE), Compound (COMP), Uniswap (UNI), Yearn.finance (YFI), Loopring (LRC), PancakeSwap (CAKE), Maker (MKR), 1inch (1INCH), Thorchain (RUNE), and Terra (LUNA).
- Privacy Coins: coins that obscure transactions on the blockchain to maintain the anonymity of its users and their activity. The constituents of this index are Monero (XMR), Zcash (ZEC), Dash (DASH), Verge (XVG), Horizen (ZEN), Beam (BEAM), Secret (SCRT), Decred (DCR), Keep Network (KEEP), and Dusk Network (DUSK).
Dalvir Mandara is a Quantitative Researcher at Macro Hive. Dalvir has a BSc Mathematics and Computer Science and an MSc Mathematical Finance both from the University of Birmingham. His areas of interest are in the applications of machine learning, deep learning and alternative data for predictive modelling of financial markets.
Bilal Hafeez is the CEO and Editor of Macro Hive. He spent over twenty years doing research at big banks – JPMorgan, Deutsche Bank, and Nomura, where he had various “Global Head” roles and did FX, rates and cross-markets research.