Author: Jack Inabinet, Bankless; Translator: Deng Tong, Golden Finance
Every weekday for the past three months, our team of analysts has written an article about a popular crypto asset and assigned it a bullish, bearish, or neutral rating, aiming to predict the price action of that token over the next three-month investment period.
With over 60 active token ratings currently in the Bankless Token Hub, our predictions are only beginning to come true!
Today, we’re showcasing the most noteworthy token ratings from June, analyzing the predictions we made, while reflecting on the biggest misses of the month.
Solana
Coverage Date: June 21, 2024
Rating: Bearish
Performance: +2%
Why We Give This Rating:
Despite Solana’s phenomenal performance between October 2023 and March 2024, culminating in a top price of $200 per coin, in June the novelty of the ecosystem appeared to be waning amid key on-chain metrics that had been largely stagnant since April.
Solana’s low fees and unified global state have proven to be a strong differentiator, enabling the chain to capture the lion’s share of the memecoin frenzy this cycle, but there’s no denying that things had been taking a turn for the worse just before Bankless began covering Solana.
Top crypto-native Solana memes WIF and BONK are down over 50% in USD-denominated value from their May highs, a trend mirrored across the sector, while celebrity tokens seeking to replace them are all aggressively moving towards $0.
We speculate that reduced profitability opportunities on Solana will force users to exit the ecosystem, leading to deteriorating Solana fundamentals and increased selling pressure on SOL.
How Our Ratings Performed:
SOL was one of only two tokens rated by Bankless in June that were positive at the time of review. While Solana has only slightly outperformed USD, it has consistently outperformed competing L1s over the past three months; the SOL/ETH ratio surged 70% to a new all-time high in the six weeks since we began covering Solana.
While Solana outperformed over the three months of the last rating cycle, we reiterate that the rotation into this alternative L1 is largely complete and warn that SOL’s wild volatility could result in large losses for ecosystem participants if it decisively breaks below its 2023 high of $120.
Ethena
Reported Date: June 14, 2024
Rating: Bearish
Performance: -68%
Reasons for our rating:
Ethena deposits surged in the weeks prior to our rating, fueled by the protocol’s short-sighted decision to reduce the interest rate on its insurance fund to bolster the attractiveness of staking USDe. As expected, outstanding USDe supply resumed its downward trend shortly after in early July.
The Bankless analyst team correctly predicted that hedge fund adoption of spot crypto ETFs would increase competitiveness of Ethena’s once lucrative underlying trade, and funding rates on ETH perpetual swaps have continued to slide into negative territory in recent days.
Ethena’s ETH perpetual shorts now generate negative yields, and while the protocol has increased the percentage of revenue paid to stakers, sUSDe currently pays a negative spread over sDAI, which has the potential to abruptly unwind this carry trade as participants flock to exit and find liquidity limited.
How We Rated:
The price of ENA has fallen 68% in USD terms since Bankless began its bearish call.
The protocol prioritizes short-term profits over long-term stability, and the Bankless analyst team remains bearish on ENA in the coming months, believing that the Ethena experiment could end in disaster as funding rates continue to compress and holders suddenly rush to exit extremely illiquid synthetic USD instruments.
Pendle Finance
Report Date: June 24, 2024
Rating: Bullish
Performance: -47%
Why we give this rating:
In the first half of 2024, PENDLE was undoubtedly one of the best performing liquid crypto assets with fundamentals (i.e. not a memecoin), recording an impressive 500%+ year-to-date gain at its peak in April and May.
While the arrival of Ethena and EigenLayer airdrops may have dampened the appetite for speculative airdrops, with bearish consequences for Pendle, the protocol has continued to forge ahead despite headwinds, with Total Value Locked (TVL) surging over 50% from May lows and topping $7 billion multiple times in June.
Crypto users continue to use Pendle to earn market-leading yields and speculate on airdrops, while the mainnet deployment of Symbiotic restaking has spawned a whole new airdrop opportunity that should enable the platform to retain depositors!
How Our Ratings Performed:
PENDLE has arguably been one of the most disappointing tokens at Bankless Token Hub, with our analyst team deeply regretting this rating just days after initiating bullish coverage.
On June 26, 2024, $3 billion of Pendle yield swaps expired in a pool created at the height of the airdrop frenzy; many users deemed the replacement opportunity insufficient, and Pendle’s TVL halved over the next ten days.
Another large quarterly Pendle expiration will occur on September 25, unlocking over $360 million in liquidity across its Arbitrum and Ethereum deployments. Given the significant yield compression since the pool’s inception in September, we expect this event to result in a net depositor exodus, which could negatively impact Pendle’s base case.
Blast
Report Date: 26 Jun 2024
Rating: Bearish
Performance: -63%
Why We Gave This Rating:
Many crypto influencers promoted their bullish view on the infinite cycle of Ponzi economics speculation supported by BLAST and announced that they had accumulated more funds after the airdrop.
The Bankless analyst team prudently saw through this undeserved hype and gave BLAST a Bearish rating. At the time, we found that there was little incentive for deposits after the disappointing token launch and expected the network to be plagued by deteriorating on-chain fundamentals and huge selling pressure on BLAST.
How Our Rating Performed:
Like many other L2 networks, with little reason to trade besides the promise of an airdrop, BLAST has lagged far behind other crypto assets. BLAST is down 70% since Bankless began coverage; we expect continued underperformance in the coming months. Lido Coverage Date: 12 Jun 2024 Rating: Bullish Performance: -46% Reasons for our rating: Lido is attempting to enter the re-staking space by partnering with Mellow Finance, an LRT platform that leverages Symbiotic, a newly launched EigenLayer competitor backed by key Lido employees and investors.
While LRT’s impressive growth in total value locked makes it a decentralized competitor to Lido, a number of companies have already deployed their first round of airdrops, providing an opportunity for these Lido-related alternatives to challenge the EigenLayer re-staking ecosystem.
A large portion of the crypto capital deposited into the EigenLayer ecosystem undoubtedly comes from airdrop hunters chasing returns, i.e. depositors could easily be forced to turn to Symbiotic due to the promise of airdrops, especially considering that EigenLayer re-staking is not yet live.
In addition, with this piecemeal approach to re-staking, Lido positions itself as the most ideal staking solution, offering both a vanilla Ethereum staking product and a slightly riskier liquid re-staking variant, allowing it to serve market participants with a wide range of risk appetites.
How Our Ratings Performed:
Two weeks after Bankless began its bullish call on LDO, the SEC charged that Lido’s staking service was an unregistered security offering, sending token holders down 25% immediately, wiping out all gains since initial coverage.
While the Bankless analyst team maintains that LDO is the leading Ethereum staking token, we expect the token to be destined for decline until L1 activity and ETH price, the two biggest drivers of Lido’s profitability, are able to surge.
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