Cryptoassets of the Month: September 2023

Every month, our research team will present the cryptoassets of the month that increased or dropped in value by more than 15%. With a data-driven approach, we highlight the most important developments and events causing price movements.

Figure 1 – 30-Day Performance: Cryptoassets of the Month vs. Traditional Asset Classes

Source: 21Shares, CoinGecko, and Yahoo Finance, from 31-Aug-2023 to 30-Sep-2023 (Close Price)

Chainlink (LINK)

Chainlink (LINK) rallied 39.18% over the past month as its Cross-Chain Interoperability Protocol (CCIP) continues to gain traction. The Chainlink Labs team was present at Sibos, a financial services event organized by global infrastructure provider Swift, to discuss how financial institutions can leverage Chainlink's CCIP for tokenization. Shortly after, Chainlink released a case study showcasing how ANZ Bank, one of Australia's leading financial institutions, successfully tested "delivery vs. payment" (DvP) settlement across two blockchains using CCIP. The experiment enabled a customer to purchase tokenized Australian carbon credit units issued as NFTs on a destination chain with ANZ-issued New Zealand dollar stablecoins on a source chain – everything on ANZ's website using CCIP in the backend. On another note, CCIP launched on Arbitrum One and Coinbase's Base, which means the service now supports seven Ethereum-compatible networks, including Avalanche, Optimism, Polygon, BNB Chain, and Ethereum itself.

Maker (MKR)

Maker (MKR) traded up 32.70% over the past month as its fundamentals continue to improve. Since the Dai Savings Rate (DSR) was raised at the beginning of August to 8% APY, Dai in the DSR has grown $1.38 billion, from $337 million to $1.66 billion. With ~30% of all Dai in circulation deposited in the DSR, the annual yield has stabilized at 5%. Regarding asset-liability management, Maker has decreased its USDC allocation by 88% in the past year, from ~3.68 billion in September 2022 to ~$438 million as of September 2023, investing instead in various public and private credit vehicles through off-chain structures. The strategy has paid off, with Maker’s annualized revenue growing more than tenfold in the same period, from ~$13.75 million to ~$159.19 million. In this regard, interest income from real-world assets (RWAs) – including more than $2 billion invested in short-term U.S. Treasuries – now comprises ~63% of all revenue generated by the protocol.

Aave (AAVE)

Aave (AAVE) traded up 21.62% over the past month. On September 7, Aave Companies, Coinbase, Circle, and five other leading real-world asset (RWA) players founded the Tokenized Asset Coalition to “accelerate the institutional adoption of tokenizing the world’s assets on the blockchain.” The initiative is built around three pillars – educational content to facilitate understanding of the ecosystem, development of best practices and industry recommendations to promote a compliant industry, and actively work toward building on-chain infrastructure that scales to the needs of all stakeholders (institutional investors, issuers, platforms, and users). On another note, the activation plan for Aave Governance v3 was presented after the community’s pre-approval. The new governance system will reduce voting costs by moving away from Ethereum to Polygon and Avalanche as the new voting networks.

Bitcoin (BTC)

Bitcoin traded up 4.02% over the past month, breaking a streak of six consecutive years with a negative price performance in September. The last time BTC registered a positive price performance during September was 2016, when the asset was hovering around $600 and had a less than $10 billion market cap. On another note, the deadline for repayments related to funds lost in the Mt. Gox exchange hack has been pushed back again from the end of this October to October 31, 2024. According to our Dune Analytics dashboard, the Mt. Gox trustee’s balance sheet contains approximately 138k BTC valued at over $3.6 billion. Regarding on-chain metrics, Bitcoin’s monthly active addresses surpassed 16.8 million in September, the highest figure since March 2021, when BTC was trading close to its all-time high price. The surge is a consequence of new use cases on the network continuing to gain traction, such as Ordinals NFTs.

Ethereum (ETH)

Ethereum rose 1.57% in September. During the All Core Developers Consensus (ACDC) call on September 21, Ethereum Foundation researcher Danny Ryan implied that the Dencun upgrade would probably not happen this year, as was believed a few months ago, but in early 2024. Dencun will include EIP-4844, which introduces a new transaction type that accepts "blobs" of data. Today, over 90% of the fees users of scaling solutions (Layer 2s) pay are due to Layer 2 data being stored on Ethereum permanently. Blobs are expected to scale down transaction fees of Layer 2 data by 10-100 times as they only store data temporarily for about two weeks, getting deleted afterward. On another note, a new Ethereum testnet dubbed "Holesky" went live on September 28 and is expected to replace Ethereum's Goerli testnet in 2024. For context, developers deploy upgrades like Dencun and new applications on testnets to ensure they function as intended before deploying to mainnet.

Strategies of the Month: September 2023

Every month, our research team will also present the ten best-performing strategies of the month in our product suite. With a data-driven approach, we highlight the most important developments and events causing price movements.

Figure 2: 30-Day Performance: Strategies of the Month vs. Traditional Asset Classes

Data Source: 21Shares Index Management Console and Yahoo Finance, from 31-Aug-2023 to 29-Sep-2023 (Close Price)

ABBA

The 21Shares Bitcoin Suisse Index ETP (ABBA) rose 2.18% over the past month. ABBA seeks to track the investment results of an index composed of Bitcoin and Ethereum based on market capitalizations. Investors should understand that Bitcoin and Ethereum serve different use cases and can complement each other in a portfolio. The former is positioned as a non-sovereign form of money, while the latter promises to be the foundational infrastructure for the new iteration of internet services.

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