Article by

Other Topics

Market Insights

Web3 Watch

Published December 28, 2023
6 mins read

Article by [email protected]

“HO HO HODL” – Saint Nicholas (aka Santa Claus)

Wishing our readers a delightful holiday season!! We’re closing off 2023 with the final Web3 Watch of the year.  


As we’ve mentioned before, many are making calls on potential narratives that have exploded and may explode in the future. Here are some narratives that are the subject of speculation currently: AI, Gaming, Modular Blockchains, Memecoins (esp. Founder pet-themed ones), BRC20 and inscriptions, Solana, Avalanche, Injective, amongst others.

BRC-20 Ecosystem-Related Developments
One polarising narrative has to do with BRC20. The BRC20 ecosystem has been performing extremely well, with tokens such as $ORDI, $MUBI and other BRC20 primitives printing over 500 – 12,000+ % returns. Many have observed that this narrative is primarily Asia-driven with the West having not caught on yet.

Above: The Grandmas and Grandpas that left-curved all of us

However, the narrative has also faced stumbling blocks of its own. Bitcoin developer, Luke Dashjr, made a statement that inscriptions are an exploitation of a vulnerability on Bitcoin, and expressed concerns of ordinals / BRC20s slowing down the network and making transactions more costly. By fixing this, Ordinals and the BRC ecosystem will cease to exist. Upon this news, BRC20 tokens took a ~35%+ dive, but recovered upon many in the community disputing Luke’s views.  BRC20-related tokens have even hit their respective all-time highs.

Twitter user @CharlieShrem also rebutted that it is not necessary to run Luke’s software as there are many implementations of BTC,and as long as consensus is followed, there will be no hard forks. Therefore, given that miners are essentially profit driven, with some listed on stock exchanges, many believe that ordinals and inscriptions are here to stay.

Since then, BRC20 related tokens have pulled back, off the back of BTC’s price action from $44k+ down to $41k levels currently. We await to see a resurgence in this narrative, with BTC-driven catalysts in early-2024, after the launch of BTC spot ETFs and halving.    

The Return of Solana Summer: Memecoins and Airdrop Season

The Solana ecosystem has also been on roll, with life-changing returns in memecoins, and sizeable airdrops. $BONK was a memecoin launched in December 2022, and rose by ~11,000%+ by early-January 2023. Subsequently, it crashed by ~80% from its highs, trending downwards all the way until September 2023 . 

However, around early-November, the price of $BONK crept up, and started exploding in December 2023, earning its holders a 6666.24% profit. In mid-December, upon Binance and Coinbase announcing the listing of $BONK, its market cap surged from $1b+ levels to over $2b. Due to the surge of $BONK, there was a massive increase in demand and price for the Solana Saga phone, as the phones are pre-loaded with 30m $BONK. There was even a Solana Saga that sold for $5k on eBay, with over 20 devices selling at a price tag of over $2k. The sudden surge in price action in $BONK in early-December is due to the combination of (i) high speculative interest that returned to Solana, (ii) the large returns of the $JITO airdrop on the network, and (iii) lackluster price action and network performance, along with high gas fees of Ethereum.

The most noteworthy airdrop driving interest in Solana was $JTO. Users who previously staked their Solana to the protocol, before it (or the Solana ecosystem) garnered much attention at all, earned themselves between $5,000 to even $100,000+ worth of $JTO. People who had staked as little as $500 worth of SOL, were able to receive between $5,000 and $15,000 worth of airdrops. As recipients of the airdrop celebrated their returns, interest and capital flowed into the ecosystem, with many seeking to farm airdrops from  protocols such as Drift, MarginFi etc, that  have yet to launch their token. We expect this increased inflow into the ecosystem and its protocols to dilute future airdrops for new airdrop farmers on Solana.

As a result, many have turned to speculating on memecoins and farming airdrops on alternative or higher-beta ecosystems such as Avalanche (eg. $COQ), Injective and Celestia, causing price increases of the tokens of these chains.

We had also previously reported on potential supply-related events regarding $SOL, due to liquidations of the FTX estate. However, according to Twitter user @solanobahn’s calculations, he postulates that the FTX estate’s unlocked token supply is nearly exhausted (table below), which means the possibility of further price impact from FTX estate-related supply events with respect to SOL could have been alleviated.However he does also warn that  due to the possibility of the unlocked supply being on exchanges and/or trading desks, there is a chance that these unlocked tokens have yet to hit the market.

Table 1: Estimated Supply of Unlocked vs Locked SOL of the FTX Estate (Source: @solanobahn)

Based on the amount of tokens moved, @solanobahn credited Galaxy, the appointed desk of the estate, for doing a “good job of preventing adverse market effects”. As much as credit is due to Galaxy, part of the alleviation of selling could be due to the bullish market conditions overall. 

As per @solanobahn’s calculations, he estimates that there is 42m left in staking out of the 62m SOL staked, , with 20m having been moved, and hundreds of millions recovered for FTX claimants. He also estimates an inflation rate of 8% for SOL, up till February 2025 based on the pace of unlocks from staking. 

Eigenlayer adds 6 new LSTs and raises restaking caps 

Back in mid-November, we reported the conclusion of a Eigenlayer vote, where the community picked 6 LST protocols to be added to the existing list of restaking pools. The total restaking cap for Eigenlayer will be 500k ETH, with each pool having a maximum cap of 200k ETH.  

On 18th November, the 6 restaking pools for Binance, Stader, Origin, Swell, Stakewise and Ankr staked ETH were opened. The launch was unfortunately delayed by 55 minutes. Upon the actual launch, restakers were met with extremely high gas fees (chart below ), with approvals taking as long as over 30 minutes. The Eigenlayer discord channel ran amok throughout, with many panicking that caps would be hit before they could restake their LSTs. From our observations from Discord, the community was mostly interested in deploying their swETH (Swell), in hopes to earn Pearls for a future airdrop from Swell, as well as Eigenlayer points for restaking their swETH – double dipping for two different potential airdrops.

Chart 1: Median Gas Price, Ethereum (Source: Nansen)

Unlike previous instances where Eigenlayer increased their caps and the cap for the entire protocol was reached within over an hour, this time was different – as of the time of writing, 14+ hours after the addition and reopening of its pools, the 500k ETH cap for the protocol has not been reached. The obvious reason for this is because previous caps were in increments of 100k ETH. We observed that the protocol accumulated 300k ETH extremely quickly,, but started to slow down after. Furthermore, from the chart below, we can infer that stETH (Lido) still leads in terms of interest, followed by swETH (Swell) and ETHx (Stader), based on the rate at which these staked assets were restaked:

Chart 2: Staked ETH deposits into Eigenlayer, by type over time (Source: geoogi via Parsec) 

As of 14+ hours after the new pools were opened and old pools were reopened, here is the current overview of total staked ETH deposited, by LST, from most to least (indicative of which LST protocols are most popular):

  1. Lido: 108,561 stETH ($244.14m)
  2. Swell: 40,255 swETH ($94.64m)
  3. Stader: 26,625 ETHx ($59.8m)
  4. StakeWise: 12,883 osETH ($28.9m)
  5. Rocketpool: 8,756 rETH ($19.7m)
  6. Coinbase: 4,690 cbETH ($10.54m)
  7. Origin: 4,038 oETH ($9m)
  8. Binance: 1,146 wBETH ($2.57m)
  9. Ankr: 279 ankrETH ($627k)

Chart 3: Proportion of staked ETH restaked in Eigenlayer (Source: @hashed_official via Dune Analytics)

Whenever Eigenlayer increases its restaking capacity, the TVLs of the respectively-integrated LST protocols would naturally increase. However, this did not impact the price action of such LST protocols’ tokens, regardless of tokenomics. It is important to note that this happened at a time when overall markets were trending sideways. 

Despite the current positive market sentiment, it is still clear that TVL and popularity of an LST protocol, does not affect its respective token price. In trading LST protocol tokens, it would be more sound to look into the protocol,  catalysts and marketing, rather than TVL restaked into Eigenlayer. The chart below shows each LST’s respective token performance, in order of highest to lowest TVL on Eigenlayer (from top to bottom)*:

Table 2: LST Token Performance (Source: QCP Insights)

*Swell has not launched a token yet

Cronos leverages zkSync’s ZK Stack to launch zkEVM L2

Joining the fray of CEXes to launch an L2 is’s Cronos – Cronos, an EVM-compatible chain built using the Cosmos SDK, whichhas launched their own zkEVM L2 using zkSync’s ZK Stack. The testnet is currently built atop Ethereum Sepolia testnet. 

Pudgy Penguins reveals ‘Pudgy World’, powered by zkSync Era

Pudgy Penguins recently revealed the launch of Pudgy World, a Web3 game described as an ‘immersive, digital environment’. Although few details about the game have been revealed, it was announced that Pudgy NFT holders and Pudgy Toy buyers will be the beneficiaries of exclusive perks.

Recent exploits

Ledger’s Connect Kit

In mid-December, Ledger’s Connect Kit, a software connected to dApps such as Lido, Sushi etc., was compromised – users were exploited via the front-end through a pop-up, which triggered a token drainer. This exploit happened due too a former Ledger employee falling prey to a phishing attack, which allowed the hacker to manipulate Ledger’s Connect Kit’s code by injecting a wallet draining payload into the frequently-used NPM package. Other DeFi websites such as Zapper and RevokeCash were also affected. Sushi’s CTO immediately warned everyone to not interact with any dApps until further notice. 

The estimated damage ranges from $484k to $610k+. Since then a new version of Ledger’s Connect Kit has been released.


Around the same time as the Ledger exploit, the OKX DEX was exploited for $2.7m, following a proxy admin contract upgrade, where the private key was compromised and leaked, which allowed the hacker to steal tokens. When DEX users swapped tokens, they granted permission to the TokenApprove contract, where the DEX contract would be able to transfer the user’s tokens. The claimTokens function then allowed a trusted DEX proxy (ie. the exploiter) to transfer out the funds. Approximately an hour and a half later, the proxy admin owner made another upgrade to the contract, but the hacker was still able to continue exploiting the DEX. 

Scopescan, an on-chain insights Twitter account, contacted the OKX DEX Team, and received a response that ‘the old abandoned MM contract was attacked, and the attack has been located and stopped, and that the losses of the users involved will be fully borne.

NFT Trader 

A pair of old contracts on NFT trading site, NFT Trader, were compromised in mid-December as well. The exploiter took advantage of old signatures and approvals, managing to drain a number of BAYCs, MAYCs, Art Blocks, and more. In response, former users of NFT Trader scrambled to revoke approvals of NFT Trader from their wallets. 

The hacker offered to return the NFTs for a fee, and did keep to his/her word. Proceeds of some Apes sold were even returned to some victims, even if they had not yet paid. Yuga Labs Co-Founder, Greg Solano had also committed to cover ransoms, if the offer was legitimate. Thanks to @0xfoobar and a 16 year-old coder known as Fade, they uncovered vulnerabilities within the compromised contracts and played huge roles in eliminating the exploits. NFT indices have since stabilized, following the attack.

LINK Staking v0.2 pool filled

Following our previous piece on Chainlink’s v0.2 staking platform,  the staking v0.2 pool was filled within 6 hours after the early participation phase was opened. Over 19m of additional $LINK was staked to the pool, with a total of 40.875m $LINK staked in total (10% of $LINK’s total supply). Chainlink community members were also invited to claim a 30-day 2x APR staking multiplier. Twitter user @level941 purports that if Chainlink were to loop its profits back into $LINK, and made users of the protocol use the native token for its services, the price of $LINK would increase, and its inflation would offset the dilution of -8% real yield. However, and unfortunately, revenue accrual is currently not embedded in $LINK’s token design, and this would also depend on existing demand for Chainlink’s services.

Web2 in the Web3 World

PYUSD / USDC gauge on Curve

On 5 December, TriDig Group, a digital assets solutions provider that claims to work with Paxos,  made a proposal on Convex to vote on adding a gauge for the PYUSD / USDC pool to Curve.  The vote was concluded on 8 December, with a resounding 100% “yes” in votes comprising 18m $CVX. This would serve to (i) deepen on-chain liquidity of PYUSD, (ii) enable bribes on the PYUSD / USDC pool and (iii) could be an indication of other institutional Web2 payment organizations following suit.

The PYUSD / USDC pool on Curve currently contains ~$16.8m in TVL, with a daily USD volume of only $421.

eBay files patent for tokenization of collectibles via NFTs

Back in November 2023, eBay filed a patent to “fingerprint(ing) physical items to mint NFTs”. This would allow them to enable a digital ‘twin’ to be created on-chain, representing a physical item, such as collectibles. Twitter user @S4mmyEth notes that eBay has always had plans to strengthen their position in the collectibles market through NFTs – in 2021, they acquired Origin, an NFT marketplace that stood a chance to be integrated into their supply chain. Furthermore, they acquired TCGplayer (a marketplace for non-sports related trading cards such as Pokemon, Magic and more) in 2022, as well as COMC, a sports trading cards marketplace, in 2023.

This future offering would have one or more features of a physical item captured using a fingerprint capture system of a client device, where the fingerprint would be provided to an authentication service, to verify that the physical item actually corresponds to an authentic physical item that matches the fingerprint. Currently, eBay offers vault services to facilitate liquidity of collectibles that otherwise would not be as liquid – users can send their items/collectibles to a vault, and buy and sell the item through eBay. Users have the option to redeem the exact item from the vault and have it delivered , or leave it in the vault for future reselling opportunities.

In the past 12 months, eBay has generated ~$72.8b in gross merchandise value (GMV), where collectibles had accounted for ~13% of GMV. eBay’s ambitions to embrace this new age of digitalization, in order to potentially maintain their foothold on the online collectibles market, indicates the growth potential of  Web3 technology in the e-commerce world.   

Web3 Gaming 


Pixelmon, an NFT/gaming project established in 2021, had a rough 2022 – upon the reveal of its NFTs and horrible art, it became the laughingstock of the community. Floor prices dipped as low as 0.125 ETH last year (chart below). 

Chart 4: Pixelmon Generation 1 Price Action, 1Y (Source:

However, in September 2022, LiquidX Studio identified an opportunity – Pixelmon had a brand name familiar to many in the space, an existing community, and a large treasury. LiquidX decided to acquire a 60% stake in the project, taking the reins from the original creator of Pixelmon, an inexperienced 20-year-old. We see this as a parallel to the acquisition and turnaround of Pudgy Penguins in 2022. 

From the time of acquisition till today, Pixelmon has built a team of ~70 with staff from prominent organizations such as Riot, Ubisoft, Blizzard and more, revamped the artwork of its NFTs, created a casual game and more. Pixelmon currently has plans to launch an ecosystem of games, with licensing fees shared with NFT holders, and more, along with a growth strategy similar to Pudgy Penguins and Memeland. Today, Generation 1 Pixelmons are sitting at 1.9+ ETH.

Latest Articles

Asia Colour -

11 Jul 24

Tonight’s CPI release has captured everyone’s attention. The market anticipates a 70% chance of a rate cut in September. This optimism has been reflected in

July 11, 2024
1 mins read

London Colour -

10 Jul 24

The macro backdrop has turned rosier over the past week, and we think crypto has bottomed as we were unable to break lower despite the

July 10, 2024
1 mins read

Asia Colour -

09 Jul 24

BTC prices dropped to $55.2K during early US trading on Monday after the German Police moved $900 million worth of BTC to exchanges. The market

July 9, 2024
1 mins read

London and New York Colour -

08 Jul 24

Equities and Gold have been bouncing higher from the start of last week but crypto prices have gone the other way. What is going on?!

July 8, 2024
1 mins read

New York Colour -

05 Jul 24

Reasons for the dip Our view Trade Idea The desk has seen a rush from clients to deploy Accumulators today. The vol spike plus dip

July 5, 2024
1 mins read

Asia Colour -

04 Jul 24

Are you feeling the pressure from the recent sell-off in the crypto market? BTC has fallen below the 60k support level, but there may still
July 4, 2024
1 mins read

Exclusive insights tailored specifically for you.

Follow us to receive the latest developments in crypto derivatives.


This information contained in this website is intended as a general introduction to QCP Capital and its activities as a Digital Payment Token (DPT) service provider and is for informational purposes only.


QCP Capital is not acting and does not purport to act in any way as an advisor or in a fiduciary capacity vis-a-vis any counterparty. Therefore, it is strongly suggested that any prospective counterparty obtain independent advice in relation to any trading investment, financial, legal, tax, accounting or regulatory issues discussed herein. This website is only directed at informed and qualified investors. Your entry to this website attests that you are fully aware that trading of DPTs is not suitable for the general public and that you are an informed and qualified investor, and are also fully cognisant of all technological and financial risk(s) associated with trading Digital Payment Tokens.


In the event you intend to onboard with QCP Capital to trade in DPTs, by onboarding with us you acknowledge that you are aware of any rules and/or regulations applicable to the provision of DPT and/or financial services, the high degree of risk involved and that in no event will QCP Capital or any if its directors or employees be liable for any injury loss, claim or damage (whether direct, indirect, consequential or incidental) arising either directly or indirectly out of, or in any way connected with, the site, or its use.


If you are located, incorporated, or otherwise established in, or a citizen or resident of certain jurisdictions, QCP Capital may be unable to, or otherwise reserve its right to refuse to engage in or establish a trading relationship with you. Please contact us if you believe you have received this notice in error. QCP Capital is not registered or licensed to operate in the states of Louisiana and New York and will not be able to establish a trading relationship with you if you are resident, incorporated or have your principal place of business in New York or Louisiana.


You also acknowledge that you understand that trading in payment token derivatives (“PTD”) are also not any less risky than trading in DPTs. PTD services are not regulated by the MAS and QCP Capital is as such not licensed under the MAS to provide PTD services. You should only trade in PTDs if you are an Accredited Investor and/or have sufficient experience and knowledge in trading PTDs.


Risk Warning on Digital Payment Digital Services
The Monetary Authority of Singapore (MAS) requires us to provide this risk warning to you as a customer of a digital payment token (DPT) service provider.


Before you pay your DPT service provider any money or DPT, you should be aware of the following.


Your DPT service provider is an exempt payment services provider pending licensing under the Payment Services Act (2019) to provide DPT services. Please note that this does not mean you will be able to recover all the money or DPTs you paid to your DPT service provider if your DPT service provider’s business fails.


You should not transact in the DPT if you are not familiar with this DPT. This includes how the DPT is created, and how the DPT you intend to transact is transferred or held by your DPT service provider.


You should be aware that the value of DPTs may fluctuate greatly. You should buy DPTs only if you are prepared to accept the risk of losing all of the money you put into such tokens.


You should be aware that your DPT service provider, as part of its licence to provide DPT services, may offer services related to DPTs which are promoted as having a stable value, commonly known as “stablecoin”.