BTC Leaving Exchanges, Bridge Farms, & Pocket's Growth

MAR 23, 2022 • 5 Min Read

Joo Kian + 2 others

DISCLOSURE: DELPHI VENTURES HAS INVESTED IN BTC, LAYERZERO, AND AVAX. MEMBERS OF OUR TEAM OWN SYN, POKT AND ARE RUNNING POCKET NETWORK NODES. THESE STATEMENTS ARE INTENDED TO DISCLOSE ANY CONFLICT OF INTEREST AND SHOULD NOT BE MISCONSTRUED AS A RECOMMENDATION TO PURCHASE ANY TOKEN. THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND YOU SHOULD NOT MAKE DECISIONS BASED SOLELY ON IT. THIS IS NOT INVESTMENT ADVICE.

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Chart of The Day: BTC Exchange Balance Trends Down
  • The BTC balance on exchanges recently hit its multi-year low of ~2.5M, last seen in November 2018. As the adoption of Bitcoin increases, we see that more users are willing to take bitcoin off exchanges and self-custody in their own wallets.
  • Previously, the BTC balance peaked on March 2020’s Black Thursday when investors rushed into exchanges to sell the macro drawdown. Since then, the BTC balance on exchanges has been trending down as the price of BTC recovered and entered the 2021 bull-run.
  • The price of BTC is somewhat inversely correlated to exchange balance, as centralized exchanges have the deepest liquidity. This means that if a BTC holder wants to sell, it’s more likely they’ll deposit and liquidate their BTC through an exchange.
  • To learn more about BTC and the general markets, read our latest Markets Insights here.

Airdrops, ETH Pools, Stablecoin Farms & Validator Rewards
[Excerpt from our Mar. 22 Yield Insights]

Synapse Farm

  • Synapse is a universal cross-chain liquidity network that connects blockchains by offering an extensible cross-chain communication protocol that supports assets, smart contract calls, and more. By leveraging Synapse, blockchains can easily and securely interoperate with each other and developers can build truly cross-chain applications including cross-chain DEX, lending platforms, margining systems, derivatives markets, yield aggregators, and much more. Learn more about it here.
  • Yield calculations can be found here. To access Metis Andromeda, you’ll need to configure your MetaMask to run Metis Andromeda’s Mainnet using this guide.
  • Bridge: You can use Synapse Protocol to bridge assets over to Metis Andromeda.
  • Emissions: The SYN token has a max supply of 250,000,000. Current SYN emissions are around 296k per week (close down to 75% since the launch of Synapse in September 2021).
  • For more, Delphi members can see our latest Yield Insights here.

Pocket Network: The Decentralized Marketplace for Blockchain Connectivity
[Excerpt from a Delphi Report]

  • In the above chart, we take a look at the 3-Day moving average of total daily relays and average POKT rewards per node. Although Pocket Network supports relays to 19 chains, Harmony Network dominates 46% of the relays serviced. This is because Harmony is using Pocket Network’s RPC endpoint as part of its default public endpoint. This is followed by Polygon and Ethereum at 34% and 10% respectively.
  • As can be seen, the first catalyzer for Pocket was the integration of Harmony in October 2021. This caused daily relays on the network to grow by 6x from ~50M pre-Harmony to ~300M peak post-Harmony. This was followed by a positive, albeit a small impact powered by the Fuse integration in February. Finally, with the recent integration of Pocket Network into Polygon’s RPC aggregator, relays from Polygon soared. In just two weeks, following Polygon integration, the total daily relays grew by 44% allowing Pocket Network to achieve new highs at 408M relays on March 18th, 2022. 
  • One takeaway here is that the demand-side growth on Pocket is highly related to business development achievements. The number of relays on the network grows drastically each time Pocket becomes the preferred choice of a new ecosystem. On this note, a new chain that’s expected to promote Pocket as one of its default RPC providers is EVMOS. Once EVMOS recovers from its recent buggy launch and gets back on its feet, it can generate a new source of demand for Pocket.
  • On the above chart, we also notice the declining node rewards. The primary reason for this is the increase in the number of total nodes. As the relays increased, so did the POKT rewards. Naturally, this resulted in an increase on the supply side of the market. As more nodes joined the network, rewards per node started to drop, cooling off at around 40 POKT / node /per day just before the Polygon integration.
  • These are 3 of the main reasons why daily POKT rewards per node reduced recently.
    1. More nodes joined the network, causing rewards per node to drop.

    2. The relays from Harmony Network have been slowing down since Mar 7th, 2022. The likely cause of this can be attributed to the slow down of DeFiKingdoms that brought a lot of traction to the Harmony chain.

    3. WAGMI (PUP-11/13) proposals which passed on February 24th drastically changed the revenue mechanism. An immediate effect of this change was a 15% reduction in POKT rewards per relay. We further analyze the impact of these proposals in the WAGMI section below.

Analyzing PUP-13 WAGMI Proposal

  • Fueled by high rewards, POKT supply has inflated by 44% over the past 6 months. Meanwhile, the inflation’s impact on the circulating supply was countered by the increased demand to stake POKT. While total supply has inflated, total circulating supply (unstaked tokens) has deflated and decreased from 440M to 334M as a result of POKT increasingly getting staked by Foundation and nodes.
  • Nonetheless, the unsustainability of the inflation rate has understandably become a concern for the community. Recently the community passed two proposals PUP-11/13 to set a Weighted Annual Gross Max Inflation (WAGMI). This proposal sets a fixed rate of annual inflation which starts at 100% and periodically ratchets down to finally reach 50% in June 2022 and remains constant from thereon.
  • To learn more about Pocket Network, read our Delphi Pro report here.
Notable Tweets

sAVAX As Collateral on Anchor

Avax Bridge to Add Native Support for BTC

2nd Stargate Community Auction

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Joo Kian + 2 others