The Weekly 301
The Market
The market maintained its positive momentum last week as the Chinese central bank unleashed aggressive stimulus measures last Tuesday. The stimulus package includes key policy rate cuts, approximately 1 trillion RMB in capital injections to state banks, support for the property sector through reduced mortgage rates and down payment ratios, as well as special bond issuance to fund infrastructure projects. While many analysts believe the stimulus may not be sufficient to return China to a 5% GDP growth trajectory, the market reacted enthusiastically as the last time China injected this much capital into the banks was in 2008. The MSCI China ETF surged nearly 20% in a week, and altcoins also experienced gains, with a 10.5% return last week.
Street economists suggests that China may introduce additional stimulus measures, as the current package is not enough to significantly boost the economy. As we noted in the past weekly, the Fed’s unexpected 50 bps rate cut has opened the door for other countries to loosen their monetary policies.
As Noell Acheson pointed out, while crypto trading platforms are not officially permitted to operate in China, crypto itself is not banned. According to Bloomberg, recent Chinese raids on underground forex transactions have uncovered many networks that continue to facilitate significant transactions using cryptocurrencies. These networks are being used to bypass the country’s strict capital controls and seek alternative investments amidst a declining property market. The liquidity injection by PBOC could positively impact Chinese capital’s appetite for crypto.
The crypto market has been buoyed by the improved liquidity conditions and outlook. BTC’s Perpetual Market Directional Premium, which measures the aggregated monthly premium paid by the long side to the short side, has increased since mid-September from a one-year low, indicating growing interest on the long side.
The Altcoin Season Index has rebounded from their summer lows, reaching as high as 46 on September 21, indicating that nearly half of the top 100 tokens have outperformed BTC over the past 90 days.
The meme coins, often reflective of bullish market sentiment, have surged once again, rising 50% since September 18, which is five times the increase seen in BTC.
The amount of stablecoins held on exchanges has resumed the uptrend since September 7. At $25B, we are still $13B away from the ATH reached at the peak of the last cycle. More dry powder could flow into the market as excess capital, driven by the rise in global liquidity, starts chasing risky assets.
DeFi Update
While attention often gravitates towards Solana DeFi and the rise and fall of meme tokens, there is a hidden gem in the Solana ecosystem that has been quietly building critical infrastructure for dApps on Solana: Metaplex.
Metaplex is widely recognized for its pioneering role in the Solana NFT space, powering 99% of NFT issuance on Solana by pioneering the compression NFT standard, a groundbreaking innovation for scaling NFT collections. However, associating Metaplex solely with NFTs significantly underestimates its broader potential.
Beyond NFTs, Metaplex's program library is highly versatile, supporting the issuance of fungible tokens and hybrid tokens as well. This makes it more than just an NFT platform—it’s a comprehensive infrastructure for all types of digital assets issued on Solana. In fact, as of August, 90% of the fungible tokens on Solana were created using Metaplex. The hybrid solution, which allows NFT holders to exchange NFTs for fungible tokens, similar to the once-popular ERC404 standard, has also gained traction among NFT issuers. With these capabilities, developers have access to a seamless toolkit for issuing and managing assets across the Solana ecosystem.
Metaplex has just launched AURA, an indexing and data availability (DA) layer, significantly extending its capabilities. AURA serves as a powerful indexing solution, enabling developers to query and access data efficiently across multiple blockchains. Its data availability layer ensures that developers can build scalable, decentralized applications with fast, reliable access to on-chain data. With AURA, Metaplex offers a truly end-to-end solution, positioning itself as a key platform for developers to build on Solana and other chains using the Solana Virtual Machine (SVM). Additionally, Metaplex has heavily invested in SDK generation that integrates with almost every on-chain protocol in any programing language, providing a smooth developer experience.
What truly sets Metaplex apart is the absence of an equivalent offering in the Ethereum ecosystem. There is no decentralized solution on Ethereum that powers an end-to-end developer experience like Metaplex on Solana. While projects like Blur dominate the NFT marketplace, The Graph (GRT) leads in blockchain indexing, and TIA focuses on data availability, Metaplex integrates all these functions into one cohesive platform. Its ability to combine token issuance, management, and data storage and indexing suggests a much broader scope of value. Reviewing Metaplex’s market cap relative to Solana vs. peers in the ETH ecosystem shows the market hasn’t fully priced in its potential.
Moreover, Metaplex has turned on the fee switch in March 2023, introducing a small fee for using their Token Metadata program. It also allocates 50% of the fee to buy back $MPLX tokens, creating value accrual to the token holders. With its multi-functional ecosystem and growing utility, we believe Metaplex deserves a higher valuation, potentially placing it in the same league as top Solana DeFi protocols in terms of functionality and growth potential.
Top 100 MCAP Winners
FTX Token (+95.28%)
Pepe (+41.48%)
Shiba Inu (+36.98%)
Dogwifhat (+36.42%)
BONK (+30.89%)
Top 100 MCAP Losers
Monero (-11.91%)
Kaspa (-1.48%)
Aptos (-0.74%)
About Decentral Park
Decentral Park is a founder-led cryptoasset investment firm comprised of team members who’ve honed their skills as technology entrepreneurs, operators, venture capitalists, researchers, and advisors.
Decentral Park applies a principled digital asset investment strategy and partners with founders to enable their token-based decentralized networks to scale globally.
The information above does not constitute an offer to sell digital assets or a solicitation of an offer to buy digital assets. None of the information here is a recommendation to invest in any securities.
About the Author
Kelly is Portfolio Manager and Head of Research at Decentral Park Capital. Investing across sectors with a thesis driven, deep research approach.
Prior to this, Kelly has led research and product efforts at CoinDesk Indices and Fidelity Digital Asset Management. Kelly has been a TradFi investor for 15 years before joining the crypto space.
You can follow Kelly on Twitter and LinkedIn for more frequent analysis and updates.