Notable Messari Updates
The Celo (CELO) proposal to activate cEUR has passed, and cEUR transfers are now enabled.
The Prysmatic Labs team has released a hotfix with two critical fixes. They later shared an incident report summarizing the issues that temporarily prevented Prysm Beacon Nodes from proposing new blocks.
Oasis Network validators accepted and executed the Cobalt upgrade, unlocking light client support, and cross-ParaTime token transfers.
The Stellar Development Foundation is asking all those who run a Stellar node of any kind to upgrade to Protocol 17 as soon as possible.
Sector Performance Overview
The week ending April 29th was led by the decentralized exchange sector. Despite the drawdown during the weekend, DEXs rebounded strongly to end the week with a 29% return. DeFi came in second place posting a weekly return of 24%. Web-3 and currency ended the week in positive territory but lagged the rest of the sectors.
Sector Drill Down – Risk and Performance Review
Top Assets
As is the case with the majority of the charts in this report, all top assets by market capitalization experienced a sharp decline during the weekend. Most assets quickly rebounded, ending the week in positive territory. Among the top assets Uniswap (UNI), Ethereum (ETH), and Cardano (ADA) ended the week with double-digit returns of 24%, 13%, and 10%, respectively. Bitcoin (BTC) and Ripple (XRP) had muted weekly returns while Polkadot (DOT), Litecoin (LTC), and Chainlink (LINK) finished the week with slightly negative returns.
Volatility (measured as the rolling standard deviation of daily returns) across most top assets has been on the decline since the beginning of March. Binance Coin (BNB) had the highest decline towards the end of March with volatility dropping approximately 10%. Starting in April, Dogecoin (DOGE) and Ripple (XRP) saw a spike in volatility reaching levels of 23% and 14% as of April 29th.
Correlation among the majority of the top assets remains high. The exception is Dogecoin (DOGE) which is the only asset with negative correlations to the rest of the group. This was caused by its rapid run-up in recent weeks.
Correlations with Bitcoin have been widely dispersed over the past few months. Around mid-February, Uniswap (UNI), Dogecoin (DOGE), and Cardano (ADA) were negatively correlated to Bitcoin for a short period of time. Correlations across all assets have picked up since the beginning of March with the exception of Dogecoin (DOGE) which saw an abrupt decrease in the middle of April as a consequence of its skyrocketing performance.
DeFi
DeFi was the second-best performing sector of the week showing some resilience to the weekend’s market shock. As of April 29th, the sector ended the week with a total return of 24%. All DeFi assets finished the week in the green with MakerDAO (MKR) being the only exception. The group was led by PancakeSwap (CAKE) with a total weekly return of 42% followed by Aave (AAVE) which ended the week with a 27% return. MakerDAO (MKR) came in at the bottom of the group with a muted return of -0.8%.
Following a similar pattern as the top assets, all DeFi assets have seen a steady decline in volatility. Notably, PancakeSwap (CAKE) and Terra’s (LUNA) volatility decline the most during March moving from a range of 18-20% to a 6%-10% range. Across DeFi assets, MakerDAO (MKR) experienced an uptick in mid-April sending the token’s volatility to 9.8% making it the most volatile asset of the group on a rolling basis. As of April 29th, volatility in the top DeFi assets ranges from 5% to 10%.
Over the past 30 days, the correlation structure of the top DeFi assets hasn’t shown strong tendencies towards either side of the correlation spectrum. Correlations in the group currently range from a low of -20% to a high of 84%. One exception is Terra (LUNA) which has become increasingly uncorrelated with the rest of the assets week-over-week.
Correlation between DeFi assets and Bitcoin followed a similar pattern over the past months. To various degrees, all DeFi assets saw a decline in February followed by an increase all through March. Starting in April, correlations started to decline once again but recently started to pick up. As of yesterday, MakerDAO (MKR) has the lowest correlation to Bitcoin at 15% and Aave (AAVE) has the highest at 63%.
Currencies
Currencies had a mixed week of performance. Similar to the rest of the assets in the report, all currencies decline over the weekend with the majority recovering by the end of the week. Unlike DeFi assets, not all currencies ended the week with positive returns much less in the double-digits. Monero (XMR) came in at the top with a total return of 9.5% followed by Dogecoin (DOGE) with a weekly return of 5%. Dash (DASH) and Bitcoin SV (BSV) were the laggards of the group with weekly returns of -5% and -5.4% respectively.
Similar to the top asset’s volatility chart, the two notable assets with higher volatility within the currencies group are Dogecoin (DOGE) and Ripple (XRP). The rest of the assets have volatility ranging between 3% and 8%.
Unsurprisingly, correlations among currencies are concentrated on the high end of the correlation spectrum. As stated above, this is not the case for Dogecoin (DOGE). Week-over-week the token has become slightly more uncorrelated with the rest of the group.
Correlations between currencies and Bitcoin have seen some dispersion in the past few months. Starting April, correlations have been on the rise reaching over 40% across most assets in the group. Again, Dogecoin (DOGE) is the exception seeing a sharp decline in mid-April ending the month with a correlation to Bitcoin of .05%.
Smart Contract Platforms
Similar to the currency sector, smart contract platforms ended the week with mixed results. Solana (SOL) was the clear outperformer of the group ending the week with a strong double-digit performance of 32%. Interestingly, Solana was one of the few assets in this report that showed high resilience to the weekend’s market drop only dipping below the zero line for a few hours. Cosmos (ATOM), Ethereum (ETH), and Cardano (ADA) also ended the week with a two-digit performance of 14%, 13%, and 10% respectively. EOS and VeChain (VET) ended the week in the red with weekly returns of -8.6% and -13%.
Volatility levels in smart contract platforms have been on the rise starting in April. Similar to other charts in the report, there was a steady decline starting in March. However, most smart contract tokens are seeing their volatility increase during April. Most notably is Tron (TRX) which saw an increase in volatility from 6% to 12% over the current month. The rest of the assets have volatility ranging between 4.5% and 11% with Ethereum (ETH) being the least volatile asset of the group.
Correlation among smart contract platforms tends to be on the positive side. One particular exception is Solana (SOL). Over the past 30 days, the token has become increasingly uncorrelated with the assets in the rest of the group. On a weekly basis, the correlation continued to decrease reaching levels as low as -45%.
The story is the same when looking at the correlation between Bitcoin and Solana (SOL). While most smart contract platforms have a correlation higher than 20%, Solana’s correlation with Bitcoin went negative in mid-April reaching a low of -50% as of April 29th.
Decentralized Exchanges
The decentralized exchange sector was the best performing during the week. As a whole, DEXs ended the week with a total return of 29%. The top DEX based on performance was PancakeSwap (CAKE) with a total weekly return of 42%. Uniswap (UNI) came in second place with a 24% return. Kyber Network (KNC), Bancor (BNT), and Loopring (LRC) were the losing assets of the group ending the week with negative performance.
Volatility in the sector has been relatively stable over the past few months. As mentioned previously, PancakeSwap (CAKE) is the only asset with a notable decrease in volatility among decentralized exchanges. As of yesterday, volatility across the group is below 10%.
Correlations within the group aren’t concentrated on either side of the spectrum. One thing to note however is that Uniswap (UNI), PancakeSwap (CAKE), and Rune (RUNE) have seen some decline in their correlation over the past week relative to the other assets in the sector.
In terms of correlation with Bitcoin, decentralized exchanges are moving in a similar direction. All correlations are above 30% ranging from a low of 33% to a high of 76%.
Web-3
Web 3 assets had the widest dispersion across all sectors. Helium (HNT) and Arweave (AR) had a phenomenal week ending with returns of 36% and 30% respectively. Most assets ended the week with performance ranging from -3% to 7%. Stacks (STX) and Siacoin (SC) ended the week at the bottom of the group with returns of -5% and 8%.
Asset volatilities have been quite jumpy among Web-3 assets. During March, Livepeer (LPT) and Storj (STORJ) saw a significant jump in their volatilities reaching levels above 25%. Similarly, Stacks (STX) experienced a similar increase from 5% to 25% volatility. As of April 29th, volatility in the group has stabilized below 11% with the exception of Stacks (STX) which is currently at its highest level since March.
Week-over-week correlations among Web-3 have mostly remained stable. The two to note are Stacks (STX) and Arweave (AR) which are becoming increasingly uncorrelated with the rest of the group.
Correlations with Bitcoin have been widely different across the Web-3 sector. While all have remained above zero, some assets have reached levels as high as 84% over the past three months which means the sector might not be as uncorrelated as some would like to believe. As of April 29th, correlations in the sector range from a low of 35% to a high of 73%. Since many Web3 projects possess their own blockchains or interoperable protocols it will be interesting to watch and see if they remain correlated to Bitcoin or start to break away as a sector.
