Altcoin Market Overview

The altcoin market recently gained momentum after the approval of spot ETH ETFs in the U.S. May witnessed a significant surge of about 20% in the total altcoin market capitalization, with ETH contributing half to this growth.

Anticipated Airdrop Excitement

The upcoming airdrops, set to distribute project tokens worth billions of dollars to DeFi users, have the potential to ignite further excitement in the altcoin market. Major airdrop events from projects like LayerZero, Etherfi, Blast, and zkSync, all of which boast multi-billion valuations, are expected to occur by the end of Q2 2024.

Analysis of Market Trends

The rising enthusiasm surrounding liquid restaking has proven beneficial for Pendle Finance in May. Pendle operates as an interest derivatives multichain protocol, allowing users to split yield-bearing token assets into principal and yield components.

Remarkable Growth of PENDLE

PENDLE's price and Total Value Locked (TVL) experienced an impressive growth of 58.6% and 50.5%, respectively, outshining other large-cap DeFi projects. As of June 3, Pendle boasted a TVL of $6.28 B, surpassing Uniswap's TVL of $6.12B to rank as the 6th largest DeFi protocol.

Diversified Pools and Asset Splitting

Liquid staking tokens constitute the most commonly deposited asset on Pendle, forming the top 5 pools with the highest TVL. Notably, Etherfi's weETH pool alone accounted for $1.4B in TVL.

Asset Splitting Mechanics

Users can divide yield-bearing assets like Renzo's ezETH on Pendle to create a yield token (YT ezETH) and a principal token (PT ezETH). The PT token represents the principal amount of the underlying asset, while the YT token entitles the holder to future yields.

Maturity and Redeemability

Each PT and YT token comes with a maturity date. PTs, which typically trade at a discount, can be redeemed for the underlying asset after this date. On the other hand, YTs continue to generate proceeds until the maturity date, after which they hold no value. Additionally, holders of YT ezETH qualify for airdrop allocations from the underlying asset, while PT holders do not. Both PTs and YTs are liquid and tradable.

Incentivizing Airdrop Participation

Airdrop farmers have been incentivized to deposit their Liquid Restaking Tokens (LRTs) into Pendle following the introduction of point multipliers by liquid restaking protocols. These multipliers enhance airdrop allocations when an asset is held in a DeFi protocol rather than in a wallet.

Leveraged Point Farming

Renzo Protocol, for instance, offers a 4x multiplier on their Pendle pool, in addition to the heightened airdrop exposure from YT tokens. By purchasing YT tokens, one can potentially acquire 117x more Renzo airdrop points than by purchasing the underlying asset. This strategy of optimizing future airdrop allocations is termed leveraged point farming.

Dependence on Liquidity Restaking Tokens

Although Pendle's dependence on LRTs for its locked value poses a significant single-risk exposure, the platform saw a substantial outflow of $1B in TVL in late April. This decline was mainly triggered by the arrival of airdrop allocations from Etherfi, Ethena, and Renzo. Despite this, these projects have announced second airdrop seasons to support their TVL.

Emergence of Notable Tokens

Another standout in the current market landscape is NOT, the native token of a Telegram Mini DApp known as Notcoin by Open the Builders. NOT witnessed a remarkable price surge of over 400% from May 27 to June 3.

Notcoin Mini DApp

A mini DApp refers to a lightweight application integrated within major social media platforms. Notcoin can be accessed through Telegram without the need for additional software installation, making it highly accessible. Players can earn in-game tokens $NOT by simply interacting with the app.

Community Engagement

Despite its simplicity, Notcoin garnered over 35 million users on May 16, with six million daily active users before the token listing. Notcoin distributed 78% of the NOT to users at launch, allocating the remainder for the strategic development of the Notcoin ecosystem.

Market Dynamics

The recent surge in NOT's price remains speculative and may be attributed to the increasing number of applications within the TON ecosystem, elevating community interest in NOT. A collaboration between Notcoin and a cat-raising game called Catizen, which supports $NOT for in-game purchases, further contributed to its popularity.

Burn Mechanism

Catizen emerged as a top-ranking application during The Open League Season 3, organized by the TON Foundation to incentivize TON users. With nearly two million daily active users, Catizen earned 50M Notcoin in three days and burned 10% of its NOT on May 22. Notcoin also engaged in burning 6.9M NOT on May 30.

Disclaimer

It is essential to note that this article does not provide investment advice or recommendations. Every investment decision involves risk, and readers are advised to conduct their own research before making any financial commitments.