How Our Token Hub Ratings Performed: Sept. 2024
Every weekday for the past three months, our analyst team has written about a popular crypto asset and assigned it a bullish, bearish, or neutral rating intended to anticipate the token’s price trajectory over a three-month forward investment horizon.
There are currently over 60 active token ratings in the Citizen-only Bankless Token Hub and our predictions are just starting to come due!
Today, we’re showcasing our most notable token ratings from June dissecting the predictions we nailed while reflecting on our greatest missteps from that month. 👇
⛓️ Solana
Date of Coverage: June 21, 2024
Rating: Bearish 🐻
Performance: +2%
Why We Gave This Rating:
Although SOL enjoyed an astounding run from October 2023 to March 2024 before topping out at $200 per coin, the ecosystem’s novelty appeared to be waning in June amid a backdrop of key onchain metrics that had largely stagnated since April.
Solana’s low fees and unified global state proved a powerful differentiator in enabling the chain to capture an outsized portion of the memecoin mania excitement this cycle, but the scene had undeniably taken a turn for the worse just prior to Bankless’s initiation of SOL coverage.
Top crypto-native Solana memes WIF and BONK were down over 50% of their dollar-denominated value from their May highs, a trend reflected throughout the sector, meanwhile, the celebrity tokens that tried to replace them were all aggressively trending towards $0.
We postulated that the declining number of profitable opportunities on Solana would pressure users to exit the ecosystem, resulting in worsening Solana fundamentals and additional SOL sell pressure.
How Our Rating Has Performed:
SOL was one of just two tokens rated by Bankless during the month of June that were positive at the time of review. While Solana only marginally outperformed the dollar, it has smoked competitive L1s during the past three months; the SOL/ETH ratio surged 70% in the six weeks following our initiation of Solana coverage to set new all-time highs.
Although Solana managed to outperform during the three-month lifespan of the prior rating cycle, we reiterate that the rotation into this alt L1 has already largely transpired and caution that SOL’s heightened volatility could translate to immense losses for ecosystem participants upon a decisive break below 2023 highs of $120.
🪙 Ethena
Date of Coverage: June 14, 2024
Rating: Bearish 🐻
Performance: -68%
Why We Gave This Rating:
Ethena deposits surged in the weeks leading up to our rating, made possible by the protocol’s short-sighted decision to reduce its insurance fund take rate to bolster the attractiveness of staked USDe. As expected, outstanding USDe supply resumed its downtrend shortly thereafter in the start of July.
The Bankless Analyst Team correctly anticipated that hedge fund adoption of spot crypto ETFs would increase the competitiveness for Ethena’s once lucrative basis trades, while funding rates on ETH perpetual swaps have persistently slipped into negative territory in recent days.
Ethena’s ETH perpetual shorts are now generating negative returns, and even though the Protocol has upped the percentage of revenues it pays out to stakers, sUSDe is currently paying out a negative spread against sDAI, threatening to abruptly unwind this carry trade as participants flock to the exits and find limited liquidity.
How Our Rating Has Performed:
The price of ENA has collapsed by 68% in dollar terms since Bankless initiated bearish coverage.
The Protocol has placed short-term profits over long-term stability, and the Bankless Analyst Team maintains its bearish coverage on ENA for the months to come, believing the Ethena experimentation could end in disaster as funding rates continue to compress and holders abruptly rush to exit from extremely illiquid synthetic dollar instruments.
⌚ Pendle Finance
Date of Coverage: June 24, 2024
Rating: Bullish 🐂
Performance: -47%
Why We Gave This Rating:
During the first half of 2024, PENDLE was undeniably one of the best-performing liquid crypto assets with fundamentals (i.e.; not a memecoin), recording impressive 500%+ year-to-date gains at its April and May peaks.
Although the arrival of both Ethena’s and EigenLayer’s airdrops could have reduced the desire to speculate on airdrops and yielded bearish consequences for Pendle, the protocol kept chugging in light of the headwinds, with total value locked (TVL) surging over 50% off the May lows and breaking above $7B multiple times in the month of June.
Crypto users continue to employ Pendle to earn market-leading yields and speculate on airdrops, meanwhile, the mainnet deployment of Symbiotic restaking has given birth to an entirely new airdrop opportunity that should enable the platform to retain depositors!
How Our Rating Has Performed:
PENDLE has arguably one of the biggest disappointments of the Bankless Token Hub, and our analyst team was stricken with a profound sense of regret over this rating just days after the initiation of bullish coverage.
On June 26, 2024, $3B of Pendle yield swaps matured on pools that were created during the peak of airdrop mania; alternative opportunities were deemed insufficient by many users, and Pendle’s TVL was cut in half over the next ten days.
Another massive quarterly Pendle expiration is set to occur on September 25, unlocking over $360M in liquidity across its Arbitrum and Ethereum deployments. We anticipate net depositor flight as a result of this event considering the notable compressions in yields since the inception of the September pools, which may reflect negatively on Pendle’s fundamental case.
💥 Blast
Date of Coverage: June 26, 2024
Rating: Bearish 🐻
Performance: -63%
Why We Gave This Rating:
Many crypto influencers publicized their bull cases for an infinite cycle of BLAST-enabled ponzinomic speculation and announced that they were accumulating more following its airdrop.
The Bankless Analyst Team prudently saw through the unmerited hype and assigned a bearish rating to BLAST. At the time, we identified that there would be little motivation to deposit following an unimpressive token launch, anticipating that the network would be plagued with worsening onchain fundamentals and hefty BLAST sell pressure as a result.
How Our Rating Has Performed:
Like many other L2 networks, with little reason to transact on aside from airdrop promises, BLAST has sharply underperformed alternative crypto assets. Since the initiation of Bankless coverage, BLAST has fallen by 70%; we expect continued underperformance in the months ahead.
💧 Lido
Date of Coverage: June 12, 2024
Rating: Bullish 🐂
Performance: -46%
Why We Gave This Rating:
Lido attempted to get its foot in the restaking sector through a partnership with Mellow Finance, an LRT platform that leverages Symbiotic, a newly launched EigenLayer competitor backed by key Lido employees and investors.
Although the impressive rise in LRT total value locked has made them serious decentralized competitors to Lido, many have already deployed their first round of airdrops, leaving these Lido-associated alternatives with a window to challenge the EigenLayer restaking ecosystem.
A significant portion of the crypto capital deposited into the EigenLayer ecosystem is undoubtedly from airdrop hunters chasing returns, i.e., depositors who could easily be compelled to make the switch to Symbiotic given the promise of airdrops, particularly considering that EigenLayer restaking is not yet live.
Further, through this piecemeal restaking approach, Lido positions itself as the most desirable staking solution by offering both vanilla Ether staking products and the marginally more risky liquid restaked variations, enabling it to serve market participants with a wide array of risk appetites.
How Our Rating Has Performed:
Two weeks after Bankless initiated bullish coverage on LDO, the SEC alleged that Lido’s staking services are unregistered security offerings, rocking token holders with an immediate 25% drawdown that erased all gains made since the inception of coverage.
While the Bankless Analyst Team sticks by its assessment that LDO is the leading Ethereum staking token, we anticipate that this token is destined to slide until L1 activity and ETH price – the two largest drivers of Lido’s profitability – can surge.