COMP and MKR have been rising for consecutive days. How is the market searching for logic for the old DeFi projects?

With the announcement of Compound founder Robert Leshner's new company Superstate, it was announced that they will use the Ethereum blockchain as a supplementary recording and storage tool to create a short-term government bond fund, creating regulated financial products that connect traditional markets and the blockchain ecosystem. The Compound token COMP has recently performed strongly in response to this news, while also sparking market interest in the concept of RWA. MakerDAO (MKR) and Aave (AAVE) have also performed well recently.

Although the concept of RWA has been around for a long time, the narrative and coin price have a reciprocal relationship, and enthusiastic users have been searching for logic for this round.

Unlike the previous on-chain real world assets (RWA), the narrative of this round of RWA is mainly due to the continuous high yield of US Treasury bonds (to be verified), which has caused serious impact on the already declining crypto market. At the same time, DeFi, which is in a bear market, is also unable to resist the siphon effect of US Treasury bonds on its institutional-level stable basic income. Even the total supply of stablecoins has decreased. According to DefiLlama's data, the total supply of stablecoins has dropped from the peak of 187 billion US dollars in the bull market to 127 billion US dollars on July 3rd.

See how the market views this round of gains.

Logic 1: RWA

Due to the recent lack of updates from the Compound project, the market has attributed the strong performance of COMP to RWA. MakerDAO has a long history of using its treasury to offer interest rates on DAI deposits, known as the DAI Savings Rate, which was first introduced in 2019. However, at that time, the DeFi industry did not have such a wide user base and total value locked in the tens of billions.

As for Aave, some users have expressed that as a larger lending platform compared to Compound, it can not only gain traffic from Compound, but also potentially have its own new narrative.

Logic 2: "Fossil Coin"

The more dominant tokens in this round not only include RWA tokens, but also include Bitcoin Cash (BCH), Litecoin (LTC), and Bitcoin SV (BSV). The strength of BCH may come from its inclusion on the US trading platform EDX. Under the influence of these tokens, some Twitter users have summarized their narrative as Dino coin, referring to the coins left over from the dinosaur era to describe the legacy currencies.

Note: The first three digits are closely related to the BCH, COMP, and ADA projects.

With the advancement of MakerDAO's new proposal to introduce intelligent destruction mechanisms, the market's expectations for MakerDAO's repurchase of MKR are becoming stronger, which may be the reason why the market is optimistic about MKR. At the same time, MakerDAO founder Rune Christensen also purchased a large amount of MKR at the end of 2022, spending millions of dollars. It is worth noting that as an early investor in Lido, his main source of funds at the time was the sale of his token LDO.

Not only that, COMP has also been purchased by a large number of whales. According to Twitter user Andrew T (@Blockanalia), some whales have collected about $11 million worth of COPM in just 11 days, all obtained from Binance. The associated address of the address has been related to IOSG, but Andrew also said that the address is likely an OTC address.

As for BCH, many Twitter users are discussing that its driving force behind is Bitmain. However, it is worth noting that Wu Jihan, the co-founder of Bitmain who previously strongly advocated for BCH, has left the company. His mining company, BitDeer, went public on NASDAQ on April 14, 2023, and announced a $1 million stock buyback plan on June 16. Since June 9, the stock price of BitDeer has risen more than twice.

Note: The yellow line represents the increase in BCH price.

Is it a success or a "dead cat bounce"?

Whether it's Compound, MakerDAO, or the hot narrative of RWA, they have all been repeatedly discussed in the industry. In this rapidly accelerating industry, each hot topic follows the same path of appearing and cooling down, rotating quickly on a monthly, weekly, or even daily basis. In the cryptocurrency industry, many people judge whether a product is "successful" based on its coin price. "Successful" no longer refers to whether the project can make money, but rather "do I still want to continue telling its story".

This rise in MKR and COMP is believed by many to be due to changes in the protocol revenue structure or proposal modifications, which can affect the coin price. However, according to this logic, UNI should be the leader in this wave of growth. Of course, you can also argue that UNI is not RWA, but when we observe the MKR price after the deployment of the repurchase proposal, the positive news of RWA or proposal modifications does not seem to have brought the expected sustained increase.

As calm users have commented, regardless of how the market narrative "adapts" to the currency price, users need to make their own judgments. "Buy the rumor, sell the news", no matter what market, a good story is the endless source that drives people to constantly recharge their faith.

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