This Week in Crypto: DAI Supply Surge, Positive News for FTX Creditors, and SEC Goes After UNISWAP

Data & Insights is a weekly series that showcases key charts from The Block's Data Dashboard. This week, we explore recent key developments such as DAI's supply increase, FTX's new compensation plan, and UNISWAP's Well Notice from the SEC.

DAI Supply Surge

DAI's supply increased by 24%, from 4.42 billion on March 9th to 5.48 billion on May 12th, reversing a prior decline. This change was influenced by the Dai Savings Rate (DSR) mechanism, where DAI is burned to create SavingsDAI (sDAI) upon deposit and minted back plus interest upon withdrawal, impacting the circulating supply. Raised to 8% in August 2023, the DSR boosted supply as users deposited to earn competitive interest rates, peaking after the USDC depeg incident in March 2023. Later adjustments brought the rate down to 5%. In response to market competition from new stablecoins, MakerDAO increased the DSR to 15% in March 2024, spurring deposits as users sought to capitalize on the higher yield, and impacting DAI's supply dynamics.

Bitcoin Network Activity

For the first time since March 2020, the 7-day moving average of active Bitcoin addresses fell below 700,000 due to high fees and excitement over Runes. On April 23rd, the average dropped to 689,810 but rebounded to 839,400 by April 30th as fees decreased from $39.15 to $11.92. However, by May 12th, active addresses fell further to 655,190, with fees at $3.86. New addresses also dipped to 290,000, the lowest since July 2018. The initial Runes frenzy has waned, reducing fees and contributing to the decline. While high fees initially slowed activity, the decline could also be due to a broader market slowdown.

Positive News for FTX Creditors

FTX creditors received positive news, contrasting the grim outlook post-bankruptcy in 2022. Rising crypto prices boosted FTX's holdings, allowing the estate to sell shares in GBTC, AI startup Anthropic, and Solana tokens to raise funds. Despite some missteps, FTX's new compensation plan promises 118% repayment for 98% of creditors with claims below $50,000, and full payment plus interest for others. The estate estimates $14.5-$16.3 billion available for distribution, sending creditor claims above 100 cents on the dollar, now trading at 109%. Some oppose dollar repayments over appreciated crypto value, but pushback is expected to be minimal. Good news for FTX also means good news for FTT, with $139 million in spot volume on May 8th, the highest since December, despite the unlikelihood of the exchange's reboot.

Uniswap and SEC Actions

Uniswap Labs received a Wells Notice from the SEC, marking a significant escalation in actions against DeFi. The SEC also issued notices to Consensys and Robinhood's crypto arm. Despite Robinhood's Q1 earnings showing a 224% increase in crypto trading volume, the notice has cast uncertainty over DeFi's future. The price of UNI, Uniswap’s governance token, dropped from $11.60 to $6.43 and stabilized slightly above $7. DeFi dominance fell to 3.63%, the lowest since June 2022's Terra/Luna fallout, and now hovers just below 3.75%. The DeFi sector's boost depends on positive news from the lawsuit.

Ethereum Lending Market Uptick

The lending market is heating up, with activity rising on Ethereum platforms. On May 7th, Aave recorded $158.65 million in net borrows, the highest in over a year. Since late February, net borrows on Aave, a dominant force in Ethereum lending, have exceeded $20 million on 36 days. Unique borrowers on Ethereum lending protocols increased, with over 200 addresses borrowing from Aave daily in May, up from fewer than 100 a year ago. However, DEX volumes on Ethereum remain lower than their late 2021 peaks, partly due to competition from Solana and Base. Lending on other chains, like JustLend on Tron, is also popular, with Aave and Compound expanding to other networks, contributing to the diversified lending landscape.

Data & Insights is a weekly newsletter and article series by The Block Research Analyst Rebecca Stevens that highlights recent trends and top charts from The Block’s Data Dashboard. Sign-up to receive Data & Insights in your inbox every Monday for free. Previous articles in the series are available with a subscription to The Block Pro.