This Week in Crypto: Memecoin Hype, Ethereum Upgrades, and Airdrop Developments

Data & Insights is a weekly series showcasing the top charts from The Block’s Data Dashboard. This week, we compare transaction fees on Solana and Ethereum and examine Arbitrum’s return to dominance. We also look at the impact of LayerZero’s airdrop on platform activity and how EigenLayer is performing post-EIGEN claim. Lastly, we assess the progress of the newly launched Hong Kong spot crypto ETFs.

Memecoin Hype and Solana’s Growth

The return of "Roaring Kitty" (Keith Gill) to X spiked the recent memecoin hype. His tweet caused GameStop stock to surge over 100% and AMC to halt trading. On-chain, the GME memecoin on Solana jumped 460%. Solana's memecoin community is thriving due to low fees and the launch of pump.fun, which hit $1.23M in revenue on May 14th. Despite a $1.9M exploit, pump.fun has resumed operations. Solana's daily transaction fees are around $1M, up from $50K in 2023, while Ethereum's fees have dropped, with Solana’s revenue reaching over 60% of Ethereum’s on some days.

Ethereum Layer 2 Networks Post-Dencun Upgrade

The Dencun upgrade lowered costs for Ethereum layer 2 networks by introducing "blobs" for cheaper data storage. Coinbase-backed Base saw fees drop below one cent, attracting users. Base’s 7-day moving average of transactions peaked at 3.09M in mid-April, later slipping to 1.92M. Meanwhile, Arbitrum’s transactions rose from under 750K to 2.57M post-Dencun, with fees under one cent since April 4th. Uniswap on Arbitrum crossed $150B in cumulative volume. Airdrop claims like UXLINK also boosted activity. Reduced costs have increased momentum for Ethereum layer 2 networks, with Arbitrum leading.

LayerZero’s Airdrop and Anti-Sybil Strategy

LayerZero announced an airdrop snapshot on May 1st. To combat sybil farmers (users manipulating the system for larger airdrop allocations), LayerZero allowed them to self-report for 15% of their potential allocation. By May 14th, over 100,000 addresses had self-reported. LayerZero, Chaos Labs, and Nansen identified over 803,000 sybil addresses through self-reports and analyses. The “bounty hunter” phase, paused after 3,000 reports and 30,000 appeals, dropped daily messages from 348,000 on April 30th to below 40,000 recently, resulting in a significant decrease in platform activity.

EigenLayer’s EIGEN Airdrop and Withdrawal Surge

Following EigenLayer’s EIGEN airdrop announcement, queued withdrawals surged. Initial issues included VPN restrictions and non-transferability of tokens. The Eigen Foundation later expanded airdrop allocations and clarified token unlock timings, calming fears. Withdrawals peaked on April 29th, with outflows starting on May 6th due to a 7-day escrow period. Daily net outflows exceeded $45M on four days since May 6th but are minor compared to EigenLayer’s nearly $15B in TVL. Despite frequent net negative days, net positive days occurred, with $57M deposited on May 15th. The mainnet launch now offers promised yields, attracting new services and depositor rewards.

Hong Kong’s Spot Crypto ETFs

Hong Kong’s spot crypto ETFs, part of its bid to become a crypto hub, have been on the market for nearly three weeks. Six ETFs (three bitcoin, three ether) from ChinaAMC, Harvest Global, and Bosera/HashKey were approved. On launch day, these ETFs saw $11M in volume, with $8.56M for bitcoin ETFs and $2.54M for ether ETFs. U.S. spot bitcoin ETFs debuted with $4.5B in volume. ChinaAMC’s bitcoin ETF raised $123M, ranking 6th among 82 ETFs launched in Hong Kong over three years. However, outflows began four days post-launch, with significant outflows on May 6th. Despite a slow start, there's potential for growth with Wintermute’s liquidity support and Harvest Global’s potential expansion to mainland China.

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.