Cardano Spotlight: Ape Drama, Butane, and CNT Bear

Author

Utsav Sheth
February 23, 2024

Hi,

What's Spotlight? Every week, we highlight the most interesting events happening around Cardano. We want to help you cut the noise and find the signal.

We start with the $Levvy announcement storm. Then, discuss butane, its unique features, and its token launch. Finally, we discuss the ongoing CNT bear market and current trends.

The Ape Drama ft. Levvy

It wouldn’t be Cardano if there weren’t any drama. This week, the announcement of the $levvy token by The Ape Society has overtaken the Cardano ecosystem. 

Levvy by TAS is the leading lending/borrowing protocol with ~50% market share on Cardano. The novel order book-based p2p protocol was built as a landmark in the 12 landmark roadmap of the Ape Society. Based on the communication from the team, Society (Soc) was considered the only token for Levvy and the entire ape ecosystem up until now.

However, this week, the team announced the launch of $Levvy - an independent token for the Levvy protocol. This would be airdropped to SOC stakers and other participants in the Ape ecosystem. This was negatively perceived and resulted in a >40% immediate decline in the $SOC price.

Many users complained that they had staked SOC for the protocol revenue fees and were stuck because of unlock penalties. Adding fuel to this fire was the revelation that the founder had defaulted on a loan and sold some SOC this month.

The reasoning provided by the Ape Society for the launch of the $Levvy is to bring in new users and reward their current community through an airdrop. Regarding the sale of SOC, the amount was trivial/regular transactions ($30K) and was unrelated to the Levvy launch announcement.

The situation is still dynamic; we should learn more about it next week.

You can read Levvy's announcement for more details.

Butane Launch

Butane is a synthetic asset protocol on Cardano. Synthetics or synths are assets that track the peg of a specific asset. You can have synthetic USD, Bitcoin, or RWAs like Gold. This allows getting exposure to these assets indirectly. To create a new synth, you only need a reliable price feed!

Here is how it works →: A user must deposit collateral like Ada in a CDP, and they can borrow different types of synthetic assets. This is similar to what Indigo has done with iAssets like iUSD & iBTC.

Here are some of the key benefits of Butane:

  • Open source: Butane has been built from scratch and will be completely open-source before its mainnet launch.

  • Multi-asset CDPs: Multiple CNTs can be used as collateral for any vaults. You can also create multiple vaults of the same or different collateral options. This allows the project to tap into the liquidity of various assets.

  • Multi-actions: You can chain actions like Open CDP -> Mint -> Sell on a DEX. Or combine multiple CDPs into one position. It uses the eUTXO architecture to chain different actions easily and simplifies the user experience.

  • Liquidations: With Butane, any user can liquidate a collateral that has fallen under its required health factor. This incentivizes users to track positions and perform liquidations to keep the protocol healthy.

Butane is doing a presale on 23rd Feb to raise ~9.7M A with a 22.5M Ada valuation.

This is not advice to invest and should only be intended as informational/educational.

Cardano Native Token Bear

The Cardano native token ecosystem has started Q1’24 on hard mode. The TVL has been flat, but the overall activity has fairly reduced.

The DEX volumes have been trending downward for the past several weeks.

This can also be seen with a ~50% reduction in transaction count and users.

During May’23, memecoins caused a lot of hype, after which capital rotated to defi plays. We saw a repeat of the memecoin season in Dec’23, but it did NOT convert to hype in Defi coins.

This time was different; everyone lost money.

The core reason is the lack of liquidity. With the launch of new projects, liquidity is being extracted and has to be replenished with new players/capital. That doesn’t seem to be happening as of now.

Another reason could be that Ada has been quite volatile in Q1’24, and users are derisking their holding.

The trends would be very interesting to watch, and hopefully, we can see a reversal in this CNT bear!

Best content of the week

Meme of the week

Cardano & drama, a match made in heaven.

Credits: Dean - Cardano-based meme account

Visit Cardano Spot to be updated with the Cardano ecosystem and learn more every week.