The Effect Of Cryptocurrency Volatility On ETH Derivatives

Source: Twitter

Based on the liquid staking ETH from ankr, rocketpool, and lido (aETH, rETH, and stETH), this article evaluates liquid staking ETH. In terms of price volatility, what are some trends? How are swaps going?

Introduction

Derivatives are contracts whose value is derived from the performance of their underlying asset. So, ETH derivatives ankr, rocketpool and lido (such as aETH , rETH and stETH ) are assets whose value is derived from ETH tokens. The underlying entity can be an asset, index, or interest rate. Here we are comparing these ETH Derivatives with the actual ETH Price. Ethereum uses Ether (ETH) for verifying transactions on its blockchain and network as a native token. A fungible token can be created by using Ethereum’s ERC-20 standard for smart contracts.

LIDO(stETH)

In essence, Lido is an Ethereum smart contract that allows ETH holders with less than 32 ETH to pool their funds and earn rewards. Pooled funds are distributed among selected operators of Ethereum validators that are required for staking operations. Lido also solves the liquidity problem of ETH stakers by issuing a special ERC20 token, stETH, at a 1:1 ratio when users deposit their ETH for staking. StETH tokens can be traded, transferred, and used in major Defi protocols, just like ETH. If a user wishes to unstake their ETH, they can sell stETH on Curve for ETH and use it however pleases them.

Ankr(aETH)

At launch, Ankr was a distributed cloud computing network. In order to avoid having to rely on a single cloud computing provider, it utilized excess capacity from idle machines. As a result, the team has made participating in, building on, and using blockchains easier for all. Payments can be made across the Ankr platform using ANKR coin, Ankr’s native cryptocurrency. A stake of as little as 0.5 ETH is automatic-routed to pools with the highest yield through Ankr’s StakeFi. Users don’t have to lock up their funds in a separate platform as this platform is non-custodial. On the Ankr platform, users get aETH (a synthetic token based on Ethereum) and additional rewards that can be used to access decentralized finance applications. 

Rocketpool(rETH)

Rocket Pool is an Ethereum 2.0 staking pool that enables users to stake their cryptocurrency. In addition to empowering the decentralization of the Ethereum ecosystem and increasing the security of it, the protocol aims to reduce both the capital and hardware requirements for staking on ETH 2.0. Towards this end, Rocket Pool facilitates trustless stake on an Ethereum node by letting users choose their node operator anonymously. RocketPool is a decentralized ETH2 Staking application. Using RocketPool, users can either stake ETH or stake ETH and run a node. Users deposit ETH and mint rETH tokens. For users only interested in staking, the minimum deposit is 0.01 ETH and the rETH tokens are liquid. For users interested in running a node and staking, the minimum deposit is 16 ETH, but better rewards are received.

Approach

  • The three ETH derivatives ankr, rocketpool, and lido (rETH, sETH, and aETH) are considered here. To obtain the data for these derivatives, we used their contract addresses as follows:
    • The Stkr ETH address is 0xe95a203b1a91a908f9b9ce46459d101078c2c3cb
    • The Rocket Pool ETH address is 0xae78736cd615f374d3085123a210448e74fc6393
    • The Lido ETH address is 0xae7ab96520de3a18e5e111b5eaab095312d7fe84
  • Staking Volume , number of stakers and number of staked transactions by these 3 derivatives are being analysed.
  • Comparison of ETH against STKR, Rocketpool, and Lido prices
  • Past 60 Days of Price Deviations Of Ethereum Derivatives
  • In addition, we are analysing since 60 days the Swap volume, swappers and swapped transactions by these 3 derivatives.

A Comparison of aETH, rETH, and stETH Derivative Stakes (Volume, Txns and Users)

This section compares three Ethereum derivatives ankr, rocketpool, and lido (rETH, sETH, and aETH) by their staked metrics like staking volume, staked transactions, and stakers over the past 60 days. Among the 3 derivatives, Lido contributes the most (70.42%) to the total Staking Volume. In terms of total Staking Volume, Stkr has the lowest total Staking Volume of 443.68 while Lido has the highest total Staking Volume of 44.6K. The maximum Staking Volume was observed on July 21, 2022, while the minimum Staking Volume was observed on June 21, 2022. In June 30, 2022 and July 22, 2022, total stakes were lower than normal, while in July 21, 2022 and June 29, 2022, they were higher than normal.

For the past 60 days, the total stake volume for all 3 tokens has been 63.3K. Among the 3 derivatives, Lido makes up 70.42 percent of the total stake volume. As a result, the Lido protocol was used extensively for staking. As a result of staking Ethereum tokens through Lido, Ethereum token holders could earn rewards for protecting the Ethereum network. The majority of ETH holders, however, are not able to stake their coins since it requires significant technical expertise. It became very popular because of these expertise features. 

Among the 3 derivatives, Lido contributes the 3 quarters of the total holders. Stkr has the lowest number of holders (168), while Lido has the highest number of holders (19,226). The maximum number of Stakers was 2,064 on August 26, 2022, and the minimum number was 88 on June 29, 2022.  The number of Stakers in August 29, 2022 was lower than normal, and the number in August 26, 2022 and September 11, 2022 was higher than normal as well. There is a sudden increase of stakers by Rockepool on August 26,2022. It is possible that many stakers will stake through Rocketpool before Ethereum Merge launches. 

Out of all 3 derivatives, Lido performs the most transactions when compared with the others. Suddenly, however, we can see from Rocketpool that there were more staked transactions on Aug 26,2022.

Compare The ETH Price Volatility With The Derivatives For Past 60 days

For the past 60 days, Lido and Ankr have always had their ETH price lower than the usual ETH price when compared with the other derivatives. As we can see here, Rocket pool’s ETH price is always higher than usual ETH price in all time.

From the graph below, we can see the percentage of price deviations for derivatives of ETH over the past 60 days on a daily basis. Initially, we can see that Ankr ETH has a price deviation of almost -10% compared to the price of ETH. By the time it reached almost -4% less than the actual ETH price due to price volatility on the crypto market. September 11, 2022 was observed to have the maximum percentage of Rocketpool at 3.77, and July 15, 2022 was observed to have the minimum percentage of Rocketpool at 0.81. LIDO and Ankr derivatives also exhibit a correlation with volatility in terms of price deviation. As a result, both are increasing simultaneously, and similarly, when rocketpool decreases according to ETH price, Ankr ETH decreases as well. 

A Comparison of aETH, rETH, and stETH Derivative Swaps (Volume, Txns and Users)

This section compares three Ethereum derivatives (rETH, sETH, and aETH) by their swapping metrics such as swap volume, swapped transactions, and swapped users over the last 60 days. The token Lido ETH contributes the most to the total token volume (93.77%) out of the 3 tokens. Among all Token Volumes, Stkr ETH has the lowest volume at 14.16K, and Lido ETH has the highest volume at 794.7K. The maximum token volume for June 15, 2022 was 52.55K, and the minimum token volume for September 1, 2022 was 605.89. Swap volumes are in decline.  In August 14, 2022 and June 25, 2022, total token volume is lower than normal, while in July 12, 2022 and September 6, 2022, it is higher than normal. 

During the past 60 days, the total swap volume for all three tokens has been 847.49K. Among the three derivatives, Lido makes up more than 93%  of the total swap volume. Therefore, Lido Tokens are responsible for the majority of swaps. The second place goes to Rocketpool tokens. 

There are 70 percent of holders of Lido’s derivatives among the three derivatives. The number of holders for Stkr is the lowest (256), while the number of holders for Lido is the highest (3,576). A maximum number of 152 users was observed on June 19, 2022, and a minimum number of 28 users was observed on September 1, 2022. It can be seen here that Rocketpool swappers increased from Sep 8 ,2022. Rocketpool pool swapping advantages may attract many users and they may be swapping many tokens through Rocketpool before the Ethereum Merge launches.  

When compared with the other derivatives, Lido performs the most swapping transactions. By Rocketpool, however, we can suddenly see that swaps are increasing from Sep 08,2022. Lido ETH is the token with the highest percentage (77.34%) of total Swaps. The lowest total Swaps are 323 (Stkr ETH) and the highest are 12,437 (Lido ETH). The maximum number of swaps was 406 on June 19, 2022, and the minimum was 80 on September 1, 2022. As a result, we can say that initially, more swaps were made by these derivatives and then they went downwards.  It’s possible that all of these things happened as a result of the volatility of the crypto market. There are many swappings that have come down as a result of all the tokens. By Rocketpool, we can see that swap transactions are on the rise in recent months. Perhaps this is because many users were attracted to Ethereum merge before its launch.

Observations

  • Among the 3 derivatives analyzed above, the Lido protocol was extensively used for staking. With Lido, Ethereum token holders can earn rewards for protecting the Ethereum network by staking Ethereum tokens. Majority of ETH holders, however, have difficulty staking their coins since it requires extensive technical knowledge. Due to these expertise features, it became very popular. 
  • The stakers at Rockepool suddenly increased on August 26,2022. There is a possibility that many stakers will stake through Rocketpool before Ethereum Merge is launched. With this Rocketpool, staking is also possible with just 0.01 ETH. Furthermore, stakers on Rocket Pool can freely dispose of the rETH they receive and use it elsewhere for lending and trading. 
  • Comparing Lido and Ankr’s ETH price with the other derivatives for the past 60 days, their ETH price has consistently been lower than the usual ETH price. It is always the case that Rocket pool’s ETH price is pegged to the price of the ETH token.
  • At first glance, we see that Ankr ETH is almost a -10% deviation from ETH price. As a result of the volatility of the crypto market, it is almost -4% less than the actual ETH price.
  • A correlation exists between LIDO and Ankr derivatives in terms of price deviation and volatility. Therefore, both are increasing simultaneously, and similarly, when rocketpool decreases according to ETH price, Ankr ETH also decreases. 
  • As we can see, Lido’s price has been the least volatile over time and was very close to the real Ethereum price.
  • The majority of swap volume comes from Lido Tokens. A second place goes to Rocketpool tokens. 
  • The number of Rocketpool swappers increased on September 8, 2022. It is possible that many users will swap tokens through Rocketpool before the Ethereum Merge launches as a result of the advantages that Rocketpool offers.  
  • Comparatively to the other derivatives, the Lido derivative performs the most swap transactions. Therefore, we can say that initially, more swaps were made by these derivatives, and then they declined.  There is a possibility that all of these things happened because of crypto market volatility.
  • During recent weeks (Sept 8th 2022) as we are almost closer to The Merge upgrade( Sept 15, 2022) , we have seen an increase in the total swap activity on these tokens.

Reference Query

SELECT 
	date_trunc(day, BLOCK_TIMESTAMP) as date,
 	case
        when CONTRACT_ADDRESS ='0xe95a203b1a91a908f9b9ce46459d101078c2c3cb' then 'Stkr'
        when CONTRACT_ADDRESS ='0xae78736cd615f374d3085123a210448e74fc6393' then 'Rocket Pool'
        when CONTRACT_ADDRESS ='0xae7ab96520de3a18e5e111b5eaab095312d7fe84' then 'Lido'
	end as provider,
 	sum(RAW_AMOUNT / 1e18 ) as staking_volume,
  	count(distinct ORIGIN_FROM_ADDRESS) as wallets,
  	count(tx_hash) as transactions
FROM ethereum.core.ez_token_transfers
WHERE CONTRACT_ADDRESS IN (
        '0xe95a203b1a91a908f9b9ce46459d101078c2c3cb',
        '0xae78736cd615f374d3085123a210448e74fc6393',
        '0xae7ab96520de3a18e5e111b5eaab095312d7fe84'
)
and from_address ='0x0000000000000000000000000000000000000000'
and BLOCK_TIMESTAMP::date >= CURRENT_DATE - {{days}}
GROUP BY date, CONTRACT_ADDRESS

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