2024/01/25 Penta Ten-Dimensioanl Score
Project Name: Shrapnel
Token: SHRAP
Current Price: $0.2409
6-Month Target Price: Currently unavailable, pending internal test data of Operator NFT holders on January 26, 2024
Upside Potential: N/A
Penta 10-Dimension Score: 80/100
Data as of: January 25, 2024
Research Summary:
DeFi Lending Regains Share Post-FTX Collapse. The crisis of confidence in centralized exchanges following the FTX implosion has accelerated the rapid development of Decentralized Finance (DeFi). The DeFi ecosystem now encompasses various on-chain financial services including currency issuance, trading, lending, asset transactions, and investment financing. DeFi lending, pivotal in the ecosystem, addresses user needs for collateralized leverage, passive income, and token incentives. DeFi lending saw rapid growth in mid-2020, peaking at $90 billion at the end of 2021. Although it experienced a decline due to the overall market downturn and several platform security incidents, it maintained a 30% share in the DeFi space and started regaining momentum from mid-2022. As per the latest data from DefiLlama, as of January 24, 2024, the total TVL of DeFi lending protocols is $21 billion, accounting for 36% of the $58 billion TVL in the DeFi space, second only to the liquidity staking track at 58%. The top three in the DeFi lending track - Aave, JustLend, and Compound - have TVLs of $6.7 billion, $6 billion, and $2.1 billion, respectively, holding a 68% market share. Aave introduced the peer-to-pool model, controlling interest rates based on supply and demand, allowing users to lend, borrow, and earn interest on crypto assets without intermediaries.
Mitigating Oracle Vulnerabilities, Point-to-Pool Lending Increases Capital Efficiency for Long Tail Assets. Traditional oracle protocols, reliant on external data for asset pricing, are susceptible to short-term manipulation, exemplified by the substantial liquidation event in Compound (around $90 million). To address oracle vulnerabilities, some protocols in the DeFi lending space have innovatively proposed oracle-less solutions, enhancing protocol security, mitigating price manipulation risks, and saving on data call costs. These solutions are mainly divided into peer-to-peer and point-to-pool models. Peer-to-peer lending allows borrowers and lenders to establish lending agreements directly on the blockchain, but it has drawbacks like high default or fraud risks and low liquidity. Point-to-pool lending, through streamlined processes on lending platforms, is more user-friendly, has higher liquidity, and offers more flexible loan terms. Ajna, utilizing the point-to-pool lending model, creates various currency pair lending pools, improving capital rates for long-tail assets and even NFTs.
Former MakerDAO Core Team Leads Ajna's New Narrative in Lending. Ajna's co-founders, Gregory Di Prisco and Joseph Quintilian, previously held positions as Business Development Head and Trading Head at MakerDAO, respectively. Bartek Kiepuszewsk, a blockchain architect from MakerDAO, serves as an advisor to the team. Since its launch in November 2019, MakerDAO has evolved into a leader in the DeFi lending space and the largest decentralized stablecoin protocol. The Ajna team's experience in market expansion, technical development, risk management, and product design contributes to building a strong competitive advantage in the rapidly developing DeFi lending market.
Valuation and Target Price: Although Ajna's TVL just crossed the $10 million threshold, the platform saw a tenfold increase in just thirteen trading days, indicating immense growth potential. Our research also shows that Aave's TVL soared from $58 million to $1.35 billion in six months post-launch. Considering Ajna's approach to mitigating oracle vulnerabilities in the point-to-pool lending market and its experienced management team, we believe Ajna could capture 10% of Aave and Compound's market share within six months, corresponding to a predicted TVL scale of $880 million and an AJNA token price of $23.5.
Key Risks: market competition, lack of user education, and underperformance in market expansion
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