Themes, statistics, and analysis of the third quarter of 2023
This past quarter has been relatively subdued compared to the first six months of 2023. Fortunately, Q3 did not feature any major bank failures or stablecoins de-pegging. However, the malaise across the DeFi, NFT, and GameFi sectors largely continued, with a few bright spots standing out from many projects experiencing dwindling volumes and activity. One promising trend was the re-emergence of SocialFi with Friend.tech and similar applications seeing meaningful adoption throughout late Q3. Additionally, the industry inched closer to spot Bitcoin ETFs launching in the U.S. but they remained elusive in Q3.
These green shoots aside, the overall sentiment in the industry remains tepid. In some sense, Q3 has resembled late 2019 in that a Bitcoin halving is on the horizon and the industry has seen a reasonable price appreciation throughout the beginning of the year. Additionally, trading volumes and overall volatility have subsided, which has been driven by user activity and interest resuming its declining trend. Similarly, venture funding and capital inflows remain muted as many early-stage projects are seeing their runways dwindle while new funding is becoming increasingly difficult to attract. More broadly, the macro environment remains less accommodative with central banks continuing to raise interest rates and geopolitical tensions continuing to rise across the globe. The outlook for the remainder of 2023 is filled with uncertainty but overall optimism from true believers across the industry remains unwavering.
Despite the uncertain macro outlook, WOO Network remains confident in its vision and mission. It demonstrated this conviction by successfully negotiating the repurchase of shares and tokens from the estate of Three Arrows Capital (“3AC”). This proactive initiative will help alleviate uncertainty from WOO Network’s community and investors about the future of the WOO tokens held in 3AC’s estate.
This quarter was filled with changing dynamics for WOO X, beginning with a staking program revamp in July and followed by the launch of the Designated Market Maker (DMM) program. Together, these initiatives resulted in introducing taker fees on all perp markets, refining staking requirements, and onboarding nearly 10 new liquidity providers. By the end of August, over 50% of the total maker volume across perp markets was filled by DMM participants. This has resulted in a more diverse ecosystem of market makers, which addresses concerns of reliance on Kronos Research previously raised by several members of the community. This business change was made possible by our tech and product teams shipping many improvements on WOO X’s trading infrastructure to help reduce latency and optimize performance for the DMM participants.
Above: WOO X maker volume share shows steady increase in volume from new market makers on the platform
Another major product launched in Q3 was WOO X Earn, with simple lending vaults as its first release. Shortly after launch, WOO X announced it would soon support tokenized treasury bills via OpenTrade, a new partnership built on Circle Research’s Perimeter Protocol. More innovative earn products are scheduled to come to WOO X in Q4.
The rate of listings increased as 22 new futures markets and 6 spot markets went live on WOO X. Over that same stretch, 7 spot markets and 4 futures markets were delisted as WOO X continued to improve liquidity across all trading pairs.
Q3 witnessed back-to-back deployments of WOOFi Swap on Linea and Base, an enhanced UI with an improved user experience, as well as an integration with 1inch that resulted in thousands of newly supported assets. It’s safe to say WOOFi now occupies an integral position in the cross-chain landscape – having executed 3.4M cross-chain swaps, accounting for just under 5% of all LayerZero transactions to date.
In addition to cross-chain swaps, simple swaps became the driving generator of revenue this quarter with 47% of all volume originating directly from WOOFi’s front-end, followed by 1inch which accounts for 30.5%, then Paraswap with 11.8%. The best-performing ecosystems were Avalanche and Arbitrum, which together constitute 56.7% of all WOOFi trading volume, with AVAX - USDC and ARB - USDT being the two most popular pairs. This quarter alone, WOOFi paid out a total of ~232,000 USDC in real yield between more than 3,650 unique wallets staking the WOO token.
Above: WOOFi Swap volume from July 2023 to September 2023
Propelling this revenue was a consistent source of traffic deriving from campaigns, two of which WOOFi launched in zkSync Era, netting more than 90,000 total participants. Beyond this, new brokers Unizen and LootBot integrated with WOOFi’s liquidity, exposing us to greater flow, and a strategic alliance was forged with Burrito Wallet – a well-established subsidiary of Bithumb – putting WOOFi firmly on the map of South Korean traders for the first time. Another partnership of a different kind also came to fruition with the esteemed hardware wallet brand Keystone as we co-marketed the release of the WOOFi Keystone 3.
Lastly, and certainly not least, came the birth of WOOFi Pro – a gasless CLOB perpetual futures DEX slated to go live on mainnet in early November with omnichain deposits, mobile support, and revenue share. Since its deployment on Arbitrum Goerli, more than 18,000 registered users have already shown up, moving a combined total volume of $1B in less than three weeks. This product sprang to life just weeks before we took our short-term incentive proposal to the Arbitrum DAO seeking a grant of 1M ARB tokens – the results of which will be revealed on the 13th of October.
Finally, if you are interested in observing data from WOOFi more frequently, we’d like to call attention to the recently updated WOOFi Analytics Dashboard on Dune, managed by community member @thethreewords.
Above WOOFi Staking WOO buyback
The WOO token
In total, the quarter ended with 1.755b WOO tokens in circulation, representing 78% of the total supply. The deployment of WOOFi Stake on Ethereum plus a few other factors contributed to a growing concentration of WOO sitting on L1 Ethereum. Currently, Ethereum holds 83% of all circulating WOO, with BSC holding 9.3%, and Arbitrum at 3.2%. With bridge exploits so prevalent, WOO Network is keen to minimize the amount of WOO exposed to third-party bridges.
The amount of unique WOO-holding addresses grew from 75k to 90k. Significant increases were seen on Polygon and Optimism, but BSC and Ethereum still retain the most with 23% and 18% market share respectively.
There are roughly 286m WOO staked on WOO X, with another 148m staked on WOOFi. Cumulatively, this number comprises 24.5% of the circulating supply. Combined with the 546m ecosystem rewards vesting as part of the January update, over 56.3% of the circulating supply is currently locked in staking or vesting. Furthermore, the vesting ecosystem reward tokens will return to cold storage as they vest and may even be locked up again in the future. Fans of revenue share got a boost with the announcement that the upcoming EVM WOOFi Pro would also support fee sharing with WOOFi Stake.
Community and Partners
Q3 was an exciting quarter for WOO X’s community and partner growth. WOO’s community empowerment program, WOO Force, continues to grow with well over 100 active members – bolstered by support from key community members. WOO Force supports the WOO ecosystem by creating high-quality content playing a pivotal role in creating new partnerships and increasing WOO’s presence offline and on social media.
With an emphasis on growth for WOO X this quarter, partnerships excelled, with now over 50 active partnerships with key content creators and well-known traders in the crypto space. WOO X continues to focus on working with high-quality individuals to increase awareness about WOO X and introduce more traders to a better trading experience. The success of these new partners can not be overstated, often being responsible for around 50% of WOO X’s daily volumes from retail users, as well as driving up WOO staking totals.
WOO ended Q3 with a heavy dose of offline meetups, starting in early September by hosting a side event in our Warsaw office, which was attended by over 200 partners and ETH Warsaw participants. Next, the team was off to Seoul to co-host an event with Bithumb and Burrito Wallet, followed by supporting the Avalanche Hacker House as a sponsor. Finally, they finished up by hosting the marquee side event of Token2049 in Singapore, a panel discussion, and a drinks reception with partners LayerZero, Pudgy Penguins, and ODaily.
The talent and acquisition team had a retooling quarter as they recruited 20 new members, but also parted ways with around the same amount. The majority of new acquisitions joined the tech and listing departments, while the departures were mostly business and support staff for regions including Turkey and Ukraine, where operations have been scaled back due to market and external conditions. The total workforce of WOO is around 170 employees, with an ambition to grow further in Q4 as we seek to hire more specialists in listings, business development, branding and PR, legal, customer success, engineering, and design.
As for expansion, huge strides have been made in Asia as we integrated with South Korea’s travel compliance tool named CODE. This milestone saw WOO products become available to Korean users for the very first time, bringing us closer to becoming fully compliant in this key region that brims with high-volume traders.
As a result of our efforts, mainstream financial and crypto-centric media outlets have covered us organically both locally and internationally. Bloomberg covered insights from our VP of Ecosystem, Ben Yorke, on the surge in interest in trading bots, emphasizing their role in enhancing accessibility to advanced DEX trading for retail crypto users. BeInCrypto also covered the launch of our Innovation Hub in Poland, emphasizing our pivotal role in identifying and supporting promising blockchain industry specialists, startups, and communities in the European region. Moreover, The Block published an exclusive report detailing our plan to offer US T-bill access to WOO X customers in Asia via our partnership with OpenTrade, with a successful launch in Korea, ensuring compliance with South Korea's CODE regulations.
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