Crypto winter is over, and the pace of innovation in the blockchain space is accelerating. ICOs are out, and Decentralized Finance (DeFi) is in.
DeFi has grown exponentially over the last year, with many innovative financial products brought to market. One of the most exciting products is the Uniswap protocol.
Uniswap is a decentralized exchange that facilitates the exchange of tokens on the Ethereum blockchain. It does away with the concept of order books, replacing them with an automated market maker mechanism that incentivizes liquidity providers.
For more details, check out Cyrus Younessi’s excellent article on the topic.
Uniswap has been experiencing explosive growth. Source: defipulse.com
At the Fluidity Summit in NYC this past May 9, the Uniswap team announced limited edition, dynamically priced socks. These socks are represented on the Ethereum blockchain by redeemable ERC-20 tokens (SOCKS). Only 500 SOCKS tokens will ever exist.
Bonding curve governing SOCKS price. Source (Uniswap Twitter)
Every SOCKS sold increases the cost of the next, but they can be sold back into the liquidity pool at any time. Thus, a nascent marketplace for SOCKS has sprung up.
unisocks.exchange is changing the meaning of the term “wash trading”. Source(unisock.exchange)
SOCKS may be tongue-in-cheek, but it’s an early example of the use of bonding curves as a price discovery mechanism for physical goods. Any limited edition item (from sneakers to concert tickets) could be priced this way.
At FRST, we focus on personifying blockchain wallets and generating real-time trading signals off of these personas for high-frequency traders, hedge funds, prop trading shops and crypto researchers.
Trading activity on DEXs like Uniswap is visible on-chain, providing granular economic data ripe for analysis. Right up our alley!
We broke down the most performant sock traders by the following categories:
We looked at all wallets that have purchased SOCKS tokens from the Unisocks.Exchange and sold the same amount back to the exchange at any point in time. We wanted to analyze those wallets that have no current position in SOCKS and how well they performed. Our analysis found that there were some very performant SOCKS traders and others that did not trade so well.
The image below shows 44 wallet addresses that have both bought and sold SOCKS tokens since the launch:
Our Best-Performing SOCK Traders: