The analytical firm Coin Metrics, announced that there are currently several ERC-20 tokens whose returns tend to closely follow the profits generated by ether (ETH), a native cryptocurrency of the Ethereum network.
In this regard, they highlight that ERC-20 tokens are used in different use cases with “market caps of billions of dollars traded on major centralized exchanges.”
The report from Coin Metrics shows the daily returns, between January 1 and December 6, 2021, for ETH and compares them with the main ERC-20 tokens in the market. Among them, points to metaverse tokens like The Sandbox (SAND) and Decentraland (MANA) and the cryptocurrency meme Shiba Inu (SHIB).
As can be seen in the graph, the three ERC-20s agree that they have constant buy-sell movements compared to ETH. This is interpreted by the report as a sign of larger movements with more regularity, both up and down.
The movements of SAND and MANA, to which the report refers, could be evidenced when both tokens hit a new all-time high (ATH), between 22 and 28 of last November, a fact reported by CriptoNoticias.
In the case of SAND, the increase was due to the rumor of the arrival of Adidas to The Sandbox, while the increase in the price of MANA from Decentraland, was driven after the sale of a virtual land for more than USD 2.5 millions.
DeFi tokens and their performance against ETH
The document also highlights that, although some ERC-20 tokens rose this year, when they were listed on ETH, something that does not happen with many of the DeFi tokensas they have underperformed ETH.
Most of the tokens, especially the DeFi tokens, have moved in stride with ETH. But there are some weaker relationships. As the narratives around the metaverse have accelerated following the renaming of Facebook to Meta, the metaverse tokens SAND and MANA have been less correlated with ETH, for example.
Coin Metrics Report, Performance Comparison Between Top ERC-20 Tokens.
The report shows the continuing evolution of Ethereum use cases and the potential benefits of that diversification. “Some tokens in Ethereum today seem to be collecting narratives that are less tied to ETH itself,” added Coin Metrics.