Joint Statement from Andromeda and Shade Regarding ANDR Price Action
Over the past 14 weeks, the ANDR price has depreciated steadily and significantly in a manner that is not common. As a result, the Andromeda contributors took a well-rounded approach to analyzing tokenomics data, claim rates for all relevant parties/actions, CEX activity, as well as available on-chain data to best identify the potential sources of persistent sell pressure. Along with the help of contributors to Shade Protocol, the goal was to identify the root causes of price depreciation best while preserving relationships and minimizing second- and third-order effects.
Legend:
$ANDR = @AndromedaProt,
$SHD = @Shade_Protocol
Criticality of Timing and a Lack of Liquidity Distribution.
ShadeSwap was Andromeda's first listing, followed by subsequent listings on four other DEX’s and MEXC in less than 90 days.
From the above graph, you can see the tokens that ANDR is paired with and ANDR's daily percent change most closely mirrors that of SHD. At the time of the first large ANDR price decline, the majority of the on-chain liquidity for ANDR was in the ANDR/SHD liquidity pool; at the same time, the majority of on-chain liquidity for SHD was in ANDR/SHD, stkdSCRT/SHD, and SILK/SHD. It appears the decline of the SHD token price, or its price correlation, had a significant impact on the dollar-value pricing of the ANDR token relative to other volatile tokens with which ANDR was paired on DEXs.
As tokens and/or any of its price correlates decreased relative to ANDR through sell pressure in their respective LP with ANDR, arbitrage bots or individuals could potentially have sold ANDR for other assets to balance the LP (stablecoins are most commonly paired asset class for ANDR), creating sell pressure for the ANDR token. Subsequently, the ANDR received from the initial token sell pressure is likely then sold on MEXC and/or GATE. The working hypothesis is that this significant sell pressure from paired and/or correlated assets, mismatch of timing between interdex arbitrage and sell pressure on CEXs, combined with low liquidity on MEXC/Gate, created continued downward pressure on the ANDR token that followed the gradual sell-off of paired assets and/or its price correlates.
Action: Reduce Liquidity and SHD/ANDR influence
While the Andromeda contributors and partners continue to review ANDR activity on Secret (Shade), Terra (Ura), Archway (Astrovault), Kujira(Fin), Injective (Helix, Mito), Andromeda and Shade Protocol will reduce the liquidity-matched in the SHD <> ANDR LP on ShadeSwap by our respective protocols. This reduction in SHD <> ANDR liquidity on ShadeSwap will align its TVL with other CPMM pools on DEXs that support ANDR.
The purpose of this liquidity reduction is to reduce price correlation to any one token, or a correlated subset of related tokens, via relatively outsized TVL available to trade while further investigating the on-chain activity of ANDR. The Andromeda contributors and our partners are acting in an imperfect information environment with the best possible information available. As actionable intelligence and information emerge, we will continue to inform the community with additional steps.
Thank you for your patience as we continue to work through the detailed analysis in search of clarity.
- Andromeda and Shade
Disclaimer
The material provided herein is for informational purposes only and should not be construed as business, financial, investment, trading, legal, tax, regulatory, or accounting advice. Andromeda has no control over and is not responsible for trading and investment activity on any exchange or otherwise involving third-party sellers.
Andromeda and its partners are new and experimental technologies and any information provided by Andromeda is subject to and limited by the Andromeda disclaimers, which you should review before interacting with the protocol.