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Ethereum's mood swings 💹
Ethereum's weekly vibes? Scarce. Yearly feels? Plenty to go around. Remember the FTX hack? $4M just moved. Chile likes Worldcoin and Bitcoin might be our eco-hero.
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Supply dynamics in Ethereum are giving us some major mood swings.
One minute it's becoming scarcer (deflationary) - that's if you’re peeking at the weekly data.
The next, on the annual scale, Ethereum seems to be pumping out more than it's burning (inflationary).
Ethereum's Gas & Supply Tango
Last year Ethereum rolled out EIP-1559 and everyone was talking about its fee-burning feature.
With this move, gas prices got cozy with Ethereum's supply.
The higher the gas prices, the more ETH went up in smoke.
This was some big prep for Ethereum's transition from proof-of-work to proof-of-stake, which slashed the issuance of ETH by 90%. This had folks dubbing it as "ultrasound money". People are now rethinking that label.
Sending ETH around now feels like a steal at just $0.28 a pop.
Trading on Uniswap? That'll set you back a mere $2.76, which is peanuts compared to the $4.17 we saw just a month back. And we haven't seen such prices since FTX's mishap in 2022.
Why the drop? Chris Martin from Amberdata broke it down for us in three bits:
Ethereum 2.0: It's been a game-changer, making things cheaper and beefing up security.
Rise of Layer-2s: These scaling solutions are drawing away much of the action from the main chain.
Awaiting the Next Big Splash: With the crypto realm in a bit of a lull, many are on the sidelines, waiting for the next flashy headline.
Vitalik's Warning Bells 🛎️
Vitalik Buterin, the brainchild behind Ethereum, is sounding the alarm over DAOs (Decentralised Autonomous Organisations) holding too much sway in choosing node operators for liquidity staking pools.
In his latest blog post, Buterin shares his concerns that if a singular staking token gains too much control, it could lead to just one possibly vulnerable governance system overseeing a massive chunk of all Ethereum validators.
Using Lido as an example, Vitalik praises the protocol for its safeguards. Yet, he feels that one line of defense might not cut it:
“To the credit of protocols like Lido, they have implemented safeguards against this, but one layer of defense may not be enough.”
Buterin discusses Rocket Pool, where anyone can put on their node operator hat with an 8 Ether deposit - approximately a cool $13,406 at the time of the article.
But this model, according to Buterin, is not without its pitfalls:
“The Rocket Pool approach allows attackers to 51% attack the network, and force users to pay most of the costs,” he warns.
Vitalik’s proposed remedy is encouraging the crypto community to diversify and use multiple liquid staking providers. This would prevent any one provider from ballooning in size and potentially destabilising the system.
Ethereum Staking: The Basics 🏛️
Ethereum's staking doors are flung wide open. Since Ethereum’s Shanghai hardfork, everyone and their grandma wants a piece of the pie.
It's all about putting down ETH to validate the network, receiving rewards for your effort. This yield varies depending on the validator set, creating a staking market dance of supply and demand.
In the ideal world, you’d stake from home — dubbed "home staking." Picture this: a small, efficient PC running Ethereum software, and you're the master of your ETH domain. But, not everyone’s up for this cozy setup. Two crowds have emerged:
Tech-shy folks: They love Ethereum, but don't have the tech skills or time to DIY.
High rollers: Why lock up ETH for a mere 3%-6% yield when you can risk more for bigger rewards?
Enter third-party stakers, the new middlemen. They manage your stake, give you tokens in return, and take a cut of your rewards.
Lido: The Goliath of Staking 🌍
Lido has rocketed to the top, becoming the main player in third-party staking.
It's semi-decentralised, non-custodial, and governed by a DAO (Decentralised Autonomous Organisation).
The Cheers 🥂: Lido’s a success story with fantastic UX and business moves. Plus, it’s not just one entity — it boasts 38 operators!
The Jeers 😡: Critics argue Lido is a centralisation menace, holding too much power with one-third of all staked ETH under its belt. While it might have 38 operators, decisions often boil down to just two influential wallets. Lido is seen by some as taking advantage of a design flaw that undermines Ethereum’s sacred decentralisation.
Jenny Johnson, Franklin Templeton CEO
Tokenisation is “securitisation done on steroids"
Jenny Johnson believes that tokenisation, the process of converting asset ownership rights into digital tokens on a blockchain, is like "securitisation done on steroids."
She said at the CNBC's Delivering Alpha event.
In her talk, Johnson broke down tokenisation's unique selling points:
Payments, but Sleeker: Tokenisation makes transactions smooth.
Smart Contracts: They can be programmed right into the token, simplifying processes.
A Single Source of Truth: With its general ledger system, whoever holds the token holds all the rights to it.
Johnson brought up pop sensation Rihanna.
No, Rihanna's not into asset management (yet!).
Instead, earlier this year, RiRi released a hit song as an NFT, giving holders a slice of the streaming royalties. Johnson was all praises for the move, explaining that smart contracts in NFTs simplify the royalty payment process.
But it's not just the music industry that's catching the tokenisation wave. Athletes, too, are in a position to leverage this.
Johnson painted a picture where a sports superstar could tokenise a portion of their future revenue stream, selling tokens to their massive fanbase, potentially at a premium.
"Think [about] athletes are going to sign a big contract. They'll say to their fans 'I'm going to sell off tokens worth 10% of my future revenue stream. I'm going to sell 100,000 tokens, and boom, the fans are probably going to pay a premium for it. So it will be a way, and if you think about it, it's just securitisation done on steroids."
Chile embraces Worldcoin's eyeball scanning.
If you've been around a metro station in Santiago, you might've noticed folks lining up in front of these mysterious orbs.
Nope, they're not props from a sci-fi movie. They're Worldcoin's orbs, devices that scan your eyeballs and reward you with crypto.
So, why are people in Chile and other emerging economies lining up for these scans?
When Carlos Santibañez, a local from Llanquihue, got his eyes scanned in September, it was mostly out of curiosity. But since then, his wallet's grown by over $150, with the promise of more tokens on the horizon. As of now, an eyeball scan could land you 25 WLD tokens, or about $42.
Considering Chile's minimum wage is $512, earning 8% of that just by getting your eyes scanned? Many see it as a no-brainer.
Beyond Chile: Worldcoin's Global Gaze
It's not just Chile; countries with economies facing challenges, like Argentina and Kenya, have shown a keen interest in Worldcoin. With Argentina grappling with high inflation, there was reportedly a day in August where someone signed up every nine seconds. Meanwhile, in Kenya, where the monthly wage can be as low as $100, long lines and over 350,000 registrations were reported, though the government has since pumped the brakes over privacy concerns.
Chile, known for its economic freedom and growing tech industry, is also leading in AI within Latin America. With such an environment, it's no surprise that Worldcoin hasn’t faced major regulatory roadblocks there.
The approval of Bitcoin ETFs could bring regulatory certainty to the crypto industry, which is currently lacking consensus on the value of institutional participation👇🏻
Last year's infamous FTX exploit is back in the spotlight, as a significant chunk of the stolen Ether starts changing hands.
This comes after the catastrophic hack that happened just hours post the announcement of FTX's bankruptcy and the exit of its founder, Sam Bankman-Fried.
Fast forward to now
Early Saturday saw the movement of roughly 2,500 ether (ETH) – that's a cool $4 million – which had been stagnant since the FTX incident.
Blockchain enthusiasts noted this ether, held in a wallet linked to the FTX hack, making its first shift in nearly a year.
The distribution pattern? A bit eclectic.
The stash was split into two initially.
700 ETH made its way using the Thorchain Router.
1,200 ETH snaked its path through Railgun, a privacy tool.
A neat 550 ETH is now lounging in an intermediate wallet.
Spotlight on Railgun & Thorchain
If you're scratching your head about Railgun and Thorchain, here's a quick breakdown:
Railgun: A super-private wallet letting users both store tokens and access decentralised financial services like borrowing and lending. Shielded transactions mean the actual activity with these funds remains a mystery.
Thorchain: Acts as a bridge that enables users to swap tokens across diverse blockchains seamlessly.
While the activity on Saturday was intriguing, the primary wallet still holds a hefty 12,500 ETH.
With current valuations, that's approximately $21 million just sitting there.
Back to the FTX saga: New updates
The Department of Justice (DOJ) plans to call former FTX customers, investors, and employees to testify against crypto executive Sam Bankman-Fried in an upcoming trial.
The customers and investors can speak to their expectations of how FTX would handle their funds, while the cooperating witnesses can provide insight into their interactions with Bankman-Fried.
The DOJ intends to call both retail customers and institutional clients who transferred significant amounts of assets to FTX. The DOJ also identified three cooperating witnesses who have pleaded guilty to charges tied to the exchange. One customer witness from Ukraine may testify via video conference due to logistical challenges.
Sam Bankman-Fried cannot blame FTX's lawyers for its collapse or operations in his opening statements, according to a federal judge overseeing his case. However, Bankman-Fried's defense team can still try to raise the "advice-of-counsel" defense later in the trial if they notify the judge and the Department of Justice first.
The defense team had previously announced their intention to argue that both in-house FTX attorneys and lawyers from Fenwick & West were involved in certain decisions made by the company.
Earth’s thermostat is skyrocketing. Flowers are blooming in Antarctica and we are doomed.
The UN's solution to the increasing warmth? Reduce methane emissions asap. And, in an unforeseen plot twist, Bitcoin mining might just be our eco-knight in shining armor.
Rethinking the Bitcoin Blame Game
Turns out, contrary to popular belief, Bitcoin mining might actually be a prime player in massive methane reduction.
The narrative? Cryptocurrency mining can, quite literally, turn trash (methane emissions from landfills) into digital treasure (Bitcoin).
Why is methane in the spotlight? It's 84x more harmful than CO2 over two decades and is rising at an alarming rate.
The ideal way to combat this? Transform this methane into electricity. But here’s the challenge: many landfills can’t sell back this green energy to the grid due to prohibitive costs or government policies.
Enter Bitcoin mining companies with their insatiable thirst for electricity. Their notorious energy consumption, once a point of contention for environmentalists, might actually make them the ideal on-site customers for these landfills.
Bitcoin mining can turn these emission-filled landfills into profitable ventures.
Debunking Bitcoin's 'Dirty' Reputation
While Bitcoin's energy consumption is often demonised, a closer inspection might suggest a different narrative.
A dive into the numbers reveals that many Bitcoin mining companies are primarily, if not exclusively, using renewable energy. Claims about Bitcoin being a fossil fuel guzzler might have been exaggerated or outdated.
Moreover, there's a powerful financial incentive behind Bitcoin's potential eco-advantage.
ESG (Environmental, Social, and Governance) funds, which prioritise sustainable and ethical practices, are booming. And the idea that Bitcoin could be a green player may soon make it an appealing asset in the ESG world.
TTD Surfer 🏄
Do Kwon, the founder of Terra, has admitted to faking trading volume, according to court documents from the US SEC.
Christen Ager-Hanssen, former CEO of nChain, has departed the company after claiming to no longer believe that Craig Wright is the true identity behind Bitcoin's creator, Satoshi Nakamoto.
BlockFi has announced that it has taken a major step towards emerging from bankruptcy.
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The Token Dispatch is a daily newsletter that takes you on a 4-5 minute drive through the wild west of the Crypto World. Daily in your email inbox @13:00 GMT. Almost always.