Ethereum ETFs are coming 💸

Hi Degens, 

Long time no see. Last Thursday feels like an eternity ago.

Well! We are back once again with another spicy issue of the Web3 Creator.

Bitcoin is being a couch potato again at $66K. That’s no problem. We have enough time and space to look at the larger crypto market again. 😂

Without further ado, let's dive in.

Ethereum community in two minds on changes to monetary policy 💸

What's happening?

• Ethereum researchers are proposing a change to Ethereum's issuance policy to address concerns about a high staking ratio.

• Currently, 26% of the total ETH supply (around 31 million ETH) is staked. This number is expected to rise in the coming years due to factors like rising ETH prices and new staking options.

Why is a high staking ratio a problem?

• Researchers believe a very high staking ratio could lead to several negative consequences:

  1. Reduced real staking yields for everyone.

  2. Ethereum becoming "expensive" money due to inflation.

  3. Ethereum losing its position as the default currency on the Ethereum network.

  4. Risk of centralization due to dominant staking providers.

The proposed solution

• The researchers propose a recalibration of Ethereum's issuance curve to target a balanced staking ratio rather than a fixed issuance amount.

• This would involve a new formula that reduces staking rewards as the staking ratio increases.

Community reaction

• The Ethereum community has largely met the proposal with negativity.

• Many believe changing the issuance curve would:

  1. Erode user and investor confidence.

  2. Distance Ethereum from its "hard money" characteristics.

  3. Disrupt existing expectations around monetary policy.

  4. Potentially strengthen the SEC's case for ETH as a security.

The debate continues

While some community members advocate for open discussion, the current sentiment leans towards rejecting the proposal. Meanwhile, Vitalik has been feverishly posting on X about the next steps in the ‘Purge’ stage of the Ethereum scalability roadmap. 

Ethena Labs Airdrop x MakerDAO Controversy 

Ethena Labs in the spotlight

• Ethena Labs is a crypto project making waves with its synthetic dollar, USDe, and its recently launched ENA governance token.

• Delphi Labs, a crypto investment firm, predicts Ethena Labs will become the highest revenue-generating project in crypto due to USDe's competitive yield.

USDe: A high-yielding stablecoin?

• USDe is a synthetic dollar pegged to the US dollar.

• Ethena Labs claims USDe offers the highest dollar yield in crypto at scale, currently at 35.4% APY.

• USDe is currently the seventh-largest stablecoin by market cap, but Delphi Labs believes it can become the third-largest by 2024.

Ethena Airdrop and community debate

• Ethena Labs launched a successful airdrop of ENA tokens on April 2, distributing $450 million worth of tokens.

• The ENA token price surged after the airdrop, reaching an all-time high of $1.297.

However, USDe's high-yield mechanism has sparked controversy in the crypto community.

• Some, including MakerDAO co-founder Marc Zeller, question the sustainability of USDe's yield and its potential risk to stablecoin pegs.

• DeFi experts like Andre Cronje raised concerns about USDe's delta hedging method and its ability to withstand negative market conditions.

• Ethena Labs founder Guy Young acknowledged the concerns and promised to address them later.

Meanwhile, a Twitter user detailed MakerDAO’s attempt to print $1 billion DAI out of thin air to shill Ethena’s USDe and capitalize on the gains. 

US Government shifts $2 billion in Silk Road Bitcoin 💰

Seized dunds on the move

• On April 2nd, a wallet associated with the US government transferred a significant amount of Bitcoin – 30,175 bitcoins, to be exact.

• This movement, valued at roughly $2 billion based on current prices, marks the first major shift of seized Silk Road bitcoin since the government sold a portion of its holdings in March 2023.

Transaction breakdown

• According to blockchain analysis firm Arkham Intelligence, the transferred bitcoins were divided into two separate transactions.

• Roughly 2,000 bitcoins were sent to a wallet believed to belong to cryptocurrency exchange Coinbase.

• The remaining 28,175 bitcoins were transferred to another government-linked wallet.

Market reaction

• The news triggered a temporary decline in the bitcoin price. Following the transfer, bitcoin dipped below $65,000 before recovering slightly.

• As of today, April 4th, bitcoin is trading at $65,200, reflecting a 4.7% decrease over the past 24 hours.

Uncertainties remain

• The purpose behind the government's decision to move these funds remains unclear.

• It's possible the bitcoins sent to Coinbase are intended for sale, though no official announcement has been made.

• The transfer of the remaining bitcoins to another government wallet suggests they may be held for future use or potential sales.

News from the decentralized world 🗺️

• Ripple to launch a stablecoin: Ripple, a fintech firm, announced it will launch a USD-backed stablecoin on Ethereum and XRP Ledger blockchains later this year. The stablecoin aims to capitalize on the rapidly growing stablecoin market. (Link)

• Are ETH ETFs getting approved?: The SEC is requesting public comment on three proposed Ethereum ETFs from Grayscale, Fidelity, and Bitwise. This is a standard step before the SEC decides on their approval. (Link)

• Crypto liquidity Firm GSR Markets gets MPI license: Crypto firm GSR Markets was granted a full MPI license by Singapore's MAS, allowing them to offer a wider range of payment services compared to standard payment firms. This is reportedly the first such license for a crypto firm in Singapore. (Link)

• Morgan Stanley and UBS in the ETF race?: Two major asset management giants, MORGAN STANLEY, with $5.1 trillion in assets and UBS, with $3.4 trillion, are racing to integrate Bitcoin ETFs into their platforms within the next 10 days. (Link)

Quick glossary 💡

MPI License

An MPI license, which stands for Major Payment Institution License, is issued by the Monetary Authority of Singapore (MAS) to financial institutions.

It allows them to conduct a wider range of payment services compared to standard payment licenses. 

More news you can use 🌐

• Will BlackRock flip Grayscale amidst incessant GBTC outflows on the ETF scene? 

• How are Ordinals driving the renaissance in Bitcoin activity? 

• Why are crypto investors fleeing KuCoin?

Tweet of the week 🐤

@pete_rizzo_ posts the best historical facts around Bitcoin and crypto. 

Meme of the week 🤡

Are you holding the Bitcoin dip? 

Anti-degen of the week 👿

Peter Schiff doesn’t learn his lessons. Still busy attempting to shill Bitcoiners with gold and dollars. 

That’s a wrap. See you next week! 👋