BlackRock’s Bitcoin ETF Bet
In This Issue
- Rebecca shares her thoughts on the Fed pausing hikes, BlockRock filing for a spot Bitcoin ETF, Ethereum’s new roadmap, Uniswap v4 & a16z announcing their first international office.
- Altcoin alpha by David.
- This week’s airdrop by Jesse.
- Sam has an NFT report on whether or not Bitcoin Ordinals are taking over NFTs.
Premium Subscription highlights this week:
- Altcoin Alpha: This week Jeese dives deep into Open Campus Network. A project bringing education on the Blockchain.
- DeFi Tutorial: Learn how to earn Up to 12.75% vAPR with OETH on Convex.
The News Now
⏸ Did The Fed Just Pause Hikes?
US inflation has fallen from 4.9% to 4%. That’s WAY lower than expected. So, the Fed chose not to increase interest rates in what would have been the 11th consecutive time. OMG…is this it…did the Fed just pause? Not quite. Powell is promising more pain ahead in a hawkish “skip” rather than a dovish “pause.” The Fed still has two more hikes planned for later in the year. And is using the next 6 weeks to monitor the impacts of the previous 10 hikes.
The dot plot is now suggesting rates will be at 5.6% by the end of 2023, up from 5-5.25% right now. With rate cuts nowhere in sight for this year, stocks and crypto dropped. But then again, Fed Chair Jerome Powell also said in his speech “I shouldn’t call this a skip.” Are you convinced? I guess we’ll have to wait to find out.
Janet Yellen didn’t help matters. She put her foot in it this week in a discussion about de-dollarization. She expects to see a gradual decline in the dollar as a percentage of global reserves. Oops! But ultimately, she still believes the dollar will remain dominant due to a lack of alternative solutions. *cough* Bitcoin *cough*
👀 BlackRock Files For Spot Bitcoin ETF
Now the big boys come into the market. Last week, the US SEC sued Binance and Coinbase. This week, BlackRock has filed an application with the US SEC for a spot Bitcoin ETF. It all makes sense now. Crypto is bad when we buy it, but it’s good when they want it. Soros Fund Management even said last week that crypto is due a TradFi takeover. The timing is uncanny.
Whilst the US already has several Bitcoin Futures ETFs and Grayscale’s Bitcoin Trust (GBTC), it’s yet to see a spot Bitcoin ETF approved. There is a lot of confusion about whether this is an ETF or a trust, for this reason. It’s called a trust, the iShares Bitcoin Trust. But unlike GBTC, BlackRock has the intention of including a redemption scheme. Either way, it doesn’t change the magnitude of the story. It will trade on the Nasdaq stock exchange and the assets are to “consist primarily of bitcoin held by a custodian on behalf of the Trust.” The custodian will be Coinbase.
BlackRock is the world’s largest asset manager with over $10 trillion in assets under management. Not to mention its political power—they basically run the world. Where all the others have failed, BlackRock can succeed. Whilst the application still needs to be approved, it’s more likely to be when, not if. This is bullish for Bitcoin’s price but isn’t bullish on Bitcoin’s overall goal. Having said that, BlackRock buying Bitcoin has sure as hell gotta be bullish on Bitcoin’s ESG rating though. Is this how the Fed ends up buying Bitcoin? Watch this space.
😬 Ethereum Will Fail Without These 3 Things—New Roadmap Released
The Merge is done and dusted. Ethereum is onto its next phase. But the stakes are much higher now. Vitalik Buterin has outlined Ethereum’s new roadmap. If it fails, it’s game over. Vitalik aims to bypass the blockchain trilemma and have ALL 3 sides of the triangle.
ETH’s survival rests on the success of these three technical transitions:
1. L2 Scaling
Rollups are the future of blockchain scalability. They process transactions off-chain, then batch them together to submit on-chain in one go. Like Arbitrum. It’s WAY cheaper doing it like this.
An Ethereum transaction costs:
- ~$4 right now
- ~$300+ at peak times
- ~$0.25 using rollups
The numbers speak for themselves.
2. Secure Wallets
Centralized exchanges have left investors rekt for days. Whether it’s because of bad actors or bad regulators. If dApps don’t step up to the plate, investors will be backed into a corner. Vitalik believes it’s crucial for users to move over to smart contracts wallets to keep their crypto safe. Without safety, trust is gone.
3. Privacy
A public blockchain is an open spreadsheet. It’s open for everyone to see but locked so no one can change it. Vitalik is not down with that much privacy sacrifice. He’s already expressed the need for stealth addresses to tackle this issue. Not everyone wants their transactions broadcast like that. He thinks users will move into centralized solutions to hide their data.
Time will tell if the ETH community decides to accept this mission.
📝 Uniswap Unveils v4 Draft Code
Uniswap is getting a major upgrade. The team has published the draft code for its proposed v4 for users to inspect, interrogate, and iterate.
It’s going to change the DEX game, here’s why:
1. Hooks
Hooks are a new type of smart contract that will bring endless possibilities to the market maker. Users will be able to customize liquidity pools (LP). Hooks contracts will allow users to create custom actions to execute:
- before and after a swap
- before and after an LP position is changed
An example of a hook would be automatic dollar-cost average buys. Sign me up!
2. Singleton
All LPs will live in one smart contract. This single smart contract solution will make users want to mingle because of this one thing—cheaper gas fees. Uniswap has forecast it will reduce the cost of pool creation by a whopping 99%.
3. Flash Accounting
A technical detail that essentially makes Uniswap a more efficient protocol. Rather than token transfers happening in and out of pools after every swap, transfers will only happen now on net balances.
4. Native ETH
Say goodbye to wrapped ETH. Native tokens will be supported inside v4 LPs. That’s even more savings on gas fees. Hurrah!
🇬🇧 A16z Announces First International Office
The US crypto crackdown has sparked an exodus. But crypto VC firm, Andreessen Horowitz, is using this time to expand. A16z is hedging its bets by announcing plans to open its first international office later this year in…drumroll please…the UK.
With the SECs lawsuits against Binance and Coinbase, A16z believes the UK can indeed establish itself as a crypto hub—a vision PM Rishi Sunak keeps babbling about. The proof will be in the legislation. But fingers crossed A16z’s presence will help steer the ship in the right direction.
A16z also comes with plans to educate Brits about crypto too. They will be teaming up with UK universities to bring its stateside Crypto School accelerator program across the pond in 2024. A16z knows if it wants the best crypto entrepreneurs, it will need to nurture them as newbies.
Altcoin Alpha by David
Existing Projects / Tokens
- Frax Finance [FXS] is building their own L2 – called FraxChain – which is slated for an end of year release. That’s according to Sam Kazemian, the protocol’s founder, in a YouTube interview this week. Frax Finance is an Ethereum-based, fractional-algorithmic stablecoin system. FXS is the governance token.
- GMD Protocol [GMD] has announced a new launchpad program, which changes up their project incubation process, as well as offers a ton of new incentives for GMD stakers. GMD Protocol is a yield optimizing platform on Arbitrum.
- Level Finance [LVL] launched on Arbitrum this week. The protocol is an omnichain perpetual DEX. Staking and other incentives are slated for July.
- Libra Finance [LBR] is preparing for a V2 launch. Libra Finance is a stablecoin protocol (eUSD) backed by ETH liquid staking derivatives (LSDs). eUSD is interest bearing, currently paying 8.64%. Developers say V2 will allow holders to spend eUSD while still maintaining its yield.
- Polygon [MATIC] Labs has issued a conceptual framework for Polygon 2.0: The Value Layer of the Internet. Polygon 2.0 will be a network of L2s that developers can infinitely scale on the back-end, but for users on the front end, it’s one unified system.
New Projects / Tokens
- Vela Exchange’s [VELA] official launch is set for June 26th. Vela Exchange is the much anticipated leverage derivatives DEX on Arbitrum. Traders have access to derivative cryptos, FOREX, stocks, and metals. Vela Exchange has been in beta, but that officially ends in 10 days. We discussed this project last month and have been keeping an eye on it.
- ZeroLiquid [ZERO] is transitioning from a closed to open public testnet right now. Mainnet is scheduled for July. ZeroLiquid is an Ethereum-based protocol that allows users to receive self-repaying loans, at 0% interest, with no risk of liquidation, on their ETH LSDs.
Airdrop by Jesse
Archway is an incentivized L1 blockchain that allows developers to capture the value their dApps create to enable sustainable economic models. Archway was built using the Cosmos SDK to enable a fast and reliable way for developers to get paid for their work.
Developers can configure three earning sources, incentivizing long-term sustainability and growth. With Cosmos being an interoperable network, this will allow Archway to expand its model to any blockchain.
Archway has begun its First Airdrop Campaign! If you’re a Cosmos user then you could be in for a nice surprise. Archway is airdropping a total of 35,753,330 ARCH to various Cosmos ecosystem participants. Users who staked at least 25 ATOM, bridged more than $5,000 worth of assets in a single transaction through Axelar, deployed a contract on Terra Classic, or used the Constantine-2 & Torii testnets before January 16th, 2023 are eligible to claim free ARCH tokens.
For any users in restricted countries. You’ll need to use your VPN to Claim this Airdrop.
Are Bitcoin Ordinals Taking Over NFTs by Sam
The NFT space shifts quickly and right now all the energy is flowing towards Bitcoin Ordinals. Just to recap, Ordinals are information attached permanently on-chain to individual sats (1 BTC is made up of 100,000,000 satoshis), creating unique digital artifacts on the Bitcoin blockchain.
They’re similar to NFTs except that because they’re on-chain (regular NFTs are usually an on-chain pointer to off-chain data), it’s a cleaner, more self-contained and fully decentralized system, and also, Ordinals are on the most valuable and resilient blockchain.
The Ordinals protocol was developed by Casey Rodarmor, who created the first inscription (inscribing is the preferred term for adding data to sats) in December 2022, and there are now approaching 12 million inscriptions.
Low Inscriptions or Rare Sats?
Figuring out which Ordinals are valuable, there are the usual factors: who is the artist or creator, is there a community of collectors, or even just a sense of FOMO? Basically, is there demand for something scarce?
But with Ordinals, there are two other, related ideas: inscription numbers and sat rarity, and there are debates about which of these is more important (hint: they’re both meaningful).
Inscription Numbers
Each inscription has a number, the lower the number, the earlier the inscription, and–if this is our priority–earlier is better. As mentioned, we’re now close to 12 million inscriptions, and the first natural cut-off point where we start to think early, is sub-100K, and you might then place markers at sub-50K, sub-10K, sub-1K… you get the idea.
Rare Sats
An element unique to Ordinals is the idea of rare sats. In art terms, this is like the canvas being as important as the painting it displays (with the canvas being the sat and the paint being the inscribed data).
According to Casey Rodarmor, because we can track when and in what order sats were mined, it follows that some sats will be seen as historically more special than others. These, basically, are rare sats, and if you can get hold of them and put inscriptions on them, then what you create might have additional value.
Here’s Rodarmor’s classification system:
And here’s an alternative system, which has coined the term Satributes, from the Ord.io platform, where you can also check the rarity of sats in your possession:
Recursive Ordinals
There’s recently been a new Ordinals tech development called recursive Ordinals. The idea is that Ordinals can call the content of other Ordinals, and then make use of that data. One simple utility would be that an NFT collection’s traits are inscribed, and then each individual item in the collection calls on those traits to assemble images, which would streamline the amount of code and storage required.
There are far more ambitious possibilities too, which revolve around the idea of inscribed packages of code that can be called on and utilized by developers to build interlinked on-chain applications.
A collection early to this kind of functionality is Cypherpunk Ghosts, which believes in the possibility of building on-chain website-like experiences on Bitcoin. Also take a look at OCM Dimensions and Ordinal Fomojis for experiments with Ordinal recursion.
Key Players
When a new crypto sector accelerates, you find key characters driving the expansion. Looking back at ETH NFTs when they started to blow up, there were Larva Labs, Snowfro and Art Blocks, artists like XCOPY and FVCKRENDR, and collector/influencers such as Cozomo de’ Medici and Punk6529.
Pushing things forward now on Ordinals, there’s Ordinally, who worked with Casey Rodarmor, Udi Wertheimer, who leads the Taproot Wizards collection, and in the arena of rare sat hunting there’s Nullish, who’s creating his own experimental Ordinals ecosystem.
Image credit: Ordinal Maxi Biz
Nullish is also working on the influential ZK Shark’s expanding Ordinal Maxi Biz collection, other important names include Leonidas and BitGod, and for Ordinals chat and to keep up with developments, there’s a regular Twitter Space called The Ordinal Show.
Upcoming Launches
With a lot of Ordinals activity happening, here are a few collections that are either launching or expanding, all of which can make good starting points to explore from:
Rare sats and scratchy artwork from ZK Shark, and set to release newly inscribed Block 9 pieces soon.
Using art and ordinals to broadcast Bitcoin’s original post-fiat cypherpunk message.
A very limited edition art collection making use of sats from the first 1,000 blocks.
100 hand-painted acrylic artworks by artist Resaang, inscribed on sats from Block 78.
There are also projects migrating or branching out from other blockchains, notably DigiDaigaku, ON1 Force, and Okay Bears, which follow on from earlier Ordinals launches by Yuga Labs and DeGods.
Are Ordinals Taking Over?
Everything in crypto moves in cycles, so growth around Ordinals does not suggest that it’s over for Ethereum. Also, Ordinals on Bitcoin may develop into something different from NFTs on Ethereum, and both might come to function in distinct ways.
That said though, statements like this–“in less than 30 days, Ordinals JPEG volume is going to flip ETH JPEG volume”–really don’t sound that implausible. Sure, you might want to expand the time frame out a little and it definitely might not happen, but it’s not a crazy prediction.
The other thing I notice is that despite some Bitcoin Maxis really not liking Ordinals, it feels like Ordinals are reviving part of the original Bitcoin spirit. Bitcoin has always had gravitational pull not just because on an engineering level it works, but because that solid foundation allows it to be irreverent and radiate positive vibes, and in Ordinals right now, you can find that old DGAF, DIY, (cypher)punk energy.
Or that’s how it looks to me anyway, but in case the idea of digital collectibles on Bitcoin still doesn’t sit quite right with you, here are Hal Finney’s thoughts on the idea of crypto trading cards, from way back in 1993.
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Final Notes
The Fed’s next move will shock Bitcoin markets. 👇
Thank you so much for your support, and I truly hope that today’s issue will give you insights needed to help you master your wealth.
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