Why Did Vitalik Just Dump All These Tokens?
GM all, it’s a new week and a new month, but what can we expect from crypto as we approach the end of summer?
Some people are speculating that 2024 is when the big moves will happen, but crypto is always unpredictable.
There’s been recent drama around Ethereum leader Vitalik Buterin, who reacted decisively to a surprising MakerDAO announcement in favor of Solana.
Here’s what’s in today’s issue:
- Sam shares his thoughts on MakerDAO possibly forking Solana for new blockchain, China considering crypto assets legal property, Bitwise withdrawing their ETF application & HashKey is betting on altcoins.
- This week on chain.
- This week’s trending coins by Rebecca.
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MakerDAO to Fork Solana for New Blockchain?
Back in May, MakerDAO–the decentralized platform that’s behind the DAI stablecoin–announced its Endgame plan, which has five phases and includes aims to develop an ecosystem of subDAOs, incorporate AI, expand the supply of DAI, and unify the project’s brand.
The final stage of the roadmap is the launch of a new blockchain–given the development name NewChain–that houses backend logic around tokenomics and governance security, and locks in the platform’s core ways of operating.
All good so far, but now MakerDAO co-founder Rune Christensen has caused a stir by announcing, unexpectedly, that rather than being based on Ethereum, the new blockchain might be forked from Solana’s codebase, writing in an explanatory post,
“After having researched all the different options available to act as the foundation for NewChain, I believe that the Solana stack is the most promising codebase to explore further.”
It’s fair to say that Ethereum chief Vitalik Buterin may not be entirely onboard with this plan, as it transpired that he subsequently offloaded his entire $580,000 stake in MakerDAO, which he had acquired in April 2018.
Which is one way to make your feelings clear.
If you throw your mind back to the end of 2022, you might remember Vitalik offering a show of support to Solana, which at the time, post-FTX, was looking particularly wrecked, but crypto moves fast and it’s a different landscape now.
One other thing to note is that MakerDAO is not definitely set on Solana, and Christensen also mentions Cosmos as a contender:
“Other than Solana, Cosmos seems to be one of the only options available. It also has some major benefits, chiefly its large and high quality talent pool and range of independent developer companies available, and of course the huge amount of existing cases of successfully developed appchains using the Cosmos stack.”
Chinese Courts: Crypto Assets Are Legal Property
China has a record of making absolutely no sense on crypto and occasionally throwing the markets into disarray.
It happened in 2021 when Beijing banned crypto mining and trading, negatively affecting prices, but that wasn’t the first incidence, as China has executed various prohibitions and controls over the past decade or so.
At the same time though, Beijing earlier this year published a whitepaper containing extensive plans to explore Web3, and emphasizing the importance of the digital economy, while Special Autonomous Region Hong Kong continues to push ahead as an innovative, crypto-friendly place.
And now, a People’s Court in China (these are courts reported as having independent judicial power) has published a report stating that crypto assets can be classified as legal property, the same as physical money and assets.
Essentially, the court recognizes that crypto is ownable and has tangible value, but this is in direct contradiction with Beijing’s official stance on crypto, although at the same time, Beijing is looking into Web3 and wants to be well-positioned in an emerging digital economy.
Does that all come across as confusing and inconsistent? For sure, but it also hints that cryptocurrencies may be a reality to which all varieties of government and regime will need to adapt.
Bitwise Withdraws ETF Application
There’s been a huge amount of attention on spot Bitcoin ETFs, and also on ETH futures ETFs, with applications for both having piled up this year. However, in a reversal of the current trend for inundating the SEC with new proposals, digital asset management firm Bitwise has withdrawn its application for a mixed Bitcoin and Ether Market Cap ETF.
The application went in at the beginning of August, and the fund would have held BTC and ETH futures, with allocation weighted around the cryptocurrencies’ respective market caps, but that plan is now entirely off the table.
Bitwise’s application for a spot Bitcoin ETF remains in play along with those of several other big firms, with the SEC having last week delayed its decisions, as expected.
Spot Bitcoin ETF ‘Inevitable’
Sentiment around those much-anticipated spot Bitcoin ETFs received a boost at the end of last week when, in a CNBC interview, the former chair of the SEC, Jay Clayton, stated unequivocally that,
“An approval is inevitable. The dichotomy between a futures product and a cash product can’t go on forever.”
HashKey Fund Bets Big on Altcoins
Over in Hong Kong, crypto asset manager HashKey Capital is looking beyond just Bitcoin and Ether, and has plans to invest over half of a new crypto fund away from the big two, and into altcoins instead.
The fund launched last week, states that it has high net worth individuals and investment firms among its clients, and is aiming to attract $100 million of investment over the next twelve months, with a strategy to outperform Bitcoin through diversification into smaller coins, while also holding some cash.
This approach reflects the open attitude to crypto that seems to be developing in Hong Kong, but we’re still waiting to hear whether HashKey bought the dip on Pepe.
Ripple Knocks Back SEC Appeal
Finally, there’s been a new development in the ongoing dispute between Ripple Labs and the SEC.
Ripple won an important legal victory in July when it was formally judged that the XRP token is not inherently a security, and so its trade does not violate securities laws.
From there though, the SEC, as expected, moved to appeal.
In response, Ripple is opposing that appeal, arguing that the requirements for an appeal have not been met.
Specifically, Ripple’s filing rejects key grounds around a “pure or controlling question of law”, “substantial ground for difference of opinion”, and that the appeal will speed up resolution of the case.
That’s all legally technical, but essentially, whatever the SEC is arguing here, Ripple disagrees with. Which isn’t a surprising attitude for the XRP issuer to take.
How do you think this all plays out though? The SEC seems to be taking hits on multiple fronts, and those BTC ETFs look like they’re incoming, so are we at a turning point for the crypto industry, and how might that affect price action with the halving coming up next year? Reply to this email and let us know what you think.
Thanks to Phemex for sponsoring today’s newsletter.
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When big holders are ready to make a move, they accumulate stablecoins, and so stables activity among whales can provide a hint about imminent intentions, with accumulation suggesting a bounce up.
However, looking on-chain at the moment there’s a lack of certainty as whales appear indecisive, creating what appears to be a neutral situation.
On the subject of stablecoins though, there’s also a potentially positive hint that the market has bottomed out, as the stablecoin market cap pauses its downtrend.
Overall, a growing stablecoin market cap indicates market entrants and crypto participation, and so a halt in decline is necessary before a shift towards a more bullish environment.
Just getting back to those big holders for a moment though, there was some curious activity recently, as a day before news broke that Grayscale had won its appeal against the SEC, resulting in a sharp but short-lived BTC price pump, whales and sharks cumulatively acquired just under 15,000 BTC, which looks like some remarkably nice timing 🤨.
As mentioned, there’s currently a lack of certainty in the markets about where prices are heading next, partly as a result of low participation, and if we look at ETH we can find that monthly trading volume is at its lowest point since 2020, suggesting (perhaps) that the cycle is at something like a reset point.
And a look at worldwide interest in the search term ‘crypto’ on Google also finds us at levels last seen around the end of 2020 going into 2021, after which there was a sudden explosion in attention.
Google Trends interest in search term ‘crypto’, worldwide.
That said, a protocol that has seen plenty of growth lately is the recently launched Base, and that momentum has increased further with the launch at the end of August, on Base, of DeFi platform Aerodrome.
This saw, over just a couple of days, the deposit of over $200 million in value, although that has now dropped off slightly to around $190 million.
This activity on Aerodrome caused the TVL on Base to double in the period since the Aerodrome launch, now reaching over $450 million.
Carrying on with the positive news, there have been hints of relief in the NFT sector, which has been navigating ongoing collapses in price and sentiment for most of this year. When it comes to large-cap PFPs, there was a bounce of 12% over the course of last week, creating the possibility that a bottom may have been reached.
PFPs have been the worst affected part of the NFT space, and if we compare PFPs with Art Blocks, we can find that while the latter has also suffered losses, NFT art (or at least NFT art on Art Blocks) has outperformed PFPs.
Looking at the larger picture though, if we consider NFTs within the whole crypto ecosystem, the total NFT market cap is just 8.9 million ETH, which is only around 1.3% of the total crypto market cap.
So, plenty of room to grow with various use cases in play?
That remains to be seen, but it will be interesting to find out how NFTs perform in the next crypto bull run.
Also considering the state of crypto as a whole, it’s useful sometimes to look at VC funding, and in this case, we can find a fourth straight month of decline, with levels comparable to where they were at the beginning of 2021.
And zooming out to get the macro view, the landscape is not currently conducive to the kind of exuberance we saw as 2021 unfolded, with the M2 money supply charting its deepest contraction ever.
What’s also really striking here is that this comes immediately after the most enormous expansion ever, creating an unprecedented reversal in the US money supply.
Here are my key takeaways from the trends this week and it’s been a week of launches and milestones despite the market correction.
- Gala is a play-to-earn (P2E) gaming ecosystem that’s seen the CEO sue its co-founder for theft of $130M in GALA tokens. GALA tanked 13% on the news. Gala has also launched its Node license sale with Rep, a social platform migrating to GalaChain.
- Arbitrum is an Ethereum L2 scaling solution that’s seen the team behind the network launch a public testnet for Arbitrum Stylus. Lybra Finance has also launched peUSD, a new omnichain version of eUSD on Arbitrum One.
- CyberConnect is a Web3 social media network that’s become the latest hype coin as Friendtech fades away. Traders have been paying as much as 2,000% in annualized fees to buy the CYBER token on margin.
- Sui is a Layer-1 that’s reached a new milestone of 5M active accounts, adding 1M accounts per week for the past two weeks. Sui also launched new bounties for its Liquid Staking hackathon.
- Unibot is an automatic trading platform for Uniswap that’s reached a new milestone of 10,000 trades in 24 hours. Unibot has also become the first Layer-2 to launch on Coinbase’s Base network.
- Sei is a newly launched Layer-1 built using the Cosmos SDK that’s now available for custody on Coinbase Prime for institutions.
- Baby Doge is a dog meme token on the BNB chain that’s set to launch its secret AI project on September 4.
- Unifi Protocol DAO is an Ethereum platform for creating cross-chain Defi apps that’s seen its UNFI token pump this week, making it a 2.5X in the past month.
- Solana is an L1 blockchain that’s being considered by MakerDAO co-founder as a base to build a new chain.
- Maker is an Ethereum-based DeFi lending platform that’s seen Ethereum co-founder Vitalik Buterin sell his MakerDAO tokens for around $581K. This has led to speculation the sale was in reaction to Maker’s potential plans to fork Solana.
- Maverick Protocol is the native token for the DeFi infrastructure provider that’s launched on Coinbase’s Base network. The WSTETH pairs on Maverick have also achieved a 79% capital efficiency, making it the No.1 DEX among competitors.
- Polygon is an Ethereum sidechain that’s announced its zkEVM mainnet beta is getting its first major upgrade called Dragon Fruit and is expected to launch the week beginning September 11.
- Aptos is a Layer-1 blockchain created by ex-Meta employees that’s been teasing its upcoming appearance at Korea Blockchain Week from September 4-6.
- Bitcoin has seen 7 spot ETFs delayed for another 45 days by the US Securities and Exchange Commission (SEC). Bitcoin on exchanges has gone down to 2M and is at the lowest level since January 2018.
- Ethereum has seen at least four liquid staking services agree to impose a 22% market share limit to keep the network decentralized. Ethereum has also been called a commodity by a New York judge after rejecting a lawsuit against Uniswap.
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.
If you are reading this it means you are on the free version of the Wealth Mastery Investor Report, which is great for news and tips on the crypto markets.
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