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Ethereum Upgrade: 100x Cheaper, But At What Cost?

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Ethereum’s most anticipated upgrade went live on the mainnet, introducing “blobs” and slashing Layer 2 gas fees by 10-100x. For example, zkSync fees dropped from $0.81 to $0.08, marking a 10x decrease. Starknet’s official Twitter account also showed a significant drop in the gas fee to about $0.01-0.04 from roughly $2 [a 99% decrease] after synchronizing the Dencun upgrade.

The estimated gas costs associated with a DEX swap, as highlighted in the screenshot from IntoTheBlock statistics, are: the gas fee for Aribitrum is estimated to be reduced from $2.02 to $0.4, Optimism from $1.42 to $0.28, and Base from $0.58 to $0.01.

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Ethereum Upgrade: 100x Cheaper, But At What Cost? 3

Regarding the impact of the Dencun upgrade on layer 1 fees directly reducing congestion on the main chain, the decrease in layer 1 fees is indirect. As of now, it primarily affects Layer 2. The implementation of Danksharding is anticipated to address layer 1 fees, but its execution will require some time.

Ethereum: Maturing Beyond Adolescence

Amidst these developments, L2s have secured more users in the Ethereum ecosystem compared to the mainnet. As seen in the graph below, the ETH mainnet remained flat for daily users over 2023, but daily users have grown consistently on Layer 2s such as zkSync, Arbitrum, Optimism, and Coinbase’s BASE.

Additionally, the Ethereum Layer 2 network has attracted more liquidity than its Layer 1 competitors. For instance, Arbitrum singlehandedly toppled most Layer 1s, including Solana, Avalanche, and Polygon, in TVL for $3 billion on February 20, 2024. “We believe that continued ETH Layer 2 traction could be a tailwind,” as per Grayscale’s analysis.

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Ethereum Upgrade: 100x Cheaper, But At What Cost? 4

However, every major Ethereum Layer-2 rollup runs a centralized sequencer at the moment. Relying on a centralized sequencer for processing and batching transactions might expose the chain to vulnerable scenarios such as outage risk as well as other potentially extractive actions such as MEV. Still, most Layer 2s have outlined plans to decentralize this over time, which Vitalik Buterin calls decentralization “stages.” This includes establishing a “distributed committee” of sequencers to mitigate the risk of value extraction.

Ethereum stands at a pivotal juncture, poised to move out of its adolescence and into its mature phase. The upgrade, alongside the broader Eth 2.0 initiative, marks a significant milestone in Ethereum’s journey towards becoming a more scalable, efficient, and user-friendly platform.

Spot Ether ETF May Approval Window Remains Open Amidst Approval Uncertainty

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The future of Spot Ethereum Exchange-Traded Funds (ETFs) in the US is still uncertain, with a decision expected on 23rd May. Even though Bitcoin ETFs were approved in January, which led to increased activity in the crypto market, there is less clarity on what lies ahead for Ether ETFs.

According to recent reports from the Fox Business correspondent Eleanor Terrett, the SEC might be softening. Issuers, custodians, and staff have been having one-sided small meetings about potential Ether ETF filings, while the SEC sounds like it’s giving Bitcoin ETFs a free pass. Chairman Gary Gensler might think that Bitcoin ETF approval has already addressed industry demand.

I’m told that Gary Gensler believes he already placated the industry with the approval of the spot BTC ETFs, said Terrett.

The SEC is worried about the relationship between futures contracts for Ethereum and the underlying spot market. The claim has been that this argument lacks any substance, according to ETF Store President Nate Geraci. According to him, if the SEC allows investors to invest in Ether ETFs, then such a regulator must also have no issues with spot products as well.

Grayscale, a company that offers a range of financial products that enable customers to invest in digital assets, is being sued by the SEC for its bitcoin trust. The possible Grayscale victory could set an important precedent for the acceptance of Ethereum ETFs. The SEC might have to either “unwind years of implicit acceptance of Ether as a commodity” or be open to more issuer lawsuits as Geraci argues.

Ether ETF Prospects Amid SEC Dynamics

However, it is still possible for Ethereum ETF to be approved by May 23rd. Eric Balchunas, Bloomberg’s ETF analyst, admits that its Chairman Gensler faces political headwinds. Grayscale may not be as aggressive in legal strategy as it was in the Bitcoin ETF saga.

The SEC’s position will be seen as crucial in the next few weeks. There is a possibility of the commission having an active engagement with the stakeholders and its addressal of correlation and regulatory clarity concerns could make it clearer about ETFs on Ethereum. However, there can be more political pressure and internal disputes within the SEC, causing these applications to be delayed or rejected completely.

Related Reading | BlockFi’s Zac Prince Unveils Bankruptcy Success And Future Ventures

Memecoins Frenzy Fuels Extreme Profits and Speculation

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The speculative frenzy around meme-inspired digital assets has set the crypto wild west ablaze. Memecoins which were once thought of as mere internet jokes are now among the top choices for traders and analysts due to their defy gravity with astronomical price surges. Prominent crypto commentators are cautioning about the bourgeoning meme mania.

“Memecoins have pumped tremendously in the past two weeks. They’re dominating the top gainers dashboard,” tweeted veteran analyst Lark Davis, cautioning investors to carefully time their entries. “You have to know when to enter, though: around the time the masses arrive.” The statement captures the paradoxical nature of these rallies, which are fueled by viral hype and fear of missing out.   

Blockchain analytics firm IntoTheBlock’s latest report sheds light on the phenomenon, evaluating “the top performing memecoins” while “sharing some key statistics on the space.” Their findings reveal triple-digit percentage gains across the meme token universe as “speculation drives on-chain fees to yearly highs.” With Bitcoin breaching new all-time price highs, investors are doubling down on these ultra-speculative altcoin bets.

Leading the charge is the PEPE coin on Ethereum, which has netted holders eye-watering returns of over 600% in just one month. A telling 91% of PEPE investors are currently sitting in profitable positions. While only 170,000 addresses hold the token, drastically less than Dogecoin’s 6.3 million holders, PEPE exemplifies the euphoric mania engulfing memecoins. 

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The frenzy is not confined to Ethereum either, with Solana’s decentralized exchanges trading a staggering $15 billion this week, according to DeFiLlama’s data. This colossal volume nearly matched Ethereum’s $20 billion over the same period. The ensuing network congestion has driven Ethereum transaction fees to their highest point in nearly two years.

Trading Tactics: Navigating the Memecoins Frenzy

Seasoned crypto traders are looking to exploit the meme frenzy as well. Analyst Dami-Defi spotlighted one investor who adroitly grew $149,000 into over $4.3 million in a year trading meme tokens yet refuses to sell a dime. “Is there a long-term game we are missing?” Dami-Defi pondered about the diamond-hand whale stubbornly accumulating MAGA, HarryPotterObamaSonic10Inu, and Mog tokens.

However, there are no signs that the allure of meme coins is waning as the crypto bull run rages on. But do we have a passing tide or a far-reaching change in the digital assets class? Nevertheless, memecoin mania burns on without any respite, leaving behind breathless traders and an all-absorbing crypto universe caught up in its unstoppable force.

Related Reading | XRP Whales On the Move: Massive Transfers Stir Speculation

Ethereum’s Quantum Leap: A Defense Plan Against Future Threats

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In a dynamic and changing environment of blockchain technology, Ethereum, the most secure, innovative, and immune to the impact of quantum computers, is there. Vitalik Buterin – the founder of Ethereum – has recently provided the concept of the future for Ethereum, which is that it is strong enough to resist any potential quantum disruptions.

 In a recent blog post, Buterin informs that the Ethereum platform would be well-prepared and capable of going through its “recovery fork” in the event of quantum attacks on the blockchain, so keeping the user funds safe and sound against the unauthorized access.

The fear associated with quantum computing is its ability to mentally penetrate the cryptographic defences to determine the asset securities that include digital assets. Although, Buterin, an ardent advocate promoting ETH’s exemption from such attacks, proposes a rescue fork as a precaution. The strategy itself, in response, however, shows the readiness of ETH to solve this problem and protect its environment from possible quantum attacks in the future.

What concerns Buterin’s statements, Colin Wu, a leading crypto journalist from China, demonstrates his strong support through social media, too. Further, Wu talks about fighting for the hard fork infrastructure if needed, which can be easily launched in response to quantum disasters on the Wu Blockchain page. This strategy is proactive thus indicating that Ethereum targets to design a secure and stable cryptocurrency platform.

Ethereum’s Hard Fork Strategy And User Impact

In the event that a quantum assault may take place, Ethereum’s backup plan is to instigate the hard fork, which demands the users accept a different app. However, Buterin gives a specific example: he says the process is very thorough and could lead to losses for only some users. Hence, the strategy will revert the blockchain operations to a secure state before the attack takes place.

It would disable traditional transaction approaches and introduce innovative transaction types that apply smart contract wallets and STARK proofs for increased security. The quantum resistance strategy combines multiple aspects of the Ethereum system, with the overall result being the flexibility required to protect users’ assets and the platform itself from the quantum threat.

The observance of the horizon by the blockchain community for further development in the quantum-related fields becomes the strategic bulletproof for Ethereum, making the last name in security and adaptability. Foresight and innovation prevail in Ethereum as it navigates the upcoming obstacles in quantum computing by coming up with resilient countermeasures, and therefore, the ecosystem is protected from the unknown frontiers.

Starknet Claims Fourth Spot Among Ethereum Layer-2 Solutions With $1B TVL

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In an unfolding revolutionary twist, Starknet – the Ethereum-based Layer-2 scaling solution surpassed $1 billion Total Value Locked (TVL) and scaled up to become the fourth-largest L2 on Ethereum. Colin Wu, a prominent journalist covering the crypto industry, revealed in a Wu Blockchain X post the meteoric rise of Starknet in the crypto world.

Starknet came into the spotlight with the launch of its STRK airdrop and distributed more than 700 million tokens out of the 1.8 billion it had allocated. Although the airdrop went well, there were some hiccups; some users, in particular, got more STRK tokens than others. It provoked an instant sell-off by some holders, which made asset prices crash momentarily after the launch.

Contrary to the rocky start, Starknet gained high backing from the major exchanges like Binance Exchange that quickly listed STRK for trading, hence helping it fetch more visibility and accessibility in the market.

Starknet TVL Hits $1.31B, Tops Ethereum L2 Solutions

According to L2Beat data, Starknet’s TVL has hit the sky-high $1.31 billion, representing an astounding 620% increase compared to its launch. That puts STRKon on the short list of Ethereum’s top L2 solutions, right behind Arbitrum 1, OP Mainnet, and Manta Pacific, with TVLs of $12.82 billion, $7.51 billion, and $1.83 billion, respectively. 

Setting itself advantageous by having zk Rollup technology, STRK has attracted large capital inflows, with smart contracts like Orbiter Finance and Rango Exchange being adopted by users.

Nevertheless, STRK has undergone major selling pressure since its birth, simulating the same volatility characteristic of digital currencies. Currently, the market value of STRK is $1.92, which is 1.53% down from the last 24 hours. Although bullish short-term rebounds are observed, metrics show that initial owners are still shedding their tokens, which caused an almost 30% decrease in trading volume to around $293,675,333.

However, against those fluctuations, the launch of Starknet is mostly declared successful, with the current market capitalization of $1.39 billion. Integrating advanced perpetual contracts trading, mainly from platforms like Binance, will allow Starknet to navigate the bearish market with resilience and flexibility.

With Starknet establishing itself as the top Layer-2 solution for Ethereum, the crypto industry is watching closely for more developments and milestones on the way to scalability and mainstream adoption.

Reddit’s Big Move with Bitcoin & Ethereum

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Reddit, a social media forum, disclosed that it has allocated a portion of its surplus cash reserves to Bitcoin and Ethereum and used ETH and MATIC as payments for sales of certain virtual goods, according to the S-1 filing. But as of December 31, 2023, it holds no other digital assets other than Bitcoin and Ethereum for financial management purposes.

“Our investments in cryptocurrencies for treasury purposes are limited to Bitcoin, Ether, and any other cryptocurrency that the SEC, Commodities Futures Trading Commission, or high-ranking members of the staff of such regulatory bodies may, through public statements or guidance, identify as likely not being a security,” it stated.

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The social media giant boasts visits from an average of 76 million people daily. Going public with the crypto holdings revelation would not only boost capital but also offer liquidity and facilitate transparency.

We are going public to advance our mission and become a stronger company. We hope going public will provide meaningful benefits to our community as well. Our users have a deep sense of ownership over the communities they create on the platform. This sense of ownership often extends to all of Reddit. We want this sense of ownership to be reflected in real ownership—for our users to be our owners. Becoming a public company makes this possible. With this in mind, we are excited to invite the users and moderators who have contributed to Reddit to buy shares in our IPO, alongside our investors.

Reddit Joins MicroStrategy & Tesla

The S-1 form is the first step in the registration process for an IPO. Although Reddit had previously filed a similar form, albeit discreetly, the new disclosure of crypto currencies has generated quite a buzz in the community. Many in the community have lauded the move, given Reddit’s past cautious stance towards digital assets.

Disclosing crypto holdings was a bold move for Reddit, even though the amount held has not been specified. The S-1 filing potentially signals mainstream crypto acceptance. With this, Reddit joins the likes of business intelligence firm MicroStrategy and electric car maker Tesla, which hold Bitcoin & Ethereum.

Bitcoin Price Remains Bullish Despite Liquidity Flush Fears

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Bitcoin, the largest cryptocurrency by market capitalization, has been on a strong upward trajectory since the beginning of the year and reached an all-time high of over $58,000 on February 21st. Nonetheless, the rally looks to be slowing down as Bitcoin has hit resistance at its $52k level and fell below $51k on the 20th of February.

According to cryptocurrency trader and analyst Michael van de Poppe, Bitcoin will continue its bullish run mainly, but he also expects some flushing liquidity before any up continuation. He said that he believes Ethereum will see strong price performance in the days to come, notably until the Dencun upgrade.

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Chart by Michael van de Poppe

On the other hand, Crypto Rover, a prominent crypto analyst, said that Bitcoin is poised for a massive breakout within its ascending triangle pattern, analysts predict. Traders anticipate significant price movement as the cryptocurrency continues to consolidate. Market sentiments remain bullish amid anticipation of potential gains.

Moreover, Ethereum has had quite an impressive performance this year, with its values surpassing $3k for the first time on February 19. In percentage gains, Ethereum outperformed Bitcoin as it benefits from a growing interest in decentralized applications (dApps), decentralized finance (DeFi), and non-fungible tokens (NFTs) that are built on its network.

As per Coinglass, open interest for Bitcoin futures has decreased by as much as 2.55%, with CME and Binance experiencing significant declines in the past 24 hours. This might show traders are either closing their positions out or reducing their leverage ahead of expiry. Conversely, within the last 24 hours, open interest for Ethereum futures increased by 2%.

Bitcoin Options Expiry Impact Analysis

The factors that could influence the direction of Bitcoin’s price include the upcoming expiration of options, which will expire 71k contracts worth $3.7 billion. Options are derivatives that give the buyer the entitlement to buy or sell an underlying asset at a given date along with a particular price.

Deribit, which is the largest exchange in the crypto options market, has a put-call ratio of 0.76 as indicated by its data. This implies that there are more put options than call options in the market. By definition, Put options are bets that imply that the price will go down, while Call options are bets that imply that the price will go up.

The put-call ratio suggests that traders expect a downward price movement or are hedging against a price drop. The max pain point, which is the price level that minimizes the losses for the majority of options holders, is $47,000. This means that if Bitcoin closes below this level on Friday, most options holders will suffer losses, while if it closes above this level, most options holders will profit.

Bitcoin is currently trading at the price of $50,917.02 with a current market cap of $1,000.11 billion. The cryptocurrency is down -2.60% over the last one day and its circulating supply stands at 19.63 million.

BTCUSD 2024 02 21 23 05 57
Source: Tradingview

Related Reading | XRP Gains Favor as Bitcoin Trader Puts $500k Behind the Token

VanEck Leads The Charge Towards Ethereum ETF With SEC Filing

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VanEck, a well-known investment firm, has demonstrated a surge in the development of an Ethereum Exchange-Traded Fund (ETF) by filing an S1-A form with the Securities and Exchange Commission (SEC). According to Mr. Seyffart, a renowned analyst in the field of ETFs at Bloomberg who has been evaluating the issues, this step was another move in the course of VanEck’s relentless efforts to deal with the regulatory environment of the product.

The competition for the coveted spot for the Ethereum ETF is hotter up, with VanEck’s application joining the list of the other contenders, all chasing approval from the SEC. This trend reflects the increased interest that spot Bitcoin ETFs generate, pushing established financial institutions to look into Ethereum ETFs with renewed vig.

VanEck’s Ethereum ETF Application amidst SEC’s Scrutiny

A concurrent development includes the Ethereum ETF application from BlackRock, an investment colossus at the global level. Nevertheless, the SEC also adhered to a very careful stance, extending the examination period not only for BlackRock’s iShares Ethereum Trust but also for a prominent player in the industry, i.e., Grayscale Investments, Fidelity, and VanEck. 

The fact that BlackRock’s application decision has been delayed until March 10, 2024, by the regulator highlights the thoroughness of the inspection process as the Ethereum network prepares to switch to the proof of stake model. Also, the fears of market manipulation continue to linger.

Regulatory obstacles notwithstanding, investor sentiment remains very high. Experts view the odds of a spot Ethereum ETF approval by May as 60%. This confidence comes from a deadline that falls within only 240 days. It also comes on May 23, which marks the end of the review process for the proposals submitted by Ark/21Shares and VanEck.

However, there is an element of mystery as well in the SEC’s deliberations with Hester Peirce, the commissioner, who is a known advocate of a more lenient policy for Ethereum ETFs. The SEC’s remarks could be traced back to their experience with the spot Bitcoin ETFs as they seem to learn as they go, indicating a potential shift in stance after an increase in the application submissions.

Ethereum Update: High-Stakes EIPs Unveiled

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After setting the calendar for Ethereum’s Dencun upgrade, developers have huddled together for the next course of events. The client teams are set to release final versions of the mainnet hard fork, which will be tested through a shadow fork by February 23. Upon successful implementation, lead developer Tim Beiko would release an official blog post announcing the Dencun upgrade early in the week thereafter, mostly on Feb 26th. 

The focus of the meeting expanded to the potential EIPs for the next fork, Pectra, and retroactively applied EIPs. Some notable mentions include the EIP-7610 proposed by the GETH Team, which seeks to integrate a third check for storage to add space for deploying a contract to an address.

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Another EIP in focus was EIP-7523, which proposes removing empty accounts on post-merge networks, citing instances of these wrecking havoc during the Shanghai DoS attacks. The team stated that the presence of empty accounts imposes a legacy of technical debt and demands its explicit ban.

The meeting ended with a brief mention of additional discussions on Pectra candidate EIPs, highlighting the need for further exploration and detailed conversations on specific topics like account abstraction and evolving externally owned accounts [EOAs]. A breakout room is mentioned for a deeper conversation on these matters in the coming weeks.

Recently, Go Ethereum, the biggest Ethereum execution layer client, released a new version of its software, called Edolus. Also known as Geth v1.13.12., the software includes the network fork number for Cancun. The feature would facilitate a smooth and seamless transition to the new Ether rules when Dencun goes live next month.

Ethereum Software Fix Bug In Miner Tips Rules

As reported by TronWeekly, the update was also brought to resolve a bug in the miner tips enforcement rules. The update further suggests validators who don’t take advantage of miner extractable value to review their miner gas price flag if they want to change it.

The Dencun upgrade, which is divided into two parts, Cancun and Deneb, is expected to go live on March 13, 2024, and is set to introduce significant changes to the Ethereum blockchain, such as the “proto-danksharding” feature.

Ethereum ETF: Frank Templeton Guns for the Lead

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Better late than never. Global asset manager Franklin Templeton has applied for a spot Ethereum ETF, becoming the latest to step into the fiercely competitive ETF race. The $1.5 trillion-valued firm recently filed a Form S-1 registration statement with the SEC, joining a galaxy of ETF applicants that include Ark and 21Share, BlackRock, Grayscale, VanEck, etc. While the above-mentioned AUMs filed their Spot Ethereum ETF applications in Q4 2023, FTI’s move has once again set the ball rolling in the regulator’s court.

The SEC, on the other hand, has so far chosen to push back applications, adopting the same tactic with Invesco and Galaxy’s Ethereum ETF as of the latest update. Industry experts have expressed no surprise, noting that more delays will continue to happen in the coming months. ETH ETF’s crucial deadline now rests around May 23rd, which is also the cutoff time for VanEck, according to popular crypto investor Lark Davis. 

He even predicted that the ETH price would go up to $4000 by then. Others, like Stevan Nerayoff, shared a more radical outlook. Nerayoff, a former Ethereum consultant, stated, “SEC chair Gary Gensler’s indirect approval for Prometheum Inc. to designate ETH as a security that effectively endorses an ETF covertly.”

Here is the list of the Spot Ethereum ETF filings.

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Source: James Seyffart

Franklin Templeton’s filing has undoubtedly sparked a buzz in the community. Earlier, FTI’s spot Bitcoin exchange-traded fund received the green light from the Securities and Exchange Commission [SEC].

Ethereum Validators Line In

In anticipation of the upcoming Dencun upgrade, staking among Ethereum validators has marked a substantial increase. More entities are rushing in to participate, leading to a rise in the validator entry queue. This is corroborated by data where the figure stood at 6187, representing over 200k Ether worth nearly $500 million, at press time. The entry of new players leads to a network build-up-like scenario that might take a little over 48 hours to be sorted out.

It is to be noted that there are limitations on the number of new validators that can join the network per epoch. One Ethereum epoch lasts roughly 6.4 minutes. These new players are called validators and can be either individuals or entities that need at least 32 Ether to stake in the network, enabling them to participate in running Ethereum’s proof-of-stake consensus blockchain.