Podcast Summary
Arbitrum airdrop and ether classification as security dominate crypto news: The Arbitrum airdrop brought new opportunities to the DeFi space, while ether being labeled a security sparked debate and the crypto markets were volatile with Bitcoin seeing a 15% increase in price.
This week in crypto saw several significant developments, including the long-awaited Arbitrum airdrop and the announcement that ether could be considered a security. The Arbitrum airdrop, which was much anticipated in the crypto community, brought in a large influx of new opportunities for those looking to participate in the decentralized finance (DeFi) space. Additionally, the New York Attorney General's office labeled ether as a security, which sparked debate and discussion about the implications of this classification. Gary Gensler, the chair of the Securities and Exchange Commission (SEC), also weighed in, stating that staking could be considered a security-like activity. The crypto markets were also volatile, with Bitcoin experiencing a 15% increase in price over the week. Despite some setbacks, such as a $200 million hack in the DeFi protocol Oiler, the overall sentiment in the crypto community remained positive. For those looking to stay informed and take advantage of opportunities in the crypto space, becoming a bankless citizen through the Bankless.com website and subscribing to the exclusive airdrop guide can provide valuable insights and potential opportunities.
Bitcoin outperforms Ether, Ethereum to Bitcoin ratio hits new lows: Bitcoin's recent surge caused Ethereum's ratio to Bitcoin to drop to its lowest since June 2022. The crypto market cap increased to $1.125 trillion, while inflation decreased to 6%.
The recent volatility in the cryptocurrency market led to a significant appreciation of Bitcoin over Ether, with Bitcoin almost doubling Ether's appreciation this week. This move caused the Ethereum to Bitcoin ratio to decrease by 6%, reaching its lowest levels since the 3 Arrows Capital liquidation in June 2022. The banking crisis may have played a role in this shift, as investors may have seen Bitcoin as a safer alternative to traditional financial institutions. Another potential factor could be Binance's decision to denominate its insurance fund in Bitcoin and Ether instead of stablecoins. Overall, the cryptocurrency market cap saw a significant increase, reaching $1.125 trillion, up from $1.025 trillion the previous week. The US Consumer Price Index (CPI) reported a decrease in annual inflation to 6%, down from the summer highs of 9%.
Uncertainty Surrounds Inflation and Crypto Market: Inflation remains a concern, but its causes and potential solutions are complex. The crypto market shows signs of activity and growth, with Ethereum and decentralized exchanges experiencing increased volume and USDC experiencing a notable depeg.
Inflation is trending down but may be more persistent than expected, and it's unclear to what extent monetary policy can push it lower. The market hasn't reacted much to the latest inflation data due to the ongoing bank crisis. Regarding inflation, there's uncertainty about whether it's driven more by supply or demand factors. Some analysts suggest the Fed may be raising interest rates to destroy demand, but the supply chain issues are beyond the Fed's control. The volume on Ethereum and decentralized exchanges like Uniswap has been increasing significantly, with over $12 billion in daily volume on Uniswap for the first time. Additionally, EIP 1559 has led to a significant amount of Ether being burned, which could impact the price slowly. USDC experienced a notable depeg from the dollar, reaching below 90¢, leading to increased exchange activity. Synthetics on Optimism have seen a surge in volume as layer 1 gas fees have been a constraint in the past. Overall, inflation remains a concern, but its causes and potential solutions are complex, and the crypto market continues to show signs of activity and growth.
Arbitrum's ARB token airdrop and its impact on the community: Arbitrum's upcoming ARB token airdrop to users and DAOs received positive reactions. A significant portion will go to the DAO treasury.
The crypto space is seeing significant developments with the announcement of various airdrops, including Arbitrum's upcoming token release. Arbitrum's ARB token, which will be used to govern the Arbitrum ecosystem, will be airdropped to users and DAOs on the platform, with a significant percentage going to the DAO treasury. This distribution has received positive reactions from the community. Additionally, the discussion touched upon the ongoing banking crisis and its potential impact on crypto, with various organizations and individuals expressing their views. The Kraken exchange was highlighted for its customer-centric approach and the availability of its NFT beta platform. Metamask Learn, an educational platform about crypto and web 3, was introduced as a valuable resource for those looking to learn about the space. Overall, the crypto industry is seeing a flurry of activity, with various developments and announcements shaping its future.
Arbitrum Airdrop: Eligibility and Distribution: Arbitrum's airdrop distribution is based on bridging, transaction history, frequency, and smart contract interaction. Eligibility depends on meeting these criteria. Arbitrum also has a governance model and uses the ARB token for governance, fault proofs, and decentralization.
The Arbitrum airdrop distribution is based on various criteria such as bridging to Arbitrum, transaction history, frequency, and value, and interaction with smart contracts. Eligibility for the airdrop depends on meeting these criteria. Arbitrum is also implementing a governance model where building an Arbitrum roll-up outside of the Arbitrum ecosystem requires DAO approval. The ARB token serves not only for governance but also for backing fault proofs and ensuring the decentralization of the Arbitrum chain. The distribution of tokens and the governance model aim to align incentives and ensure the long-term growth and success of the Arbitrum ecosystem.
Arbitrum Introduces On-Chain Governance and New Constitution: Arbitrum's on-chain governance enables faster responses to attacks and upgrades, while its new Constitution outlines terms for Arbitrum Improvement Proposals and the DAO Treasury. The layer 2 solution's DeFi moat and potential for increased activity contribute to its significance in the space.
Arbitrum, a layer 2 Ethereum scaling solution, has recently undergone a significant upgrade, introducing direct on-chain governance and a new Arbitrum Constitution. This on-chain governance allows for faster reactions to attacks and upgrades without the need for team intervention or snapshot votes. The Arbitrum token's value is estimated to be around $1.10 based on comparisons to similar layer 2 ecosystems, but its price discovery is still ongoing. Arbitrum has a 12% airdrop and is expected to have more DeFi and financial activity than its comparables, potentially leading to a higher valuation. The Arbitrum Constitution sets terms for Arbitrum Improvement Proposals, the DAO Treasury, and more, and can be found on the Arbitrum Foundation's website. Arbitrum's DeFi moat and promising potential make it a significant player in the layer 2 space, and the team's upcoming interviews on Bankless provide further insight.
Crypto-focused banks face bank runs and government interventions: During a week of financial instability, Silvergate and Signature banks faced runs due to crypto exposure. The FDIC intervened, raising insurance coverage and preventing contagion.
During the week of March 12th, there were significant developments in the crypto space regarding bank runs and government interventions. Silvergate Bank, a crypto-focused bank, went under, causing fear and potential contagion among other banks, particularly Silicon Valley Bank. This led to a run on the bank and withdrawals of funds, both electronically and physically. The situation was further complicated when Signature Bank was also announced to be shuttered by the Federal Reserve and the FDIC. In response, the FDIC raised the insurance coverage for depositors in these two banks to an effectively unlimited amount, quelling the fears and stopping the bank run. This intervention prevented a potential domino effect in the financial system. It's important to note that these events occurred while the crypto market continued to trade, highlighting its resilience and independence from traditional financial markets.
Questions Raised Over Signature Bank Closure: Targeted Attack or Contagion?: The closure of Signature Bank raises concerns over potential regulatory pressures against crypto banks, the legality of forcing a buyer to abandon crypto businesses, and potential political motivations.
The recent closure of Signature Bank raises questions about whether it was a targeted attack or a result of contagion from the Silicon Valley Bank incident. Some believe it was an opportunistic move against a crypto bank due to regulatory pressures, while others see it as a necessary measure to prevent a larger financial crisis. Regardless of the reason, the closure has raised concerns about the legality of forcing a buyer to give up all crypto businesses at the bank and the potential political motivations behind the decision. The Blockchain Association and Congressman Tom Emmer are taking action to investigate these allegations, and the crypto community is closely watching the situation unfold. Meanwhile, USDC, a stablecoin, was affected by the events, but trading continued and Jeremy Allaire, its founder, assured depositors they would be made whole.
Recent banking instability increases focus on USDC safety: USDC remains a relatively safe place to hold money amid banking instability, with all reserves securely transferred to BNY Mellon and potential for depositor bailouts if necessary. The Payment Stablecoin Act could provide additional security, while some investors move funds to crypto as a perceived safer alternative.
The recent banking instability, with the closure of Signature Bank and the potential issues with Credit Suisse, has led to increased focus on the safety and stability of digital assets like USDC. Circle's CEO, Jeremy Allaire, confirmed that all USDC reserves are secure and have been transferred to BNY Mellon, a larger and safer bank. The closure of Signature Bank means that Signet, a product used for instant inter-customer transfers within the bank, will no longer be in use. The payment stablecoin act, which aims to require stablecoin funds to be held in cash at the Federal Reserve, is an active pursuit in Congress and could provide additional security for digital assets. Despite the instability in the traditional banking sector, USDC, as a centralized stablecoin, continues to be a relatively safe place to hold money, with the potential for depositor bailouts if necessary. The recent banking issues have also led to a narrative trade, with some investors moving their money from traditional banks to crypto as a perceived safer alternative. The Federal Reserve's new instant payment service, FedNow, could also be a factor, with some speculating that the timing of its announcement was convenient for the Fed. Overall, the recent banking instability has highlighted the importance of stability and security in both traditional and digital financial systems.
New York AG sues KuCoin for selling unregistered securities, including Ethereum: Ongoing debates continue over Ethereum's classification as a security, with potential implications for the crypto industry. KuCoin lawsuit and SEC chairman's comments add to the uncertainty.
There have been ongoing debates and legal actions regarding the classification of cryptocurrencies as securities, specifically Ethereum (ETH) in this case. New York Attorney General's office sued KuCoin for offering unregistered securities, which included Ether. The argument is that the value of Ether is dependent on the efforts of others, such as its co-founder Vitalik Buterin and the Ethereum Foundation. However, it's important to note that these are just court filings and not definitive rulings. Gary Gensler, the chairman of the Securities and Exchange Commission (SEC), also weighed in, stating that proof-of-stake tokens like Ether could be considered securities. While this could potentially have significant implications for the crypto industry, the likelihood of such an outcome is relatively low. The debate continues as various stakeholders seek to clarify the regulatory landscape for cryptocurrencies. In other news, Starbucks sold 2,000 NFTs in 20 minutes, and Arbitrum announced a withdrawal date for its airdrop. These developments underscore the ongoing innovation and growth in the crypto space.
New developments in crypto and DeFi: Uniswap introduces fiat on-ramp, Phantom wallet expands to Ethereum and Polygon, Ethereum hard fork upcoming, but risks and challenges persist
The crypto space is constantly evolving, with new developments and updates coming from various projects and platforms. For instance, Uniswap, the largest on-chain marketplace for self-custody digital assets, has introduced a new fiat on-ramp, making it easier for users to buy tokens and NFTs directly from their bank accounts. Additionally, Phantom wallet, the popular wallet on Solana, is expanding to Ethereum and Polygon, bringing its user-friendly interface and staking features to these networks. However, there have been some setbacks, such as the unfortunate hack of Euler Labs' Oiler, a growing DeFi platform, which resulted in the loss of $196 million worth of assets. Despite having undergone six audits, the platform was still vulnerable to an exploit, serving as a reminder of the risks inherent in the crypto and DeFi space. Another important update concerns Ethereum, with the next hard fork scheduled for April 12th, enabling withdrawals for staked ETH. However, there could be a delay due to Lido's target date for allowing forced ETH withdrawals in mid-May. Overall, the crypto and DeFi landscape continues to offer exciting opportunities, but it also comes with risks and challenges. Stay informed and stay cautious.
New crypto challenges and opportunities: Hacking risks in new crypto ecosystems, end of privacy protocols, brands exploring NFTs, and decentralized social networks emerging
The crypto world is evolving rapidly, with new challenges and opportunities emerging constantly. For instance, hacking incidents like the one involving the $1 million bounty for the arrest of a hacker who used privacy protocol Tornado Cash, highlight the risks associated with new crypto ecosystems. On the other hand, the sunsetting of privacy protocol Aztec Connect and ZK Pay, though confusing, could lead to more sophisticated privacy technology on Ethereum. In the NFT space, brands like Starbucks and Epic are exploring new ways to engage with fans and monetize digital assets, while Meta's decision to end NFT support on Instagram could open up opportunities for decentralized social networks. Overall, the crypto landscape is filled with both risks and rewards, and it's essential to stay informed and adapt to the ever-changing landscape.
Fidelity's Bitcoin and Ether buy button for retail customers and web 3 developments like Uniswap, Arbitrum, and smart contract wallets: Fidelity introduces Bitcoin and Ether buy button for retail customers, while web 3 projects like Uniswap, Arbitrum, and smart contract wallets gain traction
While some are focusing on the potential of web 3 and NFTs, others are returning to web 2 and supporting creators through traditional means. A notable development in this regard is Fidelity's quiet rollout of a Bitcoin and Ether buy button for their massive retail customer base. Meanwhile, in the web 3 space, projects like Uniswap and Arbitrum continue to gain traction, with the latter seeing the deployment of over 100 projects and the addition of Arbitrum Nova for gaming and social dapps. Another exciting development is the rise of smart contract wallets, with teams like Soul Wallet receiving funding to bring self-hosted wallets to the next billion users. As always, there are plenty of job opportunities for those interested in the web 3 space, which can be found on the Bankless jobs board. Overall, the web 3 landscape is continuing to evolve, with both traditional and decentralized approaches making strides.
Arbitrum's User-Friendly Web 3 Platform and USDC's Complex Trust Issue: Arbitrum simplifies web 3 development with features like community engagement, docs, asset bridging, and dApp building. USDC's stability and redemption guarantees make it trustworthy, but its growing DeFi role increases reliance on the Federal Reserve, potentially offering adoption tailwinds but also fragility.
Arbitrum offers a user-friendly platform for web 3 development, with features like community engagement, developer docs, asset bridging, and dApp building. Trust in USDC as a stablecoin, despite its growing resemblance to a central bank digital currency (CBDC), is a complex issue. While USDC's stability and redemption guarantees make it more trustworthy, its increasing role in DeFi makes the ecosystem more dependent on the Federal Reserve and USDC. This can offer adoption tailwinds but also makes DeFi more fragile. The long-term goal should be to have two types of digital currencies: decentralized native currencies like Ethereum and stablecoins like USDC, with the latter providing benefits but not leading to over-reliance. Bankless Premium, with its wealth of knowledge and support, can help navigate this frontier.
Central Bank Digital Currencies vs Decentralized Assets: Central bank digital currencies like USDC can act as on-ramps to TradFi, but it's crucial to preserve decentralized currencies like Bitcoin and Ether. Optimistic Rollups and ZK Rollups are Ethereum scaling solutions, with unique advantages, enabling complex applications and faster, cheaper fees.
The crypto world is witnessing a bifurcation between central bank digital currencies (Type 1) like USDC and decentralized, non-central bank backed assets (Type 2) such as Bitcoin and Ether. While USDC can be seen as a potential on-ramp for crypto into Traditional Finance (TradFi), it's essential to preserve and strengthen our decentralized native currencies. The adoption of decentralized stablecoins like USDC, even if not fully decentralized, is still considered a net win for crypto. Optimistic Rollups and Zero-Knowledge (ZK) Rollups are two different scaling solutions for Ethereum. Optimistic Rollups function as a layer 2 of Ethereum, settling transactions back to Ethereum. ZK Rollups, on the other hand, use zero-knowledge cryptography as a layer 2, offering 10x better cryptography, compression, and faster, cheaper fees. This enables the deployment of more complex applications, such as Web 3 games, on ZK Rollups. The importance of understanding these scaling solutions lies in their impact on the crypto ecosystem. Optimistic Rollups focus on economic games and fraud proofs, while ZK Rollups utilize pure cryptography and moon math to provide cryptoeconomic guarantees. Both methods offer unique advantages, and understanding their differences can help crypto enthusiasts navigate the rapidly evolving crypto landscape.
Banks as Sovereign Roll-Ups and the Future of Crypto: Banks control their own ledgers and post data to the FedNow Technology, while crypto builders and engineers of the 2021 and 2022 classes may contribute to the industry's future. The focus is on layer twos, with various innovations and launches, and regulators like Hester Peirce are seen as supportive.
Banks function as sovereign roll-ups, controlling their own ledgers and posting data availability to the Federal Reserve. This concept was discussed in relation to the FedNow Technology, which serves as the chain through which these bank ledgers post data. Additionally, the crypto community, particularly the class of 2021 and 2022, has experienced significant challenges and learned valuable lessons in the crypto space. Ryan Seán Adams suggested that these individuals, who are builders and engineers by nature, may use their skills to contribute to the crypto future. Furthermore, there is a strong focus on layer twos in the crypto industry, with various innovations and launches taking place. David is bullish on this trend, as well as on regulators who effectively carry out their duties. Hester Peirce, an SEC commissioner, was introduced as an example of a regulator who approaches crypto in a different manner than Gary Gensler.
Hester Peirce's Concerns with SEC's Focus on Expanding Jurisdiction: Effective regulators, like Hester Peirce, prioritize dialogue and clear guidelines to govern new asset classes, aiming for a collaborative environment that fosters innovation and reduces public frustration.
The role of principled and effective regulators, like Hester Peirce, is crucial for the growth and development of the crypto industry. During a recent interview, Hester expressed her concerns about the SEC's primary focus on expanding jurisdictional reach rather than upholding principles. She emphasized the importance of open dialogue between regulators and the crypto community to establish clear guidelines for governing new asset classes. The growing frustration among the public for institutions failing to behave responsibly and the potential for a productive partnership between regulators and the crypto industry was also discussed. Ultimately, the goal is to create a collaborative environment that fosters innovation and moves technology forward. It's essential to remember that the crypto space is risky, but with the right leadership, we can build a more productive and transparent society.
