Podcast Summary
Shapella hard fork and crypto news updates: The Shapella hard fork led to ether withdrawals, while the crypto market saw Bitcoin's price surge above $30,000. The team covered Arbitrum DAO drama, MEV drama, and Token Hub launch, emphasizing the importance of crypto tax calculators for tax season.
The Shapella hard fork went live last week, leading to widespread ether withdrawals. During this time, the Bankless team continued to deliver weekly crypto news, covering topics such as the Arbitrum DAO drama, MEV drama, and the new product launch of the Token Hub. The market saw a significant increase in Bitcoin's price, crossing the $30,000 mark, and the team discussed the importance of using crypto tax calculators for tax season. Additionally, there was a brief mention of a potential breakup prank and the release of discount codes for Bankless Nation premium subscribers. Overall, the crypto space remained active with various developments and price movements.
Recovery from Significant Liquidation Events: Bitcoin and Ethereum have recovered from major liquidation events, surpassing previous milestones, and are currently hovering around significant price levels. New buyers and challenges lie ahead as they aim to surpass $40,000 for Bitcoin and $4,000 for Ethereum.
The Bitcoin and Ethereum markets have recovered from significant liquidation events that occurred at round number milestones, specifically $30,000 for Bitcoin and $2,000 for Ethereum. These events, which were caused by 3 Arrows Capital, led to significant price drops in 2021. Bitcoin has now surpassed $30,000, erasing the FTX liquidation and the three-year capital liquidation. Ethereum, on the other hand, hit its lowest point at $870 during the three-year capital liquidation but did not reach new lows during the FTX event. The next major milestone for both cryptocurrencies is to surpass $40,000 for Bitcoin and $4,000 for Ethereum, which would put them above the last major contagion events that contributed to the bull market. These milestones may require new buyers and will likely be challenging to reach. Additionally, Ether is currently hovering around $2,000, and the speaker has revised their prediction of a potential dip back into triple-digit prices.
Market volatility and differing opinions on crypto market direction: Despite market volatility, opinions differ on whether crypto is in a correction or a larger bear market. Some see it as a rerating, while others believe a potential economic recession could lead to a 50% haircut for crypto assets. However, crypto could also act as a hedge against inflation and economic downturns, and new layer twos are entering the scene.
While the crypto market has seen significant volatility and some bearish sentiment, there are differing opinions on whether this is just a correction or the beginning of a larger bear market. Itai, for instance, believes that the current market conditions are a rerating, but a potential economic recession and bear market for traditional stocks and indices could still be ahead. This could lead to a potential 50% haircut for crypto assets like Bitcoin and Ether. However, some argue that crypto could act as a hedge against inflation and economic downturns. The market is currently showing signs of growth, with the total crypto market cap reaching $1.3 trillion and new layer twos like zk Sync era and Polygon entering the scene. However, the future remains uncertain, and the opposing forces of crypto as a risk asset versus a monetary hedge will likely determine the market's direction.
Crypto's Resilient Developer Base and Key Trends: Despite regulatory pressures and lack of public confidence, crypto's developer base remains resilient, with a steady increase of 60% over 3 years. The US is losing its lead in Web 3 development, and education and understanding are needed to bridge the information gap and bring more utility to the crypto space.
Learning from the 16z annual crypto report is the resilience of developers in the crypto space. Despite some downward trends, the number of active developers building on crypto has remained relatively stable, with a steady increase of 60% over the last 3 years. This growth in developers is crucial for the expansion of utility and fundamentals in the crypto industry. Another significant finding from the report is the US losing its lead in Web 3 development due to regulatory pressures. This trend has seen a 26% decrease in the proportion of crypto developers based in the US compared to the rest of the world between 2018 and 2022. Additionally, a Pew Research Center survey revealed that the majority of Americans are not confident in the safety and reliability of cryptocurrency. However, despite this lack of confidence, crypto still outperformed the US government in the survey. This information gap and lack of understanding among the public present an opportunity for the industry to educate and bring more utility to the crypto space. In summary, the crypto industry's resilient developer base, the US losing its lead in Web 3 development, and the need for education and understanding among the public are the key takeaways from the 16z annual crypto report.
Ethereum's Shapella hard fork enables ether withdrawals: Ethereum's Shapella upgrade completes the loop for ether transactions, allowing users to stake and withdraw ether on the same day, enhancing network security and sustainability. The popular Phantom wallet is expanding to Ethereum and Polygon, and Kraken remains committed to its customers with a focus on security, transparency, and support.
The Ethereum network underwent a significant upgrade called the Shapella hard fork, which enabled ether withdrawals for the first time since the network transitioned to proof-of-stake. This upgrade marks a major milestone in Ethereum's development, as it completes the loop between staking and withdrawing ether. Previously, staking ether was a one-way process, but now, users can stake and withdraw their ether on the same day. This improvement enhances the security and sustainability of the Ethereum network by allowing a full loop for ether transactions. Additionally, the Phantom wallet, which is popular on the Solana network, is coming to Ethereum and Polygon, bringing its beloved UX and staking features to these networks. Kraken, a trusted and experienced crypto exchange, continues to prioritize its customers with its focus on security, transparency, and client support.
Ethereum's Shapella Hard Fork: Staked ETH Withdrawals and Network Security: Despite initial concerns, Ethereum's Shapella hard fork enabled staked ETH withdrawals, leading to a price pump and network security improvements. Users were encouraged to redistribute staked ETH for a more secure network.
The Ethereum community successfully executed the Shapella hard fork, which enabled the withdrawal of staked ETH, despite initial concerns about its impact on ETH price and network security. Contrary to fears of a massive sell-off, the price actually pumped to $100 post-withdrawals. The ether-bitcoin ratio also saw a slight improvement. The bottleneck for ETH going between being staked and unstaked is a deliberate measure to maintain Ethereum network security. Danny Ryan, a key figure in Ethereum, encouraged a redistribution of staked ETH among pools for a more secure network. The hard fork was celebrated in person by Ethereum enthusiasts, who gathered to watch the event unfold live. Despite initial expectations of a flawless execution, there were some missed blocks, but Ethereum's antifragile nature ensured that this was not a major issue. Overall, the Shapella hard fork was a success and marked a significant milestone in Ethereum's transition to Proof of Stake.
Unexpected high number of red blocks during Ethereum Merge: Despite bugs in two clients, Lighthouse and Prism, Ethereum successfully transitioned to proof-of-stake, highlighting the importance of a multi-client architecture in preventing potential issues and ensuring network stability.
The Ethereum Merge, a significant event in the blockchain world, was not without its challenges. During the event, some blocks were displaying an unexpected high number of red blocks instead of the usual green ones. This caused concern among those present, including Vitalik Buterin and Tim Beiko. The issue was due to quick bugs with two different clients, Lighthouse and Prism, which were promptly fixed. Despite the hiccups, the merge was successful, and the Ethereum network transitioned from proof-of-work to proof-of-stake. The multi-client architecture played a crucial role in mitigating the impact of the bugs and ensuring the network's stability. The event underscored the importance of having multiple clients in a blockchain network to prevent potential issues. Additionally, the total amount of ETH on the beacon chain had surpassed expectations, with over 19 million ETH staked. Despite some concerns about a potential exodus of staked ETH, the circulating supply of ether was increasing due to unstaking, but not necessarily selling, as the price continued to rise. Overall, the Ethereum Merge was a suspenseful event, but it ultimately proved successful, demonstrating the resilience and adaptability of the Ethereum network.
ETH Shanghai hard fork leads to massive ETH withdrawals: Kraken leads 70% of 551,000 ether withdrawals due to US regulatory pressure, price remains stable, staking APY increases, new deposits expected.
The Ethereum network is currently experiencing a significant influx of withdrawals as the long-awaited Shanghai hard fork enables the withdrawal of staked ETH. Kraken, a major cryptocurrency exchange, is leading the charge with over 70% of the total withdrawals, amounting to approximately 551,000 ether. This surge in withdrawals is largely due to regulatory pressure in the United States, forcing Kraken to discontinue its staking services. However, it's essential to note that this is not a mass exodus of staked ETH, as many are simply withdrawing their rewards instead of their principal. The price of ETH has remained stable during this event, suggesting that most of the withdrawn ether is not being sold. Furthermore, the staking APY has increased as fewer validators stake their ETH, leading to an overall increase in the APY. Looking ahead, we can expect to see an influx of new deposits as a result of the derisking event. As for Arbitrum, there was controversy last week surrounding its foundation and its handling of community concerns. For a more comprehensive understanding of both topics, Bankless.com is an excellent resource.
Miscommunication in the Arbitrum Community: Effective communication is essential in decentralized projects, as the Arbitrum incident demonstrates. Unclear assumptions and roles can lead to misunderstandings, mistrust, and negative consequences.
Effective communication is crucial in the decentralized world of blockchain projects, as evidenced by recent events in the Arbitrum community. A proposed Arbitrum Improvement Proposal (AIP) for the foundation to receive a large sum of tokens was met with community opposition in a snapshot vote. However, the Arbitrum team viewed this as a ratification, not a binding vote. The ensuing confusion led to accusations of miscommunication and mistrust. A new proposal has emerged for the foundation to return the funds to the DAO, but it was also voted down. The DAO, as a decentralized entity, lacks the legal obligations and settlement layers found in traditional corporate structures. As a result, a DAO vote functions more as a social signal than a binding decision. The Arbitrum team's assumption that the community would support returning funds to the foundation was not well-received, and the lack of clear communication led to frustration and mistrust. This situation underscores the importance of transparent and clear communication in the decentralized world. In essence, the Arbitrum situation highlights the need for effective communication and a clear understanding of the roles and responsibilities within a decentralized organization. Failure to provide this clarity can lead to misunderstandings, mistrust, and potential negative consequences for the project.
Early Stages of DAOs: Grace Periods and Exceptional Circumstances: In the beginning of a DAO or foundation, there's a need for a grace period to handle initial setup and exceptional circumstances, outside of DAO governance for efficiency and legal reasons.
During the early stages of a decentralized autonomous organization (DAO) or foundation, there should be a grace period for exceptional circumstances, such as the initial creation and initialization, which should be outside of DAO governance for efficiency and legal reasons. Eric Wall, a delegate, expressed his concern about the Arbitrum Foundation's current situation but plans to abstain from voting due to the importance of the foundation's work. The proposal for the Arbitrum Foundation to regain control of its funds did not pass. Moving on, Euler Finance has recovered most of its stolen funds, but there is an additional process for depositors to redeem their funds. Lastly, Uniswap Labs offers various products for buying, selling, and using self-custody digital assets securely, and Metamask Learn is an educational platform for learning about crypto and web 3 in a jargon-free environment.
Crypto's Rollercoaster Ride: Hacks, Recoveries, and New Platforms: Despite losses from hacks and user preference for stablecoins, the crypto market recovers and introduces new platforms to enhance user experience and expand reach.
The crypto world experienced both a significant loss and a remarkable recovery in recent events. In the Euler Finance hack, attackers exploited the system and stole millions, leaving victims in a waiting game for their funds to be returned. The perpetrator, known as "Jacob," returned the stolen funds, but the incident highlighted the importance of robust security measures in the crypto space. Meanwhile, in more positive news, David Marcus, a tech industry veteran with experience at Facebook, PayPal, and now Bitcoin, announced the launch of LightSpark, a platform aimed at improving the user experience and expanding the reach of the Lightning Network. The crypto market also saw a surge in asset prices, helping FTX, a bankrupt crypto exchange, recover over $7 billion in assets and consider a relaunch in the current quarter. However, the crypto market's successes come with challenges. The UX issue remains a significant barrier to mainstream adoption, with users preferring stablecoins over volatile cryptocurrencies like Bitcoin. Additionally, FTX's relaunch may require substantial capital due to the disconnect between the customer interface and the actual movement of funds behind the scenes. Overall, the crypto world continues to evolve, with both challenges and opportunities on the horizon.
FTX's Potential Relaunch and Japan's Crypto Adoption Progress: FTX may struggle to regain consumer trust post-bankruptcy, but Japan advances in crypto adoption, promoting tokens as fundraising tools and DAOs as LLC-like entities.
While FTX exchange is considering a relaunch after bankruptcy proceedings, it remains uncertain if the exchange will regain consumer trust, especially given the leadership void left by Sam Bankman-Fried. On a positive note, Japan is making strides in crypto adoption, with the Liberal Democratic Party pushing for crypto-friendly initiatives and tax reforms. Japan aims to promote tokens as fundraising tools for web 3 startups and establish DAOs similar to LLCs. These developments indicate a growing global interest in crypto and the need for Western countries, including the US, to catch up. Meanwhile, in lighter news, a dodgeball tournament is being proposed as part of the Permissionless event in Austin, Texas, giving crypto communities an opportunity to come together and compete. The token hub is now available for bankless citizens, offering premium benefits.
Bankless Team's Token Ratings and Discussions: Bankless offers bullish, neutral, and bearish ratings on 28 tokens, allowing users to engage in discussions and mark favorites. MetaMask's new feature enables direct crypto purchases, while security involves revoking access to untrusted smart contracts.
The Bankless team provides neutral, bullish, and bearish ratings on 28 different tokens from their analysts, which users can access through the Token Hub on their website. Uniswap, the dominant decentralized exchange, is rated as bullish due to its presence on multiple layers and monopoly on volume. Users can also mark their favorite tokens and engage in discussions about ratings within the Bankless community. MetaMask's new feature allows users to buy crypto assets directly from fiat through their wallet. Additionally, it's essential to revoke access to smart contracts that are no longer trusted to maintain wallet security. The team also shares insights from the Bankless Nation and discusses their personal bullish picks. Sponsors like Arbitrum continue to contribute to the growth of the web 3 landscape.
Rapidly growing crypto industry with challenges and opportunities: Education and awareness are crucial to combat scams and secure assets in the rapidly growing crypto industry, while platforms like Bankless Token Hub offer resources for learning and collaboration.
The crypto industry, specifically on platforms like Arbitrum, is rapidly growing with the deployment of numerous projects, including DeFi and NFT ecosystems, gaming and social dapps, and is becoming more accessible with faster transaction speeds and lower gas fees. However, the industry also faces challenges, such as scams that can negatively impact trust and growth. To combat this, education and awareness are crucial, and users must take responsibility for securing their assets. Platforms like Bankless Token Hub aim to help by providing research, ratings, and a community for learning and collaboration. While the crypto space may not be as secure as traditional finance, it offers unique opportunities for investment and innovation.
Navigating the Risks and Opportunities of Cryptocurrency and Decentralized Finance: Older individuals face heightened risks in the crypto space due to lack of native fluency, but these risks decrease over time as the industry matures. Regulatory involvement in innovation could both prevent mistakes and freeze progress.
We are currently in the early stages of a new frontier in technology, specifically in the realm of cryptocurrency and decentralized finance. This frontier comes with significant risks, but also immense opportunities. Older individuals who are learning these systems from scratch are more vulnerable to scams and fraud due to their lack of native fluency. However, this risk is a necessary part of the innovation process. With time, these risks will be mitigated, and the upside potential will decrease. For example, it is safer to hold Ethereum today than in 2016, and using multisig wallets is safer now than in 2017. Chamath Palihapatya argues that as we create things with broad societal impact, positive and negative, the government will create a layer of review and approval to prevent avoidable mistakes. On the other hand, Novell argues that inviting regulators into the innovation process could freeze progress, as we have seen in healthcare and energy. Ultimately, both perspectives highlight the importance of navigating the risks and opportunities of this frontier and the role of time and innovation in shaping its future.
Imagining new forms of regulatory institutions: To foster innovation in tech, we need new, effective, and less corrupt regulatory institutions. Traditional gov bodies have pitfalls, so focus on open-source code and Ethereum-like institutions.
While there is a need for regulatory institutions in the technological landscape, it is essential to imagine and create new forms of institutions outside of traditional government bodies. The current regulatory institutions have their pitfalls, with some being too far on the side of incumbent protection and corruption. The ongoing development in crypto, particularly in the form of open-source code and institutions like Ethereum, presents new and innovative ways to regulate and coordinate. Chamath's perspective on the need for regulatory institutions for AI is valid, but it is crucial to avoid a one-size-fits-all approach. Instead, we should focus on creating new, effective, and less corrupt regulatory institutions that foster innovation rather than stifle it. In the case of ETH staking, the industry's growth and maturation hold great promise for the future, with numerous innovations on the horizon.
Ethereum's progress towards fulfilling promises with PoS and layer 2 solutions: Collective staking through 'squads' makes Ethereum staking accessible to all, while PoS, layer 2 solutions, and EIP 4844 bring Ethereum closer to its core promises, boosting community morale.
Ethereum's transition to Proof of Stake (PoS) and the implementation of layer 2 solutions are bringing Ethereum closer to fulfilling its initial promises. The discussion also introduced the concept of "squad staking," where individuals join forces to stake ETH collectively, making it an accessible option for those who don't have the resources to stake solo. The speakers expressed excitement about the upcoming EIP 4844 hard fork, which will bring proof of stake, cheap layer 2 block space, and the fulfillment of Ethereum's core promises. The community's morale is high as Ethereum continues to ship new updates at a rapid pace. Additionally, the speakers shared their appreciation for the Bitcoin Standard book, acknowledging its impact on the crypto community, even if they don't fully agree with its author's views. Remember, this conversation does not constitute financial advice.