September 12, 2022       /       Unchained Daily       /       Laura Shin

Daily Bits✍️✍️✍️

• Security firms PeckShield and CertiK said that a hacker laundered $500,000 through Tornado Cash.
• FTX Ventures will take a 30% stake in Anthony Scaramucci-led investment firm SkyBridge Capital.
• The price of LUNA, the token of the Terra blockchain, rose almost 200% since Friday.
• MicroStrategy may sell $500 million worth of stock to buy Bitcoin.
• Bolt backed off on a $1.5 billion deal with Wyre, a crypto payment provider.
• Ethereum staking yield might be lower than expected after the Merge.
• Vitalik Buterin, the creator of Ethereum, showed up at the Kyiv Tech Summit to show support for Ukraine.
• The Algorand Foundation reported a $35 million exposure to troubled crypto lender Hodlnaut.
• The number of NFTs minted on the Solana blockchain reached an all-time high.
• Meta is being pushed by senators to fight crypto scams on social media. (Disclosure: I write a Bulletin newsletter.)
• Crypto VC firm Paradigm laid out legal arguments against the US OFAC sanctions on Tornado Cash.

Today in Crypto Adoption…

• DBS, Singapore’s largest bank, announced a partnership with The Sandbox to create a metaverse experience.

The $$$ Corner…

• Revolving Games, a Web3 game developer, raised $25 million in a funding round.
• Community Labs, a software development company and venture studio focused on data storage, closed a $30 million strategic investment.

What Do You Meme?

What’s Poppin’?

How the Merge Might Affect the Crypto Markets

by Juan Aranovich

Ethereum will transition from proof of work to proof of stake some time between Wednesday night and Thursday morning, and most likely it will trigger a lot of volatility in the markets.

The Ethereum Merge is one of the most awaited events in crypto history, and its success could mark the beginning of a new era. Some have been arguing that, if it succeeds, it could be the catalyst for the end of this bear market. A successful Merge would strengthen the network’s position as the go-to blockchain for investors and users. As a consequence, since the largest part of DeFi lives on the Ethereum blockchain, many DeFi tokens and protocols will benefit from the Merge.

However, an unsuccessful Merge (which is improbable given the number of successful tests) could crash the crypto markets. Preston Van Loon, Ethereum core developer, talked about whether there is a contingency plan for this situation and the likelihood of the Merge failing on last Friday’s show.

In the past months, crypto prices have been tightly correlated with the stock market, which has been strongly influenced by macroeconomic conditions. According to Chainalysis, the Merge might be the trigger for the ETH price to decouple from other cryptocurrencies like BTC because staking makes ETH more similar to a bond or a commodity with a carry premium.

The amount of ETH held on exchanges has been declining over the past year, and according to Glassnode, the percentage of ETH exchange balances is near its lows. The low supply on exchanges could mean that prices could rise quickly if there’s increased demand.

In addition, according to data from The Block, the aggregated open interest for Ethereum futures is on an upward trend. Open interest refers to the total number of futures contracts held by market participants at the end of the trading day, and the rising number reflects positive investor sentiment.

However, another thing to keep an eye out for is the possibility of Ethereum’s proof of work fork. Since not everyone has been on board with Ethereum’s upgrade, some have been pushing for an Ethereum network that keeps the proof of work consensus mechanism. There’s a lot of uncertainty around this issue, and it’s not even clear if the fork will emerge on time. For instance, Coinbase is demanding clarification of the fork chain and its activation.

There are some exchanges that have already listed the ETHPoW token. According to CoinMarketCap, the token is trading at $29, less than 2% of Ethereum.

Though the Merge seems like it could have a large effect on the ETH price, that could be dampened since the Consumer Price Index will be released on Wednesday morning. If the inflation rate continues to be high, it could push the Fed to increase interest rates, which would have negative consequences on all markets, thus muting the impact of the Merge on the price of ETH.

Recommended Reads

1. Justin Bons on Bitcoin
2. Pintail on post-Merge MEV
3. Tincho Abbate on Rocket Pool

On The Pod…

Preston Van Loon, cofounder and Ethereum core developer at Prysmatic Labs, talks about the Merge, its impact on an environmental level, and why he is a plaintiff in the lawsuit against the Treasury Department over Tornado Cash. Show highlights:

• what the Merge is on a technical level and what its impact will be
• whether the proof of stake consensus mechanism makes the network more decentralized and secure
• what happens if the Merge fails and whether there’s a contingency plan
• why Preston founded Prysmatic Labs and how Prysm works
• what the next steps are for Ethereum and what the community is working on
• whether Preston thinks a proof of work Ethereum fork would succeed
• when and how Ethereum’s high fees and scaling issues are going to be resolved
• why Preston joined the lawsuit against the US Treasury over the Tornado Cash sanctions
• how Preston would celebrate a successful Ethereum Merge

Book Update

You can purchase it here: http://bit.ly/cryptopians