Crypto is polarizing US politics
We stay on-chain, so you don't have to. Get ahead of the curve weekly in 5 minutes.
The S&P 500 is at all-time highs. BTC showed signs of strength going as high as $72,000, $2,000 short of its all-time high, and ETH is hours away from potentially having its first spot ETFs approved in the U.S.
Honestly, in such a scenario, it’s hard to not be bullish.
On a Real-world note, U.S. politics (Democrats, in particular) seems to be changing their stance on crypto ahead of elections — while it’s not a topic that wins votes, it's definitely one that can lose them. In fact, the 2024 elections are probably the first ones where crypto plays such an important role. The SEC did an incredible U-turn on its ETH ETF stance, and an important crypto bill has just been passed in the U.S. House.
While the ETF is certainly bullish Ether, which is shown by the huge increase in DeFi activity, over the long term investors will start seeking beta plays involving the next approved ETF — with odds in favor of SOL, LTC, and DOGE — and Ethereum’s ecosystem tokens. Regarding alt-coins, there hasn’t been much movement, except for memes showing some strength.
Broadly speaking, BTC keeps ranging near its ATH while its dominance lowered a little due to ETH gaining significant momentum, with the former seeing a healthy 8.3% increase in spot ETFs net inflows are nearing the $60B mark once again. Whilst the Total market cap increased by 7.26%, stablecoins inflow within the system is stagnant, signaling we’re still in a PvP environment.
SEC makes U-turn on Ethereum ETFs leaning toward approval
Odds weren’t looking good for Ethereum spot ETFs until the last few days, yet when last hopes were about to be given up Bloomberg analysts confirmed a U-turn by the SEC on the matter. Apparently, the approval has become increasingly political with Democrats trying not to make themselves too many enemies during an election year. A bipartisan group went as far as sending a letter to Gary Gensler urging the SEC to approve the ETFs.
As soon as the news broke markets showed their hands vigorously, with ETH over-performing BTC 23% to date and showing a gas frenzy on Ethereum as people started longing.
Now, what to expect, and when? VanEck’s application is the first in line, with its deadline today. Reasonably, a SEC response should come at about 4 pm ET or 8 pm UTC — and if things were to go as they went with BTC ETFs we’ll see them all approved at once.
However, to begin trading an ETF needs to receive approval for its 19b-4 application, and an S-1 filing as well. While the first formally approves the ETF, the latter is needed to effectively begin trading. Given the sudden change of sentiment, it’s likely to see the 19b-4 applications approved right away but for S-1 filings (hence, trading) to take a few weeks if not months while exchanges get details straight with issuers.
One peculiar detail is that the few issuers that included staking of the underlying ETH in their application have updated their filings removing the feature, so that Ethereum tokens securing the spot ETFs won’t be able to earn the ~ 3.5% staking yield to validate the Proof-Of-Stake network. Likely this was a bargaining chip to get them approved faster, but nothing rules out for it to be implemented in the future. Valkyrie, instead, decided to renounce listing for this very reason.
As to size and inflows, Grayscale’s ETHE trust is looking to convert into a Spot ETF, allowing $10.8B to migrate to other cheaper ETFs or exit the market (in a similar fashion to what happened with GBTC). The fund currently represents ~ 17% of the BTC ETFs market. While inflows are hard to predict, the HK ETH ETFs are 18% the size of BTC ones, and in a risk-on scenario many investors could decide to rotate some BTC ETFs into ETH ones.
Markets are forward-looking, so what’s next? Assuming the ETH one gets approved, bets on the next ETFs lie with SOL, DOGE, and LTC. The first one has definitely more demand, but the token was defined as a security by the SEC and would probably need to start trading as a Future contract on U.S. markets for a while before approval is granted; on the other hand, while DOGE and LTC approval seems easier they seem to be lacking considerable demand.
“Decentralizing the supply”: WLD is unlocking $50M per day — 𝕏/DefiSquared
Fantom Foundation unveils Sonic Network
After raving about the potential of 10,000 TPS on testnet, the Fantom Foundation is ready to back its words with a real test. So-called Fantom 2.0, the Sonic network has now been formalized as a governance proposal. In short, the chain would use a new token called S, and leverage a high TPS L1 architecture powered by a L2 bridge connected to Ethereum’s mainnet and others.
FTM holders would be able to convert their tokens 1:1 at Genesis, with the Fantom Foundation earmarking a significant portion of its treasury holdings for various incentives. Even though most activity is expected to migrate there, the Fantom “1.0” chain would continue operating with FTM as a gas token. One peculiarity of the proposal is the tease of an S airdrop, possibly to incentivize early usage of the network. While FTM showed some strength following the news, it has only slightly outperformed BTC since the beginning of the year.
Fastest wins the race? CoinGecko ranked blockchains per real TPS, with Solana taking the first spot with 1053.7 transactions per second — coingecko.com
EigenLayer is hiring Ethereum Foundation people. Should we worry?
Show me the incentives and I’ll show you the outcome, they say. EigenLayer is introducing perhaps one of the biggest revolutions to Ethereum since its inception — leveraging its security to validate other networks and applications. But that comes with inherent risks, risks that could damage the base layer as well. You can watch this video to delve deeper into the topic — the issue is that of all the guests here, Vitalik is the only one without a potential conflict of interest in seeing EL succeed. Do you see the problem? Justin Drake and Dankrad Feist have been called out for not disclosing their multi-million advisor position to EigenLayer, while others are investors and/or employees.
The low float high FDV meta: Cobie published a Substack post highlighting the shift of upside from public to private markets.
LayerZero doubles down on Sybil hunting
LayerZero labs announced the ending of the self-reporting phase of its Sybil hunt campaign ahead of TGE, where one could report its address to retain 15% of allocation in case he did partake in Sybil-related activities.
With about 100,000 self-reported addresses, the project used the help from Nansen and Chaos Labs to identify another ~ 700,000 addresses using similar patterns.
Given there’s 6M total addresses, that’s not huge in itself, but now comes the “fun” part: everyone will be able to report, until May 31st, clusters of at least 20 addresses considered to be Sybils. By doing so, they’ll gain 10% of the Sybil intended allocation, with the cluster allocation erased.
Gone too far? A Solana developer has been hospitalized with third-degree burns, the reason? he was trying to pump a meme coin — Decrypted
Bitcoin’s Pizza Day: the first time BTC bought goods
May 22, 2010. Laszlo Hanyecz convinced someone to send him two Papa John’s pizzas in exchange for 10,000 BTC. The BTC is now worth ~ $700M, and the transaction marked the first time someone allegedly bought goods using Bitcoin. Today, the same pizzas would cost as low as 0.00037 BTC. Wonder what that’ll be in another 10 years?
Happens on-chain
Mode adds 200,000 OP to its staking module — 𝕏/modenetwork
Pump.fun exploit post-mortem — 𝕏/pumpdotfun
Kernel Protocol introduces Karak-native LRTs — 𝕏/vectorreserve
There’s a proposal to introduce a mETH governance token — 𝕏/GarretZ
After stealing $75M+, the notorious “Pink Drainer” announces intention to shut down — t.me/ZachXBT
The value of Blast Gold nearly tripled due to past incorrect estimates — 𝕏/PacmanBlur
Crypto Punks releases 500 pieces collection — 𝕏/cryptopunksnfts
Governance proposal for next launchpad is up for voting on Jupiter — vote.jup.ag
Whales Market launches meme launchpad platform — whales.meme
DCA into WIF using your SOL staking rewards with wifSOL — 𝕏/sanctumso
Eric Wall winds down Orb Land — 𝕏/ercwl
MetaMask is working to integrate Bitcoin into its wallet — CoinDesk
deBridge unveils DBR token ahead of potential Jupiter launchpad — The Block
The Hyperliquid L1 will support a native EVM — 𝕏/HyperliquidX
Traditional rails
ByBit has been blacklisted in France — amf-france.org
Trump campaign now accepting crypto — 𝕏/tier10k
British court rules Craig Wright is not Bitcoin creator Satoshi Nakamoto — 𝕏/BitMEXResearch
Grayscale CEO Michael Sonneshein steps down — 𝕏/News_Of_Alpha
Europe to launch “Europeum” blockchain infrastructure — DLnews
Uniswap Labs answers to SEC Wells Notice — uniswap.org
Worldcoin ordered to halt operation by HK’s PCPD — CoinTelegraph
Venezuela bans crypto mining to protect power grid — CoinTelegraph
Kraken denies rumors of USDT delisting in Europe — 𝕏/marklg
Grayscale launches trusts for STX and NEAR — Decrypt
FIT21 bill has been approved by U.S. House in an effort to give a clearer crypto framework — 𝕏/drjasper_eth
Hong Kong SFC in talks to allow staking for Ether ETF issuers — 𝕏/News_Of_Alpha
Tech go up
ChainLink shares results of industry pilot with world’s largest financial institutions — 𝕏/chainlink
Cosmos NFT marketplace Stargaze brings Ethereum & Polygon NFTs onboard using zk-IBC bridge — 𝕏/StargazeZone
Sei puts up a proposal to implement Sei v2 — 𝕏/SeiNetwork
VCs go brrr
Farcaster raised $150M Series A Round at $1B valuation, led by Paradigm — crypto-fundraising.info
Binance Labs invests in perpetuals platform Aevo — binance.com
Airdrops
zkSync rumored to TGE this week, with 21B supply — The Block
Mantle updated EigenLayer dashboard for mETH holders — mantle.xyz
You can now check Scroll “marks” points — 𝕏/Scroll_ZKP
You have until May 31st to claim your Rabby points — 𝕏/Rabby_io
Mitosis 3rd epoch opening on May, 24th at 15:00 UTC — 𝕏/MitosisOrg
Taiko’s TKO airdrop claim is live — claim.taiko.xyz
Upcoming events
May, 23: Final deadline for VanEck’s ETH spot ETF application
May, 24: ASI token launch
May, 25: ALT unlocks 7.73% of its circulating supply
June, 01: DYDX unlocks 11.91% of its circulating supply
Infinex, backed by Syntethix’s founder Kain Warwick, is trying to take over CEXes with the ease of use of blockchains. For a limited time of 30 days, you can deposit USDC on multiple blockchains, and farm points that can be converted to governance NFTs at a later stage. Skipping the regulatory shenanigans, napkin math suggests that points should floor at $0.025 each, suggesting a 25% return or 300% APR on deposits.
Aptos aficionado? Say no more. By looping your USDC on Aries, you can achieve up to a 60% APY, paid in USDC and APT.
Want to be part of the Stay on-chain community? Join the crew on Telegram, and follow our latest announcements here.
If you found this edition valuable, why not share it with a friend?
Forward this email—it's the best gift you can give us!
Thank you for reading and see you next week!
Disclosure: Authors may own crypto assets named in this newsletter. Stay on-chain is meant for informational and educational purposes only. It is not meant to serve as investment advice. Please consult your investment, tax, or legal advisor before making investment decisions.