🔮 Dencun Reduces Fees, SLERF Burn Error, Fidelty Tries to Include Staking, El Salvador and Microstrategy Love BTC

Token Specific News

Ethereum's Dencun Upgrade Reduces Layer 2 Fees Dramatically

Ethereum's Dencun upgrade, featuring the introduction of "blobs" for cheaper data storage, has led to a significant reduction in transaction fees across Layer 2 (L2) networks, marking a pivotal moment in Ethereum's scalability journey. Networks like Optimism, Base, and Starknet have witnessed substantial fee drops, with median gas fees on Base plummeting from around $1 to just $0.0012, showcasing the tangible benefits of the upgrade. This drastic fee reduction underscores the upgrade's importance in enhancing the competitiveness of Ethereum's L2 ecosystem against other low-fee networks. While the transition to blobs has brought immediate cost savings, increased demand for blobspace may lead to slightly higher transaction costs in the future, highlighting the need for ongoing optimization efforts.

Source: Dune

Evaluating Grant Funding in Web3

Grant funding in the Web3 ecosystem, unlike traditional startup financing, supports public goods without requiring equity stakes. A recent report analyzing thirteen grant programs, totaling over $1 billion, shows varied outcomes. The Algorand Foundation's experience reflects both successes and hurdles. Initially effective in jumpstarting the Algorand blockchain ecosystem, the foundation's grant program faced diminishing relevance as the ecosystem matured. Challenges included managing overheads, assessing impact, and combating grant farming. These findings underscore the complexity of grant funding in Web3, emphasizing the need for adaptable strategies.

Bitcoin Flash Crash on BitMEX Triggers Speculation and Investigation

Bitcoin experienced an unexpected and dramatic flash crash on the BitMEX exchange, plunging to $8,900 from over $60,000 within just two minutes before swiftly recovering. Speculation emerged, suggesting that a massive sell order, possibly from a whale, catalyzed the crash. BitMEX responded promptly by launching an investigation into potential trader misconduct, particularly on its Bitcoin-USDT spot market. The exchange stated that the BTC sell orders were too substantial and frequent for market makers and traders to react to effectively. As part of the investigation, BitMEX temporarily suspended withdrawals for a select group of accounts involved in the crash. Despite BitMEX's assurances that the incident had no significant impact on the broader market, Bitcoin's price remains down 7% at $63,000 over the last 24 hours.

Source: TradingView

Accidental Token Burn Sparks Chaos in Solana Memecoin SLERF

The team behind the Solana-based memecoin SLERF inadvertently burned $10 million worth of tokens, leading to dismay among early investors. The project's developer confessed to the error on social media, expressing regret and acknowledging the irreversibility of the situation due to revoked mint authority. Despite the turmoil, SLERF token experienced a staggering 60% drop initially but has since surged by nearly 2,000% in the past 24 hours, reaching a market capitalization of $250 million and witnessing $2 billion in trading volume. The incident underscores the frenzy surrounding memecoins, with some investors viewing the mishap as a potential catalyst for further price appreciation. The mishap also prompted humor about Solana becoming deflationary, following the removal of 53,000 SOL from the supply. However, the incident may have tax implications, as noted by crypto tax platform TokenTax. The SLERF team has been actively engaging with the community, offering apologies and assurances of working on a solution to refund affected investors, despite the developer responsible for the mistake claiming they are no longer involved in the project.

March Spot Volume Surge

March has emerged as a landmark month for cryptocurrency spot volume, surpassing February's figures and poised to become the highest-volume month since November 2021. The uptrend reflects the sixth consecutive month of growth, with volumes steadily climbing from the lows witnessed in September. Binance is experiencing a resurgence, accounting for a significant portion of the total volume in March. With approximately $727.5 billion in volume, Binance is on track to achieve a market share of over 46%, marking its highest since June 2023. Despite facing regulatory challenges and declining volumes at the end of last year, Binance's recent performance indicates a turnaround in its market share decline. Although spot volume may have peaked earlier in March, it remains substantially elevated compared to earlier in the year, driven in part by asset appreciation. The outlook suggests that March volumes are likely to surpass those of February by a significant margin.

Source: The Block

Regulation

Fidelity Amends Ethereum ETF Application to Include Staking Plans

Fidelity, managing $4.5 trillion in assets, has updated its spot Ethereum ETF application to reveal intentions of staking a portion of the fund's Ether through a third-party staking provider. The amended filing, submitted to the SEC, highlights Fidelity's strategy to earn network rewards in Ether tokens, potentially treated as income for the fund. The SEC now has 90 days to respond to the amendment, with the deadline for BlackRock and Fidelity's Ether ETF applications set for May 23. The news briefly boosted governance tokens of liquid staking providers like Lido (LDO) and Rocket Pool (RPL), although Fidelity's preference for a centralized staking provider led to retracements in token prices. Fidelity joins Ark Invest and Franklin Templeton in seeking approval for spot Ether ETFs, all intending to stake a portion of their funds' Ether. Staking allows asset holders to validate Proof of Stake blockchains and earn rewards, with Ethereum transitioning to PoS consensus in September 2022.

BIS Report Sheds Light on User Behavior in DeFi Lending Pools

The Bank for International Settlements (BIS) has released a report titled "DeFi Leverage," focusing on user behavior within decentralized finance (DeFi) lending pools. The report examines the process of tokenized borrowing, where users deposit crypto assets into a lending pool and borrow against their collateral, subject to predetermined loan-to-value (LTV) ratios. By analyzing over eleven million data points from nearly 56,000 Ethereum blockchain users spanning January 2021 to March 2023, the report reveals that participants exhibit conservative borrowing behavior to avoid significant losses through automatic liquidation. Despite the potential for instant settlement, users typically maintain debt for around two hundred days, with an average debt of $0.6MM against an average asset of $1.2MM. The findings underscore the importance of considering user behavior in the design of collateralized borrowing platforms, particularly with the emergence of tokenized assets.

You Are Not The Father Satoshi

A U.K. judge, James Mellor, has ruled that Craig Wright is not Satoshi Nakamoto, the pseudonymous creator of Bitcoin, nor the author of its whitepaper or initial software versions. The decision, following a case brought by the Crypto Open Patent Alliance (COPA) to challenge Wright's claims, was based on "overwhelming" evidence against Wright's assertions. Testimonies from key figures in Bitcoin's creation, including Adam Back and Martti Malmi, disputed Wright's claims during the trial. The lawsuit aimed to prevent Wright from claiming copyright over the Bitcoin whitepaper. COPA hailed the ruling as a victory for developers and the open-source community, stating that it ends years of misinformation and intimidation by Wright and his backers.

El Salvador's Bitcoin Journey: From Legal Tender to Significant Reserves

In a bold move in the summer of 2021, El Salvador adopted Bitcoin as legal tender, distributing $30 worth of Bitcoin to its citizens and initiating Bitcoin mining using volcanic energy. President Bukele personally purchased Bitcoin for the country's balance sheet, starting with 200 Bitcoin and adding another 200 on the same day. Recently, El Salvador announced that it has moved its Bitcoin holdings to cold storage, revealing a substantial reserve of 5,689 Bitcoin, worth over $400 million, a remarkable achievement given the country's modest revenue. This development highlights the increasing interest in Bitcoin among nations and underscores its potential significance as part of national reserves.

BlackRock Introduces Tokenized Asset Fund 'BUIDL' on Ethereum Network

BlackRock has launched 'BUIDL,' its first tokenized asset fund on the Ethereum network. BUIDL aims to provide investors with enhanced access to on-chain offerings, transparent settlement, and platform interoperability. Although the fund's initial investment minimum was initially set at $100,000 in an SEC filing, it has now been raised to $5 million. To facilitate integration with traditional markets, BlackRock has partnered with Bank of New York Mellon as the custodian and administrator. Additionally, Securitize Markets, LLC, an SEC-registered transfer agent, will support tokenization. BlackRock's strategic investment in Securitize highlights the potential of securities tokenization to transform capital markets. The announcement follows anticipation for an Ethereum-based investment vehicle, although SEC approval for a spot Ethereum ETF remains uncertain. Despite regulatory challenges, BlackRock's move underscores its commitment to embracing tokenization for traditional financial products.

Other Domestic Regulation Updates

• At the start of the week, Donald Trump raised (more) eyebrows when he seemed to backtrack from previous criticism of Bitcoin and crypto. Now, a new poll shows that crypto holders favor him for U.S. Commander In Chief, 48% to 39% over President Joe Biden.
• Federal Judge Finds U.S. Committed Gross Abuse of Power in DEBT Box Suit

Other International Regulation Updates

• Hong Kong’s central bank begins new phase of its CBDC pilot
• Bitwise CIO says 'we’re probably a few weeks away' from first wirehouse to support spot bitcoin ETFs
• IMF Asks Pakistan to Tax Crypto Gains as a Condition of Bailout
• Binance says it’s working ‘collaboratively’ with Nigerian authorities

Pain & Gain

Pain

• Binance quietly spun off $10 billion venture arm Binance Labs
• MicroStrategy now holds over 1% of bitcoin’s total supply after latest purchase

Gain

• Maker moves to meet demand for DAI
• Mining giant Marathon set to buy another site just weeks ahead of bitcoin halving
• Solana market cap hits all-time high, price surges 10% amid memecoin fever
• Elon Musk threw fans a bone during a recent factory visit in Berlin, saying he would like his company to accept Dogecoin to buy Tesla vehicles