BTC and ETH have been range bound since the sell-off on March 2, though ETH looks marginally stronger here. DeFi tokens are showing signs of strength relative to alt L1s and ETH L2s which look weaker than the majors. It's chop season, so I am expecting more volatility ahead. Powell is on the second day of his Congress tour and said enough to push equities slightly higher. In addition, job openings beat expectations by falling to 10.8 million. My macro quant tells me job openings can be used to get a pulse check on the labor market, so the Fed was likely aiming for fewer job openings to weaken the pressure on US wages. Grayscale just wrapped up oral arguments in its lawsuit against the SEC for blocking the transition of GBTC into a spot ETF. Overall, it appears the sentiment is that Grayscale won this round of the debate. Jeff Roberts posted a thread on the discussion, noting that judges hammered the SEC on its decision to approve a futures market but not a spot market ETF. The next step is a final decision from the court. So far it looks like the market agrees, as GBTC is trading up 15% over the last week, contracting the discount from 45% to 35%. Considering the market strongly believed this was not going to happen, ETF approval would act as a massive narrative tailwind in the middle of a bear market by legitimizing the industry. It feels like the SEC is launching an all-out attack against crypto. This would be a major battle to win in the long war ahead. - Dan Smith |
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Bitcoin has a long-term sustainability problem stemming from its lack of transaction fee generation. I explained my view of this issue and why it will lead to the flippening in the Blockworks Research 2023 Theses report. In late January, ordinal inscriptions were popularized as a way to attach files (text, audio, video, etc.) to individual sats (0.00000001 BTC). The idea became quite popular on Crypto Twitter as it essentially mimics NFTs for Bitcoin and could be a way to drive more fee revenue to Bitcoin miners. Galaxy wrote a detailed piece on the concept, suggesting the ordinal inscription market could grow to $5B by 2025. Over 345k inscriptions have been created to date resulting in $1.5M of fees for miners. The chart of the day details the daily Bitcoin miner revenue broken into block subsidy, transaction fees, and ordinal inscription fees. If you break out the microscope, you can see ordinals generated just 0.2% of the total block rewards paid to miners in February. I see this as the most exciting development on Bitcoin in recent years, but I am personally not sold on ordinals becoming a $5B market. Regardless, it is a refreshing sight to see innovation on Bitcoin. |
Just two weeks ago, the Curve DAO passed a governance vote that added moving averages to its liquidity pools. New pools can be launched that emit a "price oracle" based on the exponential moving average (EMA) of the swaps in the liquidity pool. Yearn was one of the first protocols to take advantage of this by launching a new yCRV/CRV pool. There is a new vote live for this yCRV pool to expand the EMA calculation from 10 to 30 minutes of price history. A longer EMA is less volatile and harder to manipulate, making it a stronger price oracle. But why is that useful? Well, lending protocols require price oracles, so yCRV can soon be used as collateral which drives more utility to the asset. Convex is going through a similar process for cvxCRV, an asset that has historically struggled to stay pegged to CRV. Curve continues to build true building blocks of DeFi. As these pools have zero external dependencies, they can serve as the base infrastructure for other protocols to build on top of. |
While the Superchain vision is just an idea today, Coinbase's commitment to the OP stack and partnership with the Optimism core development team makes it much more likely that it comes to fruition. |
In April 2022, Frax introduced FPI, an inflation-resistant stablecoin. The protocol recently launched a staking system for its FPIS governance token. With $2M in profits over the past year, it is worth diving into the protocol to see what comes next. |
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"KYC norms are no longer a best practice but a legal obligation," one tech lawyer said about India's latest directive for the crypto industry |
On the surface, Gensler is preoccupied with the crypto industry — but the head of the SEC is looking closely at finance's future with artificial intelligence |
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The insights, views and outlooks presented in the report are not to be taken as financial advice. Blockworks Research analysts are not registered broker/dealers or financial advisors. Blockworks Research analysts may hold assets mentioned in this report, further outlined in the Firm's Financial Disclosures. | 133 W 19th St, New York, NY, 10011 |
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