Just like how my tax refunds are always delayed, the SEC has also decided to delay a few spot Bitcoin ETF decisions. Those who got delayed include BlackRock, Fidelity, and Bitwise among others. The next deadline that the SEC has is 45 days out, which puts us at mid-October for the next decision. From there on out, there are two more deadlines, with a final decision having to be made by March 2024 for most of the applications.
Binance, the largest crypto CEX by a wide margin, has decided to sunset BUSD in favor of its new stablecoin, FDUSD. Truth be told, I still haven't figured out the difference between BUSD, FDUSD, and TUSD. As part of the sunset, Binance will gradually be deprecating various BUSD functionalities, including delisting spot BUSD trading pairs. As of right now, FDUSD's market cap is 1/10th the supply of BUSD, standing at $350M, but users will be able to manually convert their BUSD balances to FDUSD at a 1:1 ratio soon.
On the macro front, the unemployment rate jumped from 3.5% to 3.8%, marking a sharp turn from the historically low unemployment rates we've seen in the past few months. The labor force participation rate also came in above expectations at 62.8% and has been trending up ever since the start of the year. However, this is still below the 63.3% participation rate pre-covid. On a MoM basis, average hourly earnings increased less than expected, only increasing 0.2% MoM vs. the expected 0.3%.
Lastly, yesterday I wrote a tweet that was a quick jab at a tweet from @superphiz, which stated that a few liquid staking providers, including Rocket Pool, Stakewise, Stader Labs, and Diva Staking have all agreed to self-limit to <22% of Ethereum validators. My tweet stated, "I hereby commit that if I ever build a business, I will never self-limit and plan on dominating my industry as a long-term monopoly." It was partially intended as a joke, but I was also being somewhat serious. I am now blocked by @superphiz, so if he happens to be a subscriber to this newsletter, I'm sorry for not aligning with Ethereum.
Liquid staking protocols are companies. Companies exist to maximize value for shareholders, or in crypto's case, for token holders. If a company has the opportunity to dominate an industry, and not at the cost of future growth, why would it not do so? Liquid staking protocols are not public goods. If anything, these four liquid staking protocols agreeing to limit their market share could potentially pave the way for Lido to strengthen and sustain its dominant position. I would argue that if you have to agree to self-limit through social consensus, the underlying incentive mechanisms are already broken. You can't perpetually bet on human goodwill and social consensus being put above greed (also known as rational profit maximization). - purplepill3m |
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Permissionless II is just around the corner. We would love to see you join the Blockworks family in Austin, TX, for the world's largest DeFi event. Pro tip—FOMO in now, don't wait until the tickets are gone. More information and tickets can be found here. |
Prisma Finance, a non-custodial LST-backed stablecoin protocol on Ethereum, opened deposits to the public at 5am ET this morning. The mkUSD supply is capped at $20M for the initial launch, with $6M mintable against wstETH, rETH, and sfrxETH, and $2M against cbETH. The mkUSD outstanding supply is hovering around $17M as of 10am ET, quickly approaching the $20M cap. There are plenty of other Liquity forks utilizing LSTs on the market, so it's hard to get too excited over the Prisma launch. But they will be launching a token, PRISMA, which will adopt the 've' model in an attempt to kick off a flywheel whereby protocols battle over voting power. The endorsements from Curve, Frax, and Convex certainly help the PRISMA/mkUSD bull case, but I would imagine most depositors are simply looking for an airdrop. |
Base saw over $100M of inflows yesterday alone, thrusting Base TVL over $380M. The reason for the massive inflows is likely the Aerodrome launch, which we discussed in yesterday's newsletter. Aerodrome's TVL is over $200M, and the AERO/USDbC pool is still yielding over 1000% APR. However, AERO is trading at $0.30, which is at the lower end of the trading range since it launched earlier this week. It appears some large farmers opted to take some chips off the table. Another interesting takeaway is Velodrome, the protocol that was forked to create Aerodrome, has seen its TVL drop ~15% since Aerodrome's launch on Base.
If you pop into Velodrome's discord, you'll quickly notice that some community members are feeling as though they vampire attacked themselves by supporting a fork of its V2 tech stack. Nevertheless, Aerodrome is now the largest protocol on Base by far, and while we are uncertain if the Solidly model will prove sustainable on Base, we are expecting interesting farming opportunities to arise on Aerodrome as new protocols launch on Base and look to establish liquidity for their native tokens. The graph above will be included in our Data product launch that we are pushing in mid-September at Permissionless. Be sure to sign up for the waitlist if you want to check it out! |
With EIP-4844 going live towards the end of this year, we expect stepwise improvements from a rollup cost perspective, and the main rollup teams building towards more secure and robust architectures. We can expect that this time next year, we will see exponentially more rollups as the tech continues to mature. |
Stargate V2 is a significant improvement to the core protocol, and should help it remain competitive and profitable after a potential airdrop. Project Hydra could be a genius long term strategic move if executed correctly, and could completely eliminate the need for liquidity incentives. |
Bankman-Fried's Emergent bought a stake back in May 2022 |
The state's Department of Motor Vehicles accepts payments in crypto assets supported by PayPal |
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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. |
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