19 May 2023

Hello,Since when have we become more concerned about the US economy than India’s? Short answer, the last year or so. Crypto markets rebounded late this week as excitement about a potential US debt ceiling raise have lifted the spirits. Bitcoin (BTC) continues to trade just around the $27,000 level and will likely have a renewed attempt at $30,000 in coming weeks. A confirmation of a pause in interest rate hikes by the US Fed in June will be the key catalyst for a relief rally.

In our hot take today, we focus on what liquid staking has in store for Ethereum, post the Shapella upgrade. Indicators are all positive. Let’s have a look.

Top-3 stories of the week:

1

Tether is planning to allocate up to 15% of its realized operating profits toward purchasing Bitcoin monthly.

The strategy will only consider tangible gains from operations, excluding unrealized capital gains from price increases

. Along with this, Tether will also invest in building peer-to-peer communication, energy, and Bitcoin mining infrastructure.

2

Binance has decided to exit from Canada citing challenging regulatory environment. The company stated on Twitter that

makes the Canadian market no longer tenable for Binance at this time. However, the company believes to return to the market when Canadian users once again have the freedom to access a broader suite of digital assets.

3

Ubisoft has launched Assassin’s Creed NFT collection.

Integral Reality Labs and Ubisoft have partnered to create Assassin’s Creed Smart Collectibles

, which are NFT access passes minted on Ethereum scaling network Polygon that are paired with physical collectibles inspired by the popular historical action franchise.

The newsletter is put together by Giottus Crypto Platform and The News Minute’s Brand Studio. You can read all the previous issues of Cryptogram here.

Was this newsletter forwarded to you?

WEEKLY MACROS

• Total crypto market cap - $1.12 trillion - DOWN 0.9%

• Bitcoin price - $26,871 - UP 0.8%

• The dollar index (DXY) - 103.5 - UP 1.4%

• Bitcoin Dominance - 46.3% - DOWN 1.3%

• Crypto Fear and Greed Index - 48 - the market is in neutral condition

ICO CALENDAR

• 23 May 2023 - Scapesmania ($MANIA)

THE HOT TAKE

Ethereum is silently scoring brownie points post Shapella

Ethereum has captivated institutional and retail investors alike post its successful Shapella upgrade. The upgrade enabled staked ETH to be withdrawn at will – a key factor for mass adoption. The network is having good inflows of staked assets indicating growing confidence in its future. We map key trends around this.

1) Shapella is a success

Ethereum underwent a network upgrade on April 12 this year that enabled withdrawing of staked ETH tokens. Although many suggested (including us) that this might cause a sell-off, the impact on price was mild.

We did witness some exit activity immediately post the upgrade but it cooled down after couple of weeks.

Source: Glassnode

In fact, staked ETH on the network has been growing and has reached an all-time high of 21.8 million. Lido Protocol is currently leading with 6.2 million tokens as the top depositor.

Source: Nansen

2) Staking ratio is still low and can grow fast

The current Ethereum staking ratio (share of eligible supply that is staked) is

15.2%

. The staking ratios of some competing proof-of-stake (PoS) chains are now over 60% indicating that ETH has potential to grow quick. We believe that the ratio can double in the next one year. This is evident from the strong inflow of capital into liquid staking projects such as Lido or Rocket pool.

Centralized exchanges (including

Giottus

) have also started providing staking services with an APY in the range of 5-7% that could draw retail attention.

3) Staked ETH will get a better yield than traditional deposits

Bank deposit yields are set to drop as interest rates are lowered in the near term. That would make Ethereum staking a viable way to earn attractive yield along with growth of the asset itself.

As Ethereum shares all of its earnings with validators, the recent memecoin frenzy actually translated into more than 20,000 ETH gain for validators in the last week.

Source: https://beaconcha.in/ethstore

4) LIDO and RPL soar as a result

Top ETH liquid staking platforms Lido DAO (LDO) and Rocket Pool (RPL) have had double digit gains in their own tokens even as the market remained sideways last week.

The market is also getting crowded – Asymmetry Finance recently

raised

$3 million to grow its market share.

5) US SEC crackdown concerns linger on

A crackdown by US SEC remains the main issue that ETH staking can face. It penalized Kraken $30 million for offering the service without registering in February this year and is apparently going after Coinbase as well. That Coinbase paused withdrawals of staked ETH yesterday is a concern, though they say

it's temporary

and not related to the SEC.

What this means for you?

Are you a believer in Ethereum and its ecosystem? Then you must be investing in the asset or building a ETH heavy portfolio with time. You must consider staking ETH for stable rewards while you wait for the asset to grow in price over the next couple of years. Do consider short-term macroeconomic risks and regulatory risks. We are all so used to it now, aren’t we?

Was this newsletter forwarded to you?

If you have any questions or feedback for us, write to us at [email protected]. You can check out the previous issues here.