Celsius & $1B ETH Withdrawal Queue

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Good Morning. Fox news said the Bitcoin ETF decision will be out by Wednesday. Political affiliation aside, traders seem to agree the R:R is not there to long BTC this close to the decision event.

Funding rate remains stable, in comparison to the leverage flush we saw last week.

In Today's Email:

• What Matters: Celsius & ETH exit queue🚦 

• Products: Tokengated content 💳️ 

• Charts: LST growth, Q4’23 funding surge 📈 

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WHAT MATTERS

ETH Validator Exit Queue Surges Past 20,000

State of play: Ethereum validators face delays in withdrawing staked ETH due to a backlog, partly attributed to Celsius's significant unstaking activity.

The network's cap on daily unstaking contributes to the current congestion.

• According to Validatorqueue, Ethereum's validator exit queue soared from 26 to over 16,000 in a day, tying up over $1B in staked ETH.

• As of today, the exit queue is at 20,074 (912,315 validators).

• The backlog could delay withdrawals by up to 7.75 days.

• Celsius announced on X, plans for substantial unstaking to free up ETH for prompt creditor payments.

• Nansen reports that ~32% (~206K ETH) of pending ETH withdrawals are from Celsius, with an additional ~54% (~352K ETH) tied to Figment, a staking service utilized by Celsius.

What’s next: If the market reacts violently, we might see another liquidity-duration mismatch scenario for stETH and other liquid staking tokens, similar to the ones that (partially) contributed to 3AC’s demise.

Our take: It’s not surprising if such an event happen given that liquidity is ETH LST is limited.

• A sophisticated market participant will capitalize on the opportunity to stabilize the peg and profit enormously from it.

For builders and investors: Understanding how to leverage ETH LST, restaking tokens, and eventually liquid restaking tokens will be of major importance — for builders to achieve growth, and for investors to properly position their capital.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our list of 500 crypto VC individuals 👇

PRODUCTS OF THE WEEK

Monetized, a New Tool for Content Creators

Monetized is a tool that allows content creators to easily monetize their work by creating token-gated landing pages for their content.

• Monetized supports various payment methods including credit cards, Pay-with-Email, Web Monetization, and NFTs.

• Monetized allows its users to “tokengate”, Tokengating is a Web3 paywall that allows access based on the ownership of NFTs.

• Monetized provides an easy-to-use interface to ask for engagement from the user’s community.

Other cool products:

• ChainDon, a web3 donation platform.

• zkFarmers, an NFT & ERC20 stake and earn platform.

• Solide, an interactive hub + IDE for everything smart contract.

• Omni Liquid Staking, the first omni-chain liquid staking protocol.

• Royllo, an open-source search engine for Taproot Assets on Bitcoin.

CHARTS OF THE WEEK

Liquid Staking Dominates DeFi with $31B TVL

State of play: Liquid staking has proven its resilience in the DeFi sector, maintaining dominance with over $31.25B TVL and a remarkable 3.9x YoY growth in early 2024, even amid market ups and downs.

• The growth is driven by users who seek to maximize yield.

• Ethereum, the largest LST market, faces centralization risk as Lido approaches a critical 1/3 sector share.

• In contrast, other chains like Solana have seen robust competition, with projects like Marinade ($701M TVL) and Jito ($674M) gaining traction.

Our take: LST will continue to become (if not already) the most important crypto sector to watch in 2024, given the upcoming restaking and liquid restaking tokens launch.

Q4’23 Saw an 81% Surge in Fundraising

State of play: Q4 saw an 81% increase in fundraising, driven by early-stage growth and significant Bitcoin miner deals, with top deals like Blockaid and Ritual pushing the average deal size to $8M from $5.8M in the previous quarter.

• The total amount raised peaked in October 2023 with ~$2.2B, despite a lower number of deals compared to January 2023.

• Deal Volume in Q4’23: $3.83B, an 81% increase quarter over quarter (QoQ).

• Deal Count: 397 deals, a 28% increase QoQ.

Our take: Private market deals will continue to soar as market participants generate profit from secondary (liquid) crypto markets.

Notable Rounds in Q4’23:

• Blockaid: $33M Series A

• Ritual: $25M Series A

• Drift: $23.5M Series A

• Blast: $20M Strategic round

• Privy: $18M Series A

QUICK BITES

• Mercari plans to accept BTC payments.

• Arthur Hayes foresees 30% bitcoin crash.

• DCG says it has paid back Genesis short-term loans.

• $1.2M of BTC sent to Satoshi Nakamoto’s genesis wallet.

• Better Markets urged the SEC to reject spot Bitcoin ETFs.

• BlackRock expects spot Bitcoin ETF approval on Wednesday.

• Coinbase plans acquisition to expand derivatives offering in EU.

• VanEck pledges 5% of spot Bitcoin ETF profits to Bitcoin core devs.

NOTEWORTHY READS & MEME

• Mobius Research’s read on the price of restaking.

• Arthur Hayes’ read on Bitcoin ETFs and macro markets.

• Tripoli’s read on the year in blockspace demand (2023).

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.