ETH Faces Market Doubt as Confidence Wanes

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Good Morning.

We’re getting so close to breaking BTC's all-time high. I pray that by the time you read this email, the US market opening session is strong enough to blast us above $75,000 conclusively.

And oh, sometimes there’s crazy stuff being done in this space, if you’re terminally online on crypto Twitter, you know what I’m talking about — in light of that event, lets remind each other to be kind. Cheers.

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In Today's Email:

• What Matters: ETH Faces Market Doubt 📉 

• Case Study: Polymarket Bets Exceed $200M 📈 

• Governance & Features: $42.5M Optimism Grant 🐙 

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WHAT MATTERS

ETH Faces Market Doubt as Confidence Wanes

State of play: Ethereum’s ecosystem faces a mix of challenges and ambitious goals, affecting its user experience, staking rewards, and even workforce adjustments within major contributing companies.

Vitalik Buterin recently responded to criticisms of Ethereum's Layer 2 network, acknowledging the user experience as fragmented but emphasizing a focus on future improvements rather than defending current limitations.

• He highlighted an interoperability roadmap to unify the Layer 2 ecosystem, promoting cross-chain ease of use and setting ambitious scalability goals of 100,000 transactions per second.

Meanwhile, Ethereum’s staking rewards have declined to around 3%, lagging behind other major proof-of-stake networks like Cosmos and Solana.

• While this lower rate may help curb inflationary pressure, it indicates a gradual slowdown in staking inflows, as seen with Lido’s stETH holdings, which have plateaued around 9.6M ETH.

Amid these technical and economic pressures, Consensys, a key player in Ethereum’s development and creator of MetaMask, has announced a 20% workforce reduction.

• CEO Joseph Lubin attributed this decision to macroeconomic and regulatory challenges, including ongoing legal battles with the SEC.

What’s next: Vitalik Buterin’s vision for cross-Layer 2 standards, aiming for 100,000 transactions per second, will demand strong developer collaboration to ensure consistency across different Layer 2s.

Why it matters: Improving Layer 2 usability and staking competitiveness is essential for Ethereum’s continued growth and adoption, especially as it faces competition from other high-yield proof-of-stake networks.

Our take: ETH needs to get back to wartime mode and understands that the headstart it has will not always be there forever.

For builders and investors: Choosing a chain to build on is oftentimes more of a political and alignment decision instead of technological one.

CASE STUDY

Polymarket Bets Exceed $200M

Cumulative open interest in Polymarket's 2024 US presidential election market has surged past $200M, quadrupling since the start of October as voters prepare for the upcoming election.

• Donald Trump is enjoying a favorable position, with his odds rising above 66%

• Kamala Harris is experiencing her lowest odds since taking over the ticket from President Biden in August.

• The betting market has gained traction this election season, with $91.5M in open interest on Trump’s victory compared to $48.5M for Harris

• Overall, trading volume on Polymarket has reached over $2.1B this month, with approximately 200,000 active traders participating.

• As a result, betting markets are increasingly influencing election predictions, providing alternative insights to traditional polls.

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INSIGHTS

$MSTR Soars Nearly 250% in 2024

MicroStrategy's stock ($MSTR) has surged nearly 250% year-to-date, significantly outpacing Bitcoin's 60% return.

• MicroStrategy's strategy of leveraging its substantial Bitcoin holdings has allowed its stock to serve as a leveraged bet on Bitcoin's price movements.

• This performance follows a remarkable 353% gain in 2023, as investors seek exposure to Bitcoin through publicly traded equity.

• MicroStrategy currently holds 252,220 BTC, valued at over $17B, making it the largest corporate holder of Bitcoin.

FEATURES & GOVERNANCE UPDATE

Kraken Got $42.5M in $OP Grant

Kraken has announced its plans to build a layer-2 network called Ink using Optimism's OP Stack framework, following a substantial grant from the Optimism Foundation of 25M OP tokens (~$42.5M).

• This deal, finalized earlier this year, enables Kraken to participate in the rapidly expanding "Superchain" ecosystem.

• “Superchain” includes other major players like Coinbase, Sony, and Uniswap.

• The grant will be distributed over time based on transaction milestones, highlighting Optimism's commitment to supporting developers within its ecosystem.

Other notable feature updates:

• Solayer has launched BGSOL.

• Yuga Labs has launched Apechain.

• MetaMask has introduced pool staking.

• Avalanche introduced the Avalanche Card.

• LayerZero has announced a partnership with ApeChain.

• Curve pools now support cross-chain swaps via the EYWA Protocol.

QUICK BITES

• Circle raises fees as Fed cuts.

• DYdX lays off 35% of its employees.

• Glif Protocol sets to airdrop 100M tokens.

• Consensys laying off 20% of its workforce.

• ETH staking rewards remain at around 3%.

• Gemini receives preliminary approval for an MPI license in Singapore.

• Swell switches to OP stack to develop rollup, replacing Polygon CDK.

• DWF Labs dismissed partner Eugene Ng amid drug spiking allegations.

NOTEWORTHY READS & MEME

• Taran’s read on TIA OTC story.

• @karan4d’s read on setting your pet rock free.

• Berachain’s read on value creation at the application layer.

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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.