Ethereum Foundation $100M Budget
Vitalik Doesn't Like DeFi? | $74B BTC Mining Opportunity
Marco Manoppo & Karon Pangestu
August 26, 2024
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Good Morning.
The market rebounded after Powell’s rate cut signal but has largely remained flat over the weekend. Meanwhile, Vitalik is voicing out his criticisms towards DeFi while the EF is getting criticized for its budget spending.
In Today's Email:
What Matters: EF’s $100M budget 💸
Product: Animoca’s GAMEE 🎰
Charts: $74B BTC mining opportunity & stablecoins on L2s 📈
Narratives: Memes are outperforming as the market bounced.
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WHAT MATTERS
Ethereum Foundation's $100M Budget
State of play: On Saturday, the Ethereum Foundation (EF) deposited 35K ETH (~$94M) to Kraken, with Executive Director Aya Miyaguchi citing it as part of their treasury management.
Miyaguchi also mentioned that EF's annual budget of approximately $100M is primarily allocated to grants and salaries.
As for why EF moved the ETH to a CEX, Miyaguchi explained that some recipients of grants and salaries can only accept fiat currency.
Miyaguchi explained that due to regulatory issues earlier this year, EF couldn't perform treasury activities or share their plans in advance.
She clarified that the recent ETH move is not equivalent to a sale.
Miyaguchi was the managing director of Kraken Japan from 2014 to 2017.
The move has drawn questions, criticisms, and support from the crypto community:
Gabriel Shapiro criticizes EF for lacking transparency in its $100M annual spending.
He argues that the EF is not focused on maximizing ETH value, undercompensates core developers and funds projects misaligned with Ethereum's core interests.
Shapiro calls for greater transparency and accountability in the crypto “foundation.”
He suggests that organizations like the EF should operate as BORGs (Blockchain Organizations).
Hudson Jameson, a former EF employee, explained that the ~$100M annual budget is reasonable given the scope of EF's activities.
He noted that the EF often supports initiatives behind the scenes, focusing on coordination rather than taking public credit, which can make it hard to see the full extent of their contributions.
He listed several things that cost EF a lot of money such as legal costs for trademark protection, infra for protocol development, and grants.
He noted that while transparency can be improved, the EF's budget is justified and supports many essential functions.
The 2022 Ethereum Foundation report reveals that in 2021, the foundation's expenditures amounted to just $48M.
$21.8M for L1 R&D.
$9.7M for Community Development.
$5.9M for Developer Platform.
$5.1M for Internal Ops & Support.
$3.6M for Applied ZK.
$1.9M for L2 R&D.
What’s next: Miyaguchi said that there will be planned and gradual sales (of ETH) by EF from here on.
For builders and investors: While it’s clear the EF has a broader vision, it’s undeniable that the EF can benefit by improving its treasury management process by hiring a professional and taking more public inputs regarding how those funds should be managed. Perhaps even a hybrid DAO process would work.
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PRODUCT OF THE WEEK
GAMEE: Animoca’s Gaming Platform
GAMEE is a dynamic mobile gaming platform designed to engage a broad audience while introducing them to the world of Web3.
Founded in 2015, GAMEE joined Animoca Brands in 2020,
GAMEE partnered with over 40 communities, including Mocaverse, Decentraland, Sandbox, and Cool Cats.
GAMEE has over 80M registered users and 3M DAU.
The platform is powered by the GMEE token, its currency for access and governance.
GAMEE has a large gaming community on Telegram with 50M registered users and has onboarded over 2M user wallets into the TON ecosystem.
Other cool products:
CHARTS OF THE WEEK
Credits to Newhedge for the original chart.
State of play: At current bitcoin prices, the remaining 1.3M BTC left to be mined is valued at about $74B, JPMorgan reported on Friday.
According to data from Newhedge, there are 1,254,813 BTC left to mine.
JPMorgan reduced its price targets for several Bitcoin miners following second-quarter results and changes in Bitcoin prices and network hashrate.
The bank cut CleanSpark's (CLSK) target to $10.50 from $12.50, Iren's (IREN) to $9.50 from $11, Marathon Digital's (MARA) to $12 from $14, and Riot Platforms' (RIOT) to $9.50 from $12.
According to the report, the four-year block reward revenue opportunity is estimated at $37 billion, down 19% since early June but up 85% year-on-year.
The bank favors Iren and Riot, noting that their recent stock underperformance presents a potential buying opportunity for investors.
Our take: The Bitcoin economy has been relatively flat in the past few cycles. By flat we mean that there hasn’t been much financial innovation surrounding the mining process, or BTC as an asset itself.
Stablecoin Market Cap on L2s
Credits to Growthepie & OurNetwork for the original chart
State of play: The L2 stablecoin market cap is nearing $10B, representing ~12.5% of stablecoins on Ethereum and ~5.7% of the entire stablecoin market.
Arbitrum and Base dominate the market, with Arbitrum holding ~$4.36B and Base at $3.19B in July 2024.
OP Mainnet ($1.27B), Blast ($455.59M), and Mantle ($202M) contribute smaller but significant portions to the total market cap.
The market has shown consistent growth, especially since the beginning of 2024, with notable increases in Arbitrum and Base's market shares.
Our take: The upward trend in the overall market cap indicates a growing acceptance and use of stablecoins on L2 networks, likely driven by lower fees and faster transaction times than Ethereum's mainnet.
QUICK BITES
US Trustee objects to FTX plan.
Shiba Inu unveils plans to launch DAO.
Polygon restores control of the Discord server.
Telegram Founder Pavel Durov arrested in France.
Harris and Trump return to 50-50 standoff on Polymarket.
Stablecoin market cap hits new ATH amid 11 months of growth.
China extradites $14B crypto pyramid scheme mastermind from Thailand.
PayPal partners with Anchorage for the PYUSD stablecoin rewards program.
NOTEWORTHY READS & MEME
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