The State of ETH Withdrawals, Will $2.5B Be Dumped?

Happy Holiday,

The bears have gone back into the woods. Crypto markets are up with BTC and ETH breaking $30,500 and $2,100 respectively. Maybe we’ll get DeFi summer 2023?

One can only hope.

In Today's Email:

• What Matters: ETH pending withdrawals hit $2.5B 🤲

• Founders-Investors Highlight: Sreeram Kannan, Founder of EigenLayer 🖥️

• Deal Flows: Bitkraft $220.6M token fund II 💼

Check out our weekend issue, Breaking Down Businesses, covering Aave, here.

Reply to this email to let us know what protocols/companies you want us to cover!

WHAT MATTERS

Shapella Success: The State of ETH Withdrawals

State of play: The Shapella upgrade was a success. ETH stakers can now withdraw their funds. $2.5B in ETH is pending withdrawal — however, the price of ETH soared to above $2,100.

• The 3 largest entities that are waiting for their ETH withdrawals to be processed are: Kraken, Coinbase, and Huobi.

• Kraken withdrawals requests alone is over 551,000 ETH ($1 billion+). The exchange needs to do this as part of its settlement of charges with the SEC regarding its staking program.

• The net staking balance since Shapella went live is -161,740 ETH. More than 278,000 of ETH has been withdrawn while 116,800 of ETH has been deposited.

The key takeaway: The sentiment seems to be leaning towards the positive side as ETH price soared even though billions of ETH might be hitting the market.

• At the end of the day, the price will be dictated whether the flows of new buyers or stakers is higher than the amount that will be sold.

Why it matters: This update marks another successful attempt from the Ethereum core developers to upgrade a decentralized network. The ability to withdraw with a peace of mind will now makes it easier for institutional market participants to join the market.

• In turn, this will further cement ETH’s role as de-facto money for web3 applications, with staking being the base-rate yield for on-chain markets.

For builders: Figure out ways to capitalize on the success of Shapella and the growth of staked ETH ratio for your products.

• Even if what you’re building doesn’t directly touch on-chain funds, there are ways to service ETH stakers.

For investors: Pay attention to the new primitives that will emerge around ETH yield and staking mechanisms.

• Protocol such as EigenLayer (restaking) and Flashstake (paying yield upfront) are essentially taking a playbook of TradFi complex products and bringing it on-chain. The outcome will be interesting.

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BUILDER-INVESTOR HIGHLIGHT

Sreeram Kannan, Founder of EigenLayer

Sreeram Kannan is the Founder and CEO of EigenLayer, a protocol that aims to introduce a new primitive called“restaking”. With restaking, ETH tokenholders can use their same ETH to secure multiple protocols.

• ETH stakers can opt-in to EigenLayer’s smart contracts and restake their ETH to other applications or networks.

• EigenLayer raised a $50M Series A in March 2023. The round will value EigenLayer at $250M post-money equity and $500M token valuation.

• It’s basically ETH rehypothecation on streoids.

Previous backgrounds: Sreeram is an Associate Professor (and the Head of Blockchain Lab) at the University of Washington. Prior to that, he had an extensive background in research in Academia at UC Berkeley and UIUC.

• He was also a Research Intern for both Microsoft and Qualcomm.

The big idea: EigenLayer aims to supercharge ETH value as web3 money by enabling restaking of ETH to secure other projects, ranging from Oracles to even other L1s or sidechains.

Take a peek at our new referral reward at the bottom of this issue. Share this newsletter and receive our list of 100 smart crypto investors' wallet addresses 👇

DEAL FLOWS

Bitkraft $220.6M Token Fund II

Deal flows remains strong in the past week 🤝 — we saw $420M+ in deals.

Bitkraft $220.6M Token Fund II: Gaming-focused VC firm Bitkraft has raised $220.6M for its second token fund. The firm previously launched a $75M token Fund I in October 2021.

• Bitkraft didn’t comment on the investment mandate, simply saying its general web3 investment strategies.

• Founded in 2016, Bitkraft focuses on Seed through Series B, and in the intersection of gaming and web3.

• Bitkraft currently managed more than $600M in AUM.

Deal flows in the past week:

• Pear Protocol, $1.25M Seed Round

• Huddle01, $2.8M Seed Round

• Helio, $3.3M Seed Round

• Gameta, $5M Seed Round

• Fingerlabs, $5M Series A

• Xclaim, $7M Series A

• CryptoGPT, $10M Series A

• Sei, $30M Strategic Round

• Cat Labs, $4.3M Unknown Round

• Safeheron, Undisclosed $ Series A

• Ramper, Undisclosed $ Strategic Round

• RSSR3, $10M Private Token Sale

• OP Crypto, $28M Fund of Funds

• Liquidity Tech Protocol, $100M Quantitative Incubation Fund

• Bitkraft, $220.6M Token Fund II

QUICK BITES

• Twitter partners with eToro to show real time crypto information.

• LSEG to offer BTC futures and options.

• Solana readies Saga phone sale for May 8.

• Kraken prepares to unstake $1B+ worth of ETH

• Uniswap launches iOS wallet app.

• FTX could reopen, says its attorney.

• Ethereum reaches $1.34B in pending withdrawals after Shapella.

• EU’s MiCA law prepares for its final vote

• Yearn Finance exploited for ~$10M.

• Aptos plans to give out $20M to artists building on its blockchain.

MEME & NOTEWORTHY READS

• Molly White’s thread on FTX hearing.

• Barnabe.eth’s read on seeing like a protocol.

• DeFi Ignas’ thread on DeFi users population.

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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.