🔮So Much ETH & Related, Regulation What Ifs, Coinbase's Strong Year

“Tokenization eliminates all corruption” - Larry Fink

Token Specific News

Introducing ERC-404: The Hybrid Token Standard Shaking Up Ethereum

ERC-404, a new token standard blending ERC-20 fungible tokens with NFTs, has made waves recently. Each token is linked to an NFT, creating a semi-fungible asset. The launch of Pandora, the first ERC-404 project, saw impressive trading volumes and token price surges. However, the increased minting and burning of NFTs within this standard have raised concerns about transaction costs on the Ethereum network. Despite its popularity, the high fees associated with ERC-404 transactions may pose challenges for its long-term viability. Nevertheless, the ERC-404 team is working on optimizing the standard to address these issues. See similar: A collection of 10,000 Replicants enabled by ERC404

Source: The Block

Ethereum Staking Hits Milestone as Over a Quarter of Ether Supply Now Staked

Following the Shapella upgrade, the Ethereum network sees a milestone with over 30.1 million ETH staked, surpassing a quarter of the total supply. This surge in staking activity, enabled by the April 2023 upgrade allowing for withdrawal of staked ether, has led to a reduction in staking rewards, halving from a peak of 8.6% to under 4%, reflecting increased participation and lower per-staker rewards. Lido Finance validators hold over 31% of ETH stakes, raising concerns about network decentralization and security. Users have the option to switch to alternative staking solutions, akin to miners changing mining pools in proof-of-work blockchains. Lido, Coinbase's staking service, holds 14% of staked ether, followed by Binance at 4%.

Source: Dune

Surge in Daily Active Users and Emerging Trends in Layer 2 Blockchain Usage

The daily active users (DAU) on Layer 2 (L2) blockchains have seen a remarkable 8x increase over the past year, driven by enhanced transaction speed and reduced fees, leading to improved user experience. Notable L2 blockchains like Arbitrum, OP Mainnet, and Starknet have witnessed significant DAU growth, with percentages ranging from 168% to 927%. Additionally, new entrants such as zkSync Era, Base, and Manta Pacific have emerged, each offering unique transaction volumes and fee structures. Notably, zkSync Era stands out for its high transaction volume and low fees, while Base experienced a surge in transaction fees due to increased interest in its Farcaster platform and the introduction of new features like Frames. These trends reflect a growing demand for scalable solutions and innovative applications within the L2 blockchain ecosystem.

Source: Token Terminal

GoDaddy and ENS Partner to Integrate Crypto Wallets with Traditional Domains

In a collaboration announced on February 5th, GoDaddy and Ethereum Name Service (ENS) have joined forces to enable GoDaddy's large customer base to effortlessly link their crypto wallets to traditional domains via ENS. This integration allows users to seamlessly manage their traditional domain names alongside associated ENS names within one user-friendly platform. See similar: ENS community mulls $300,000 settlement with Manifold in eth.link domain dispute. More partnerships: Deutsche Telekom Partners With Fetch.ai to Develop AI Tech for Web3

Starknet Foundation Unveils STRK Token Distribution Plan for Ethereum Layer 2 Scaling

The Starknet Foundation has introduced its token distribution plan for STRK, the native token of Starknet, an Ethereum Layer 2 solution utilizing ZK-Rollups for dApp scalability. The distribution aims to reward approximately 1.3 million eligible wallets, including early ecosystem dApp users, network contributors, Ethereum stakeholders, open-source developers, and solo stakers. Eligible participants can claim the STRK token within a 4-month window starting from February 20th. The initiative seeks to decentralize and govern the Starknet network, fostering wider adoption and community participation in STARK-based scaling solutions.

Coinbase Reports Strong Q4 Earnings Amid Ongoing Legal Battle with SEC

Coinbase (COIN) released its fourth-quarter and full-year earnings, revealing a 41% increase in total revenue to $954 million in Q4, with adjusted EBITDA surging 69% to $305 million. Notably, Coinbase reported a net income of $273 million. Highlights included a significant increase in transaction revenue driven by higher volatility and crypto asset prices. For the fiscal year 2023, Coinbase reported total revenue of $3.1 billion and an adjusted EBITDA of $964 million. The company also provided an update on its litigation stages, particularly the ongoing SEC v Coinbase case, highlighting the awaited ruling on the Motion to Dismiss, which could have significant implications for the US crypto market.

Ethereum's Dencun Upgrade Set for March 13th Deployment

Ethereum's core developers have confirmed the deployment date for the highly anticipated Dencun upgrade, scheduled for March 13th. Following successful testnet deployments, the upgrade, featuring EIP-4844 or proto-danksharding, aims to reduce transaction costs, particularly on Layer 2, by introducing lightweight Binary Large Objects (blobs) in place of gas-intensive calldata. Additionally, the Ethereum Foundation announced initiatives to train new core developers through the EPF Study Group and offered $1M in funding for academic research grants, focusing on various subjects including economics, cryptography, security, and privacy, with submissions closing on March 5th.

Regulation

Banks Lobby SEC for Accounting Guideline Revision Amid Bitcoin Rally

US banks, excluded from key roles in bitcoin ETFs, are urging the SEC to revise accounting guidelines regarding digital asset holdings. They argue that the current rule, Statement of Auditing Bulletin No. 121 (SAB 121), understates cryptocurrency values during market surges. This lobbying effort, led by a coalition including the Bank Policy Institute, American Bankers Association, Securities Industry and Financial Markets Association, and Financial Services Forum, aims to address concerns about fairness and transparency. The SEC has yet to respond to their request, amidst pressure from Congress to reconsider the guidance.

Source: Farside

New York Attorney General Expands Lawsuit Against Digital Currency Group, Alleging $3 Billion Fraud

New York Attorney General Letitia James has tripled the estimated size of alleged fraud to over $3 billion in an expanded lawsuit against Digital Currency Group (DCG). The lawsuit, initially focused on the Gemini Earn crypto lending program's retail investors, now implicates DCG's affiliate Genesis in defrauding more investors who directly contributed their money to the firm. The lawsuit, filed in October, accused Gemini, Genesis, and DCG of defrauding over 29,000 New Yorkers of more than $1 billion, a figure now raised to over 230,000 investors defrauded of more than $3 billion. James stated that DCG was "lying to investors and defrauding them out of billions" after months of false promises. This development follows Genesis Global Holdco's bankruptcy protection filing and subsequent settlement with the NYAG.

Bankruptcy Court Allows Genesis Global Holdco LLC to Sell GBTC Shares Worth $1.3 Billion

A bankruptcy court ruling permits Genesis Global Holdco LLC to sell approximately 35 million shares in Grayscale's GBTC fund, valued at over $1.3 billion. Judge Sean Lane approved Genesis's conversion of GBTC shares into bitcoin or cash. Additionally, Genesis plans to sell more than 11 million shares in two Grayscale Ethereum Trusts, totaling over $200 million. The parent company, Digital Currency Group (DCG), sought to delay the sale pending approval of a debt repayment plan. Earlier, Genesis agreed to pay a $21 million fine to settle a lawsuit by the Securities and Exchange Commission over the Gemini Earn program.

Coinbase Pay Integrated into Ledger Live for Seamless Asset Purchases

Crypto exchange Coinbase and hardware wallet provider Ledger have joined forces to integrate Coinbase Pay into the Ledger Live app. This collaboration enables Ledger Live users to buy digital assets directly from Coinbase without needing to transfer their crypto off their hardware wallet. Users can utilize various payment methods, including ACH, Visa, and Mastercard, to purchase assets from Coinbase, which are then automatically sent to their Ledger device. This partnership aims to streamline asset management and enhance user experience for self-custody of crypto assets. Additionally, future developments may include the option for recurring buys on Coinbase through the Ledger Live app.

SEC Considers Regulation Update, Potentially Impacting Decentralized Exchanges

The US Securities and Exchange Commission (SEC) is considering updates to Regulation Alternative Trading System (Reg ATS) rules, which could extend regulatory oversight to decentralized exchanges (DEXs). While not explicitly mentioning digital assets, the proposal's broad definition of an exchange could affect DEX user interfaces, potentially holding developers and liquidity providers liable. SEC Chairman Gary Gensler's push for broader regulation of digital assets underscores the agency's aim to protect investors and ensure market fairness. The proposed amendments, expected to be finalized in the coming months, reflect the SEC's proactive regulatory stance under Gensler's leadership.

Other Domestic Regulation Updates

• Is That Joe Biden or an AI Deepfake? White House Plans to Tag Authentic Content

• Bitcoin ETFs ‘Not in Any Way an Approval of Bitcoin’: SEC Chair Gensler
• German Partnership Launches First Ever Regulated Carbon Credit Exchange
• Missouri Bill Would Shield Mining Operations From State Regulations

• Franklin Templeton Files For Ethereum ETF

Other International Regulation Updates

• BlackRock and Fidelity bitcoin ETFs already ahead of GBTC in two liquidity metrics
• Rishi Sunak’s UK crypto ambitions at risk after watchdog approves just four firms
• Binance founder Changpeng Zhao’s sentencing postponed to April
• Binance Co-Founder Offers $10,000 Bounties to Employees Who Report Leaks
• Hong Kong Plans Universal AML Requirements for Over the Counter Trading
• South Korea FIU Tightens Oversight, May Expel Unfit Exchanges  

Pain & Gain

Pain

• Fireblocks reduces headcount by 3%
• Stop tokenizing everything
• Crypto gaming platform PlayDapp loses $290 million worth of tokens in two exploits
• Treasury cracks down on crypto mixers 

Gain

• Wormhole Airdrop: W Tokenomics, Unlock Schedule and Eligibility
• zkSync eyes lower fees after Dencun upgrade
• Starknet Reveals Airdrop Details for 1.3 Million Eligible Ethereum Wallets
• You’re Never Going to Beat Twitter by Just Copying It, Says Farcaster Co-Founder
• Anti-Slashing Liquid Restaking. Earn while decentralizing Ethereum