Token Specific News
Exodus of DeFi Traders from EigenLayer After Airdrop Allocations
EigenLayer, a prominent DeFi protocol with $14.5 billion in total value locked, has experienced a notable outflow of users following the distribution of its highly-anticipated airdrop allocations. Over 13% of EigenLayer's user base, approximately 14,000 wallets, initiated withdrawals since April 29, albeit representing a small fraction of the platform's total value locked. Criticism from the DeFi community has centered around EigenLayer's decision to geo-block certain countries and restrict VPN users from participating in the EIGEN token airdrop, despite accepting deposits from these regions earlier. Moreover, dissatisfaction arose due to the non-transferability of the EIGEN token at launch and perceived favoritism towards larger depositors in the token distribution. While some see these actions as necessary for the protocol's long-term viability, others view them as a missed opportunity for inclusivity and fair distribution of rewards.
Source: Dune
Polychain Capital Leads $38M Series A for Movement Labs to Integrate Move Virtual Machine with Ethereum
Polychain Capital has spearheaded a $38 million Series A funding round for Movement Labs, aimed at integrating Facebook's Move Virtual Machine with Ethereum. The project's objective is to mitigate smart contract vulnerabilities and bolster transaction throughput through Movement's zero-knowledge Layer 2 blockchain solution. Movement's Layer 2 infrastructure will extend the utility of the Move programming language
Ethereum Faces Period of Reduced Activity Amidst Declining Transaction Fees and Increased Net Emissions
Ethereum is experiencing a period of decreased activity, reflected in lower transaction fees and a decline in the amount of ETH being burned. With less than 1,000 ETH burned on most days since April 20th, this indicates reduced demand and usage within the Ethereum DeFi ecosystem. The shift in activity could be attributed to the rise of other networks like Solana and Binance Smart Chain, which offer cheaper transaction fees and have attracted vibrant DeFi communities. Additionally, Ethereum's net emissions have been positive since March 15th, meaning more ETH has been issued via staking rewards than burned, challenging the expectation of Ethereum becoming deflationary post-EIP-1559 and The Merge.
Source: The Block
Bitcoin Mining Difficulty Hits Record High After Halving for First Time
Bitcoin mining difficulty surged by 2% on Wednesday, achieving a new all-time high. This marks a departure from previous halving events, where the difficulty dropped immediately after. Following the halvings in November 2020, July 2016, and May 2020, the adjustments were -2%, 0%, and -6% respectively. Despite historical trends, this time, the hash rate has remained near peak levels due to increased transaction fee rewards for miners post-halving. The surge in activity is attributed in part to the excitement surrounding Runes, a new fungible token standard for Bitcoin launched alongside the halving event.
Source: BitBo
Runes Protocol Drives Bitcoin Fee Surge and Market Metrics Shift
The introduction of Runes during the latest Bitcoin halving has significantly impacted the network's dynamics, particularly in transaction fees and market metrics. Despite its recent debut, Runes' hype continues to elevate Bitcoin's average transaction fees, which have surpassed those of Ethereum multiple times. Moreover, the total fees paid on the Bitcoin network have outpaced Ethereum, reaching new all-time highs. This surge has led to a notable shift in the market capitalization to transaction fee ratio, with Bitcoin's ratio dropping below Ethereum's for the first time since July 2019. While this doesn't imply undervaluation for Bitcoin or overvaluation for Ethereum, it underscores the considerable demand experienced by the Bitcoin network following the introduction of the Runes protocol, despite a recent slowdown in fee growth. See similar: Omnity Introduces Cross-Chain Transfer Functionality For Runes
Source: The Block
Regulation
Asia's First Spot Bitcoin and Ether ETFs Debut in Hong Kong
Asia's inaugural spot bitcoin and ether exchange-traded funds (ETFs) have officially launched on the Hong Kong Stock Exchange, marking another step in the region's burgeoning crypto landscape. Managed by China Asset Management (ChinaAMC), Harvest Global, and Bosera/HashKey, these six ETFs, comprising one bitcoin and one ether ETF per issuer, were listed by the Hong Kong Exchanges and Clearing Ltd (HKEX). Despite being accessible to qualified investors outside Hong Kong, individuals in mainland China remain restricted from investing in these products. Notably, these Hong Kong-based ETFs offer unique in-kind creation and redemption features, enabling investors to directly utilize bitcoin or ether to trade the ETFs. While the debut saw a combined trading volume of $11.2 million, led by ChinaAMC's spot bitcoin ETF, this figure falls short of the $4.5 billion first-day volume recorded for spot bitcoin ETFs launched in the U.S. in January.
Taste of Your Own Medicine: ConsenSys Files Lawsuit Against SEC Over Ethereum's Regulatory Status
ConsenSys, the Ethereum software giant behind MetaMask and Infura, has filed a lawsuit against the Securities and Exchange Commission (SEC), alleging that the regulator aims to designate Ethereum as a security, contradicting previous statements. The complaint asserts that Ethereum does not meet the attributes of a security and seeks a declaration to confirm its status. The legal action comes amidst increased regulatory scrutiny on Ethereum and follows a Wells Notice served to ConsenSys regarding MetaMask. Ethereum co-founder Joe Lubin emphasized the importance of regulatory clarity for the broader ecosystem, while the SEC has yet to respond to the lawsuit.
BlackRock's IBIT Bitcoin ETF Ends 71-Day Inflow Streak
BlackRock's IBIT spot bitcoin exchange-traded fund (ETF) has concluded its remarkable streak of consecutive daily inflows after 71 days. The fund had previously ranked among the top 10 ETFs with the longest consecutive inflow streaks and stood as the last U.S. spot bitcoin ETF to maintain such a streak. However, on Wednesday, the fund recorded zero flows for the day, marking the end of its impressive run amid $120 million in net outflows for all spot bitcoin ETFs combined. Despite the streak coming to an end, IBIT remains the ETF with the highest net assets, boasting $17.6 billion under management after 72 days. In related news, the Securities and Exchange Commission (SEC) has postponed its decision on listing and trading spot bitcoin ETF options and has solicited public input on the matter.
Source: Bloomberg
Stripe Reintroduces Crypto Payments, Adding Support for USDC Stablecoins
After a six-year hiatus, Stripe, the fintech giant with a $65 billion valuation, is reintroducing crypto payments by supporting transactions in USDC stablecoins. Transactions settle instantly on-chain and automatically convert to fiat, with payments settling on Solana, Ethereum, and Polygon blockchains. This move marks a significant development in the crypto payments space, given Stripe's immense influence and track record of processing over $1 trillion in transactions last year.
DOJ Opposes Motion to Dismiss Charges Against Tornado Cash Developer
The U.S. Department of Justice (DoJ) has contested a motion filed by Roman Storm, a developer associated with Tornado Cash, a crypto mixing protocol, seeking dismissal of criminal charges against him. Storm faces allegations of operating an unlicensed money-transmitting business and engaging in money laundering, purportedly profiting millions from Tornado Cash's operations. The DoJ argues that Storm's case warrants trial by jury, asserting that it's premature to dismiss the charges. Privacy advocates have rallied in support of Storm, criticizing the DoJ's stance for its technical inaccuracies and its perceived hostility towards privacy and emerging technology. The indictment against Storm underscores the broader regulatory scrutiny faced by developers in the decentralized finance (DeFi) space, particularly those associated with privacy-focused protocols like Tornado Cash.
Other Domestic Regulation Updates
- Franklin Templeton has enabled peer-to-peer transfer for its on-chain U.S. Government Money Fund
- FBI warns Americans against using unregistered crypto money transmitting services
- Binanceās CZ Sentenced to Four Months on AML Charges
Other International Regulation Updates
- Australia's largest stock exchange could list approved spot bitcoin ETFs by the end of 2024
- Thai Regulator Cracks Down on Deceptive AdsĀ
- UK āSeize and Freezeā Law Targeting Money Launderers Takes Effect
- UK Police, National Crime Agency Gain New Crypto Seizure Powers
Pain & Gain
Pain
Gain
- Coinbase rolls out Lightning Network support in collaboration with Lightspark
- Visa Launches Stablecoin Analytics Dashboard
- Google Cloud Launches Web3 Portal to Mixed Reviews
Important Legal Notices
This reflects the views MJL Capital LLC (āMJLā), but it should in no way be construed to represent financial or investment advice. Nothing in this correspondence is intended to constitute or form part of, and should not be construed as, an issue for sale or subscription of, or solicitation of any offer or invitation to subscribe for, underwrite, or otherwise acquire or dispose of any security, including any interest in any private investment fund managed by MJL. Any such offer may only be made pursuant to a formal confidential private placement memorandum of any such fund, which may be furnished to potential investors upon request and which will contain important information to be considered in connection with any such investment, including risk factors associated with making any investment in any such fund. Further, nothing in this correspondence is, or is intended to be treated as, investment or tax advice. Each recipient should consult their own legal, tax and other professional advisors in connection with investment decisions.
Domenic Salvo is a Managing Partner at MJL Capital, helping lead Portfolio Research and Investor Relations.
