🔥 Anticipation builds for ETH merge
This is Shashank’s Newsletter, a newsletter with bite sized content on everything that happened in web3 over the past week.
In today’s email,
🔥 Anticipation builds for the ETH merge
🦍 Bored Ape Yacht Club launched a token $APE
🎰 22M$ LUNA bet
💸 Consensys and Optimism raise $$$
Historical Ethereum returns
Wanted to share an interesting chart instead of the regular weekly gainers this week. Looking at historical ETH returns, April could be a killer month 👀
🔥 Anticipation builds for the ETH merge
2022 is the year of the largest network upgrade to ETH, with the switch from environmentally unfriendly PoW (Proof of work consensus) to PoS (Proof of stake consensus).
Quick intro on PoW vs PoS: These are both consensus mechanisms which determine which node in the network can add the next block of transactions on the chain to synchronize and secure data. PoW does this by having nodes compute complex puzzles requiring large amounts of electricity. PoS chooses validators based on number of tokens they hold.
On March 15, The Ethereum Foundation announced that the merge was successfully completed on testnet. ETA for the merge is June 2022.
3 big takeaways from the merge:
There is over 10M ETH staked right now earning 4.5%. This APY is expected to increase to 10-14% when the merge happens. Learn more about staking from my previous post.
The merge is also expected to reduce the ETH emissions by 90% making it a deflationary asset. Ethereum currently issues ~12,000 ETH per day, or roughly $30m per day in security costs to validators. The merge removes 10,720 ETH from that new daily issuance.
Simultaneously, validators no longer have to sell their ETH to cover for their electricity costs as they would have with PoW consensus. This means that there is no sell pressure on the ~1280 ETH issued to validators every day.
All of these could have a significant impact on the price of ETH in coming months. Start stacking 🧱
🦍 Bored Ape Yacht Club launched a token $APE
Yuga labs is like the FAANG of NFTs as it owns 5 NFT collections in the top 20: CryptoPunks, Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club, Meebits and Bored Ape Kennel Club. Yuga released more “yuge” news with the launch of a new coin APE for culture, gaming and commerce on web3.
Main takeaways:
Tokenomics: 62% of the 1B APE token supply is allocated to the ApeCoin community, and 15% of the total supply, or 150M APE, would be claimable by BAYC NFT holders. Each BAYC NFT holder was airdropped 10,000 APE tokens, currently worth ~$110K. Compared to the ~$250K floor price of the collection, that's an impressive ~45% "dividend" 🤯
Launch partners: The launch was pretty impressive as APE was trading on all major crypto exchanges like Binance, FTX, Gemini, and Coinbase.
Utility: APE holders will have access to multiple cutting edge projects, merch, events, services and more. New NFT projects looking to leverage the BAYC ecosystem will now integrate APE as their form of currency.
With a current market cap of 3.2B$, ApeCoin is now in the top 50 crypto currencies in the leagues of big tokens like Axie Infinity, Fantom, Aave and more.
🎰 22M$ LUNA bet
Crypto twitter usually has some drama between degens with strong views. But this is one of the most wild and *expensive* degen trades that I’ve seen.
It all started with some negative tweets about $LUNA from Sensei Algod, a pseudonymous crypto investor calling it a ponzi. UST’s peg has historically been maintained by allowing 1 UST to be exchanged for $1 worth of LUNA at any time. When UST falls below $1, traders can purchase it on the open market and then swap it for $1 worth of LUNA, pushing the price back up to $1. Demand for UST is also driven by the roughly 20% fixed APY offered by Anchor protocol. Sensei Algod asserts that the yields are “printing out of t[h]in air” and are “unsustainable.” Algod argues that when the Black Swan event happens or supply exceeds demand, it will be a race to the bottom and it's only a matter of time.
Algod then offered to bet $1M that $LUNA will be at a lower price in one year than it is today ~$88. Do Kwon, the founder of Terraform labs and $LUNA replied “Cool, I’m in”
This escalated pretty quickly as another crypto whale, GCR aka Gigantic Rebirth enters the chat to get in on the action and ups the stakes by 10x. Do Kwon takes the offer with ease. A popular crypto analyst “Cobie” agreed to act as an escrow for the bet and hold the wagers for the year, and shared a wallet address to accept deposits. Since, all the data is on-chain, you can view the $10M transaction from GCR here and the $10M match from Do Kwon here.
Like Cobie said, "May the best degen win."
💸 Consensys and Optimism raise $$$
As the funding mania continues, Optimism raised $150M Series B funding to grow their Layer 2 scaling solution for ethereum. It uses optimistic rollups (a transaction execution method) to improve throughput and lower transaction fees while still maintaining the security properties of the underlying blockchain.
ConsenSys, which owns Metamask and Infura raised $450M Series D funding as MetaMask Reaches Over 30 Million MAUs. Interestingly, Consensys said all proceeds from the round will be converted to ETH to further build ConsenSys’ “ultra sound money” position as part of their treasury strategy. 🔊
How did you enjoy this week’s edition?