[Daily] Ethereum moves to Shanghai

Good morning! Welcome to The Daily Moon. The US is losing its edge in crypto development. Its share in global crypto developers fell 26% in five years. Lack of regulatory clarity and sudden clampdowns (remember Tornado Cash?) are possible reasons for this decline.

As of Wednesday, 7PM IST

The markets showed mixed trends even as inflation in the US was slower than expected. Bitcoin was bullish on institutional interest. Ethereum saw rapid selling amidst the Shanghai upgrade launch. S&P 500 and Nasdaq saw buying in technology stocks in early trade. Back home, Sensex and Nifty ended higher on IMD forecasts of a normal monsoon in 2023.

Unstaking Has Arrived

After a three-year wait, Ethereum can finally be unstaked. The Shanghai upgrade that went live on the mainnet late last night enables staked Ether to be withdrawn. ETH worth ~$34 billion has been staked.

What’s the drill?All of the staked ETH can’t be withdrawn. Every day, about 1,800 validators will be able to unstake their ETH. The daily withdrawal limit will be under 60,000 ETH to prevent a price collapse. There’s an expectation that investors will HODL because they have staked via liquid staking platforms. It means that they get staked token versions that can be traded in exchange for the locked Ether.

How’s the mood?There are mixed reactions. Ahead of the upgrade, the second-largest crypto was volatile and fell below $1,900. Meanwhile, inflows slowed down as well.

How does it change things?The Shanghai upgrade is expected to increase liquidity in the network and attract more institutional investors because the token circulation is predictable, there’s hope that Ether, too, can become an inflation hedge for investors. The next phase of development will enable proto-danksharding. To simplify, it will divide the data into smaller units that can be processed faster and at cheaper rates.

With all this being planned, the big question is: When is the flippening? Analysts say it will take a few decades.

Can Rocket Pull A Lido?

Liquid staking’s popularity may increase following the Shanghai upgrade. But staking platforms such as Lido and Rocket Pool are having their internal race of sorts.

What’s Rocket Pool?It is a decentralised ETH staking protocol that allows users to stake Ether with only 16 ETH. From a market cap of just $261 million in January, it topped $1 billion in February.

What’s the Lido connection?Lido, the OG staking platform, has competition. While it boasts of a market cap of $2.07 million, Rocket Pool has breached a market cap of $906 million. Lido’s daily active users are ~380 while Rocket Pool's DAU is slightly above 200.

Rocket Pool wants to attract more users through a higher commission compared to Lido. Similar to Lido’s bets on LDO, Rocket Pool has used its RPL token to increase market share in the staking space.

DeFinitely On the Table

Decentralised finance, or DeFi, has found interest from regulators. And not all of it is bad. For now anyway. But it’s definitely on their radar.

They just want to knowRegulators in the US and France have come out with two separate reports. Both basically assess how DeFI may be used for illicit activities such as money laundering. Recent hacks on DeFi projects are what prompted the concerns.

Identify yourself, and we goodThe US report notes that some DeFi projects don’t meet identification requirements. The French regulator wants a minimum set of standards in place.

The crux: we don’t like crypto but if DeFi follows basic standards, we’ll allow it to exist. Let’s see where this goes.

Twitter→ X?

A controversy a day. That seems to be Elon Musk’s strategy, especially for Twitter. Let’s bring you up to speed with the latest.

“X”That’s what he said. No, seriously. Musk tweeted just X. See for yourself:

And it would’ve been all right, given that it’s just him. But then, reports surfaced about a court filing in the US that says Twitter Inc “no longer exists”. It has merged with X Corp, the entity that was created to buy Twitter. 🙄

So now what?Well, nobody knows. Some think this is part of his plan to make an “everything app”. Others speculate this is him making good on this other cryptic tweet where he agreed with a user that all his big companies into a single entity called X. So who knows what the X means.

It could just be a desperate owner trying to drum up interest in a platform which constantly crashes, whose employees leak stories, and whose advertisers don’t want to return.

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