[Daily] Polygon is unsure

Good morning! Welcome to The Daily Moon. Elon Musk has a new pet project: to build an alt ChatGPT. He doesn’t want one chatbot to control the AI business so he’ll hire a team to develop a worthy opponent. Going by his Twitter shenanigans, our best wishes to the developers.

As of Wednesday, 8PM IST

The markets recovered despite growing concerns about the US economy. Bitcoin rallied on the Ordinals Inscriptions buzz. Ethereum was bullish as its upcoming upgrade attracted investors. S&P 500 and Nasdaq fell in early trade on investor jitters. Back home, Sensex and Nifty bounced back after eight days on buying in auto, banking, and IT stocks.

Stacks Soars On Hype

Stacks, a Layer-2 blockchain built to scale Bitcoin, has stumbled upon something interesting. Its STX token surged more than 53% in the past seven days over the Bitcoin NFT boom. In fact, STX crossed the magic figure of $1 on Wednesday.

FYI Layer 2 protocols are built on a base blockchain, Bitcoin in Stacks’ case. Stacks aims to decongest the network for dApps, NFT, and DeFi developers.

What’s driving it?A lot of NFTs. The Ordinals project, for instance, has recorded 223,987 Inscriptions just a month after launch. Yuga Labs (of Bored Apes’ fame) has launched its first Bitcoin NFT collection called TwelveFold. Stacks has rallied on the back of this growth.

Analysts see an upside opportunity in STX on the increased use cases and because of the smart contract functionality of the Stacks blockchain.

Upgrade movesStacks is set to upgrade to Stacks 2.1 on March 20. This will boost the network speed and also introduce additional incentives for “stacking”. Similar to staking, stacking means locking up STX tokens on the blockchain to earn rewards.

Not everyone is impressedFutures traders have bet on STX’s price crash. Close to $80 million has flown into short positions. There’s chatter that the NFT mania will be short-lived and that STX is overbought.

Polygon Gives Mixed Signals

Polygon had a good run in 2023. It collected $7 million in transaction fees and its NFTs have soared. It even outperformed other ETH Layer-2 tokens such as Arbitrum and Optimism. But, all is not well.

Why?The network activity has slowed down, gas fees dipped ~30% in the past 10 days and DeFi transactions on Polygon have turned lukewarm. All of this has caused MATIC to slide ~6%. A technical metric called the Relative Strength Index has fallen below the neutral mark of 50. It's an indication that the bears will take over.

What about zkEVM?Well, the zkEVM mainnet launch is scheduled for March 27. But there’s been controversy, Polygon developers classified it as “Ethereum equivalence”, which didn’t go down well with the investors. Nobody likes MATIC being another ETH.

FYI zkEVM is an Ethereum scaling solution that can validate multiple transactions on a single protocol.

Tel Aviv’s Crypto Trading Dreams

The Tel Aviv Stock Exchange has dreams— to expand crypto trading to non-banking members. Before you get excited, it’s not a done deal yet. The exchange has made a proposal.

The proposal

• Non-banking members will be licensed providers for crypto trading.

• An intermediary for crypto trading activities will hold customer funds.

• Customers will be able to withdraw funds originating from the sale of crypto.

Hurdles aboundIt’s a great idea on paper but up against Israel’s own direction on crypto. In January, the Israel Securities Authority proposed that digital assets be regulated as securities.

One Step Forward, One Step Back

Every few days, there are countries that do or say things that are progressive and others who make it more difficult for the sector to thrive. In today’s edition, it’s Sweden and France.

SwedenThe Nordic country is close to issuing a CBDC. And naturally, there are fears that it wants to monitor people’s payments more closely. But it seems the country doesn’t care about people’s day-to-day payments. Privacy above everything.

FranceLawmakers have approved stricter rules for crypto firms trying to enter the country. They’ll be required to make disclosures and be open to more scrutiny. The broader European Union laws are about to come into effect. And they aren’t friendly to crypto either.

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