[Daily] Is staking out?

Good morning! Welcome to The Daily Moon. The crypto VC party is over. And FTX played party pooper. After the crypto exchange crashed last year, the SEC plans to go tough on VCs that fund such companies. So, is it goodbye to crazy valuations?

As of Thursday, 8PM IST

The markets were in the red. Bitcoin slipped below $23,000 and Ethereum fell to $1,640 levels. Nasdaq rose in early trade. Back home, Sensex and Nifty ended higher on buying in finance and IT stocks.

What’s On SEC’s Mind?

A tweet riled the market. It claimed that the US SEC will ban crypto staking for retail customers. We don't know if that'll happen for sure, but it sure freaked everyone out.

FYI Staking means that you stake or deposit a certain amount of crypto on a blockchain network. These tokens are used to run the network and you earn rewards in return.

Wait, what’s happening?If the rumours are accurate, staking Ethereum and other crypto assets will fall under SEC’s purview. Even though the SEC refused to comment, in the past, SEC had indicated that staking is akin to securities because profits are earned based on the efforts of others. Tbf, there was no mention of Ether, but tokens in general.

There is a lot at stake here. At least $42 billion in staked assets to be exact. These assets brought $3 billion in rewards to the stakers.

Now what’s interesting is that the commodities regulator CFTC has classified Ethereum as a commodity. So, who will prevail?

What about my staked assets?Don’t fret yet. If there was a ban, there’ll probably be some way out of it. After all, there are billions of dollars pumped in as staked assets.

But Lido’s happySEC’s staking ban, if it comes, will only affect crypto exchanges. Decentralised networks such as Lido that allow staking won’t be affected by it. That’s why Lido’s LDO token’s up ~10%. The global crypto market cap, however, fell ~2%.

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ETH Derivatives Fly High

Ethereum has stayed glued to $1,600 and the bulls are behind it. But there’s also interest from traders. The ETH derivatives market has been bullish with money pumped from new investors.

FYI Derivatives include futures contracts where investors bet on the price of a token at a future date.

How do you know?There is a sudden rise in Open Interest for ETH futures. To simplify, Open Interest is the number of futures contracts held by investors at the end of each day. The higher the interest, the higher the cash flows into ETH. Open Interest has crossed 1 billion ETH, which is a two-year high.

Volumes surgeETH volumes have crossed 8 billion. This coincided with the successful simulation of staked ETH withdrawals under the Zhejiang testnet. It’s part of the several tests ahead of the Shanghai upgrade. Despite all the wins, ETH has stiff competition from BTC among derivatives traders.

NFT Boosts BTC Network

The community hated NFTs on the Bitcoin network but not users, seemingly. It has contributed to network activity reaching two year highs.

Bitcoin NFTs?Well, it began in February last year. NFTs on Bitcoin use something called an Inscription. It’s a digital asset stored on the Bitcoin blockchain that allows the creation and transfer of unique digital artefacts. Ethereum NFTs use token standards. So Bitcoin NFTs are fully on-chain and immutable. But not everyone is happy. Purists say this NFT business moves away from Satoshi Nakamoto’s original vision for Bitcoin.

Are there positives?Well, there are. Bitcoin NFTs:

• Expand the potential financial use cases for Bitcoin

• Drive higher demand for block space

• Means higher fees for miners

It is still early days for this Bitcoin NFT project so things can go either way. Watch this space.

We’ve Reached Peak Meme

Never thought we would say this but we may have reached peak meme coin. The number of wallets holding the Shiba Inu token is now up to 1.3 million. No, really. 1.3 million people think there is merit to holding the token for something more than lols.

There has to be moreThere is. Shiba Inu is going through a hard fork—Shibarium—which will decrease volatility and a clear path towards token utilisation.

What kind of utilisation?Don’t know. But the community is excited and hope that there will be now use cases that will emerge at the end of the fork.

When’s the upgrade?Like everything Shiba Inu no one knows either. The founder isn’t saying too much. We’re guessing he’s enjoying the hype. Why wouldn’t he? It’s up 12% in a week.

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