Investments

Shift toward Liquid Staking Derivatives expected after ETH Shanghai upgrade

Published

2 weeks ago

January 15, 2023

Shift toward Liquid Staking Derivatives expected after ETH Shanghai upgrade Josh O’Sullivan · 12 hours ago · 3 min read

Ethereum’s Shanghai upgrade in March will enable withdrawals from the beacon chain by granting ETH validators the ability to unstake.

3 min read

Updated: January 15, 2023 at 7:29 pm

Cover art/illustration via CryptoSlate

The Ethereum (ETH) Shanghai upgrade is due to release March, enabling withdrawals from beacon chain and allowing ETH currently staked in ETH 2.0 validators to be unstaked.

With over 70% of ETH stakers currently at a loss with their ETH inaccessible, the Shanghai upgrade will enable stakers access to their ETH and decide whether to sell at a loss or hold long-term until back in profit.

Ethereum: Mean and Median Block Interval – (Source: Glassnode.com)

Post-ETH merge

Back in September 2022, the ETH merge took place in the Bellatrix upgrade. In the process, block validation was taken over by the beacon chain completing the transition from Proof of Work (POW) to Proof of Stake (POS).

The beacon chain is organized by validators who have deposited 32 ETH before being able to begin operations. Currently, the number of beacon chain validators has reached 500,000 — with a recent burst in new active validators — with a total of over 16 million ETH staked in the ETH 2.0 deposit contract.

Ethereum: Proof-of-Stake Change in Active Validators – (Source: Glassnode.com)

New ETH credentials format

Validators who wish to withdraw their staking rewards must ensure their withdrawal credentials are updated to the new “0x01” standardized format. The same prerequisite exists for validators who wish to stop validating or exit their full balance.

Currently, roughly 300,000 validators have yet to update their credentials from “0x00” while roughly 200,000 validators have already updated on the beacon chain.

Of the 500,000 total validators, the over 16 million ETH they have staked represents roughly 13% of the total ETH supply — which will change as time goes on as the result of:

Slashing — in the event of malicious behavior.
Revenue earned from issuance and fees.
Inactivity leak — if validators will block or attestations.
New deposits and, eventually, withdrawals.

Ethereum: Proof-of-Stake Total and Effective Balance – (Source: Glassnode.com)

Liquid Staking Derivatives

Due to the nature of staked ETH, it is an untradeable asset once staked. As such, numerous providers emerged that allowed ETH to be staked in return for a tradeable asset representing a share of the staked ETH — known as Liquid Staking Derivatives (LSD).

To date, Lido is by far the largest LSD provider, with a market holdings amount of around 5 million ETH. However, currently staking providers such as Lido, Coinbase and Binance control large segments of the ETH market — revealing issues with centralization.

Ethereum: ETH 2.0 Total Value Staked by Provider [ETH] – Source: CryptoSlate.com

As an asset geared towards decentralization, ETH holdings amassed by the aforementioned ETH staking providers lend to the narrative that ETH is becoming too centralized — and ultimately controlled by companies with the largest holdings.

With the integration of the upcoming Shanghai upgrade, ETH investors and validators alike will be gearing up to withdraw staked ETH in favor of positions that allow the share and value of their staked ETH to be returned in the form of LSDs.

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Investments

Crypto investment products see weekly inflows of $117M, highest since July 2022

Published

17 hours ago

January 30, 2023

Monika Ghosh

Crypto investment products see weekly inflows of $117M, highest since July 2022 Monika Ghosh · 1 hour ago · 1 min read

Bitcoin has emerged as an investor favorite as BTC investment products saw inflows of $116 million over the past seven days.

1 min read

Updated: January 30, 2023 at 1:50 pm

Cover art/illustration via CryptoSlate

Amid investor sentiment signaling ‘greed,’ cryptocurrency investment products saw weekly inflows of $117 million last week — the highest since July 2022, according to a CoinShares report. Investors are almost solely focusing on Bitcoin, which saw inflows of $116 million.

Total assets under management (AuM) of investment products increased 43% from November lows to $28 billion. The trading volume of investment products also improved to $1.3 billion in the week of Jan. 23 — up 17% compared to the year-to-date average. Comparatively, the average weekly volumes in the larger crypto market jumped by 11%.

Germany accounted for 40% of all inflows last week at $46 million. Canada, the U.S., and Switzerland saw inflows of $30 million, $26 million, and $23 million respectively.

Multi-asset investment products kept losing money for the ninth consecutive week. Last week, outflows totaled $6.4 million, although CoinShares noted that investors are selectively quitting certain investments. This is because while Solana, Cardano, and Polygon saw inflows, Bitcoin Cash, Stellar, and Uniswap experienced minor outflows.

Posted In: Bitcoin, Bitcoin Cash, Cardano, Polygon, Solana, Stellar, Uniswap, Canada, Germany, Switzerland, U.S., Investments, Trading

Exchanges

Prosecutors seize SBF’s $50M deposit to small bank

Published

6 days ago

January 25, 2023

Zeynep Geylan

Prosecutors seize SBF’s $50M deposit to small bank Zeynep Geylan · 7 hours ago · 1 min read

Roughly $50 million of SBF’s deposit has been seized by prosecutors – Alameda invested $11.5 million earlier in the same bank.

1 min read

Updated: January 25, 2023 at 5:14 pm

Cover art/illustration via CryptoSlate

Prosecutors seized just under $50 million belonging to FTX founder Sam Bankman-Fried (SBF) held in Farmington State Bank on Jan. 4, according to a Yahoo Finance (YF) report on Jan. 24.

The total amount seized was only $500 short of $50 million, according to the YF report. The bank specialized in agricultural loans to farmers and had only three employees when SBF deposited this amount. It also didn’t offer online banking services or credit cards and had a net worth of $5.7 million.

Alameda invests in Farmington

SBF’s venture capital Alameda Research invested $11.5 million in the bank in March 2022, according to a New York Times (NYT) report published in November 2022,

Farmington has been steadily collecting about $10 million in deposits for a decade — by the third quarter of 2022, this amount increased to $84 million, according to the NYT report. Of this increase, $71 million came from new accounts.

The bank also changed its name to Moonstone Bank and started offering online banking services after FTX’s investment, according to the NYT report.

The former head of the Independent Community Bankers of America, Camden Fine, reportedly shared his thoughts about the investment, according to the NYT report. He said:

“The fact that an offshore hedge fund that was basically a crypto firm was buying a stake in a tiny bank for multiples of its stated book value should have raised massive red flags for the F.D.I.C., state regulators and the Federal Reserve. It’s just astonishing that all of this got approved.”

Recent FTX Stories

architects

Former head of FTX.US raises $5M from Coinbase, Circle for a new crypto startup

Published

2 weeks ago

January 20, 2023

Andjela Radmilac

Former head of FTX.US raises $5M from Coinbase, Circle for a new crypto startup Andjela Radmilac · 8 hours ago · 1 min read

Brett Harrison, the former CEO of FTX.US, raised $5 million from big-name investors to launch a new crypto startup called Architects.

1 min read

Updated: January 20, 2023 at 1:53 pm

Cover art/illustration via CryptoSlate

Former FTX.US President Brett Harrison is in the process of launching a new cryptocurrency startup that would service institutional clients.

According to a Bloomberg News report, Harrison has raised $5 million from well-known industry investors, including Coinbase Ventures and Circle.

Harrison’s new company — dubbed Architects — will reportedly cater to institutional clients and provide them with access to both centralized and decentralized crypto markets.

In an interview with Bloomberg, Harrison said he hoped Architect would help institutions regain their faith in the crypto industry.

Harrison said that he had trouble securing funding for the venture, as the collapse of FTX caused venture funding in the crypto space to drop as much as 75% in the fourth quarter of the year. Harrison’s close connections to FTX also made it difficult to secure investments for Architects.

Earlier in January, it was reported that Harrison was seeking a $6 million investment at a $60 million valuation.

However, the former head of FTX.US didn’t disclose the current valuation of the company. Most of the funding will be used for recruitment, with Harrison noting that he hoped to hire his former FTX.US colleagues.

Architect’s product is expected to launch in the second quarter of the year. Harrison said that he hoped the software the company is developing would eventually be incorporated into Coinbase’s and Circle’s platforms.

Harrison’s platform was also backed by SV Angel, Third Kind Venture Capital, Motivate Venture Capital, as well as Anthony Scaramucci and SALT, a fund managed by his son AJ Scarammuci.

FTX’s investment arm acquired a 30% stake in Scaramucci’s SkyBridge Capital in September 2022. Harrison declined to comment on his talks and potential funding from other private investors.