Who is driving the notable movement in Ethereum Spot ETF this week?

February 23, 2024

I. Mainstream exchange news

• KuCoin responded to claims of user funds being locked, saying it has already communicated with users to resolve the cases, which were reported on Reddit.
• Binance Inscriptions Marketplace launched a limited-time airdrop campaign where traders can trade to share over $1,000,000 worth of rewards.
• Binance will add FIL/USDC, HBAR/TRY, PENDLE/TRY, and WLD/USDC spot trading pairs.
• Binance will support the conversion of PlayDapp (PLA) tokens to PlayDapp (PDA).
• Binance Futures launch GLMUSDT Perpetual Contract with up to 50x leverage.
• Coinbase's international platform launches DOT, ICP, and NEAR perpetual futures contracts trading.
• OKX Jumpstart will launch GPT(QnA3.AI).

II. Mainstream projects and trending events

• Ronin Bridge was attacked with a loss of 2790 ETH, stolen funds are currently being transferred to Tornado Cash.
• Worldcoin's leadership has hinted at a "major announcement" to be released soon.
• OP Labs announced that the Delta Upgrade will be launched on OP chains. Span batches, a feature introduced by Delta, will reduce the fixed overhead cost of operating an OP Chain by over 90%.
• Franklin Templeton submitted an Ethereum Spot ETF 19b-4 document.
• Bitcoin ETF provider Valkyrie launched a double-leveraged Bitcoin Futures ETF.
• Starknet announced the launch of the cross-chain bridge StarkGate 2.0 mainnet.
• Ondo Finance is expanding its USDY stablecoin to the Aptos network.
• L2 network Mint Blockchain will launch its testnet on February 28th.
• Ethereum liquidity staking project ether.fi will join the Manta Network ecosystem.

III. Funding news

• Cryptocurrency infrastructure provider Januar ApS completed a €1.5 million seed round of funding, with participation from CMT Digital.
• Ethereum-based token streaming protocol Superfluid raises $5.1 million in strategic funding.
• Binance Labs announced an investment in Ethereum restaking protocol Renzo.
• Clave completed a $1.6 million pre-seed round of funding led by Matter Labs.
• a16z invested $100 million in Ethereum restaking protocol EigenLayer.
• Solana infrastructure company Helius completed a $9.5 million Series A funding round led by Foundation Capital.

IV. Regulatory news

• The Cyberspace Administration of China released the China Blockchain Innovation Application Development Report and Case Collection (2023).
• The EU has established a new anti-money laundering agency in Frankfurt, Germany, which is responsible for supervising cryptocurrency.
• Nigeria issued a ban on cryptocurrency exchanges such as Binance, Coinbase, etc.

IV. Popular projects 

Starknet adjusts the token unlocking schedule for early contributors and investors

On February 23rd, Starknet made an announcement stating that there would be changes to the token unlocking schedule for early contributors and investors. Initially, the plan was to unlock a third of their 3.9 billion total holdings on April 15th.

The revised schedule will see 64 million STRK tokens worth nearly $125.5 million and 0.64% of its 10 billion total supply unlock on April 15th. The unlock will continue at 64 million STRK a month until March 15th next year. It will then bump to 127 million STRK a month for the next two years until March 15, 2027.

According to the new unlocking schedule, 580 million tokens will be unlocked by the end of 2024. Additionally, 1.4 billion tokens will be gradually unlocked by the end of 2025, another 1.5 billion will be unlocked by the end of 2026, and another 380 million tokens will be unlocked by March 15, 2027.

Currently, over 430 million STRK tokens have been claimed, accounting for more than 74% of the total. This adjustment of tokenomics has coincided with a 15% increase in the price of STRK over the last 24 hours.

Chiliz updated tokenomics 2.0

On February 22nd, sports blockchain Chiliz, known for its fan tokens, announced its Tokenomics 2.0. The key optimizations include:

1. Introduction of inflation: An inflation rate of 8.8% for the first year was introduced to provide long-term incentives for community users and the ecosystem, ensuring continuous developments and iterations.
2. Decreasing inflation: The inflation rate decelerates annually until it reaches 1.88% in the 14th year and will then remain constant. EIP-1559 is introduced, which means that if on-chain activity increases and gas consumption rises, CHZ could potentially enter deflation.
3. Validator and delegator returns: Validators and delegators would achieve an Annual Percentage Yield(APY) of 5.72% given 100% token staking. If the staking rate is 50%, the APY would be 11.44%.
4. Inflation revenue allocation: 65% for validators and delegators, 10% for community vault, CHZ LP, and restaking rewards, and 25% for maintenance and operations.

With the Euro 2020 approaching in June, sports blockchains led by CHZ, and fan tokens like SANTOS and BFT, have rebounded. Given the update in CHZ's tokenomics, it is expected that the interest in these could further rise.

Investment announcements continued to heat up the restaking track.

1) Binance Labs announced an investment in Ethereum restaking protocol Renzo.

2) a16z invested $100 million in Ethereum restaking protocol Eigenlayer. 

Market Expectations: 

1) ETH ETF narrative: Following the precedent of BTC ETF approval, the narrative surrounding the May ETH ETF leads to whales continuously purchasing more ETH, promoting a continuous rebound in the ETH to BTC exchange rate.

2) Cancun upgrade: Around March 12th, the Cancun upgrade is set to officially launch on the main network, which will significantly enhance TPS and reduce costs. This upgrade will have a long-term positive effect on the ETH ecosystem.

3) Growing restaking track: The current restaking protocol primarily targets restaking assets based on ETH. Top projects in the protocol, such as Eigenlayer have a TVL  close to $8 billion, ether.fi at $1.44 billion, Puffer at $1.05 billion, and Renzo close to $400 million. 

With expectations of airdrops and enhanced mining points in conjunction with Pendle's liquidity incentives, there is currently an estimated annual APY between 20% to 50% for these products. This provides significant potential returns. Future token issuance status of projects within the ecosystem might be noteworthy.

Babylon testnet to be launched next Wednesday

Enabling staking capabilities for Bitcoin, Babylon enhances security by leveraging the robustness of the Bitcoin chain and extending it to various Proof of Stake (PoS) networks like Cosmos, Binance Smart Chain, Polkadot, Polygon, and more. This provides a return for BTC stakers while ensuring the security of PoS chains.

Babylon announced on February 22nd that its testnet would be launched next Wednesday. Users can acquire Signet BTC through the Signet faucet and get BBN tokens in the #faucet channel in Discord. After staking is open, users can stake their Signet BTC and provide a Polygon address to obtain a Pioneer Pass. Each Pass is numbered, so participating early is beneficial.

Babylon is a Layer 1 blockchain created by Stanford University Professor David Tse. In December 2023, it announced a financing round of $18 million, led by Polychain Capital and Hack VC, with investments from Framework Ventures, Polygon Ventures, OKX Ventures, IOSG Ventures, and others. As the BTC ecosystem narrative continues to grow, the concept of BTC PoS might garner more attention in the future.

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