DeFi
Ethereum’s lowered yield might signal a paradigmatic shift in the ecosystem
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5 hours agoon
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adminDisclosure: The views and opinions expressed here belong solely to the author and do not represent the views and opinions of crypto.news’ editorial.
In mid-August 2024, Ethereum (ETH) gas fees dipped to 0.6 gwei—a record low since 2019. While some see this as a concerning drop, it is symptomatic of broader, healthier shifts within the ecosystem.
Lower gas fees reflect decreased mainnet transaction volume, which has, in turn, led to reduced staking yields for validators. Simultaneously, the slow adoption of Ethereum exchange-traded funds in the US adds to the market’s uncertainty. These recent events have prompted some to question Ethereum’s viability and long-term future. But rather than signaling a crisis, these developments point to a new chapter in Ethereum’s evolution—one that marks a transition to a more mature and sustainable ecosystem.
The reduced yields should not be viewed as a sign of diminished activity or liquidity but as a result of Ethereum’s success in scaling and distributing its load across layer-2 solutions. This shift, alongside new investment vehicles like spot ETH ETFs, is creating a more efficient and accessible market, bringing long-term benefits to Ethereum and decentralized finance as a whole.
Ethereum’s paradoxical growth
Ethereum is currently experiencing what can best be described as paradoxical growth. On the one hand, its mainnet is seeing reduced transaction activity and lower yields. On the other hand, L2 solutions—designed to reduce transaction congestion—are flourishing. Daily transactions across L2 ecosystems surged to an all-time high of 12.42 million in mid-August, coinciding with the lowest gas fees seen on the Ethereum mainnet in years. These dynamics reveal that rather than a slowdown in the ecosystem, Ethereum is shifting its activity to more scalable, efficient layers.
The lowered staking yields for validators, which many are concerned about, are a natural consequence of this migration of activity from the mainnet to L2s. Over time, Ethereum’s mainnet may evolve into a settlement layer reserved for high-value transactions, allowing the bulk of lower-value activity to be handled by L2s. This isn’t a sign of decline but of a maturing market capable of meeting the demands of a growing user base while optimizing costs and efficiency.
Instead of focusing narrowly on the mainnet’s yield, stakeholders would do well to consider Ethereum’s ecosystem as a whole. Attracting more users to the protocol, enhancing accessibility, and rolling out initiatives like incentivized airdrops and points systems could help Ethereum further solidify its position as the go-to platform for decentralized applications and DeFi innovations.
The expanding influence of DeFi
Ethereum’s role as the foundational layer of DeFi continues to shape the broader blockchain space. Despite current concerns, Ethereum’s growth remains a powerful driver of innovation, and this evolution is crucial for the future of decentralized finance.
On the protocol level, Ethereum’s continued development and expansion create a more competitive and accessible network for users and developers alike. As Ethereum scales, its capability to support new dApps and financial products increases, further contributing to DeFi’s success. This, in turn, drives network effects, where increased participation enhances security, utility, and, ultimately, adoption.
Ethereum’s influence is also spreading to traditional finance, most notably through the introduction of spot ETH ETFs, which provide a more familiar and regulated entry point for institutional and retail investors alike. These ETFs lower the entry barrier for those unfamiliar with blockchain technology but eager to invest in the space. By offering a regulated framework and a product perceived as safer than direct token purchases, spot ETH ETFs are attracting traditional investors to the Ethereum ecosystem. This not only expands Ethereum’s reach but also positions ETH as more than just a tech-driven asset—transforming it into a recognized store of value.
As this trend continues, we can expect further integration between Ethereum and real-world assets, enhancing the network’s utility and long-term potential.
Supporting ecosystem transitions
As Ethereum navigates this paradigm shift, it’s important to recognize that these changes are a natural part of the ecosystem’s evolution. Lowered staking yields and gas fees are not indications of failure but reflections of Ethereum’s capacity to adapt and scale. Supporting this transition is crucial for the network’s long-term success, and this can be achieved through initiatives that prioritize user engagement and developer incentives.
For instance, platforms like Base—an L2 solution—handled over 109 million transactions in the past 30 days compared to Ethereum’s 33 million. This is a clear sign that L2s play a critical role in the network’s growth. However, acknowledging this shift isn’t enough; the ecosystem must prioritize collaboration among DeFi protocols to build dApps that maximize Ethereum’s potential. This is the only way for Ethereum to achieve its actual goal of serving the masses with decentralized technology.
A new dawn for Ethereum
The Ethereum mainnet’s lower yields and gas fees may appear to signal a slowdown, but they are, in fact, signs of Ethereum’s growing scalability and efficiency. As L2 networks take on more transaction activity and new financial products like spot ETH ETFs open the door for traditional investors, Ethereum is evolving into a more robust and versatile platform.
The ebbs and flows of market dynamics—like the recent yield reductions—are part of a larger shift that strengthens Ethereum’s role as the backbone of DeFi. The future of Ethereum lies in its ability to scale, integrate real-world assets, and foster a thriving community across its ecosystem. Far from being a calamity, the lower yields signal a new dawn in which Ethereum continues to lead the way in decentralized innovation.
Danny Chong
Danny Chong is the co-founder of Tranchess, a multi-staking protocol, and co-founder of Digital Assets Association Singapore, a non-profit organization pushing the convergence of TradFi and DeFi. With over 17 years of experience in investment banks, Danny has previously held leading roles in trading, sales, and management at prominent French banks, including BNP Paribas and Société Générale for the APAC region.
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cryptocurrency
FLR leads top altcoins in 24-hour gains despite market wide selloff
Published
2 days agoon
October 3, 2024By
adminFLR has emerged as the leading gainer among the top 100 cryptocurrencies, witnessing a 21% rise in price within the past 24 hours, driven by positive developments within its ecosystem.
Flare (FLR) climbed from a low of $0.0149 to a high of $0.0178, eventually stabilizing around the $0.016 range when writing. This significant uptick solidified a 12% gain for the day and propelled the market capitalization of its circulating supply of 48.487 million tokens to approximately $819.2 million while most of the crypto market struggled as Wall Street traded deep in the red.
FLR’s price upswing coincides with an explosive increase in trading volume, which has soared by over 390%, translating to more than $30 million worth of the token exchanging hands.
Strategic growth and technological integrations
The Flare Network has been actively broadening its technological and strategic footprint, which has contributed to its recent price performance.
Among key developments is the integration of Google Cloud earlier this year as an infrastructure provider—a partnership that significantly enhances the network’s data handling and validation capabilities, thereby elevating its standing in the blockchain ecosystem.
In an aggressive push to foster sustainable growth, Flare has committed to reinvesting 50% of its FLR token sales back into the ecosystem. This strategic reinvestment is earmarked for the enhancement of vital network functions, including lending protocols and decentralized exchanges, aiming to boost both the utility and intrinsic value of the FLR token.
Further, Flare has implemented a token burn policy, recently eliminating 66 million FLR tokens from the total supply. This adds to the bullish narrative, as reduced supply tends to increase scarcity and potentially drive up the token’s value.
Market sentiment
According to data from CoinMarketCap, the social sentiment around the token was largely bullish, with the majority of community members expecting the rally to continue.
Technical indicators, such as the Moving Average Convergence Divergence on the 1-day price chart, illustrate a bullish crossover—where the MACD line has crossed above the signal line, a pattern which typically means that the strength of the bullish trend is building.
However, the subdued histogram suggests that while momentum is building, it may not be strong enough for a major breakout yet.
The Relative Strength Index further corroborates this view, resting at 58.83—above the midpoint but below the overbought threshold, indicating a gentle but persistent uptrend.
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Canada
Gemini follows Binance and OKX in departing Canada
Published
4 days agoon
October 1, 2024By
adminCrypto exchange Gemini has announced its exit from the Canadian market, joining several other platforms that have left due to the country’s strict regulatory environment.
Canadian customers of the Winklevoss-founded exchange reported receiving an email urging them to withdraw their funds by Dec. 31, giving them 90 days to move their assets.
According to the Sept. 30 notice, all Canadian accounts will be closed by the given deadline “with limited exceptions.” Users have been asked to withdraw their crypto and fiat balances.
The move comes as a surprise, considering that the exchange previously described Canada as an “essential market” for its international expansion. Gemini’s decision to exit Canada mirrors that of other major platforms like Binance, OKX, dYdX, and Bybit, all of which have struggled to navigate the regulatory environment.
These exchanges have cited the complexity and cost of compliance with Canadian regulations as primary factors in their decision to leave the market.
Currently, some global platforms, such as Coinbase, Crypto.com, and Kraken, are among those still operating within Canadian borders.
Restrictive regulations
Notably, the regulatory environment began tightening in February 2023 when the Canadian Securities Administrators required all crypto exchanges operating in the country to sign legally binding pre-registration undertakings. This came on top of existing restrictions, including the prohibition on offering margin trading to Canadian users.
The regulations were aimed at bolstering investor protections and bringing more transparency to the crypto sector but also imposed strict limitations on certain activities within the crypto market.
Since the CSA considers some stablecoins to be securities or derivatives, exchanges were prohibited from offering stablecoins or value-referenced crypto assets through contracts without prior approval. This regulation was one of the most challenging for platforms to comply with.
Some exchanges, such as Bybit and KuCoin, were also hit with fines from the Ontario Securities Commission for operating without proper registration.
Although Gemini initially complied with these regulations by submitting its pre-registration in April 2023, it ultimately decided to cease operations in Canada.
With exchanges like Gemini bowing out, Canadian users have fewer ways to access the decentralized market as crypto regulations get tighter by the day.
On April 17, 2024, the Canadian government introduced a new Crypto-Asset Reporting Framework, set to be enforced in 2026, which will require all cryptocurrency service providers, including exchanges, brokers, and ATM operators, to report detailed transaction data annually.
Further, the framework requires service providers to disclose client-specific information, such as names, residential addresses, and taxpayer identification numbers.
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CEX
Crypto-native platforms need on-ramps to grow and leap forward
Published
1 week agoon
September 28, 2024By
adminDisclosure: The views and opinions expressed here belong solely to the author and do not represent the views and opinions of crypto.news’ editorial.
Crypto was once a self-contained industry. The average user only heard about it at the Bitcoin (BTC) price peaks and was reluctant to invest in this new asset class. Those passionate about crypto found their way through with limited options to convert their digital coins into fiat and back.
But those days are gone. As crypto products grow in popularity, many platforms, previously entirely confined to web3, are integrating fiat bridges to open their doors to new users.
Disruption that doesn’t benefit users
Imagine a common type of web3 product that wants to disrupt its niche and make its service go mainstream. It describes its solution and how blockchain revolutionizes the traditional way of doing things. Then, it says: connect your web3 wallet and make sure you have enough Ethereum (ETH) to pay gas fees. If you don’t have any, set up an account on a centralized exchange and buy some.
This path is ridiculously long and bumpy for a regular non-crypto user. Centralized exchanges are still the most common way to convert fiat money into crypto, but their cumbersome interface often leaves newcomers feeling dizzy. Even for experienced users, CEXes as a gateway are not always convenient—withdrawing funds to an external platform involves multiple confirmations and extra fees. All of this creates a great deal of friction, complicating the user’s journey into web3.
Why would a DEX need a fiat gateway?
One could argue that web3 projects aiming to go mainstream and blockchain-native platforms mostly focused on the crypto audience are different—in the sense that crypto protocols don’t really need fiat. For example, decentralized exchanges that let enthusiasts swap various L1 and L2 tokens earned in airdrops, bounty campaigns, and other activities confined to the blockchain realm.
Is that really the case? In practice, that’s not quite so. For instance, Uniswap introduced its fiat-to-crypto bridge back in December 2022 and has since partnered with various providers to expand opportunities for its users. This is a good example of how a DeFi project realized that it couldn’t reach the next level without opening a channel for inflows from the traditional economy. The move also strengthened the project’s value proposition, giving people more opportunities to safely trade in a decentralized environment.
Memecoins are another example. As the memecoin frenzy unfolded in 2024, this asset class became well-known to a wider audience, catching the attention of traditional investors. While many of them turned to centralized exchanges due to a lack of other options, the Shiba Inu (SHIB) memecoin integrated a fiat on-ramp, offering users the ability to purchase the token directly into their wallet. Investors gained an easy way to buy the asset, and the project increased the value and utility of its token.
The efforts of top crypto platforms to integrate on- and off-ramps highlight the user demand. However, they also indicate that the infrastructure for fiat-to-crypto bridges is now ready. Today, setting up an on-ramp can take just a few days using pre-built software that supports dozens of countries, payment methods, and national currencies. Good gateways are fully licensed in many regions, freeing their clients from compliance issues.
Some argue that crypto-native platforms don’t really need fiat bridges because not many people have used them so far. But what if that was the case simply because there were far too few bridges available?
We constantly think of how to make crypto more accessible. But it often doesn’t require us to reinvent the wheel—it’s about removing the friction faced by those who want to use their fiat in the crypto world. There was a time when fiat and blockchain realms barely intersected. However, as they continue to converge, only tighter integration between traditional and digital currencies will facilitate faster adoption of crypto.
Konstantins Vasilenko
Konstantins Vasilenko is a co-founder of Paybis, a pioneering fintech startup in the Baltic States, which has become a leader in the digital and cryptocurrency exchange business. Konstantin is a seasoned IT expert with over 20 years of experience spanning enterprise IT project management, CRM systems, blockchain technology, digital payments, and cryptocurrencies. Prior to Paybis, Konstantin honed his skills at Accenture. His career reflects a strong commitment to innovation and digital transformation, driving the bridge between traditional finance and the crypto economy.
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