The latest moves in crypto markets, in context Was this newsletter forwarded to you? Sign up here. |
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Good morning, and welcome to First Mover. I’m Lyllah Ledesma, here to take you through the latest in crypto markets, news and insights. - Price Point: Bitcoin has managed to hold $22,000 as the ECB has flagged it would raise rates by 25 bps on Thursday. ETH continues to rally, up 5% on the day.
Market Moves: Omkar Godbole looks at staked eth's expansion to layer 2 and how it could mean lower fees and more yield-generating opportunities for investors staking ether. This newsletter was produced by Parikshit Mishra. Let us know what you think by replying to this email.
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Bitcoin (BTC) was trading up slightly on the day, as Eurozone bond yields shot up after reports that the European Central Bank would discuss whether to raise rates by 25 basis points (0.25 percentage point) or 50 basis points at a meeting on Thursday. BTC is up 15% over the last seven days, marking Monday as the cryptocurrency’s best day in over a month. Ether (ETH), the second largest cryptocurrency by market capitalization, was trading at around $1,550 at the time of writing, marking a 5% increase on the day. Ethereum Classic (ETC), the legacy chain that split from Ethereum following a hard fork, is up 10% on the day, trading at around $25. This comes as the Merge is the topic of conversation amongst traders and as the Ethereum Community Conference (EthCC) kicked off this morning in Paris. There will be more than 250 speakers at the event with a speech from Ethereum co-founder Vitalik Buterin on Thursday. Ether's options market flipped bullish on Monday, showing a bias for strength in Ethereum's native token for the first time in over six months. Other altcoins continued to rise on Tuesday, with NEAR up 12%, SOL by 9.5% and UNI by 5.7%. In other news, crypto broker Genesis Global Trading, has filed a $1.2 billion claim against the now insolvent Three Arrows Capital, according to a 1,157-page court filing uploaded by bankruptcy trustee Teneo. Meanwhile, crypto lender Celsius laid out its mining-focused reorganization plan at its first bankruptcy hearing Monday. |
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Market Moves
By Omkar Godbole |
Liquid staking, which allows users to stake cryptocurrencies while retaining a tradeable variant of the locked coins, will soon become accessible to investors wary of Ethereum's high transaction costs. On Monday, Ethereum-based liquid staking giant Lido Finance announced plans to offer staked ether (stETH) – a derivative representing an equivalent amount of ether (ETH) deposited into the protocol – on layer 2 solutions, which process transactions relatively faster and at cheaper costs than the Ethereum mainnet. "For Ethereum stakers, this means staking with lower fees and access to a new suite of DeFi applications to amplify yields," Lido said in an explainer blog published Monday. Lido's stETH is heavily integrated into decentralized finance. Ethereum's high transaction costs have kept retail investors from accessing decentralized finance (DeFi), therefore, the launch of liquid staking solutions on the relatively cheaper layer 2s could boost mainstream adoption of DeFi. Layer 2 protocols run a separate blockchain on top of the mainnet, providing a secondary framework where transactions can take place. Once the transactions are processed, the data is sent back to layer 1 where it is stored in the blockchain ledger. That way layer 2s help alleviate network congestion on the mainnet. Polygon, Optimism, Arbitrum, and Loopring are some of the well-known Ethereum layer 2 solutions, facilitating higher transaction throughput (expressed as a number of transactions per second) at lower prices to broaden participation, all the while retaining the security of the layer 1. While Lido did not announce a timeline for its layer 2 expansion, it did express commitment to offering liquid derivatives of staked tokens on various layer 2s with "demonstrated network activity," starting with Arbitrum and Optimism. Lido said it has already integrated with Ethereum smart wallet Argent to make wstETH, the wrapped version of the staked ether token, available on Ethereum-focused scaling solution zkSync. Earlier this year, Aztec protocol unveiled its layer 2 solution on zkSync. At press time, Lido controlled 90% of the $6.9 billion ether liquid staking market, according to Dune Analytics. Lido users can stake their ether in return for stETH, which can be used in decentralized lending and borrowing protocols to generate an additional yield. Lido users can also avoid the burden of owning a minimum of 32 ETH to participate in staking – a process of holding coins in a cryptocurrency wallet to support the network's operations in return for newly minted coins. Lido users can redeem stETH for ETH only after the completion of Ethereum's transition from the proof-of-work to the proof-of-stake consensus mechanism. Lido is confident that a large portion of economic activity will migrate to layer 2 networks in the future. The company plans to support wstETH bridging and staking in the early days of L2 expansion, eventually allowing "staking of ETH held by users on L2 networks directly from that L2 without the need to bridge their assets back to Ethereum Mainnet." stETH is supposed to trade close to the spot price of ether. However, the staked derivative slipped to a discount of 0.93 to ETH following the collapse of Terra's algorithmic stablecoin UST in May. The situation has improved somewhat, with the Ethereum developers recently announcing Sept. 19 as the tentative timeline for the long-awaited transition to a proof-of-stake mechanism. The stETH discount to ether has narrowed to 0.98 since the announcement on Thursday. While ether has rallied by more than 30%, Lido's governance token LDO has surged by 58%, according to data provided by CoinDesk. Read the full story here: Lido Finance Will Soon Offer Staked Ether on Layer 2 Networks, Proposes to Sell LDO For DAI. |
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The following are the biggest movers in the CoinDesk 20 digital assets over the past 24 hours: |
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Biggest Gainers Biggest Losers | Asset | Ticker | Returns | DACS Sector |
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| XRP | XRP | −1.1% | Currency |
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Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges. |
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Check out the CoinDesk TV show “First Mover,” hosted by Christine Lee, Emily Parker and Lawrence Lewitinn at 9:00 a.m. U.S. Eastern time. - Cheyenne Ligon, U.S. regulatory reporter, CoinDesk
- Noah Hamman, CEO, AdvisorShares
- Josh Lipsky, director, Atlantic Council
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Where innovators, changemakers, investors and leaders present their best ideas for investing in the future of the Web 3, digital assets, blockchain and crypto ecosystems. Register now. |
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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments. |
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