ETH Hits A New All-Time High

On Tuesday, Ethereum (ETH) hit a new all-time high of $4,600 – reminding us, once again, that it's still got some tricks up its sleeves.

Let's review:

ETH's rapid climb this year started in July, just before the highly-anticipated EIP-1559 upgrade went live. As a result, transaction fees are more predictable and a relatively small amount of ETH is now getting "burned" alongside every transaction (over $3 billion worth of ETH has been removed from the supply since the upgrade)
The leading sources of ETH burning are perhaps two of the most trendy things in 2021, NFTs (for example, the OpenSea marketplace has removed more than 92k ETH) and SHIB swapping/trading (unlike DOGE, this meme coin is an Ethereum token)
Just this week, another ETH upgrade called Altair quietly went live. The upgrade is perhaps the last upgrade to the Beacon chain before Ethereum fully transitions to a proof-of-stake network

Bottom Line: Popular crypto projects and initiatives continue to drive traffic to the Ethereum blockchain, and as a result of a recent protocol upgrade, all that traffic is having a big impact on the supply and demand (and obviously price) of ETH.

Want to Dig Deeper?

If Ethereum was a corporation and had a quarterly earnings report, what might it look like? Probably something like this.

In a post inspired by James Wang, Ben Giove from Bankless explores Ethereum's growth over the past year including the rise of NFTs, DeFi becoming larger than some banks, and the launch of EIP 1559.

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If you haven't already, now's the perfect time to head on over to DeFiSaver.com and check out their suite of power tools for Ethereum DeFi users.

DEEP DIVES

DAOs: Absorbing the Internet

From the desk of Mario Gabriele at The Generalist, here's a deep dive into Decentralized Autonomous Organizations (DAOs): what they are, how to start one, their legal implications, etc.

Introducing DeFi 2.0

The second generation of DeFi protocols is on the rise which are being aptly dubbed: DeFi 2.0.

The term was coined in an approachable thread by @scupytrooples.

If DeFi, in general, makes your eyes glaze over, we suggest skipping along to the next section or spending some understanding the what and why of DeFi before digging into this next generation.

What is DeFi 1.0?

Although there isn't a clear boundary between the first and second generations of DeFi, it is widely accepted that the first generation consists of protocols such as MakerDAO, Uniswap, Compound, and Yearn. These are projects which attracted new users by rewarding them with a high yield. The only problem? Well exactly that, the investors were ONLY attracted to the yield... not the roadmap of the project. As soon as a new, higher yield paying project came along, investors left.

What's the difference between DeFi 1.0 and DeFi 2.0?

Unlike the first generation of DeFi, DeFi 2.0 projects aim to attract new users, but also keep them around. Projects are doing this by acquiring funds to support their financial applications, rather than tapping users’ funds by enticing them with liquidity mining rewards.

What projects are under the DeFi 2.0 umbrella?

Projects like OlympusDAO, Fei Protocol, Tokemak, and Alchemix, are all experimenting with new ways of capturing users with the new challenge of getting them to stay.

For more, we suggest checking out this write-up from The Defiant.

Crypto Cities

Does it make sense to have a city with a coin, an NFT, a DAO, some record-keeping on-chain for anti-corruption, or even all four? As it turns out, there are already people trying to these things in cities around the world.

In this post, Vitalik Buterin explores the different crypto city projects going on today as well as what he believes cities should be doing.

In other timely news, mayor-elect Eric Adams wants to create an NYC cryptocurrency.

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REGULATORY FRONT

Big Hires, Big Money and a D.C. Blitz: A Bold Plan to Dominate Crypto

Andreessen Horowitz (a16z) made its first crypto investment in 2013 with a $20 million initial bet on Coinbase. Today, that investment is valued at $11 billion. Since then, they have funded at least 50 crypto start-ups, through their three investment funds ($350 million Fund I, $515 million Fund II, $2.2 billion Fund III)

Now, while tech companies have a bad odor in Washington and as the crypto industry is drawing increasing scrutiny from regulators, a16z is pursuing a particularly audacious plan: to both own big chunks of the emerging world of digital currencies and have a hand in writing the rules for how it will operate. To do this, they have hired a cabal of "lobbyists" to help shape the rules on regulating crypto.

Two New Reports Regarding Crypto Regulation

This week, we had two reports released intended to help shape regulation around cryptoassets.

1. The Treasure Department has released their long-awaited report on Stablecoins

The report clearly emphasized that the SEC and CFTC should participate in regulating the markets for at least some stablecoins. For more, Kristin Smith, the Executive Director at The Blockchain Association, dug into the report on Twitter.

The report quickly provoked a range of responses from legislators and regulators.

2. Financial Action Task Force (FATF) released updated crypto guidance with clarifications on DeFi, NFTs

After a half-year delay, the Financial Action Task Force (FATF) is back with crypto guidance. To understand the good, the bad, and the ugly of the report, we turn to Jake Chervinsky.

TWEET OF THE WEEK