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🟣 Ether ETF and what comes next

Can Ethereum developers keep up the momentum?

Author

Macauley Peterson
May 27, 2024

Welcome back to 0xResearch – quick hitting alpha for the crypto degens. Here's what we got for you today:

  • ETF postscript

  • Ethereum flexing Pectra

  • Celestia’s data growth

  • CT: $JENNER?

Now that the SEC has indeed approved spot ether ETF applications in the US, what comes next?

Ether — at least in its unstaked form — is unambiguously designated as a digital commodity and not a security, since the ETF applications approved are for commodity-based trust shares.

The SEC still must sign off on the ETF registration statements (S-1s and S-3s) before they can begin trading, a process that will take somewhere between “a few weeks” and “a couple of months” according to David Lawant, Head of Research at FalconX.

“Although there has been cases in which the gap between 19b-4 and S-1 was more than three months, I’m expecting that the spot ETH ETF processes will take significantly less,” Lawant said Friday.

Following the initial shock-induced pump to start last week, ETH has seen several days of consolidation and now is pressing range highs once more at $3,950.

US Markets are closed for the Memorial Day holiday.

“We ship when ready” —Lukasz Rosmej (Nethermind)

Last week’s Ethereum ACD call was spent mostly discussing the next Ethereum hard fork, “Pectra,” short for Prague-Electra.

Among the candidates for inclusion (CFI), there remains some uncertainty around EOF, which is kind of mind-boggling given how much application developers want it.

Implementation is in progress and most stakeholders are well in favor of inclusion, but the current worry is that it could delay Pectra into 2025.

Project coordinator Tim Beiko even said Thursday that we should expect that EOF will prevent devs from executing the hard fork before year’s end. That guesstimate is partly the result of a pragmatic look at the calendar, which has the major Ethereum conference DevCon scheduled for Bangkok from Nov. 12 to 15, followed by Thanksgiving in the US and the winter holiday period.

The question is, can devs ready Pectra for deployment ahead of DevCon? That would be ideal — it would mean DevCon becomes a celebration of progress, and dapp developers and rollup teams would get an earlier crack at the benefits of all the mainnet upgrades.

But Andrew Ashikhmin, software engineer on the Erigon client team, said EOF could add 3 months of work to developers plates, and worried that if not included in Pectra, it might not arrive for years, since the next “Osaka” upgrade is currently planned to be devoted to upgrading Ethereum’s data structure — a major undertaking known as Verkle Trees.

Others suggested postponing Verkle and adding another smaller fork in between.

The only consensus was that the final Pectra scope needs to be determined during the next ACD call on June 6.

— Macauley Peterson (X: @yeluacaM | Farcaster: @Macauley)

P.S. In case you’re wondering, I’m avoiding Caitlyn Jenner’s confusing memecoin launch, because — while it’s all over my feed — I really don’t give a flying fig whether it’s a scam, a hack, or just mind-numbingly dumb! (But there’s an X thread about it below.)

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Celestia usage on the rise:

The total number of projects with Celestia underneath is up a bunch over the past month. Rollups from Manta, Orderly, and most-recently Lyra lead the way in terms of data volume, Blockworks Research data shows. A new dashboard is tracking 24 Namespaces.

The total data stored by Celestia nodes now exceeds 13 GB. And a lot more is on the way, with Movement and Eclipse among the highly anticipated additions coming soon.

Bitcoin L2s aim to boost scalability while preserving decentralization and security, unlocking a better user experience, and new avenues for Bitcoin-powered innovations. However, no existing Bitcoin L2 leverages the full security of Bitcoin.

Although these are strong narratives, the key driving force behind crypto gaming will likely be financial incentives through tokens, similar to how SocialFi apps flourished under financial incentives and tokenization (Friend.tech tokenized communities and personalities while Farcaster benefited greatly from DEGEN and Frames).

Opinion: When it comes to long-term custody, exchanges just aren’t worth it — and frankly, it’s absurd to ignore the risks they pose as custodians.

Plus, the doge passes away and fantasy.top trading slows.

The insights, views and outlooks presented in the report are not to be taken as financial advice. Blockworks Research analysts are not registered broker/dealers or financial advisors. Blockworks Research analysts may hold assets mentioned in this report, further outlined in the Firm’s Financial Disclosures.