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VanEck filed for a Solana ETF, and Paradigm is more vocal about Ethereum R&D.
Hayden
June 27, 2024
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VanEck files the first Solana ETF
Prominent Ethereum investors question Ethereum’s research direction
VanEck SOL Trust
Earlier this morning, VanEck announced filing the first Solana ETF, arguing SOL is a commodity like BTC and ETH. While the spot ETH ETF approval signaled the expectation that eventually other tokens would receive similar treatments, getting a filing this early comes at a surprise. That said, this is merely step one, and it is still not clear when or if the SEC will approve.
In any case, this bodes well for markets. After holding support, markets are extending the bounce from lows.
Paradigm challenges Ethereum
A large topic of discussion this year among Ethereum researchers and infrastructure developers has been preconfirmations and based sequencing. The goal for these initiatives are to improve UX via leveraging Ethereum’s set of proposers to offer faster confirmations. Doing so introduces a myriad of different complexities, including trusting other service providers, sorting through more economics, and creating new software implementations.
While it has gained a lot of traction among Ethereum researchers and various Ethereum aligned infrastructure providers, the reaction from other areas of the community have been mixed. The reasoning is, why should we introduce more roles and complexities to the protocol rather than increase gas limits and shorten block times? The counterargument is typically in favor of prioritizing the solo staker, that raising gas limits or shrinking block times would crowd out solo stakers, and over time the network is at risk of further exacerbating timing games and centralizing to the most sophisticated validators.
However, more recently, prominent investors and researchers within the Ethereum community have been more vocal against preconfirmations and based sequencing, including researchers at Paradigm.
At a high level, it is still unclear to what extent this criticism can affect change, but it feels like these conversations will raise more discussion among investors and developers about the trade-offs of based sequencing versus alternative solutions, and serve as potential tailwinds for developing a roadmap that involves shorter block times (among other ideas), which have the potential to mitigate a myriad of other application layer issues (such as LVR), improve UX, and make Ethereum more competitive against more performant L1s i.e. fast chain, good.
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From modularity to restaking, to the intersection of AI and crypto, to the long-awaited consumer-facing apps to the most recent Bitcoin-related innovations.
We’ll be breaking down all of these and more with the help of a few of the thought leaders in crypto at Permissionless.
L2 MEV
After Dencun, gas fee reductions increased activity on L2s, from both average retail users to bots performing more sophisticated MEV strategies.
Interestingly, even though L2s do not have public mempools, Danning attempts to size an area of MEV by looking at the fees paid by Telegram bot applications. For the week of March 25th, BananaGun volume on Base totaled $150M, almost the same amount of volume of Ethereum and Solana, combined (image above).
BananaGun is an MEV generator—last March, it paid $23M to builders and validators. This is only a portion of the MEV that exists on L2s, and interesting to keep in mind as rollups decentralized sequencers and potentially opt into shared sequencing networks.
Read the full Flashbots report here.
Fully onchain gaming has historically struggled with player and developer onboarding. The development experience is subpar, and games are often less complex and "fun" compared to traditional options. This makes it challenging to attract players, especially given the already difficult onboarding process for Web 2.5 games. However, with the launch of new fully onchain gaming tooling and frameworks, such as Argus' World Engine and Lattice's MUD, the sector might see new interest.
A significant portion of the call was dedicated to discussing the proposed ZK-PoS Phase 1, which aims to connect Polygon PoS to the AggLayer using a ZK proof of consensus, in addition to a pessimistic proof. This upgrade is intended to generalize how chains settle while protecting chain health and asset integrity. The implementation will involve deploying new contracts for the LxLy unified bridge for token mapping and migrating existing tokens from the PoS portal to the new deployment.
The investment firm is the first American company to file for a US-based solana ETF
Coinbase requested information from both the SEC and FDIC in 2023, but was denied, sparking fresh legal action
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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.
