🟣 Tuesday, August 6

Author

Darren Mims
August 06, 2024

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Welcome back to 0xResearch. Here's what we’ve got for you today:

  • Politicians send letter to CFTC to prohibit betting markets from having election-related events.

  • The market downturn continues, with the fear index at 17 (Extreme Fear).

  • Ethena’s USDe undergoes a stress test due to market volatility.

  • Bitcoin L2s questioned on their viability.

Recent market volatility continues, with $SOL holding up reasonably relative to the other major assets, with $ETH being down almost 25% over the last 5 days.

In other news, a group of politicians, including Jeffrey Merkley, Elizabeth Warren, Chris Van Hollen, and five others have sent a letter to the CFTC ban prediction markets like Polymarket.

In this letter to the CFTC, the group is supporting a new regulation "to prevent further corruption of our electoral system by moneyed interests." The group claims that political event contracts are not the purpose of futures markets and is calling for the Commission to specifically regulate election prediction market activity.

Additionally, this week, Ethena had its first real test for its peg maintenance. Over $100 million worth of Ethena was redeemed during the market selloff over the past few days. This selloff was the result of cascading liquidations across exchanges, totaling over $1 billion with $400 million of that on DeFi protocols. Lending markets like Aave, Compound, and Moonwell Finance, all achieved highs in revenue from the market volatility.

Finally, a recent report from Galaxy Digital notes that data availability may be a profitable market for Bitcoin L2 enthusiasts. The monthly costs for posting data on Bitcoin can be up to $28,744 (at 25 KB/Post and 10 Sat/vByte). However, this also paints a bearish view of burgeoning BTC L2s. For a rollup to remain profitable, they would have to see large inbound transactions and fees on the L2 to outpace the DA costs.

Galaxy also reports that they predict to see more partnerships with Bitcoin miners in the future for private block inclusion deals, locking in a fixed transaction fee rate.

— Darren Mims (X: @0xMims)

All 1000X listeners know that when Jonah and Avi give guidance on the markets, it’s best to pay heed. 

Catch them live and in person at Permissionless III in October as they answer the perennial question: “Where are we in the cycle?”

ORE, a new PoW token, is now live with its version 2.0. Originally, ORE launched mining last spring but halted its mining operation as it led to Solana network congestion. ORE is a token with a limited 21,000,000 supply that will be able to be mined on any device, computer or otherwise.

ORE v1 experienced high volatility, swinging from lows of $40 to $1300 in a short period. Notably, ORE uses a proof of work model where the more ORE is staked, the more mining rewards miners receive. Thus, it’s only a matter of time before a large mining pool is created.

— Darren Mims (X: @0xMims)

The Ahmedabad hard fork specifications are being finalized, with a focus on PIP-30 for increasing max code size and on PIP-36 for improving state-syncing transactions. The inclusion of PIP-45, which proposes a token ticker change, is still under consideration and may affect the timeline. The ticker change has been discussed extensively over the past PPGCs. MATIC to POL transition is scheduled for Sept. 4, 2024. This transition involves multiple PIPs to upgrade backwards-compatible with automatic conversions between MATIC and POL where necessary. The proposed PIP-45 suggests changing the token name and symbol from MATIC to POL, which could have potential implications for smart contracts, front-ends and systems relying on these identifiers.

The Paradigm team has developed Reth, a framework for developing Ethereum-compatible nodes to enhance Ethereum’s infrastructure by improving its performance and fostering a more efficient and developer-friendly environment. The aforementioned framework serves as a growth catalyst for Base, Optimism and Symbiotic.

Europe is handing Tether unforeseen advantages with MiCAR.

There is a strange correlation between Trump’s odds and the price of bitcoin.

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.