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Daily Brief

Bitcoin Wants To Be ETH?

Weekly recap: Bitcoin's BRC-20 token, Ethereum's hiccup
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Bankless Bankless May 13, 20234 min read

Dear Bankless Nation,

It was a funny week in the crypto space. Memecoin fever struck, and this time, Bitcoin got in on the action.

For our weekly recap, we dig into:

  1. BTC plays dress-up
  2. Tether opens its books
  3. Ethereum Beacon chain hiccups
  4. Lido's level-up
  5. The IRS rugs

- Bankless team

📅 Weekly Recap

Identity theft is not a joke. Image: The Office

1. BTC plays dress-up

The latest hype in Bitcoin is the arrival of the fungible BRC-20 token format.

Hardline Bitcoiners love to deride much of what Ethereum enables as useless, so it is more than a little ironic to see “Ethereum things” spontaneously emerging and capturing the attention of that community.

BRC-20 tokens are created by inscribing code onto Bitcoin NFTs that are created via the Bitcoin Ordinals protocol.

In the past two weeks, BRC-20 tokens have exploded in a frenzy of meme tokens, reaching a market cap of $529 million. 63% of that market cap is made up of the current top token ORDI ($332 million), which is now being listed on centralized exchanges like Gate.io.

As of Saturday, 5.9 million inscriptions have been made. Total fees from Ordinal are at $32.1 million. UniSat makes up more than half ($2,408,033) of trading volumes.

Read more in this week's Bankless piece:

2. Tether opens its books

Source: Tether

Tether has been less than transparent over the years, but we got some new details from the firm after the release of its Q1 2023 attestation report this week – audited by the BDO Italia accounting firm.

Tether’s excess reserves are at an all-time high of $2.44 billion today, the company says. The majority of USDT’s reserves (85%) are invested in U.S. Treasury Bills, cash and other short-term deposits. For the first time, Tether also reported its gold and Bitcoin holdings, which make up 4% and 2% of its total reserves.

As of May 9 2023, Tether’s total assets are $81.8 billion, exceeding its total liability of issued tokens in $79.3 billion. Tether also claims to be “reducing its reliance on pure bank deposits as a source of liquidity and instead leverage the Repo market as an additional measure”. The report points to Q1 2023 as an “excellent quarter”, having improved its net profits by $1.48 billion and increased USDT’s circulating supply by 20%.

3. Ethereum Beacon chain hiccups

The Ethereum Beacon chain suffered some hiccups this week that left developers scratching their heads.

Thursday evening saw the Beacon chain halt block finalization, only to resume 25 minutes later. Finalization refers to a permanent state of on-chain transactions being set in stone. Not finalizing is not the same as the chain being halted, since blocks continue to be produced. However, this can cause the chain to enter an emergency mode of “inactivity leak” which would stop attestation rewards and slash validators for non-participation.

It's not clear what the root cause of the problem is yet, but most suspect it is due to consensus clients being stressed, in particular the majority-used Prysm client. Prysm has since released a patch.

THANKS TO METAMASK PORTFOLIO

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4. Lido level-up

Lido is conducting its final on-chain vote to launch its V2 upgrade, which would finally enable ETH withdrawals.

The vote started May 12 and will conclude three days later on May 15. If the vote passes, stETH holders will be free to withdraw a total of ~270K ETH. Lido withdrawals are expected to be much quicker than Beacon chain withdrawals, approximately less than 24 hours for stakers holding under 1000 stETH.

As of Saturday morning, the vote is 100% in favor of the V2 upgrade. A previous Snapshot vote on March 1 also voted overwhelmingly in favor of the upgrade, suggesting that V2 is likely to pass.

5. The IRS rugs

The IRS is looking to claw back $44 billion worth of claims from the now-bankrupt FTX crypto exchange. The largest claims were a $20.4 billion claim against Alameda Research for “unpaid partnership taxes.”

These claims would take priority before the claims of institutional and retail creditors.


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