Happy Friday mates!
Yup, sorry to say but it’s game over for ETH as Gensler is about to start a witch hunt and 2 new young punks on the block that might take out Solana. Ok maybe that’s a little overdramatic, but still, he’s fud’ing my ETH bags and that’s not cool!
We take a dive into wdf is happening with ETH, the SEC and SOL.
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In Todays Enclosure
• The Big Topic – It’s game over for ETH and SOL!
• Bitesized bits – Russia thumbs up Bitcoin, the ZIL console and Wintermute get hacked
• Chart of the day – 1 minute $BTC chart (lol)
• Hidden Alpha – 👀
🔥 The Big Topic – It’s game over for ETH and SOL
T ‘em up and bat them out, ETH and SOL are done for! Well, they’re in for a bumpy a ride, ETH from the SEC and SOL from a couple of young punks pitted to be the next big thing. So let’s take a look under the hood and see if you would.
Come on Vitalik…surely you saw this coming as we all know Gensler doesn’t like crypto. Since ETH has gone proof of stake the price has tanked over 20%, they’ve changed the fundamentals and the SEC is chiming in on our post-merge parade, raising concerns that ETH should now be classified as a security (maybe he’s just a Bitcoin maxi at heart).
Why is the SEC so bothered about ETH being a security?
Well, staking generates a form of passive income that a staker doesn’t need to work for and according to Etherscan approximately 46% of all ETH nodes operate on good old American soil (with Germany housing 18%). This could then be classed as a dividend, which, put bluntly, means it’s TAXABLE anon. You can kind of see where we’re going with this right?! Therefore, they’re trying to cash in on your crypto and that’s a royal payday if it all goes through!
What does being a security mean for ETH?
Gensler said that “From the coin’s perspective… that’s another indication that under the Howey test (security classification test), the investing public is anticipating profits based on the efforts of others.”
Simply put, ETH miners had to work for their bags whereas ETH stakers…well, they kind of just chip in and let the validator do their thing.
If ETH is classified as a security it would have a massive knock-on effect, not just to ETH itself, but all of the other dapps that are deployed on top of the layer 1 as the SEC could lay claim to these as securities. All in all, it would mean that projects build on top of ETH would need to go through the lengthy process of registering with the SEC.
Unquestionnable Implications
What implications will this have on big exchanges that support staking like Coinbase, Kraken and Binance? Or defi protocols like Rocketpool and Lido? Or the ETH ETF’s and the hedge funds that are offering crypto to their customers?
Are fines coming for the ETH foundation if they are found to have been a security all along? A lot of MASSIVE questions are to be asked, answered, and addressed here.
Here’s something to consider, IF this all does go through how would the SEC find the owners of the top 100 addresses seeing as they control 40% of the supply and the rewards they generate? Which compounded over time should have hefty taxes paid ontop? Tyranny and world domination anyone?!
Ok so, what does it mean for YOU the degen who staked?
Tax, FFS that 3 letter word that’s the bain of our lives BUT should always be adhered to in whichever country you live in! Koinly wrote a simple guide on what the merge might mean for you and your crypto taxes.
Ok that’s a lot to digest and the TLDR is Gary doesn’t like crypto, ETH is probably a security, a number of potential network-wide ramifications, taxes and a sprinkle of tyranny to end it all off.
So what about Solana and the 2 young punks that could haymaker Solana down into single digits? Well let’s save that for next week, but in the meantime DYOR on Aptos and Sui 👀.
Our Take
This is turning out to be a right pickle, but what this SEC drama does highlight is that crypto, however decentralised you may think crypto is, it does need to have some form of classification if we want to see a $3 trillion market cap again otherwise we will continually see consistent fud against our bags.
🗞 The Bitesized News Bits
Wintermute Hacked for $160m, CEO and founder Wishful Cynic breaks down what happened.
Cardano Vasil Hardfork Begins, hopefully, this gives ADA holders some hopium. The 5-day process should bring better network performance.
Russia get bitcoin bullish, and decide to use crypto for international payments including payments for energy exports. Digital Ruble is also in the making.
ZIL vs Nintendo, PS and Xbox, as the layer 1 blockchain is set to release its own web 3 gaming console. Will this now become the ecosystem for gamers?
ALGO pumps off the back of the news of hiring the former comms head at Visa and Fidelity (don’t forget ALGO’s FIFA partnership in the run-up to the world cup!)
Of course, we can’t ignore the monsterous run that XRP is having at the moment given the latest updates in the SEC case and whales have been accumlating.
🛡 Chart of the day: $BTC
Our Take
If you’re as degen as we are then you zoomed in to watch the 1 minute time frame on the Bitcoin chart as Fed Chair Jerome Powell dropped the news that the Fed was going to increase rates again by 75 basis points plus more hawkish sentiment. The 24 periods surrounding the Fed meeting wiped out approximately 88,000 trades for $320m…ouch (data courtesy of coinglass!
Check out the weekly timeframe volume bars, some of the highest we’ve seen in a very long time as well as testing a key area of support. Looks like something is definitely happening…
🤝 Here’s the Deel
and a quick word from our super awesome sponsors who help us make this all possible
If you are a builder in this space and are hiring a remote-first team take a look at one of our partners, Deel. They allow you to hire, manage, onboard, and pay from anywhere in the world without the hassle. Yes, Deel allows you to pay your team in crypto too…
🦧 Updates from the bloc
The latest thread
You’ve probably heard about DYDX and that they are heading over to the Cosmos soon but what really is DYDX and why should you be interested in them? We round up our series on derivatives with a deeper look into the token and up-and-coming DYDX chain.
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To round up our derivatives series we have just released:
What is @dYdX, the $DYDX Token and the DYDX Chain?
There is a lot of talk about DYDX recently so we thought we would get it covered in an article.
Written by gigachad – @EzPz_99 ✒️
The latest podcast
If you missed part 1 of this epic 2 parter with legends Noah Seidman and Ben then check the link out below as the team sat down to discuss creating a portfolio that prints cold hard cash on a weekly basis.
🎉 Who won the Internet this week?
No words are needed on this one. Sorry anon but it cuts us all deep!
🕵️♂️ Hidden Alpha
Soooo you want a 5-minute head start against the rest of the market, well here are our picks to add to your watchlist:
ZIL, given the recent news of their web 3 game console, could be one to go deeper into.
ALGO, yes it has pumped BUT with the world cup coming and the Fifa partnership, it might be a surprise.
Stables, As always staying stable in an unstable time that needs a bit of stability is always a good idea anon.
🦍 The Ape Enclosure
We’re ready to ape in, at any time. Got a good idea that needs funding? Send us an email with all of the info to [email protected] – Equally, if you would like your project to be featured in our Sponsor Section, contact us and we will see if it is a good fit for our audience!
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