Ethereum

Ethereum’s powerful new “EigenLayer” promises a wave of innovation. But is this a threat to blockchain?

Published

1 year ago

26 May, 2024

Ethereum’s powerful new “EigenLayer” promises a wave of innovation. But is this a threat to blockchain?

Ethereum has spent the current bull market living in Bitcoin’s shadow, but two recent developments could put the world’s second-largest blockchain back in the spotlight. The first is the surprise green light from the Securities and Exchange Commission. Ethereum ETF. The second is a popular but controversial new investing feature called Clean diaperwhich received support of 100 million dollars Andreessen Horowitz (a16z) Crypto.

EigenLayer is a new protocol, or set of instructions, located on top of the main Ethereum blockchain. It provides a way for those who have already invested tokens by means of staking– a blockchain feature that rewards those who lock up their tokens to secure the network – the ability to “take back” these tokens. The term is what it sounds like. By reinvesting, users take the Ethereum tokens they have already invested and then invest them again. But instead of receiving a reward from the Ethereum network, as is the case with staking, those who reinvest are paid by other projects that rely on the blockchain’s existing security pool.

Resttaking has been around for a while, but EigenLayer is looking to supercharge the process by adding many more participants. The protocol aspires to resemble a Amazon Web Services for cryptoeconomic security.

The implications of this are “profound,” a16z wrote in a blog post about the company, noting that EigenLayer has the potential to accelerate innovation on Ethereum “100x faster.” While this seems like a promising development for blockchain, EigenLayer has yet to be tested on a large scale. And while this could lead to an explosion of innovation for Ethereum, some point to a major potential downside: a new concentration of risks that, in a worst-case scenario, could harm both users and the broader ecosystem of the blockchain. Should Ethereum users view EigenLayer with excitement, fear, or both?

“Open a wormhole”

The arrival of EigenLayer is a boon both for investors, who can now more easily earn an additional slice of yield, and for developers who can more quickly add a layer of trust in the form of collateral. The problem, however, is that using the same pool of collateral to secure multiple aspects of the blockchain creates new vulnerabilities.

“It opens a wormhole,” Rushi Manche, co-founder of Ethereum layer 2 Movement Labs, told Fortune. Manche raised a troubling hypothesis posed by EigenLayer critics: what happens if there is a hack or a bug in retaking smart contract? How does this affect the broader ecosystem that also depends on this unique deposit?

At the same time, Manche noted that supporters claim that “a whole new design space has opened up” for developers thanks to EigenLayer, allowing the same asset to be extended much further and reach much more. . From this perspective, the rewards far outweigh the risks. It is also worth considering the downsides if tools like EigenLayer are not available.

Specifically, absent restructuring, decentralized applications built on Ethereum must create their own proof of participation token: a high entry bar for any startup. With the re-easing, protocols can tap into the nearly $95 billion in staking on the main blockchain. Ether for the safety. To revisit the cloud computing analogy: if hackers want to attack small businesses, they need to get past vulnerabilities like Google Cloud or AWS that these companies rely on. EigenLayer supporters make the same argument: Hackers must bypass a security system created by Ethereum, which is worth more than three times the market cap of Nike.

But what happens when the same collateral is used over and over again?

“EigenLayer reminds me of the 2008 recession: under-collateralization, over-indebtedness. It’ll be fine,” a X user job…just one of the industry watchers who have drawn a parallel to the financial crash, where banks rehypothecated subprime mortgages.

Austin Campbell, former head of portfolio management at Paxos, told Fortune the comparison was not insignificant. “At the heart of any leveraged system is the simple truth that the more leverage you use, the less stable your system is,” he said.

There is a risk of “cascading failures” if a project fails, he acknowledges. Omid Malekan, assistant professor at Columbia Business School. But he and many experts were quick to qualify the 2008 parallels: reinvestment does not involve repeated borrowing and lending. Instead, it’s about taking a blocked asset and locking it up again. Think of it more like reusing an apartment security deposit to secure other apartments, suggests Jack O’Holleran, CEO of Skale, an Ethereum layer 2.

What if you trashed both apartments?

One so-called flat destruction scenario would be if those operating re-staking services – known as AVS for “actively validated services” – choose to devalue the re-staked tokens. “There could be this house of cards effect, but in reverse,” says O’Holleran.

The debate is analogous to criticism of liquid staking provider Lido, which currently accounts for 28% of all Ethereum staked. In theory, Lido introduces a “centralized point of failure” which is “obviously concerning,” Fortune told Tekin Salimi, founder of dao5 Capital and seed investor in EigenLater. But according to him, rather than banning this innovation, the solution is to diversify liquid staking providers.

Noting these concerns, EigenLayer says on its website that it includes a “veto committee” to contain slashing – the term used in the Ethereum world for destroying the collateral of validators who fail to perform their duties – and to prevent contagion to the main network or others. protocols. It will serve as a “doubly reliable intermediary between AVS and the staker”. Thus, the reduction conditions are the responsibility of each AVS, instead of the discretion of the overall protocol. But it’s unclear what this will actually look like in practice. To this end, risk reduction remains “the most real and yet the most undefined” of all those mentioned, thinks Vance Spencer, co-founder of the crypto venture capital firm Framework Ventures.

“Don’t overload the system,” warns Ethereum founder

EigenLayer gave rise to specific security concerns, but also to a broader existential problem: what fraction of the staked tokens can be concentrated on a separate protocol on Ethereum, which considers decentralization as its primary value? Empowering EigenLayer, according to O’Holleran, amounts to the Ethereum community giving massive leverage and power to another system. Additionally, copy recovery services are also popping up, like Karak, which announced a $48 million Series A raise last month. Additionally, an unnamed but similar version will hit the market soon, sources familiar with the matter told Fortune.

Vitalik Buterin, The Ethereum founder raised concerns about EigenLayer in a blog post last May. “Be wary of application layer projects that take actions that risk expanding the ‘scope’ of blockchain consensus to anything other than verifying the fundamental rules of the Ethereum protocol,” he wrote. Buterin warns of the “slippery slope” of the loss of credibility of the “fragile” social consensus of the underlying network. His message was clear: don’t overload the network consensus.

One of the most concerning focus risks for Buterin is system security overload.

The strength of Ethereum’s security system is directly linked to the economic value of the network: it would be prohibitive for hackers to muster the resources necessary to defeat the consensus system that protects the network. “We agree that Ether is used to secure the mainnet, and that is its sole purpose,” says Campbell. But if you use your staked tokens to secure Ethereum and other networks, the surface area of what Ether is used to secure increases. This increases the value based on a single point, Campbell says, which can provide more attractive incentives for hackers.

The second concentration risk concerns decision-making. Let’s say 40% of Ethereum’s tokens end up being reinvested and EigenLayer’s smart contract suffers a hack or bug. It’s unclear when there will be consensus to cancel Ethereum in order to release it, says Tom Schmidt, a partner at crypto venture capital firm Dragonfly. “I don’t know where that threshold is,” he admits.

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Ethereum

Ethereum Price Hits $3,300, Eyes on $4,000 This Week?

Published

1 year ago

15 July, 2024

editorial

The cryptocurrency market has seen a strong price rally over the past weekend. This has helped Ethereum price reclaim the $3,300 mark. Moreover, with the increased bullish sentiment, ETH price is likely to see some positive action this week.

Moreover, with the recent market rally, the Ethereum token market cap has crossed the $400 billion mark and is currently valued at $404.72 billion. In this context, investors are worried about whether Ethereum will reach $5,000 and whether ETH will rise again.

Scroll down because in this article, we have covered the market sentiment, price analysis, and possible short-term price targets of ETH price. To know if the Ethereum token will hit $10,000 in this bull rally, read CoinPedia’s detailed analysis on the Ethereum Price Prediction.

ETH coin price evolution:

Ethereum price started the week on a positive note by adding 5.67% to its portfolio over the past two days. Additionally, the altcoin recorded 5 out of 7 positive days over the past week, highlighting increased buying pressure.

TradingView: ETH/USDT

Additionally, with the continued bullish price action in the crypto space, the ETH Price is about to test its descending channel pattern resistance trendline, the outcome of which is unpredictable.

With a jump of around 5% over the past day, the Ethereum token has regained the $3,300 mark. Moreover, the altcoin leader has surged by 11.76% over the past seven days, indicating an increase in bullish sentiment within the cryptocurrency market.

Ethereum Market Sentiments:

The Relative Strength Index (RSI) has crossed above its midpoint and is heading towards its overbought zone. This indicates a strong bullish reversal in the crypto space. Moreover, the average trendline is showing a positive curve, suggesting that the ETH price will continue to gain value this week.

The MACD indicator is showing a steady rise in the green histogram, highlighting an increase in buying pressure. Moreover, the averages have registered a bullish convergence, indicating a positive outlook for the altcoin leader in the crypto space.

Will ETH Price Hit $4,000 in July?

If Ethereum price breaks out from its channel pattern resistance trendline, the bulls will gear up to test its upper resistance level of $3,700. Sustaining the price at this level will pave the way for the ETH cryptocurrency to head towards its higher high of $4,000 in the coming time.

Conversely, a bearish trend reversal could push Ethereum price towards its July low of $3,000.

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Ethereum

Digital assets see record $17.8 billion inflows year-to-date as Bitcoin and Ethereum lead the charge

Published

1 year ago

15 July, 2024

editorial

Digital assets see record $17.8 billion YTD inflows as Bitcoin and Ethereum lead the charge

Digital asset investment products saw back-to-back inflows this month, with $1.44 billion recorded last week, according to CoinShares“Last weekly fund flow report.

The recent inflow brought the year-to-date total to a record $17.8 billion, surpassing the $10.6 billion in inflows in 2021.

However, trading volumes remained low, at around $8.9 billion, compared with a seven-day average of $21 billion.

Bitcoin sees fifth largest inflow.

A flow analysis showed that Bitcoin Last week, Bitcoin recorded its fifth-largest weekly inflows ever, totaling $1.5 billion. Conversely, short-Bitcoin saw its largest weekly outflow since April 2024, amounting to $8.6 million.

This move suggests a shift in market sentiment for the cryptocurrency industry. Bitcoin’s large inflows indicate growing investor confidence in the asset’s potential for substantial growth, with many investors taking advantage of the recent price drop to enter the market.

James Butterfill, Director of Research at CoinShares, said:

“We believe that price weakness due to German government bitcoin sales and a sentiment reversal due to lower-than-expected US CPI prompted investors to add to their positions.”

Crypto Asset Inflows (Source: CoinShares)

In the meantime, EthereumCryptocurrency-linked crypto products attracted $72 million in inflows ahead of the launch of its cash exchange-traded funds (ETFs). This was its largest inflow since March, bringing its year-to-date flows to $57 million.

Nate Geraci, President of ETF Store, predicted The SEC will reportedly approve ETH ETF products for trading this week as the financial regulator “sees no good reason to delay further at this point.”

Additionally, large-cap alternative digital currencies like Solana, Chainlink, Avalanche and XRP has recorded more than $8 million in cumulative admissions.

Regionally, the United States led the way with capital inflows of $1.3 billion last week, reflecting generally positive sentiment. Switzerland set a yearly record with $58 million in inflows, while Hong Kong and Canada recorded $55 million and $24 million, respectively.

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Ethereum

Bitcoin, Binance, Ethereum, Solana and Ripple: The biggest crypto news of the past week

Published

1 year ago

15 July, 2024

editorial

Bitcoin, Binance, Ethereum, Solana and Ripple: The biggest crypto news of the past week

2:00 p.m. ▪ 4 min read ▪ by Luc Jose A.

Between groundbreaking announcements, technological advances, and regulatory turbulence, the crypto ecosystem continues to prove that it is both a territory of limitless innovation and a field of regulatory and economic battles. Here is a summary of the most significant news from the past week around Bitcoin, Ethereum, Binance, Solana, and Ripple.

Assassination attempt against Trump: Bitcoin soars

Last Saturday, an assassination attempt against Donald Trump during a rally in Pennsylvania shook the political and financial scene. The shooter, Thomas Matthew Crooks, was neutralized after wounding Trump in the ear. This attack triggered an immediate reaction in crypto markets, with the price of Bitcoin rising 5.5% to $62,450. Donald Trump’s support for the cryptocurrency industry stands in stark contrast to that of his opponent Joe Biden, who has bolstered investor confidence in a potential pro-crypto administration. Bitcoin’s rise has been followed by other cryptocurrencies like Ethereum and Solana, driven by public support from influential figures like Elon Musk.

XRP Takes Another Step Towards Institutional Recognition

Ripple has taken a crucial step in integrating XRP into the institutional market with the announcement by the Chicago Mercantile Exchange (CME) to launch real-time price indices for the crypto. The move, backed by Ripple CEO Brad Garlinghouse, marks a significant step forward for XRP and provides institutional investors with reliable and accurate price references. The launch of these indices by CME, in partnership with CF Benchmarks, includes continuous updates based on the activities of major trading platforms such as Coinbase and Kraken. This could pave the way for future developments such as an XRP-based ETF, further strengthening its position in the traditional financial market.

Bitcoin joins French retirement savings plans

Bitcoin made a notable entry into Retirement Savings Plans (PER) via an innovative partnership between VanEck Europe and Inter Invest. This partnership introduces a Bitcoin ETN, allowing French savers to diversify their portfolios with the leading crypto. This ETN, backed by real bitcoins and held by a regulated custodian, ensures secure and controlled exposure to this emerging asset class. Jean-Baptiste de Pascal, Deputy CEO of Inter Invest, underlines that this initiative is part of a strategy to democratize innovative financial assets. Martijn Rozemuller, CEO of VanEck Europe, adds that while Bitcoin is currently volatile, it represents an innovative asset in the long term. This integration of Bitcoin into the PER opens up new opportunities for savers while modernizing the retirement savings sector in France and meeting the expectations of investors seeking diversification.

USDT surpasses Bitcoin, Ethereum and Solana in trading volume

Tether (USDT) recently reached daily transaction volume exceeding $55 billionoutperforming Bitcoin (BTC), Ethereum (ETH), USD Coin (USDC), and Solana (SOL) combined. This performance underscores the growing role of stablecoins in the crypto ecosystem, especially during periods of high volatility. The increased demand for more stable assets like USDT, coupled with its growing use in trading, is behind this trend. The increased liquidity provided by USDT boosts investor confidence and stabilizes trading. The outlook for USDT and stablecoins, in general, is promising but depends on regulatory developments and market adoption.

That’s the main takeaway from this week. But if you’d like a more detailed summary and in-depth analysis delivered straight to your inbox, feel free to Subscribe to our weekly newsletter.

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Luc José A. avatar

Luc José A.

A graduate of Sciences Po Toulouse and holder of a blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of blockchain to transform many sectors of the economy, I am committed to raising awareness and informing the general public about this constantly evolving ecosystem. My goal is to enable everyone to better understand blockchain and seize the opportunities it offers. Every day, I strive to provide an objective analysis of current events, decipher market trends, relay the latest technological innovations and put into perspective the economic and societal challenges of this ongoing revolution.

DISCLAIMER

The views, thoughts and opinions expressed in this article are solely those of the author and should not be considered investment advice. Do your own research before making any investment decision.

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Ethereum

Ethereum hits record high of $3,300 amid ETF hype

Published

1 year ago

15 July, 2024

editorial

A busy week for Ethereum (ETH)The cryptocurrency has surpassed the $3,300 mark, driven by growing anticipation surrounding the Ethereum Spot Exchange Traded Funds Approval Imminent (ETF). According to Cointelegraph, analysts like Nate Geraci are betting big on this development, predicting that the SEC could greenlight eight ETH ETFs by the end of the week.

ETF Approval Imminent

Nate Geraci, known for his insightful analysis on The ETF Store, is optimistic about the chances of launching ETH spot ETFs this week. According to Cointelegraph, Geraci and insiders close to the process believe there are few hurdles left, suggesting that ETF approvals could go smoothly.

The Meteoric Rise of Ethereum

Ethereum’s price surging past $3,300 shows how confident the market is in ETFs. Experts like MV Global’s Tom Dunleavy predict an influx of money from big investors once these ETFs go live. Speaking to Cointelegraph, Dunleavy described Ethereum’s appeal as a tech stock in the crypto world that’s easier for ordinary investors to understand than Bitcoin.

Recent Ethereum Developments

While ETFs are in the spotlight, Ethereum’s core setup is seeing big improvements. According to Cryptoquant, Ethereum developers are talking about projects like Pectra and PeerDAS. These projects aim to make Ethereum faster and more secure, which is crucial to its long-term success.

What future for ETH?

ETH is now trading around $3,357 and climbing, all eyes are on Ethereum’s future. The focus is on two things: how regulators will decide on ETFs and the new technology updates that are underway. Analysts and investors are glued to these details, expecting them to shape Ethereum’s performance in the months to come. Moreover, if these ETH spot ETFs get the green light, it could send Ethereum’s price even higher.

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