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Cryptoassets of the Month August 2023

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Every month, our research team will present the cryptoassets of the month August 2023 that increased or dropped in value by more than 15%. With a data-driven approach, we highlight the most important developments and events causing price movements.

Every month, our research team will present the cryptoassets of the month August 2023 that increased or dropped in value by more than 15%. With a data-driven approach, we highlight the most important developments and events causing price movements.

Figure 1 – 30-Day Performance: Cryptoassets of the Month vs. Traditional Asset Classes

Source: 21Shares, CoinGecko, and Yahoo Finance, from 31-July-2023 to 31-August-2023 (Close Price)

Bitcoin (BTC)

Bitcoin traded down 11.31% over the past month. On August 17, we saw ~$979 million of liquidations, of which ~$786 million were longs, as BTC dropped 7.50% in a single day. This event constituted the most significant long liquidations in more than a year (even higher than during the FTX collapse), indicating that many investors were positioned to the upside amidst last month’s price decline. In this regard, BTC futures perpetual open interest across centralized exchanges dropped 33% from $10.02 billion on August 8 to $6.71 billion on August 31. On another note, BTC on exchanges reached a five-year low of 2.25 million, a figure not seen since March 2018.

Ethereum (ETH)

Ethereum traded down 11.42% over the past month. On August 7, fintech giant PayPal launched its own stablecoin (PayPal USD) on the Ethereum network. The move could drive a significant influx of new users to Ethereum, as PayPal had 435 million active accounts at the end of 2022, compared to ~1 million active users on Ethereum and L2s. Moreover, it is a massive step toward integrating crypto with traditional payment methods. On the fundamentals side, Coinbase’s Base L2 network launched on August 9. Instead of launching a native token, users transacting on Base pay transaction fees in ETH, generating demand for the asset. Base’s network has already amassed over $400 million in assets and 100k daily active users throughout the month.

Aave (AAVE)

Aave (AAVE) traded down 15.06% over the past month. In July, Aave launched GHO – a fully collateralized dollar-pegged stablecoin governed by AAVE holders, already reaching over $23 million in circulation. In contrast to stablecoins issued by centralized companies like Circle’s USDC or Tether’s USDT, which are backed by physical U.S. dollars and short-term Treasury bills, GHO is mainly backed by Lido’s staked ETH (42%), ETH (23%), and wrapped BTC (15%). Moreover, instead of liquidity providers (LPs) receiving most of the interest paid, the Aave DAO collects 100% of GHO’s borrowed interest. As a result, Aave registered over $12 million in fees during August, a 71% increase from July.

Algorand (ALGO)

Algorand’s native token ALGO traded down 15.24% over the past month, making a new all-time low of $0.09 on August 17. Algorand launched in June 2019, but the network has struggled to gain user and developer traction. Electric Capital data shows that Agorand only had 34 monthly active developers as of June 2023, a 63% decrease from the previous year. In addition, Algorand’s ecosystem experienced a significant setback in July when Algofi, the largest DeFi application on the network, announced they would sunset the platform and put it in withdrawal-only mode due to a ”confluence of events that no longer makes building and maintaining the Algofi platform to the highest standards a viable path.”

Lido (LDO)

Lido (LDO) traded down 15.68% over the past month. On August 11, the Lido DAO voted to onboard two new node operators – African-based Launchnodes and Latin American-based SenseiNode, thus contributing to Ethereum’s geographic resilience. Launchnode, who has previously worked with UNICEF to pay for school internet connectivity and Save The Children funding tablets for refugee camps, has committed a portion of future staking rewards to fund similar long-term social impact projects in developing countries. Regarding fundamentals, Lido’s staked ETH grew 7.17% from 7.95 million on July 31 to 8.52 million ETH (~$14 billion) on August 31. Lido retains 10% of staking rewards, registering over $5.3 million in revenue in August, and is on track to surpass $60 million in annual revenue for 2023.

Bitcoin Cash (BCH)

Bitcoin Cash (BCH) traded down 16.37% over the past month. On August 17, Tether announced they would discontinue support for USDT on Kusama, Omni Layer, and Bitcoin Cash SLP due to a ”lack of significant traction over a significant period of time and no signs of recovery in usage indicators.” The low usage meant maintaining support became inefficient for Tether and jeopardized security oversight. For context, Bitcoin Cash SLP refers to ”Simple Ledger Protocol,” a blockchain token system that allows users to create, issue, and transfer digital tokens leveraging the security of the Bitcoin Cash network.

Polkadot (DOT)

Polkadot’s native token DOT decreased by 16.44% in August. During Decoded 2023, the ecosystem’s flagship conference, Polkadot founder Gavin Wood announced the network’s vision as a ”global, multi-core supercomputer” on which many applications run. Under the current architecture, projects that want to launch a ”parachain” (i.e., app-specific blockchain) on Polkadot need to lock up a significant amount of DOT, which token holders loan to lease their slot for two years. The new direction presented by Wood, which people are dubbing ”Polkadot 2.0,” would evolve Polkadot away from its current reliance on parachain slots to offer more flexible ways of launching applications on the network.

Stacks (STX)

Stacks’ native token STX traded down 16.81% over the past month. Hiro Systems, core contributors of the Stacks network, announced a new feature dubbed ”Chainhook” that will enable more efficient indexing of Bitcoin blockchain data and a novel way to add conditional logic to applications on Stacks. On another front, Pyth’s oracle network, which secures more than $1.2 billion in value across the Solana, BSC, and Optimism ecosystems, has enabled more than 300 price feeds on the Stacks network, including equities, exchange-traded products (ETPs), commodities, foreign exchange pairs, and cryptoassets. Because blockchains are isolated from their world outside their ledger, integrations with oracle networks feeding data external to the blockchain are essential for a thriving ecosystem.

Solana (SOL)

Solana (SOL) traded down 16.96% despite exciting ecosystem developments. Solana Pay, a decentralized payment protocol, has integrated its plug-in with e-commerce company Shopify, allowing millions of businesses on its platform to use Solana-based stablecoins like USDC for payment at checkout. In addition, Visa expanded its USDC cross-border settlement pilot to include the Solana blockchain to onboard more clients, citing ”significant demand to leverage newer, high-performance blockchains that can send and receive stablecoins with higher speed and lower costs” than Ethereum. Compared to a ~3-minute average settlement time on Ethereum, Solana settles transactions in just ~400 milliseconds. Solana’s integration with existing financial software players marks a crucial step toward the widespread adoption of stablecoins for merchant payments.

Cardano (ADA)

Cardano’s native token ADA traded down 16.96% over the past month. The education team of IOHK, the company behind Cardano’s architecture, conducted teach-in sessions on Haskell in Nairobi, Kenya, and the ITESO University in Guadalajara, Mexico. For context, Plutus – the language developed to write smart contracts on Cardano – is based on Haskell, commonly used in the banking and defense sectors. Education is essential to lower the barrier of entry of new builders to the Cardano ecosystem – Stack Overflow’s 2023 Developer Survey suggests that only 2.09% of worldwide developers use Haskell.

Tezos (XTZ)

Tezos’ native token XTZ traded down 16.97% in August despite some exciting developments. Following the activation of the Nairobi protocol upgrade on June 24 – which increased transactions per second (TPS) by ~8x – the Tezos team announced Oxford, the network’s 15th upgrade proposal. Among many improvements, Oxford will introduce a dynamic inflation mechanism for XTZ based on a target staking ratio of 50%. When the percentage of staked funds decreases from the target, emission rates will increase, incentivizing validators to stake funds to re-approach the target and vice versa.

Polygon (MATIC)

Polygon’s native token MATIC traded down 20.24% over the past month despite the number of brands with a footprint on the network continuing to grow. Japanese electronic manufacturing company Casio announced the launch of Virtual G-Shock on Polygon. The project will issue 15,000 limited-edition ”G-Shock Creator Pass NFTs,” granting holders access to exclusive Casio community projects and channels. Furthermore, German airline Lufthansa launched Uptrip, a mobile application that rewards travelers with NFT cards living on the Polygon network for every flight they take. With the cards, users can form collections that offer loyalty rewards like business lounge vouchers and free miles.

Cosmos (ATOM)

The Cosmos Hub’s native token ATOM traded down 22.01% in August despite signs of ecosystem traction. Last month marked the second implementation of Interchain Security (ICS) – liquid staking network Stride became a ”consumer chain,” joining Neutron in handing block production to the Cosmos Hub’s validator set and rewarding ATOM stakers for this service. As such, the Stride blockchain now has the same economic security as the Cosmos Hub (~$2 billion), a nearly 100x increase from Stride’s previous security. In addition, Circle will launch USDC on Cosmos via Noble – an ”appchain” purpose-built for native asset issuance in the Cosmos ecosystem by leveraging the Inter-Blockchain Communication (IBC) protocol.

Avalanche (AVAX)

Avalanche’s native token AVAX traded down 22.21% over the past month. On August 8, Circle launched its wallet-as-a-service platform for developers on Avalanche, Ethereum, and Polygon. The service allows developers to seamlessly embed wallets into their interface, with user-friendly features such as a PIN and social account recovery instead of lengthy private keys and mnemonic phrases. Regarding ecosystem developments, the Avalanche Foundation granted $3 million to Dexalot, a central limit order book (CLOB) Subnet, as part of Avalanche Multiverse, an up to $290 million incentive program to accelerate the growth of Avalanche Subnets.

Chainlink (LINK)

Chainlink (LINK) traded down 22.25% over the past month. In August, interbank messaging company Swift released a report on its year-long experiment using Chainlink’s Cross-Chain Interoperability Protocol (CCIP). The results showed that by combining Swift’s messaging standards with CCIP, financial institutions like BNP Paribas, BNY Mellon, and Citi successfully used their existing backend systems to interact with tokenized assets and transact across public and private blockchains. Increased adoption of CCIP would benefit Chainlink’s profitability as the protocol charges a fee on top of the gas cost overhead for every transaction. Since launching in July 2023, Chainlink has earned over $69,000 from CCIP.

Decentraland (MANA)

Decentraland (MANA) traded down 23.05% despite rising platform usage. About 3,820 unique wallet addresses interacted with Decentraland throughout August, a ~108% growth from July. On August 22, the Decentraland Foundation announced monthly event themes, starting from September 2023 through the end of 2024. The initiative aims to create a framework for the community and brands in the decentralized virtual world to launch their own events and experiences related to a specific theme, encouraging innovation and new content on Decentraland. For instance, the themes for the next three months will be design, artificial intelligence (AI), and music.

Stellar (XLM)

Stellar’s native token XLM traded down 23.63% over the past month. On August 15, the Stellar Development Foundation (SDF) acquired a minority stake in money transfer company MoneyGram International (MGI) to help expand its digital business with blockchain technology integrations. Thanks to a partnership with MoneyGram, USDC on Stellar already has over 81,000 on-ramp locations and over 320,000 off-ramp locations worldwide. The SDF’s investment could further benefit Stellar’s mission to provide seamless fiat-to-crypto on and off-ramps.

The Sandbox (SAND)

The Sandbox (SAND) traded down 26.72% in August, underperforming the broader market. Regarding ecosystem traction, the British Museum chose The Sandbox to establish its metaverse footprint. Through the partnership, the British Museum will create a range of digital collectibles and experiences showcasing its history – founded in 1753, it was the first public national museum to cover all fields of knowledge. On a less optimistic note, about 3,780 unique wallet addresses interacted with The Sandbox throughout August, down 17% from July.

XRP Ledger (XRP)

XRP traded down 27.00% in the past month. XRP’s relative strength index (RSI) was in the ”overbought” zone (>70) for the latter half of July as the cryptoasset rose ~47% on the back of the U.S. District Court’s summary judgment deeming that the XRP token, by itself, was not a security under U.S. law. In August, the SEC filed a motion to request an interlocutory appeal of the landmark decision from July, arguing it could have a ”substantial impact on a large number of pending litigations.” On another front, the Republic of Palau partnered with Ripple to pilot the launch of the Palau Stablecoin (PSC), backed by the U.S. dollar, on the XRP Ledger.

Uniswap (UNI)

Uniswap (UNI) traded down 33.18% over the past month, underperforming the broader market. Uniswap launched on Coinbase’s L2 Base on August 8 and is already the network’s most dominant decentralized exchange (DEX) with ~$46 million in weekly trading volume. On another note, the Uniswap Labs team hosted an internal 24-hour ”hackathon,” a coding event that gave life to sixteen new projects. The winning team created an end-to-end NFT ticketing system for venues that would allow Uniswap mobile wallet users to display a QR code for their NFT tickets, which they can sign in-app to prove ownership. The venue system would then scan the QR code, verify ownership, and mark attendance on the backend.

Strategies of the Month: August 2023

Every month, our research team will also present the ten best-performing strategies of the month in our product suite. With a data-driven approach, we highlight the most important developments and events causing price movements.

Figure 2: 30-Day Performance: Strategies of the Month vs. Traditional Asset Classes

Data Source: 21Shares Index Management Console and Yahoo Finance, from 31-June-2023 to 31-August-2023 (Close Price)

SHETH

The 21Shares Short Ethereum ETP (SHETH) rose 7.12% over the past month. SHETH seeks to provide a -1x return to the performance of Ethereum for a single day. This enables investors with stringent risk-management practices to benefit from tactical short-term inverse exposure to ETH during market downturns. The BitMEX Weekly Historical Ether Volatility Index (EVOL7D) hit an all-time low in the first half of the month before ETH dropped 7.8% on August 17, bringing volatility back.

SBTC

The 21Shares Short Bitcoin ETP (SBTC) rose 4.94% over the past month. SBTC seeks to provide a -1x return to the performance of Bitcoin for a single day. This allows sophisticated investors to hedge and benefit from tactical short-term inverse exposure to BTC. Despite outperforming all the major cryptoassets (with the exception of BNB), BTC still traded down 11.31% in August. The BitMEX Weekly Historical Bitcoin Volatility Index (BVOL7D) was near all-time lows during the first half of the month before BTC dropped 9.7% on August 17, bringing volatility back.

Research Newsletter

Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com

Disclaimer

This document is not an offer to sell or a solicitation of an offer to buy or subscribe for securities of 21Shares AG. Neither this document nor anything contained herein shall form the basis of, or be relied upon in connection with, any offer or commitment whatsoever in any jurisdiction. This document and the information contained herein are not for distribution in or into (directly or indirectly) the United States, Canada, Australia or Japan or any other jurisdiction in which the distribution or release would be unlawful.This document does not constitute an offer of securities for sale in or into the United States, Canada, Australia or Japan. The securities of 21Shares AG to which these materials relate have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There will not be a public offering of securities in the United States.This document is only being distributed to and is only directed at: (i) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (“FSMA”) (Financial Promotion) Order 2005 (the “Order”); or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”); or (iii) any other persons to whom this document can be lawfully distributed in circumstances where section 21(1) of the FSMA does not apply. The securities are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.In any EEA Member State (other than the Austria, Belgium, Croatia, Denmark, Finland, France, Germany, Great Britain, Hungary, Ireland, Italy, Liechtenstein, Luxembourg, Malta, The Netherlands, Norway, Poland, Romania, Slovakia, Spain and Sweden) that has implemented the Prospectus Regulation (EU) 2017/1129, together with any applicable implementing measures in any Member State, the “Prospectus Regulation”) this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Regulation.Exclusively for potential investors in Austria, Belgium, Croatia, Denmark, Finland, France, Germany, Great Britain, Hungary, Ireland, Italy, Liechtenstein, Luxembourg, Malta, The Netherlands, Norway, Poland, Romania, Slovakia, Spain and Sweden the 2021 Base Prospectus (EU) is made available on the Issuer’s website under www.21Shares.com.The approval of the 2021 Base Prospectus (EU) should not be understood as an endorsement by the SFSA of the securities offered or admitted to trading on a regulated market. Eligible potential investors should read the 2021 Base Prospectus (EU) and the relevant Final Terms before making an investment decision in order to understand the potential risks associated with the decision to invest in the securities. You are about to purchase a product that is not simple and may be difficult to understand.This document constitutes advertisement within the meaning of the Swiss Financial Services Act (the “FinSA”) and not a prospectus. In accordance with article 109 of the Swiss Financial Services Ordinance, the Base Prospectus dated 12 November 2021, as supplemented from time to time and the final terms for any product issued have been prepared in compliance with articles 652a and 1156 of the Swiss Code of Obligations, as such articles were in effect immediately prior to the entry into effect of the FinSA, and the Listing Rules of the SIX Swiss Exchange in their version in force as of January 1, 2020. Consequently, the Prospectus has not been and will not be reviewed or approved by a Swiss review body pursuant to article 51 of the FinSA, and does not comply with the disclosure requirements applicable to a prospectus approved by such a review body under the FinSA.

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Rate Cuts and Bitcoin’s Scaling Potential: What Happened in Crypto This Week?

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Exciting Future for Bitcoin’s Scaling Potential BTC’s Rising Accumulation Meets a Growing Delta-Neutral Trading Strategy Rooting for Rate Cuts, Banking Crisis Looms in the U.S.

• Exciting Future for Bitcoin’s Scaling Potential

• BTC’s Rising Accumulation Meets a Growing Delta-Neutral Trading Strategy

• Rooting for Rate Cuts, Banking Crisis Looms in the U.S.

Rooting for Rate Cuts, Banking Crisis Looms in the U.S.

Benchmarks of monetary policy success are shifting around the world. The 2% inflation rate target is no longer within reach in the immediate term, while high interest rates seem to be doing more harm than good. On June 5, Canada was the first G7 country to lower its interest rate to 4.75% from the 5% it stuck to since July 2023. Despite its two-year high unemployment rate of 6.1% and an inflation rate of 2.7% in April, Canada’s move might have started the rate cut season.

Now, while Europe’s inflation has improved over the past six months, inching towards the 2% medium-term target, the European Central Bank (ECB) might have followed suit. For the first time since 2019, the ECB lowered interest rates to 25 basis points. Starting June 12, the EU’s key interest rate will be reduced to 3.75% from 4%, where it has been since September 2023. Realizing the 2% target is far from reach, European monetary policy seems to factor in a more realistic dimension. The ECB staff added 20 basis points to their annual inflation forecasts to be 2.5% in 2024 and 2.2% in 2025.

At the same time that 20 European countries will be celebrating the long-awaited rate cut, the U.S. will be rooting for a cool Consumer Price Index (CPI) print that would boost the Federal Reserve’s confidence that inflation is heading in the right direction. However, the labor market is showing mixed signs of recovery in May, with the unemployment rate increasing slightly above expectations at 4%. In contrast, nonfarm payroll employment increased to 272K, 50K higher than the monthly average. Average monthly earnings have also inched up from April’s reading, increasing by 0.4%. As seen, the delicate balance between inflation control and economic growth remains uncertain, which would definitely be reflected in the Federal Reserve policy decisions. Thus, crypto will remain sensitive to the different interpretations of macro data.

Specifically, volatility will be expected this week in anticipation of the Federal Open Market Committee statement scheduled to shed some light on the U.S. monetary policy on June 12. However, more macro data is coming out later in the week. As shown in the calendar at the end of this newsletter, we’ll know more about changes in wholesale prices on Thursday and conclude the week with the University of Michigan survey results around consumer sentiment, which should give a more complete picture of where the economy stands.

Moreover, the higher-for-longer approach is straining the banking sector in the U.S., with 63 banks declared to be sitting on $517B in unrealized losses, increasing by $39B in the first quarter. Higher unrealized losses on residential mortgage-backed securities, resulting from higher mortgage rates in the first quarter, drove the overall increase. This is the ninth straight quarter of unusually high unrealized losses since 2022, when the Federal Reserve began raising interest rates.

How will this developing crisis affect BTC? Bitcoin usually stood strong amid banking crises, acting as a hedge against counterparty failure over the past few years. That was evident in March 2023, when Bitcoin jumped by 30% after the world experienced the most significant banking stress since 2008. Lack of transparency, mismanagement, and vulnerability towards a single point of failure led to the collapse of hundreds of banks between 2007 and 2012. These factors led to what is now known as the Great Recession, inspiring the creation of Bitcoin in the process. The network’s disciplined monetary policy, combined with its immutable nature and decentralization, became the antithesis of the failures of traditional finance.

On another but rather relevant note, global liquidity has experienced an uptick in the past month, reaching an all-time high of $94T, as shown in Figure 1. As we trace the two lines, we can deduce that Bitcoin is a big profiteer of the expanding global liquidity. Almost $3T has been added since Bitcoin’s all-time high of $69K in 2021. If the banking crisis persists in the U.S. and spreads worldwide, like last year, central banks will have to step in to make their banks whole, which will translate into the growth of their balance sheets even more. Higher liquidity reduces perceived uncertainty, encouraging investors to increase their risk-taking in assets like equities and crypto.

Figure 1 – Bitcoin’s Performance Against Global Liquidity

Source: IntoTheBlock

BTC’s Rising Accumulation Meets a Growing Delta-Neutral Trading Strategy

Last week, the Bitcoin ETF market sustained its recent momentum, mostly driven by the shifting sentiment around the global economy’s battle against inflation, as discussed in the previous section. This was symbolized by the ECB and Bank of Canada’s move to cut rates, which led Bitcoin to hit $72K while its open interest reached an all-time high of $32.02B. However, this was shortly met with a cascade of liquidations (~$400M) as the excitement was countered by the jobs report, which gave a troubling signal of the FED’s progress on taming inflation, leading the entire crypto market to drop by 4%.

That said, U.S. spot ETFs accumulated nearly 25,729 BTC over the last week, equivalent to eight weeks’ worth of new BTC supply entering the market from block rewards. Notably, the impressive recent inflows led to recording the second strongest day of inflows since late March, with more than 12K BTC absorbed via ETFs on June 4. Overall, ETFs now hold close to 5% of Bitcoin’s total supply while making up roughly 60% of Gold ETFs assets under management in the U.S. As we’ve emphasized over the past months, the impact of ETFs on the supply and demand dynamics of the BTC market shouldn’t be ignored. They continue to lay the groundwork for a supply shock that could occur in the medium to long term, especially as BTC on exchanges continues to reach the lowest point in over six years. Similarly, Bitcoin’s accumulation addresses (wallets that have received more than two transactions and have never spent their funds) saw an uptick in the last few weeks, as shown in Figure 2. This echoes our belief that long-term believers are unfazed by their short-term volatility and believe that Bitcoin still has more room to grow.

Figure 2: Total Number of Bitcoin Accumulation Addresses

Source: Glassnode

However, one notable trend to monitor though is the emergence of a cash-and-carry trade, as depicted in Figure 3. This strategy involves investors purchasing Bitcoin on the spot market through ETFs, while simultaneously shorting it on the CME Group exchange to capitalize on the arbitrage opportunity. This phenomenon helps rationalize why the buying pressure from ETFs was being offset by the shorting activity on the futures market. In that sense, it provides a more comprehensive understanding of the surge in Bitcoin’s open interest while potentially explaining why BTC wasn’t able to break through its major resistance at $72K.

Figure 3: The Net Positions of Different Investors on CME Exchange

Source: TheBlock

Exciting Future for Bitcoin’s Scaling Potential

Moving on, Bitcoin’s fundamentals received a significant boost last week. Starknet, the developer of one of Ethereum’s leading scaling solutions, announced its plans to expand to Bitcoin. The company aims to integrate its Zero-Knowledge technology, which powers its Layer 2 platform, to scale Bitcoin without requiring any hard forks. According to Starknet’s founder, the solution will be designed to allow applications to settle transactions on both Bitcoin and Ethereum simultaneously, enhancing Bitcoin’s competitiveness as a settlement platform for a broader landscape of transactions. That said, the key to making this integration a reality lies in the potential soft fork upgrade known as OP_CAT, which could unlock new possibilities for Bitcoin’s scripting language.

For context, OP_CAT is a decade-old script from the Satoshi era that enabled a more feature-rich programming language that paves the path for smart contracts on top of Bitcoin. However, Satoshi removed it as it was feared that it could introduce more security risks into the network, which we’ll break down later. Nevertheless, the function is now making a resurgence as certain segments of the Bitcoin community are looking for different ways to scale the network. This is inspired by the innovation spurred by Ordinals last year, which was enabled on the back of the 2021 soft fork upgrade called the Taproot upgrade.

In line with this, reintroducing OP_CAT could significantly benefit Bitcoin. It can simplify the creation and management of assets’ metadata, thereby laying the groundwork for asset tokenization. It can also enable secure vaults to safeguard against unauthorized access to users’ wallets through advanced multi-signature setups. Additionally, OP_CAT can support escrow wallets, which is crucial for financial use cases that involve locking BTC in a smart contract for yield-generation purposes or using it as collateral for money markets. Lastly, OP_CAT will play a pivotal role in enabling expressive smart contracts, such as trustless bridges, essential for the emergence of Layer 2 solutions, which Starknet aims to capitalize on replicating Ethereum’s scaling success on Bitcoin.

On the other hand, the concerns that led Satoshi to avoid OP_CAT remain pertinent today. The reintroduction of this function could create large scripts that consume significant resources, potentially leading to vulnerabilities such as Denial of Service (DOS) attacks that could cripple Bitcoin’s usage. DOS involves flooding and overwhelming a system with a massive number of requests and messages to bring it down to a halt and make it impossible to process transactions. The function could also introduce unforeseen security threats that weren’t relevant a decade ago, while it could result in a hard fork if certain node operators don’t support the upgrade.

Thus, given the network’s value proposition as the oldest and most secure blockchain, the trade-off between modifying the network’s codebase to add more features, which increases its complexity, versus leveraging external solutions that transform the network’s utilization is contentious. This explains why the functionality has been hotly debated for years but has never been implemented. Nevertheless, it is noteworthy that OP_CAT was formally designated as BIP420 in April, leaving the decision to implement the upgrade to the community for consideration and debate.

In conclusion, the emergence of various scaling solutions for Bitcoin is a significant development. This includes Stacks’ approach utilizing sidechain technology, BitVM enabling rollups similar to Ethereum’s Arbitrum and Optimism, Ordinals and Runes creating unique digital assets, and now the potential of OP_CAT. The diversity of these scaling methods is essential for fostering a robust and resilient ecosystem, as it ensures that Bitcoin is not limited to a single approach and can continue innovating if one solution becomes obsolete.

This is crucial because miners need a supplementary source of income to mitigate the decline in revenue resulting from block issuance and ensure the long-term sustainability of the network as the newly mined BTC supply continues to decrease. Similarly, the economic impact of Ordinals, BRC20, and Runes can’t be understated, as they play a sizable role in Bitcoin’s on-chain activity. For context, miners were able to generate close to 11K BTC, equating to $750M, in fees from processing transactions related to all three aforementioned primitives over the last year, as seen below in Figure 4. This underscores the necessity for scaling solutions to offset the diminishing revenue from Bitcoin’s decreasing block issuance by allowing an on-chain economy to emerge on the largest crypto network by market capitalization.

Figure 4: Revenue Generated from Bitcoin’s Ordinals, BRC20, Runes

Source: CryptoKoryo on Dune Analytics

Ethereum: The Future of Finance and the Internet Itself

The 12th issue of our State of Crypto is out! What’s Inside?
• An introduction to the Ethereum economy: ETH supply, smart contracts, and gas fees.

• A map of the Ethereum ecosystem of scalability solutions and decentralized applications.

• An explainer of Ethereum’s Staking and Re-Staking primitives and their associated risks.

• Our signature Ethereum valuation methodologies

You can download the report here.

This Week’s Calendar

Source: Forex Factory, 21Shares

Research Newsletter

Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com

Disclaimer

The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.

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WMGT ETF för den som vill vara med på de senaste megatrenderna

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WisdomTree Megatrends UCITS ETF USD (WMGT ETF) med ISIN IE0000902GT6 försöker spåra WisdomTree Global Megatrends Equity-index. WisdomTree Global Megatrends Equity-index spårar företag över hela världen som är involverade i globala megatrender (sociala, demografiska, tekniska, ekologiska eller geologiska förändringar). Aktierna som ingår filtreras enligt ESG-kriterier (miljö, social och bolagsstyrning).

WisdomTree Megatrends UCITS ETF USD (WMGT ETF) med ISIN IE0000902GT6 försöker spåra WisdomTree Global Megatrends Equity-index. WisdomTree Global Megatrends Equity-index spårar företag över hela världen som är involverade i globala megatrender (sociala, demografiska, tekniska, ekologiska eller geologiska förändringar). Aktierna som ingår filtreras enligt ESG-kriterier (miljö, social och bolagsstyrning).

Den börshandlade fondens TER (total cost ratio) uppgår till 0,50 % p.a. WisdomTree Megatrends UCITS ETF USD är den enda ETF som följer WisdomTree Global Megatrends Equity-index. ETFen replikerar det underliggande indexets prestanda genom full replikering (köper alla indexbeståndsdelar). Utdelningarna i ETFen ackumuleras och återinvesteras.

Denna ETF lanserades den 5 december 2023 och har sin hemvist i Irland.

Varför investera?

Strategin utnyttjar den långsiktiga tillväxtpotentialen hos megatrender och tillhörande teman från sociala, demografiska, tekniska, miljömässiga eller geopolitiska förändringar.

Strategisk och taktisk allokering mellan teman för att anpassa sig till nuvarande marknadsmiljöer med hög diversifieringspotential och dra nytta av strukturell medvind.

Fokuserad exponering mot globala företag med en utvald korg av investeringsteman, som uppfyller WisdomTrees ESG-kriterier (miljö, social och styrning).

Undersökningen för urvalet av företag i indexet och, därefter, fonden, utförs av experter inom det relevanta tematiska området, vilket säkerställer att portföljen förblir fokuserad och relevant för den designade tematiska exponeringen.

ETFeen är fysiskt uppbackad och UCITS-kompatibel.

Potentiella risker

Även om indexet skapades för att välja företag med en relativt högre exponering för de relevanta teman, finns det ingen garanti för att detta mål kommer att uppnås.

En investering i aktier kan uppleva hög volatilitet och bör betraktas som en långsiktig investering.

Högre tillväxtföretag som de som spelar en roll i megatrender tenderar att handla till högre värderingar. Investeraren bör överväga risken som följer med högre värderingar som en del av alla investeringsbeslut.

Investeringsrisken kan vara koncentrerad till specifika sektorer, länder, företag eller valutor.

Denna lista täcker inte alla risker; ytterligare risker beskrivs i KIID och prospekt.

Handla WMGT ETF

WisdomTree Megatrends UCITS ETF USD (WMGT ETF) är en europeisk börshandlad fond. Denna fond handlas på flera olika börser, till exempel Deutsche Boerse Xetra och London Stock Exchange.

Det betyder att det går att handla andelar i denna ETF genom de flesta svenska banker och Internetmäklare, till exempel DEGIRONordnet, Aktieinvest och Avanza.

Börsnoteringar

BörsValutaKortnamn
London Stock ExchangeGBXWMGG
London Stock ExchangeUSDWMGT
XETRAEURWMGT

Största innehav

NamnKortnamnLandVikt %
Taiwan Semiconductor Manufacturing Co Ltd2330 TTTW2.46%
Cleanspark IncCLSK USUS2.43%
Nvidia CorpNVDA UQUS2.34%
Broadcom IncAVGO USUS2.11%
Coinbase Global Inc -Class ACOIN USUS1.98%
Riot Blockchain IncRIOT USUS1.60%
Bitfarms Ltd/CanadaBITF USCA1.54%
Advanced Micro DevicesAMD USUS1.50%
ASML Holding NVASML NANL1.48%
Elastic NvESTC USUS1.43%

Innehav kan komma att förändras

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0GZB ETC spårar kopparpriset och hedgas i euro

Publicerad

den

BNPP RICI Enhanced Kupfer (ER) EUR Hedge ETC (0GZB ETC) med ISIN DE000PZ9REC4, försöker följa RICI Enhanced Copper (EUR Hedged) index. RICI Enhanced Copper (EUR Hedged)-index spårar priset på terminskontrakt på koppar. Valutasäkrad till euro (EUR).

BNPP RICI Enhanced Kupfer (ER) EUR Hedge ETC (0GZB ETC) med ISIN DE000PZ9REC4, försöker följa RICI Enhanced Copper (EUR Hedged) index. RICI Enhanced Copper (EUR Hedged)-index spårar priset på terminskontraktkoppar. Valutasäkrad till euro (EUR).

Denna ETCs TER (total cost ratio) uppgår till 1,20 % p.a. BNPP RICI Enhanced Kupfer (ER) EUR Hedge ETC är den enda ETC som följer RICI Enhanced Copper (EUR Hedged)-index. Denna ETC replikerar det underliggande indexets prestanda syntetiskt med en swap.

BNPP RICI Enhanced Kupfer (ER) EUR Hedge ETC är en mycket liten ETC med 1 miljon euro tillgångar under förvaltning. Denna ETC lanserades den 7 augusti 2019 och har sin hemvist i Nederländerna.

Information

ISINDE000PZ9REC4
Securities identification number (German WKN)PZ9REC
Bloomberg0GZB GY
Reuters0GZB.DE
TypeETC
CurrencyEUR
Currency hedgedYes, EUR Hedge
Roll optimizedYes
LeveragedNo
Physical deliveryNo
Total Return Yes
ExchangeFrankfurt Stock Exchange (Regulated Market – Xetra®), Stuttgart Stock Exchange
Trading periods08:15 am – 20:00 pm
Maturityopen end

Handla 0GZB ETC

BNPP RICI Enhanced Kupfer (ER) EUR Hedge ETC (0GZB ETC) är en europeisk börshandlad produkt. Denna ETC handlas på flera olika börser, till exempel Deutsche Boerse Xetra

Det betyder att det går att handla andelar i denna ETC genom de flesta svenska banker och Internetmäklare, till exempel DEGIRONordnet, Aktieinvest och Avanza.

Börsnoteringar

BörsValutaKortnamn
XETRAEUR0GZB

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