ETH Staking Centralization, ThorSwap Turmoil, and the ETF Waiting Game | Crypto Weekly Brew #010
This week's crypto brew focuses on the concerns around the centralization of ETH staking, ThorSwap platform halting trade which sparked lots of outcry from the community and further delays on the crypto ETFs.
Rise of Centralization in ETH Staking
Source: Rise of Ethereum staking came at cost of higher centralization — JPMorgan
Recent reports from JP Morgan have cast a spotlight on Ethereum's increasing centralization due to a significant surge in staking activities post-ETH 2.0 launch. Notably, many of these activities are concentrated within the Lido platform, which has raised questions about the trade-off between decentralization and the perceived safety and yield that centralized platforms offer.
In bear markets, cryptocurrency users tend to prioritize safety and yield over decentralization. However, this inclination towards established platforms challenges fostering healthy competition and building better alternatives. Also, the declining staking yield from 7.3% to 5.5% impacts the incentive for innovation in the staking landscape.
Despite the dominance of platforms like Lido, there is a growing need to explore alternative staking platforms that can strike a balance between decentralization, safety, and yield. Comment below if you know of any new platforms that provide ETH 2.0 staking.
ThorSwap halts platform
Source: THORSwap Halts Platform After Some Trades-Related FTX Hack
Continuing with the topic of DeFi and decentralization/centralization is ThorSwap over the weekend halted the operation of its platform. This incident raises critical questions about the integrity and security of decentralized platforms. It also highlights the challenges of regulating and ensuring compliance in the DeFi space. Following consultations with legal experts and law enforcement agencies, ThorSwap halted is platform. However, it also raises questions about the effectiveness of such measures when users can still potentially engage with smart contracts independently.
Source: $68,280,864,429 has been lost to hacks, scams, fraud, and other disasters since January 1, 2021.
The number of security breaches in the DeFi space during the crypto bear market continues to grow. DeFi projects and platforms that prioritize security and implement robust auditing processes are likely to gain favor among users.
The Bitcoin ETF Approval Saga
Source: Ex-BlackRock Director Says SEC Will Approve a Bitcoin ETF in '3 to 6 Months'
A former BlackRock executive has made a bold prediction that all Bitcoin ETFs will be approved in the next three to six months. This anticipation raises questions about the potential market impact of such approvals, considering regulatory approaches and the desire to avoid providing a first-mover advantage.
Source: Should Low Ethereum Futures ETF Trading Volumes Be a Cause for Concern?
While the spotlight is often on Bitcoin ETFs, there is also an emerging market for Ethereum Futures ETFs, but the early indications, revealed low trading volumes and demand for such financial instruments. As the crypto ETF saga continues to unfold, market sentiment will play a crucial role in determining whether a flood of retail and institutional money will flow back into crypto. Positive sentiment regarding ETF approvals can drive market the market forward into 2024 and it will be an interesting narrative to watch especially considering that 2024 will have other key events like Bitcoins halving and the US elections.
The crypto landscape is experiencing significant shifts and challenges, from concerns of centralization in staking to security breaches in DeFi and the potential impact of ETFs on the market. Regulatory decisions and market dynamics are set to sculpt its trajectory in the coming months and, potentially years.
Thank you for reading and hope you have a good rest of the day!
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