Greetings fellow HODLers, and welcome to episode 3 of the crypto coinundrums weekly digest, where we talk about the hottest and silliest happenings within the never boring crypto space of the past week.
Today we will talk about:
- Ethereum Shanghai upgrade
- Arbitrum DAO drama
- U.S as a bitcoin whale?
Let’s dive in!
The Ethereum Staking Pool Party: How It All Began
Before we dive headfirst into the Shanghai Upgrade, let’s rewind to the origins of liquid staking. A true underdog, liquid staking shot to fame as the second most important sector in crypto, right after decentralized exchanges in terms of total value locked (TVL). But why all the fuss?
Well, the answer lies in consensus mechanisms, the unsung heroes of blockchain transactions. Thanks to PoW (Proof-of-Work) and PoS (Proof-of-Stake), cryptocurrencies like Bitcoin and Ethereum can validate transactions without a central authority. But there’s a catch! Ethereum validators need a jaw-dropping 32 ETH (around $52,000) to join the elite club.
For ordinary folks without bottomless pockets, liquid staking platforms like Lido, Rocket Pool, and Tranchess emerged as knights in shining armor. They enabled users to stake smaller amounts of ETH and still enjoy the rewards, massive W for inclusivity!
Shanghai Upgrade: The Great Unchaining
Staked ETH has been locked away for over two years since staking began in December 2020. Why the lockdown? To ensure network decentralization and security during the 2022 Merge. But since the Shanghai upgrade went live on April 13th 2023, hundreds of thousands of dusty Ethereum tokens will be able to roam freely once again!
The upgrade will reduce the risks associated with staking, making it more accessible to individuals and institutions. No more locking up your hard-earned ETH for years! This newfound liberation will enhance network security, improve node validator uptime, optimize block space efficiency, and promote decentralization.
In anticipation of the upgrade, validators have been popping up faster than Shiba Inu clones and knock-offs, recently reaching the 500,000 milestone. The freed Ether will spread across them and decentralization will flourish like flowers in spring.
Will ETH Prices Soar or Sink?
The million-token question: will the Shanghai Upgrade send ETH prices into the stratosphere or the abyss? While we don’t possess magical crystal balls, it’s possible that the upgrade’s risk reduction and security enhancements could trigger a positive trend (but remember, this isn’t financial advice).
Many expected the price to dump straight into the Mariana Trench due to these unlocks, now we are a couple days into the fact and we can take a little look at the numbers.
Token unlocks brings a fantastic overview into the actual numbers, here we can see things like how much Eth is currently staked (roughly 15% of the entire token supply) and current staking APR (roughly 4,99%).
Right now we can see that ever since the upgrade that happened merely a couple days ago, over 927k of ETH tokens has been withdrawn, and over 320k of ETH tokens have been deposited into staking. So it’s not all doom and gloom.
The Arbitrum DAO Debacle: Community vs. Foundation
In the crypto realm, where drama is as omnipresent as blockchain itself, we turn our gaze to Arbitrum, the crème de la crème of Ethereum Layer 2 scaling solutions, boasting a mind-boggling $2.3 billion in total value locked (TVL). With its newfound fame, Arbitrum has become the virtual arena for the ARB token holders, who’ve been given a chance to flex their democratic muscles in the first-ever Decentralized Autonomous Organization (DAO) governance proposal.
But alas, this newfound power has stirred the pot, as a provocative proposal, AIP-1.05, dared to demand the return of a whopping 700 million ARB governance tokens to Arbitrum’s DAO treasury. Like a phoenix rising from the ashes of defeat, some ARB whales roared with opposition, sending a clear message: “Not on our watch!”
The Proposal: A “Symbolic Gesture” or a “Power Play”?
AIP-1.05 was introduced after the Arbitrum Foundation transferred funds without community approval in March. But on April 15, the proposal met its fate, defeated by a staggering 118 million votes (84% of the total votes received). In comparison, only 21 million ARB tokens (nearly 14.5% of the total) voted for the proposal, while around 2 million ARB tokens abstained.
The proposal called for the foundation to return the tokens as a “symbolic gesture” to show that governance holders, not the Arbitrum service provider or the Foundation, ultimately control the DAO.
However, some whales were not convinced. ChainLinkGod, a whale with 4.8 million ARB tokens argued that the proposal “seems to only serve as a power play” and would add an “unnecessary step,” delaying the foundation’s ability “to support the growth of the Arbitrum ecosystem.”
Another whale, voting against the proposal with 18 million ARB tokens, emphasized the need for balance to promote decentralization and progress in the ecosystem:
“There is a balance that we need to try to accomplish between advocating for decentralization and preventing progress in the ecosystem. I believe that decentralization in its ideal form is nowhere to be seen in this industry yet.”
A Rift in the Community
The Arbitrum community and its foundation have been at odds over the foundation’s governance proposal AIP-1, which called for an investment of nearly $1 billion worth of ARB tokens to fund its operations. The foundation later claimed that AIP-1 was a ratification, not a proposal, and added that some of the tokens were already sold for stablecoins.
This disagreement emerged after Arbitrum’s first attempt at governance following its token airdrop in early March. To reestablish dialogue with the community, the foundation has already released a new set of improvement proposals.
So, as the saga of Arbitrum’s token turmoil continues, we’re left to ponder: is this a power play or an honest quest for balance in the ecosystem? Only time will tell.
Uncle Sam’s not-so-secret crypto stash
Alright, crypto enthusiasts, after America officials gaining the reputation for serial FUD shenanigans, we are going to take some time to delve into some peak irony, because today, we’re diving into the revelation that the US government – yes, Uncle Sam himself – is a bigger hodler of Bitcoin than both MicroStrategy and Tesla combined. Talk about a plot twist!
Reports have surfaced that the United States government now holds a staggering 205,000 Bitcoin, which is around 1% of the total current Bitcoin circulating supply. With today’s market prices, that’s worth a cool $5.7 billion. Now that’s what we call “big bank energy”!
To put things in perspective, MicroStrategy holds 132,500 BTC, while Tesla has 10,752 BTC. As impressive as those numbers are, they’re utterly dwarfed by Uncle Sam’s crypto treasure chest.
How Did the Government Amass Such a Hoard?
You might be wondering, did the US government suddenly go on a Bitcoin shopping spree, taking inspiration from Michael Saylor’s tweets? Well, not quite. The government has accumulated its stash through various asset seizures over the years, taking on the role of an accidental Bitcoin whale.
First on the list of seizures was a cool 69,396 BTC from a mysterious figure comedically dubbed “Individual X”, who supposedly had hacked the funds from Silk Road. Blockchain analysis revealed that the address “1HQ3” could be linked to Silk Road marketplace activities. Cue dramatic music.
The second instance of seizure involved a hefty 94,636 BTC, which was related to the infamous Bitfinex hack in 2016. Enter Ilya Lichtenstein and his wife, who were arrested and charged with laundering 119,754 BTC in over 2,000 transactions spanning five years. This event earned the title of the “largest cryptocurrency seizure to date.” Impressive, but also kind of an “F” in the chat for the dynamic duo.
Another case involved a certain James Zhong, who pleaded guilty to unlawfully obtaining over 50,000 Bitcoin. This seizure happened in November 2021 when the Department of Justice raided Zhong’s residence in Gainesville, Georgia, and confiscated more than 51,326 BTC.
A Curious Case of Bitcoin Speculation?
Despite the US government sending 9,860 BTC to Coinbase in March 2023, it still holds the title of the biggest known Bitcoin holder. It’s like the world’s most unexpected flex.
Uncle Sam’s enormous Bitcoin stash raises two interesting points. First, it shows that the US government is determined to crack down on what it considers unlawful activities involving Bitcoin. Second, and perhaps more intriguing, is the fact that the government hasn’t liquidated its stash as soon as it could. It begs the question: Is the US government low-key a Bitcoin speculator? Or are they just waiting for the perfect opportunity to take a chunk out of the BTC market cap?
So there you have it, folks! The US government is sitting on a mountain of Bitcoin that could make even the most seasoned HODLers green with envy. One thing’s for sure: in the wild world of crypto, truth is often stranger than fiction.
