⛽️ Ethereum Gas Fees Fall to Lowest Level in Two Years

Hello Defiers! Here’s what we’re covering today: News Ethereum Gas Fees Fall to Lowest Level in Two Years Crypto Mixer Tornado Cash Added To US Sanctions List Buterin Backs Proposal For Stealth NFT Transfers BlackRock Partners With Coinbase To Offer C...

Hello Defiers! Here’s what we’re covering today:



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⛽️ Ethereum Gas Fees Fall to Lowest Level in Two Years

Sharp Decline May Cast Doubt on Summer Rally in DeFi

By Samuel Haig


PLUNGE With network activity plunging, Ethereum’s transaction fees are now at their lowest level since the heady days of ‘DeFi Summer’ in mid-2020, according to data from Ycharts.

FEES Ethereum’s average fees are at their lowest level in two years, with transactions executing for less than 13 gwei a pop. The sharp decline in on-chain activity may also cast doubt on the bullish signal that’s been driving a summer rally in Ethereum and other DeFi names: The Merge.

DESTROYED Investors may have to reckon with the likelihood that more Ether may not be destroyed than new coins are issued after the network shifts to Proof-of-Stake consensus in September.

BURNING In August 2021, Ethereum’s EIP-1559 upgrade went live, introducing the burning of base transactions fees. From then on, a portion of each Ethereum transaction fee is permanently destroyed.


Market Action

🐂 Wall Street Traders Love The Merge… For Now

Some Investors are Betting Ethereum May Double When it Shifts to PoS

By Owen Fernau

Wall Street Traders Love The Merge… For Now

UPGRADE The Merge has emerged as the storyline of the summer. And DeFi bulls couldn’t be happier as anticipation for Ethereum’s historic upgrade crowds out the doomstruck headlines of the bear market.

SWITCH Even Wall Street appears to be getting excited about Ethereum’s switch from a Proof-of-Work system of blockchain maintenance to one based on Proof-of-Stake.

SCALE “ETH, for its part, is being watched extremely closely as The Merge approaches,” Philipp Pieper, the co-founder of Swarm, a crypto exchange based in Berlin, told The Defiant. “The move at this scale could be nothing less than ground shaking.”

BETS Long bets in the ETH options market, which draws institutional investors, are outpacing bearish positions, according to Glassnode. There’s more than $300M in open interest for calls to buy ETH at a minimum level of $4,000. That means sophisticated investors are betting ETH will double by Sept. 30, when the options expire.



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Layer 2s

🚀 Optimism and Arbitrum Storm DeFi Rankings As TVL Rises

Layer 2s Rank No. 4 and No. 6 by Total Value Locked

By Samuel Haig

Optimism and Arbitrum Storm DeFi Rankings As TVL Rises

BOOST Layer 2 networks are boosting Ethereum’s DeFi market share amid the downturn. Arbitrum and Optimism now rank as the fourth and sixth-largest smart contract chains respectively, according to data from L2beat.


Optimism TVL. Source: L2beat

TVL The bear market has taken a particularly harsh toll on DeFi, as the total value locked (TVL) in the sector has fallen by 60% in four months. Low-cost Layer 1 (L1) networks offering cheap transactions and EVM compatibility are among the hardest hit.

FEES Despite posting spectacular growth in late 2021 as developers rushed to recreate Ethereum’s DeFi ecosystem without the then-skyrocketing fees, Fantom is down 92%, Avalanche has shed three-quarters of its TVL, and Terra Classic is no more, according to DeFi Llama.


Market Action

📈 Ether Heads For Highest Weekly Close In Two Months As Merge Nears

By Jason Levin

Ether Heads For Highest Weekly Close In Two Months As Merge Nears

RALLYING Crypto markets are rallying ahead of the weekend as investors digest a better-than-expected jobs report from the world’s largest economy.


Source: The Defiant Terminal

MARKET CAP Ether is up 5.4% to $1,737 and total crypto market cap stands at $1.15T. Ether continues to outperform Bitcoin as investors pile in ahead of the long-awaited Merge, Ethereum’s transition to an eco-friendly proof-of-stake consensus mechanism that’s now slated for September. The ETH/BTC ratio has climbed to 0.074, its highest level since May.

UNEMPLOYMENT According to the Aug. 5 releasefrom the Bureau of Labor Statistics, the U.S. added 528,000 jobs in July and the unemployment rate has dropped to 3.5%. Markets initially reacted negatively to the numbers, with Ethereum dropping 2.3% from $1,718 to $1,668 and Bitcoin diving 3.9% from $23,409 to $22,489.

INFLATION While an increase in employment numbers sounds great, this could actually be a headwind for the crypto market. Many believe that due to the strong jobs market, the Fed will continue to hike interest rates to adjust for higher wages and more spending, in its quest to tackle inflation. Rising rates are generally considered negative for investors placing their money in riskier assets like crypto.


Crypto Regulation

🌪 Crypto Mixer Tornado Cash Added To US Sanctions List

The move makes it illegal for US citizens to interact with any wallets or contracts related to Tornado Cash

By Jason Levin

Crypto Mixer Tornado Cash Added To US Sanctions List

BANNED Crypto mixing service Tornado Cash is now banned in America. On August 8, the Office of Foreign Asset Control (OFAC), an enforcement agency of the U.S. Treasury Department, added Tornado Cash to its Specially Designated Nationals (SDN) list. The list includes thousands of people, companies, and organizations that have been identified as posing a threat to U.S. national security.

ILLEGAL The move makes it illegal for US citizens to interact with any wallets or contracts related to Tornado Cash. Tornado Cash is known for anonymizing Ethereum transactions by breaking the on-chain link between source and destination addresses. Its smart contracts accept crypto deposits that alternate addresses can then withdraw.

HACKERS According to the US Treasury, Tornado has been used to launder over $7B of crypto assets since its creation in 2019. It was also allegedly used by North Korean hackers The Lazarus Group to launder over $455M from their attack on Axie Infinity’s Ronin network. The Treasury also says that over $96M in crypto was laundered from the Harmony Bridge Heist and at least $7.8M from the Nomad Heist.


Layer 2s

👀 Arbitrum To Launch Nitro Upgrade on August 31

Nitro a Major Upgrade for Arbitrum

By Claire Gu

Arbitrum To Launch Nitro Upgrade on August 31

NEWS Arbitrum, a Layer 2 scaling solution for Ethereum, has said that its network will undergo a significant upgrade, called Nitro, on Aug. 31 — its one-year anniversary.

MIGRATION Offichain Labs, the company behind Arbitrum, confirmed the news following the successful migration of the Arbitrum Rinkeby testnet. Developers can now prepare their contracts and front-ends for migration and testing.

ROLLUPS Arbitrum uses optimistic rollups to speed up transaction times and cut costs on Ethereum. It does this by bundling multiple off-chain transactions together in large batches before submitting final results to Ethereum. As one of the most popular scaling solutions, its total value locked (TVL) stands at $860M at the time of writing.


Crypto Privacy

🌑 Buterin Backs Proposal For Stealth NFT Transfers

Proposed ERC721 Extension Would Let Users Shield NFT Holdings

By Jason Levin

Buterin Backs Proposal For Stealth NFT Transfers

Ethereum co-founder Vitalik Buterin likes the idea of ‘stealth addresses’ for NFTs. Using a new ERC721 extension proposed by Ethereum researcher Anton Wahrstätter, users would be able to transfer NFTs with only the new owners being able to see who owns the NFTs.

The proposed extension would work by obscuring public blockchain transactions by generating one-time addresses for every transaction and utilizing zero-knowledge proofs.

Buterin suggested an alternate solution using so-called stealth addresses.“The reason why you don’t need Merkle trees or ZK-SNARK-level privacy is that each ERC721 is unique, so there’s no possibility of creating an “anonymity set” for an ERC721. Rather, you just want to hide the link to the sender and recipient’s highly visible public identity,” he posted.


Crypto Deals

🤝 BlackRock Partners With Coinbase To Offer Crypto To Institutional Investors

Bitcoin to be the First Digital Asset Offered to Blackrock’s Clients

By Tarang Khaitan

BlackRock Partners With Coinbase To Offer Crypto To Institutional Investors

PARTNERS BlackRock, the largest asset manager in the world with more than $8T in assets under management, has partnered up with Coinbase to offer cryptocurrency services to its clients.

PLATFORM Bitcoin will be the first digital asset to be offered to clients of Aladdin, BlackRock’s end-to-end investment management platform. Additionally, clients of both Coinbase Prime and BlackRock’s Aladdin will have access to crypto trading, custodial services, prime brokerage, and other reporting capabilities.

ASSETS “Our institutional clients are increasingly interested in gaining exposure to digital asset markets and are focused on how to efficiently manage the operational lifecycle of these assets,” stated Joseph Chalom, BlackRock’s Global Head of Strategic Ecosystem Partnerships.


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DeFi Explainers

🧐 What is the Difference Between Market Cap and Fully Diluted Market Cap?

A Primer on Two Key Metrics in Crypto Markets

By Rahul Nambiampurath

What is the Difference Between Market Cap and Fully Diluted Market Cap?

VALUE Companies and blockchain projects represent value in different ways, typically via stocks and digital assets. In both cases, their values differ based on their value being fully accounted for, or just partially. This is the difference between market capitalization (cap for short) and fully diluted market cap.

COINS Market capitalization is produced when you multiply the number of circulating coins for a certain cryptocurrency with the price of each coin. Diluted market capitalization is produced when you multiply the number of all coins that could exist with the price of each coin.

SUPPLY Let’s dive in deeper to see why diluted caps matter vs. regular market caps. Let’s briefly visit the traditional stock market to ground the terms. When stocks are available for public trading, they are called outstanding shares. This is equivalent to crypto’s circulating supply. The market cap of both would then be calculated by multiplying stocks/coins with the price of each.



🔗 U.S. Treasury sanction of privacy tools places sweeping restrictions on all Americans: Coin Center

Tornado.cash—the website and associated Ethereum addresses—has been added to the OFAC (Office of Foreign Assets Control) SDN list (the list of Specially Designated Nationals with whom Americans and American businesses are not allowed to transact).

🔗 Michael Lewis teases new Wall Street book: ‘You’ll learn all about crypto’: Financial News

Author Michael Lewis is being coy about his next project. But, he says over a video call from his home in Berkeley, California: “I will lift my skirt a little, but not a lot here.”

🔗 Circle freezes USDC funds in Tornado Cash's US Treasury-sanctioned wallets: The Block

Centre, the consortium behind the USD Coin (USDC) stablecoin, has blacklisted wallet addresses controlled by Tornado Cash following the US Treasury sanctions against the crypto mixer.


parithosh | 🐼👉👈🐼 @parithosh_jThe Goerli testnet will merge in the next ~2 days, this will be the last testnet to merge before mainnet. If you are running a Goerli node, please update and follow the numerous guides to ensure we can have a smooth merge. More information here: notes.ethereum.org/@launchpad/nod…


8:57 AM ∙ Aug 8, 2022440Likes118Retweets

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🧑‍💻 ✍️ Stories in The Defiant are written by Owen Fernau, Aleksandar Gilbert, Claire Gu, Samuel Haig, Jason Levin, and yyctrader, and edited by Edward Robinson, yyctrader and Camila Russo. Videos were produced by Robin Schmidt and Alp Gasimov. Podcast was led by Camila, edited by Alp.

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