The flash crash explained
The flash crash explained
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Welcome to Stay on-chain! What a start for 2024.
After quiet Christmas holidays during which Ethereum gas went back to reasonable levels, everyone expected New Year’s to bring in pre-approval from the sec for the BTC spot ETFs applications due on January 10. Instead, we got the opposite.
Read on while we delve into the crypto latest.
In today’s edition:
Market performance
News roundup
Extra content from great minds
Farms of the week
Venture Capital
Meme of the week
Reading time: 5 min
Everyone is asking themselves the same question: what caused the flash crash on January 3rd? But let’s take a step back: did the market crash because of a single reason, or did we crash and later on try to link the downward movement to some narrative? Fundamentally, three catalysts are competing here.
Matrixport released a report stating that delay or rejection of Bitcoin spot ETF for the January 10th deadline is likely, shifting approval to Q2.
Excessive leverage in the markets due to the upcoming bull market euphoria — in fact, everyone was expecting a flush, it was simply a matter of when, not if. Coinglass reports $600M in long liquidations, the highest in months.
The last one might sound like a joke to you, but Jim Cramer spoke on January 2nd, stating that Bitcoin is here to stay, and you cannot kill it. Well, thanks for the pointer, Jim.
Besides the reasons behind all this, the crash gave us a nice sight of the strength in altcoins, with incredible performers like SEI, ARB, and TIA giving impressive bounces off the local lows. On the other hand, we have CAKE and UNI on a negative trend — but it’s worth noting that CAKE had an impressive run following its supply cut proposal, so this was likely a sell-the-news event.
Bitcoin spot ETF: is approval near?
Reuters anticipated a pre-approval from the SEC to ETF asset managers early this week, so that they may launch by the January 10th decision deadline. Instead, we got Matrixport’s report speculating that the SEC will delay or reject the ETFs and approval will be a matter for Q2, fueling yesterday’s flash crash.
As of today, the ETFs competing for approval are 14, including those backed by giant funds such as Blackrock and Fidelity. The main blockers for approval were fundamentally three, now seemingly fixed: a cash redemption system instead of an in-kind one, naming authorized participants, and clear terms in case of airdrops & hard forks of the network.
Besides the Matrixport contrarian (and confused) opinion, Polymarket’s betting platform is pricing approval by January 15th at 89% probability, with leading ETF analysts confirming the general consensus on approval.
On Jan 3, Bitcoin celebrates 15 years since its first block in 2009.
Goldman, JP, and Jane Street are joining the ETF games
New major TradFi players want to participate in the Bitcoin spot ETF listings. Jane Street, SBF’s alma mater, has emerged as the go-to broker for Bitcoin-ETF issuers by being appointed as the main "authorized participant" (AP) – the term used for the trusted firm facilitating ETF transactions. Not to be left behind, Cantor and JPMorgan have also secured AP roles. Meanwhile, Goldman Sachs is in talks to play an important role in the Bitcoin ETFs proposed by BlackRock and Grayscale.
The stage is set, and the traditional finance giants are making their moves to position themselves well.
Real yield takes over: since October, Uniswap has generated $2.5M in revenue from fees, whilst Metamask raked in a whopping $10.5M
Vitalik shares an updated Ethereum roadmap
Vitalik Buterin recently shared an updated roadmap for the blockchain's future in 2024. He outlined key points the Ethereum community is focusing on: increasing the number of transactions per second (Surge), addressing risks related to POS issues (Scourge), making block verification easier (Verge), and simplifying the protocol (Purge). Vitalik expressed support for single-slot finality (SSF) as a way to improve weaknesses in Ethereum's design, praised the progress made on L2s, and highlighted the importance of addressing centralization in Ethereum, especially in areas like MEV and liquid staking.
While there are some updates and tweaks, the main goals for Ethereum remain consistent with last year's plan.
Oh, and by the way, he just tweeted saying ENS is "super-important". Guess what? The ENS token went through the roof, shooting up by 60% in just one day.
Curve rollup? There’s a non-zero probability that Curve launches a rollup in the future — 𝕏/0xdaesu
Avalanche Foundation will be buying meme-coins
Avalanche Foundation is thinking of scooping up some meme coins as part of their push to embrace crypto culture. According to them, meme-coins, which often ride on internet jokes and trends, are more than just practical assets — “These coins, often inspired by internet culture and humor, go beyond mere utility assets.” The foundation, supporting the growth of the Avalanche blockchain, is exploring this move after seeing the buzz created by tokens like BONK, which pretty much kicked off a lot of action on the Solana network.
Crypto martyrs: all the crypto projects that failed in 2023 — Rootdata
Three protocols got hacked this week
First off, Orbit Chain's cross-chain bridge took a hit, losing a substantial $81.5 million in cryptocurrencies and stablecoins. The hack involved sizable transactions of stablecoins, wBTC, and ETH, with details of how it happened still unknown.
Next in line, Radiant had to hit the pause button on its lending and borrowing markets on Arbitrum after a hack led to a loss of 1,900 ETH, equivalent to about $4.5 million. The hack exploited a known vulnerability related to the activation of a new USDC market.
Adding to the list of unfortunate events, Gamma Strategies fell victim to an exploit, resulting in an estimated loss of $3.4 million. The protocol promptly disabled deposits to its DeFi vaults, however, users can still make withdrawals.
Wen airdrop, ser? That’s the tool for ya: https://www.wenser.xyz/
PancakeSwap proposal to cut supply from 750M down to 450M CAKE has been approved by a large majority — The Block
Etherscan acquired Solscan — info.etherscan
Blast hits $1.1B in two months before launch — CoinDesk
L3 blockchains built atop Arbitrum using Arbitrum Orbit will be able to use custom gas ERC20 tokens — The Block
The Devcon 7 conference will be held in Bangkok, Thailand, from November 12 to 15, 2024 — Ethereum Blog
The U.S. government will not proceed with a second trial for SBF on secondary charges — Bloomberg
$560M worth of SUI, APT, APE, AXS, INJ, ID, OP etc. tokens is getting unlocked in January — TokenUnlocks
Levana Protocol on Osmosis got exploited for $1m — The Block
Donald Trump is selling his ETH — 𝕏/ArkhamIntel
Curve deployed main crvUSD pools on Arbitrum — 𝕏/CurveFinance
Saylor is selling MicroStrategy shares. To buy Bitcoin? — The Block
Manta’s new paradigm is giving out STONE tokens to depositors, backed by ETH 1:1 and redeemable from March, 10. STONE cannot be redeemed, but can be traded for ETH, allowing degens to loop their way into having more airdrop points on Manta’s program with the trade-off of temporarily de-pegging STONE compared to ETH. Hence, you can buy STONE on ApertureSwap for a 7% discount using your bridged ETH, and redeem for ETH in a couple months realizing a ~ 40% single-staking APR. Not bad, eh?
WooFi is a one-stop shop for trading and earning activities, that received Arbitrum STIP funding. Enjoy it by single-staking WBTC to earn a 9.96% APR, or USDC for a 37.30% APR.
Hyperliquid is a perpetuals protocol built atop their own Layer-1, where you can supply stablecoins to act as the counterparty to traders — statistically, traders lose most of the time, making this profitable. Especially in an uncertain market that is experiencing high volatility, and their airdrop coming closer. Currently, you can earn a 221.06% APR on their counterparty vault HLP.
CESS raised $8M in a Series A round from HTX Ventures, Infinity Ventures Crypto, and others. Description: blockchain-driven project focused on creating a decentralized cloud storage system, ensuring reliable data storage and access through virtualization technology.
EZ Swap raised $1M in a round led by the EOS Network Foundation. Description: NFT DEX protocol and inscription marketplace designed to revolutionize the gaming industry.
Memeland raised an undisclosed amount in a Strategic round from Binance Labs. Description: Web3 ecosystem that connects meme creators and fans, allowing them to collaborate and earn using the Memecoin (MEME token).
Gelato Network raised an undisclosed amount from IOSG Ventures. Description: decentralized backend for Web3, enabling developers to craft automated and efficient smart contracts across various EVM-compatible blockchains.
Solscan has been acquired by Etherscan for an undisclosed amount. Description: block explorer dedicated to the Solana ecosystem.
Want to know more? Head out to Crypto Fundraising and get real-time investing data.
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Disclosure: Authors may own crypto assets named in this newsletter. Stay on-chain is meant for informational and educational purposes only. It is not meant to serve as investment advice. Please consult your investment, tax, or legal advisor before making investment decisions.