Sup, nerds!

Here’s what you’re getting in today’s edition:

• 💅 This is cool: Bitcoin is the new Ethereum?

• 🔎 This seems important: The death of Grayscale’s Bitcoin ETF

• 🤝 Partner: Ready to get hands-on with AI?

• 🔪 Let's dissect this: A vote for ultra-sound money

Terms used in this edition (click for an explanation, or ask Web(GPT)3!):
Layer 1/2, tokenomics, web3.

💅 This is cool:

So, What, Bitcoin is Just Ethereum Now?

In one sentence: Stacks, the Bitcoin L2, can now process faster transactions and push all settlements to the BTC L1 (pretty much exactly the same method ETH is using to scale).

Is it just us or does it feel like Bitcoin is trying to become the new Ethereum?

Yesterday we covered BTC’s adoption of one of ETH’s key features (token creation) — and not 24hrs later, we’re covering another feature yoink.

Stacks, the Bitcoin layer 2, just went through its Nakamoto upgrade, enabling it to process faster transactions and push all settlements to the BTC layer 1.

(Ooops! We made a word salad!)

Here’s what that all means:

Stacks is acting like a banking app on an iPhone. The app uses the bank’s infrastructure to process transactions — the iPhone has no part in that.

What it does have a part in is the app’s security (to log-in, users need to pass a FaceID check).

Same goes for Stacks and Bitcoin — Stacks processes transactions on its own network, but relies on Bitcoin for security.

And if this is all feeling eerily familiar — that’s because Ethereum L2’s work the same way.

So, what, R.I.P. Ethereum?

Nope! The Ethereum network is established well enough to weather a little competition (even if its coming from Bitcoin).

Continuing with the theme of smartphone analogies, way we’d frame it like Apple’s iOS and Google’s Android platforms…

Both can exist and grow in the same space, without destroying one another.

And for us as consumers — this competition and optionality pushes innovation, making developments a net positive on both sides.

We love to see it!

🥇 Want the news before anyone else?

🔎 This seems important:

The Death of Grayscale’s Bitcoin ETF

In one sentence: Grayscale is creating a new, low fee ETF and letting its existing shareholders move over to it (tax free), meaning the original high-fee fund’s days are numbered.

This should logically result in the death of the Grayscale Bitcoin ETF.

(We can’t see how it wouldn’t).

But shoot, we’re jumping the gun here…

First, if you’re not up to speed on the BTC ETF gossip, here’s what you’ve missed:

When all of the BTC ETFs launched, Grayscale didn’t start cold — instead, it converted its Bitcoin Trust into an ETF — the exact differences between which you don’t need to know for this story, outside of this:

Grayscale had a bunch of shareholders in its Trust, which it had wedged between a rock and a hard place when it converted the trust into an ETF.

Cause if the Trust holders were to sell their newly converted ETF shares, they were going to have to pay ~15% in capital gains tax.

Knowing this, Grayscale kept their management fees higher than their competitors (1.5% vs. BlackRock’s 0.25%), assuming their customers wouldn’t leave and take the tax hit.

But they were wrong! Grayscale investors have been leaving in droves, to the tune of billions.

Now, here’s how Grayscale’s Bitcoin ETF dies:

To stem the bleeding, Grayscale is about to launch another Bitcoin ETF — this time, with the lowest fees on the market (0.15%) — and they’re allowing anyone holding shares in their old high-fee fund to make the jump to its low-fee little brother, without taking a tax hit.

Making the old ETF’s days numbered.

Cause whether you’re an existing Grayscale client, or entering the market for the first time — why opt for the fund with the highest fees??

And if you’re wondering why Grayscale doesn’t just lower its fees on its existing fund, the simple answer is:

We have no idea ¯\_(ツ)_/¯

Maybe it’s a ‘easier to star afresh rather than change the existing reputation’ thing?

(It makes no sense to us either).

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🔪 Let's dissect this:

A Vote for Ultra-Sound Money

In one sentence: The Injective community voted to approve changes to the INJ 3.0 tokenomics system, with 99.99% approval, moving it towards ultra-sound money.

Something cool happened yesterday.

The Injective community voted to approve changes to the INJ 3.0 tokenomics system.

“That doesn’t sound very cool.” - you, probably.

But it is cool (we promise), here’s why:

The proposal plans to make INJ "one of the most deflationary assets in crypto” by making it four times more deflationary over the next two years.

Bitcoin is commonly referred to as 'sound money’ because it has a guaranteed total supply of 21M BTC.

Following this change for INJ, it moves towards being ‘ultra-sound money,’ meaning the total supply actually has the potential to decrease over time.

Injective Foundation CEO, Jenna Peterson, said it best: “To guarantee the ecosystem serves long-term as a peer to institutional players, INJ must function as ultrasound money - rewarding early adopters and attracting new participants.”

And it seems the community agrees with a whopping 99.99% approval rate for the proposal.

The fact that a proposal for a change like this can even exist, and can be voted on by the community that it impacts, is one of the many things that makes web3 great.

More news like this, please :)

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Why Bitcoin is Sound Money