Aaaaand we’re back…Sup, nerds!

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

• 💅 This is cool: Crypto payments enter the end game

• 🔎 This seems important: Crypto went into free fall (here's why)

• 🤝 Partner: Save big on turnover costs with Express Employment Professionals​

• 🔪 Let's dissect this: An exciting time for Ethereum...

Terms used in this edition (click for an explanation, or ask Web(GPT)3!):
Blockchain, stablecoin, liquidity, staking.

💅 This is cool:

Crypto Payments Enter The End Game

In one sentence: ‘Zero fee transactions’ are coming to the blockchain, which could see crypto become the method of choice for moving money globally.

Today we’re going to be talking about Tron.

Please, please — hold your boos.

We’re aware that it’s not the most loved blockchain out there, but this new announcement from Justin Sun (its founder) has broader implications.

They’re planning to remove all transaction fees on stablecoin transfers.

Which sounds kinda ‘meh,’ seeing as they already have relatively low fees compared to legacy options like bank and Western Union transfers, but it has some larger implications for the crypto industry.

Let’s start with this:

Crypto is a competitive game. If a blockchain adopts a feature that users love, their competitors will do everything in their power to copy it.

Zero fee transfers are the end-game for money transmission, and they benefit everyone — from low income workers sending $20 a week back home across boarders via Western Union, to the ultra wealthy trying to move billions between their accounts.

And the name of the game in crypto is to support more transactions (whether via games, social apps, or payments), which then funds the network, and increases its value over time.

If this new move by Tron catches on — crypto has a clear shot of becoming the ‘no brainer’ move for much of the world to move their cash.

“Ok, but no fees means no money going back into the crypto networks. Riddle me that.”

The move here isn’t to eradicate fees, but to cover them on behalf of the end user, by investing some of the stablecoin dollars in reliable assets (like government bonds) and using the profits to pay the fees.

Helluva concept!

🥇 Want the news before anyone else?

🔎 This seems important:

Crypto Went Into Free Fall (Here’s What Caused It, and Where We’re Headed)

In one sentence: Two key narratives (Germany selling BTC and Mt. Gox repaying creditors) caused the market to dump, but there’s not much liquidity left to be swept below current prices, so the market should stabilize over the coming week(s).

If you’ve ever seen Chevy’s uncle Frank eat scallops, you’ll know it’s a sight to be seen.

At every turn you’re thinking “There’s no way he can inhale another plate” — but alas, Frank always finds room…until his wife Miriam inevitably has to step in, tell him he’s embarrassing her, and waddle him to the car.

Watching the crypto market dump over this past week has felt akin to Frank eating scallops.

Bitcoin’s price dipped below $60k on Thursday, then down to $56k, before bottoming out at $53.5k last Friday, taking the rest of the market down lower with it.

(And at every step down, we’ve thought “surely it can’t go lower”…)

Here’re the narratives driving the sell off:

• The German government has started selling its stash of ~$2.2B worth of Bitcoin.

• 127,000 creditors are about to be repaid the Bitcoin they lost in the Mt. Gox exchange collapse of 2014.

• On top of that, the summer months usually see lulls in market movements and there’s still no solid statement from the Federal Reserve on when they might lower interest rates.

Here’s the opportunity being leveraged:

The big dogs that have the wealth to move markets (aka ‘market makers’) recognize the selling events that these narratives are likely to trigger, and choose to amplify them (when there’s money to be made).

The money to be made here is mostly in the loans that people took out to buy more crypto, back when Bitcoin hit ~$56k a few months back — and once prices started dipping below $60k, they saw their opportunity.

Cause if market makers sell huge chunks of Bitcoin, they can help to:

Push prices down → force these loans to be repaid → which requires people to sell their Bitcoin → which pushes prices even lower.

…at which point, market makers can buy back in at a heavily discounted prices.

(This is known as a ‘liquidity sweep’).

It’s a complex method of ‘buying low, and selling high,’ and as convoluted as it is — it works!

Good news is:

There’s not much liquidity (loans) left to be swept below the current price.

So the market should stabilize over the coming week(s) and hopefully start to recover.

🤝 Partner:

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🔪 Let's dissect this:

An Exciting Time for Ethereum

In one sentence: Four companies that will soon be offering spot Ethereum ETFs in the US, amended their filings yesterday; meanwhile over 27% of the total supply of ETH is now being staked.

We couldn’t choose which piece of news to write about for this last article, so here’s two pieces of interesting news mish-mashed together.

News 1: Four companies that will soon be offering spot Ethereum ETFs in the US, amended their filings yesterday, suggesting the final approval process is coming soon (i.e. people will soon be able to actually buy/sell spot ETH ETFs).

News 2: 32.6 million ETH - which is over 27% of the total supply - is now being staked according to the latest data from Coinbase.

On one hand, the more staked ETH, the better (in general).

By staking ETH (i.e. locking it up to get an annual % return), investors are saying two things:

1. I care about the security of the Ethereum network and I’m putting my money where my mouth is by staking ETH to sure up the number of validators on the network.

2. I want that high interest return baaaby! And I ain’t touching my stash until it grows and grows.

On the other hand, too much staked ETH could lead to a more centralized ownership of the network.

(Which leads to more voting power, and more ability to manipulate prices).

Now, here’s how we’re tying those first two pieces of news together:

When the spot Ethereum ETFs are finally approved in the US, due to a regulatory constraint, the asset managers won’t be able to stake their ETH.

So even if billions of dollars worth of Ethereum is purchased by the few companies that are approved to offer ETH ETFs, that 27% number won’t get any higher - chances are it will drop.

Overall, good news all ‘round.

Could be a big week in crypto!

Staking Explained