Ethereum Shapella Upgrade Goes Live, RWA Bridges the Gap Between Crypto & TradFi, and More

In a week marked by mixed news, the crypto market experienced relatively sideways movement, with a few notable exceptions. While inflation came in lower than anticipated, U.S. banks exceeded earnings expectations, leaving the Federal Reserve’s response in their upcoming May meeting uncertain. Bitcoin remained relatively stable this week, while Ethereum surged nearly 10% following the successful Shapella upgrade. On the same news, Lido, a staking provider, witnessed an increase in TVL of more than 10%. Among the top performers were Solana, which saw a significant uptick with the announcement of their smartphone, SAGA, and Arbitrum in the scalability sector, boasting an impressive 30% growth.

Figure 1: 7-Day Price and TVL Developments of Cryptoassets in Major Sectors

Source: Coingecko, DeFi Llama. Close data as of Apr 17, 2023.

Key takeaways

• Two significant US house committee hearings that could affect DeFi, Stablecoins

• Ethereum Shapella upgrade is executed smoothly, Avalanche introduces subnets focused on financial-institutions

• Real-world assets continues building bridges between DeFi & TradFi

• Reddit releases their third generation NFTs, Adidas reveals its dynamic NFT ecosystem
Spot and Derivatives Markets

Figure 2: Ethereum Futures Open Interest

Source: Glassnode

Although Ethereum’s price has trailed behind Bitcoin’s impressive performance in recent weeks, a sudden surge in Ethereum Futures Open Interest suggests renewed enthusiasm and interest for the second-largest cryptocurrency. The successful Shappela upgrade has dispelled many uncertainties, fueling a resurgence of interest that has driven Ethereum’s price to rally by over 10% week over week.

On-chain Indicators

Figure3: Ethereum Deposits & Withdrawals

Source: Hildobby / Dune Analytics

Contrary to the speculation leading to the Shapella upgrade, which enabled withdrawals for the Ethereum network, users have been predominantly unstaking their rewards rather than their entire principal staked amount, as shown above. This echoes our belief that stakers are long-term believers of the Ethereum network, and as such, enabling withdrawals should merely be a non-event for them. To put it differently, users will be keen on withdrawing their rewards to unlock capital, but even so, they might re-stake it through the variety of liquid-staking protocols to use the idle capital across the DeFi ecosystem rather than removing themselves completely.

Next Week’s Calendar

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