SBF Proposes Community Standards, Ethereum’s Supply Growth Becomes Deflationary, and More!

The crypto market entered another week maintaining a high resistance level, with Bitcoin’s price bearly moving as shown in the figure below and Ethereum’s returns rising by almost 2.4%. This week’s biggest winners are Optimism increasing in price by almost 14%, Lido by 3%, and Algorand’s total value locked (TVL) increased by 11% on the back of a $25M injection in the Layer 1’s DeFi protocols which we’ll delve deeper into later in this report.

Figure 1: TVL and price development of major crypto sectors

Source: 21Shares, Coingecko, DeFi Llama

Key takeaways:

• Tesla’s $218M of Bitcoin holdings in Q3 remain unchanged from Q2

• Ethereum’s supply growth has become deflationary over the past two weeks

• MakerDAO to invest $1.2BB into Coinbase custody for to earn $15M in annual revenue

• A South Carolina house has been sold as an NFT on OpenSea

Spot and Derivatives Markets

Figure 2:

Source: Glassnode

The chart above plots the average funding rate (in %) set by exchanges for perpetual futures contracts. A negative funding rate, as seen in Figure 2, means that short positions have to pay long positions periodically and usually indicates a bearish sentiment since more short traders are dominant.

On-chain Indicators

Figure 3:

Source: Ultrasound.money

Ethereum’s supply growth has become deflationary over the past two weeks as the network prepares itself to convert ETH into a deflationary asset in the long run, in the case that Ethereum maintains its adoption, and in turn, becomes a more valuable asset. In Figure 3 we can see that issuance of ETH has dropped after the Merge, which promises to decrease Ethereum’s inflation rate by 90%. We delve deeper into the implications of that further in this report.

Next Week’s Calendar

Read the full report here

Research Newsletter

Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com

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