QCP’s sentiment towards ether is cautiously optimistic, with concerns about potential corrections and the impact of leverage in the market.

Ether (ETH) prices could see a possible correction, Singapore-based digital assets trading firm QCP Capital said in a series of recent notes published to its Telegram channel.

The trading firm is still cautiously optimistic about the long-term potential of ether.

Although ether has sailed past $4,000, its highest price in two years, QCP writes that it’s observing a shift in market sentiment, marked by negative risk reversals. These reversals measure the difference in implied volatility between call and put options and have turned negative, likely due to the low probability of a spot ether ETF being approved in the near future.

Historically, network upgrades like Bitcoin’s Taproot and the Ethereum merge have had minimal impact on pricing under bearish and sideways market conditions, but with current market dynamics, there could be price reflexivity on Ethereum and its Layer 2s, potentially influenced by the already priced-in Dencun upgrade or a positive knee-jerk reaction, along with possible capital inflows into Layer 2 ecosystems, QCP analysts wrote in a Telegram interview with CoinDesk.

A Polymarket prediction market contract only gives a 31% chance of an ether ETF being approved by May 31.

CoinDesk recently reported that market data shows a rise in demand for ether put options as traders prepare for short-term weakness. This is reflected in the negative skew of one-month and 60-day call-put ratios, while longer-term sentiment remains positive.

QCP also wrote that it is concerned about the amount of leverage currently in the market, but traders will quickly buy back any dips. Excessive leverage in the market is said to have caused the May 2021 crash, where prices fell by 30% over the course of 24 hours, and a 10% correction in bitcoin’s price in January.

Ether has outperformed the CoinDesk 20 (CD20), which tracks the world’s largest and most liquid cryptocurrencies, gaining 54% in the last month versus the CD20’s 50% rise.

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Ethereum implemented the Shanghai upgrade early Thursday, opening withdrawals of more than 18 million ETH staked in the blockchain since late 2020.

Binance announced Thursday that users who staked ether (ETH) through the exchange will be able to redeem coins with their BETH holdings on a 1:1 basis starting from April 19, 08:00 coordinated universal time (UTC).

The announcement came hours after Ethereum implemented the highly-anticipated Shapella hard fork, also known as Shanghai upgrade, opening withdrawals of more than 18 million ETH staked in the blockchain since late 2020.

Binance said that user requests for withdrawals, once submitted, cannot be canceled and the process may be slow initially, requiring 15 days to several weeks for completion. Users will receive redeemed ether in their spot wallets and pending BETH tokens locked in pending ETH withdrawal requests won’t be eligible for staking rewards. BETH is a wrapped token issued by Binance which is 1:1 pegged to ETH on the Ethereum blockchain.

“The expected distribution date of redeemed ETH will be shown before users confirm their withdrawal requests. Users can refer to the most updated ETH distribution date at Staking History,” Binance said in an official announcement.

The exchange added that there would be a daily redemption quote for each user, considering the processing limitations on the Ethereum network and it is subject to change.

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The widely-tracked ratio measures ether’s market capitalization in relation to the value of onchain transactions processed on the Ethereum network.

An on-chain indicator suggests leading smart-contract blockchain Ethereum’s native cryptocurrency, ether (ETH), may be trading at compelling valuations.

The seven-day average of Ethereum’s network-to-value (NVT) ratio, which measures the cryptocurrency’s market capitalization (numerator) in relation to the value of on-chain transactions processed on the underlying blockchain (denominator), slipped to 59.3.

That’s the lowest since Nov. 19, according to data tracked by blockchain analytics firm Glassnode.

A rising ratio, implying a slower growth rate of onchain transactions relative to the cryptocurrency’s price, suggests the network is overvalued. A declining ratio indicates otherwise.
The metric is analogous to the price/earnings (P/E) ratio widely used in stock markets to gauge whether a share price is cheap or expensive.

Ether has gained over 20% since late Friday, with prices reaching a six-month high of $1,784 at one point, CoinDesk data show.

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Coinbase said Thursday that it is leveraging Optimism’s technology to launch an Ethereum layer 2 scaling product, Base.

Nasdaq-listed centralized digital assets exchange Coinbase (COIN) on Thursday announced an Ethereum scaling product that will leverage layer 2 network Optimism’s technology. The news seems to have lit a fire under the cryptocurrencies from the Optimism ecosystem.

Data from Coingecko shows VELO, the native token of the Optimism-based decentralized exchange Velodrome Finance, has gained 21% in the past 24 hours. The token has more than doubled in the past seven days. Velodrome is the ninth-largest decentralized exchange in the world, accounting for 2.5% of the total market volume.

Optimism-native lending protocol Sonne Finance’s SONNE token has jumped 82%, taking the seven-day tally to over 300%.

OPX, the governance and utility token of OPX Finance, has skyrocketed by 144%, while perpetual-focused decentralized exchange Perpetual Protocol’s PERP token has seen a 42% rise in its market value. Other lesser-known names like THALE, HND, RING and PICKLE have also chalked up double-digit rallies in the past 24 hours.

Optimism’s OP token has jumped over 10%, reaching a two-week high of $3.10, CoinDesk data show.

Coinbase launched the testnet version of its new Ethereum layer 2 scaling product, Base, announcing that it will be interoperable with other chains like Solana but won’t have its native token.

“Base aims to be decentralized, permissionless, and open to anyone with the vision of creating a standard, modular, rollup agnostic Superchain powered by Optimism,” the exchange said. “We’re joining Optimism as a Core Dev on the open source OP Stack and working to create a thriving community of other developers.”

The speculation on Crypto Twitter is that Coinbase is making a KYC-based DeFi portal with the help of Optimism, which will open doors for institutional participation in democratized finance.

Coinbase’s foray into the world of Ethereum layer 2 comes a year after the exchange launched a non-fungible tokens marketplace. Per data from Analytics Insight, Coinbase Ventures is one of the most active venture capital firms in crypto today, with over 240 investments.

So, observers are optimistic about Base evolving as a got to place for decentralized applications.

“The collaboration strives to upgrade Optimism Mainnet, Base, and other L2s to an initial superchain,” pseudonymous analyst Route2FI tweeted. “The hope is that the superchain can blossom into a sprawling network that maximizes interoperability, shares decentralized protocols and standardizes its core primitives.”

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Arbitrum’s dominance among the layer 2 landscape continues to grow in quarter one of 2023, as the number of unique addresses on Arbitrum reaches an all-time high.

On Tuesday, Feb. 21, layer 2 scaling solution Arbitrum surpassed Ethereum in daily transactions, increasing Arbitrum’s dominance as the leading layer 2 rollup.

The number of daily transactions on the Arbitrum, the fourth-largest blockchain overall in terms of total value locked (TVL), jumped from 159,919 in daily transactions on Jan. 1 to over 1,103,398 at the time of press, representing a roughly 590% increase in less than two months, according to block explorer Arbiscan.

In comparison, the number of daily transactions on Ethereum increased a meager 46% in the same period to 1,084,290, per Etherscan.

Moreover, the number of unique addresses on Arbitrum’s network has reached an all-time high of about 2.95 million addresses, and data from TVL aggregator DeFiLlama shows that Arbitrum’s TVL jumped 81% since Jan. 1 to roughly $1.85 billion.

Arbitrum’s move ahead of Ethereum follows GMX, a decentralized perpetual exchange native to Arbitrum, overtaking Ethereum in daily fees last week. The growing layer 2 ecosystem has also seen many financial applications emerge like Camelot, Vela Exchange and Radiant Capital, which have all seen their users and transactions increase by over 100% in the past 24 hours, per Nansen data.

Despite Arbitrum’s boost in transactions and addresses, Arbitrum is still lagging behind Ethereum in terms of network fees.

At press time, Ethereum’s one-day fees stand at $6.7 million, while Arbitrum’s one-day fees sit at roughly $154,000, which is less than 2.3% of Ethereum’s network fees for the day, according to cryptofees.info.

The increased activity on Arbitrum may stem from users hoping and speculating about a potential Arbitrum airdrop, despite the lack of plans and announcements from Arbitrum developers about a potential token drop, according to Walter Teng, vice president of digital asset strategy at Fundstrat Global Advisors.

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Gnosis co-founder Martin Köppelmann flagged potential security issues in a proposal discussion on Gnosis’ governance forums.

The co-founder of privacy-focussed Ethereum sidechain Gnosis, Martin Köppelmann, has proposed plans to reduce external dependencies and increase the security of GNO tokens on Ethereum and Gnosis.

In a preliminary discussion on the Gnosis governance forums, Köppelmann said that while GNO was initially minted on Ethereum, the GNO tokens comes from a bridge contract and represent a claim against GNO on Ethereum – which may open up potential security issues for the tokens if “unexpected events could lead to a difference between the two.”

Köppelmann cited bridge risks as a key factor in his proposal. “Currently, the bridge has the right to mint unlimited GNO tokens on Gnosis,” he wrote. “Of course, it is only supposed to mint GNO tokens on Gnosis if an equivalent amount has been locked on Ethereum (and that should be limited), but bridges are unfortunately still a potential source of hacks and bugs and thus are a risk.”

“Every bridge bug is very dangerous in any case but as GNO is relevant for the consensus of the chain it is especially true for GNO,” Köppelmann added.

Bridges refer to blockchain-based tools that transfer tokens between different blockchain networks. But this important software became a major security risk last year as exploiters managed to find weak points that led to $2 billion lost or stolen from cross-chain bridges, as CoinDesk reported.

Another focal point of discussion is the 10 million supply of GNO tokens on Ethereum. Köppelmann said that 7 million of these tokens are supposed to be burned, there is currently no way for this to be “enforced by code” – or automatically by a smart contract if predetermined conditions are met.

“Changing the “source of truth” for GNO to Gnosis chain would give us the opportunity to enforce the DAO vote in code,” Köppelmann noted.

The proposed solutions include increasing the supply of GNO on Gnosis to 3 million, removing the bridge’s right to mint new GNO, and creating a separate system contract to mint new GNO if withdrawals from the Ethereum blockchain occur.

“In practice, those changes should not affect the GNO token on Ethereum or the GNO token on Gnosis. However – those changes are meant to reduce external dependencies of Gnosis Chain and thus make it more resilient and secure,” the preliminary discussion concluded.

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Daily fees on the blockchain have more than doubled in the past month, the report said.

Ethereum has witnessed much healthier on-chain activity recently, with improved interest in non-fungible-tokens (NFTs) led by the launch of a mini-game by Yuga Labs, Bernstein said in a research report Monday.

Daily fees on the blockchain have more than doubled since the start of the year from around $2 million to $4 million-$6 million, the report said. Ether (ETH) has gained around 35%.

Bernstein notes that ether inflation has remained negative for over two weeks, with the expectation of further deflation with more on-chain activity and demand.

“We do believe BTC [bitcoin] and ETH remain relatively clean here and will see gradual conviction-based spot positioning,” analysts Gautam Chhugani and Manas Agrawal wrote.

The next big catalyst for Ethereum remains the Shanghai upgrade due mid-March, when withdrawals of staked ether will be enabled, the note said.

There may be some caution heading into this event because of concerns around supply from the un-staked ether as 70% of the ETH staked has been through liquid staking pools such as LIDO or led by exchanges, the report said.

The remaining ether has been directly staked into the beacon chain and is unlikely to be short-term holders. Therefore, there may be caution approaching the event, “but improved conviction in holding in spot markets, as the fears recede,” the report added.

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The stewards will be responsible for the Meta-Governance, ENS ecosystem, and the Public Goods working groups for 2023.

The Ethereum Name Service (ENS) decentralized autonomous organization (DAO) members voted to elect stewards for three working groups for the forthcoming year.

Voting ended on Dec. 15 at 09:00 UTC, when DAO members elected the stewards that will handle responsibilities for the Meta-Governance, the ENS ecosystem and the Public Goods working groups for the first two quarters of 2023.

ENS working groups are a type of subgroup that tackle specific issues within the DAO. These smaller groups have stewards, which are members chosen by ENS voters who make decisions for the DAO.

Each working group oversees different matters. The meta-governance working group is in charge of oversight and governance issues, while the ENS ecosystem working group supports members and their issues affiliated with the domain service. The public goods working group is in charge of organizing and funding ENS projects within the wider web3 ecosystem.

Voters were tasked to select three stewards for each working group. These stewards nominated themselves and DAO members voted by choosing their three favorite candidates from a pool of nominees.

For the Meta-Governance group, Nick Johnson, the co-founder and lead developer for ENS, and simona.eth were reelected (receiving 1.6 million ENS & 1.5 million ENS votes respectively). Katherine Wu was also elected for her first term with 1.4 million ENS votes.

The ENS Ecosystem group reelected Alex Slobodnik with 2.1 million votes, as well as limes.eth (1.9 million ENS votes) and yambo.eth (850,000 ENS votes) for their first terms.

Lastly, the Public Goods working group elected Alex Van de Sande, the co-founder of ENS, coltron.eth, and vegayp.eth with 2 million, 1.9 million, and 1.4 million ENS votes respectively.

The stewards will start their terms on Jan. 1, 2023 and they will be working in their new roles for a six-month term.

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Trader Joe locks up over $95 million worth of tokens as of Friday and is among the most popular Avalanche-based products.

Avalanche-based decentralized exchange (DEX) Trader Joe will soon deploy on Ethereum scaling solution Arbitrum as it looks to capture new user bases.

“Our aim was to always innovate on the frontiers of DeFi at a global level,” Trader Joe developers said in a statement. “Deployment to Arbitrum One is the next step in this global expansion effort.”

Trader Joe is the largest DEX and lending service on Avalanche, locking up over $95 million worth of tokens as of Friday. This is the first time Trader Joe will be deployed on a separate network.

Trader Joe will initially be deployed on the Arbitrum testnet in the coming days with the mainnet launch expected in early 2023. The DEX captured $2.5 billion in locked value at its lifetime peak and continues to attract the highest transactional volumes among all Avalanche-based products.

Trader Joe’s Liquidity Book AMM – a product that claims to make DEX trading more efficient – will be rolled out in the initial launch. The DEX’s native JOE Token or the full suite of DeFi products, such as lending and staking services, will not be available on Arbitrum.

Why Arbitrum?

As previously reported, crypto traders and investors are increasingly seeing the Arbitrum ecosystem as a likely spot for capturing returns along the lines of the 100-times-plus multiples sometimes witnessed in prior bull-market cycles.

The Ethereum-based scaling product, which allows traders to transact on the blockchain network for under a few cents in fees and transacting times of a few seconds, is among a flurry of blockchain networks that launched in the past year – each promising to be faster and cheaper than the previous one.

On-chain data shows Arbitrum is not all hype. Since August, weekly transactions on Arbitrum have skyrocketed over 550%, with the Arbitrum network now commanding more than 62% of the weekly transactions on Ethereum.

The total value locked (TVL) on Arbitrum has increased by over $300 million in the past few months, data from DeFiLlama shows, with the ecosystem now holding just under $1 billion. Popular trading tool GMX accounts for nearly 40% of all this TVL.

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AltLayer is a layer 2 scalability product built on the Ethereum blockchain.

AltLayer, a layer 2 scalability blockchain built on Ethereum, said it appointed Amrit Kumar as chief operating officer.

Kumar, 34, will be responsible for executing the company’s global operations strategy and supporting its aim of building custom roll-ups-as-a-service for Web3 applications and innovators, the Singapore-based firm said in a statement.

Before AltLayer, Kumar co-founded Zilliqa Research, where he held the positions of president and chief science officer.

AltLayer employs about 25 people and builds pay-as-you-go blockchains for decentralized applications (dapps) and Web3 applications. A dapp is a digital app that uses blockchain technology to keep users’ data out of the hands of the organizations behind it. Web3 is the next generation of the internet that promotes decentralized protocols and aims to reduce dependency on large tech companies.

Layer 2 refers to a set of off-chain systems or separate blockchains built on top of layer 1s. A layer 1 network is the base layer, or the underlying infrastructure of a blockchain.

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