Weekly Newsletter – 19 Aug 2022

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Weekly Summary

  • Top five misconceptions about the highly anticipated ETH merge explained
  • Markets dipped as Federal Reserve releases minutes of its July monetary policy meeting
  • 40 public companies invested approximately $6B into blockchain startups between September 2021 and June 2022
  • Two venture capital funds raise this week totaling half a billion despite the bear market

Industry Stories

Top 5 misconceptions about the anticipated Ethereum upgrade:

  • Misconception 1: ETH gas fees will be reduced. The Merge is just a switching of the consensus mechanism from Proof-of-Work (PoW) to Proof-of-Stake (PoS). Gas fees are dependent on the network capacity and throughput, which will be solved through scaling solutions like rollups.
  • Misconception 2: Transaction speed will be faster. The Beacon Chain allows validators to publish a block every 12 seconds which is about the same as mainnet.
  • Misconception 3: There will be downtime at the point of transition. While some CEX’s like Coinbase may briefly pause new ETH and ERC-20 deposits and withdrawals as a precaution, the Merge is expected to be seamless from a user perspective.
  • Misconception 4: Staked ETH (stETH) can be withdrawn after the Merge. The locked staked ETH on the Beacon Chain will remain locked and illiquid for at least 6-12 months after the Merge transition.
  • Misconception 5: Validators will not be able to withdraw ETH rewards. While stETH remains locked for investors, validators will have immediate liquidity to the fees from transaction tips and MEV earned during block proposals after the Merge.

Markets dipped on the release of Fed Minutes as investors trim exposure: Participants agreed that there was little evidence inflationary pressures were easing. US central bankers remain committed to raising interest rates to curb rising prices but agreed that the pace of hikes should slow down at some point. The probability of a 50 bps hike in September has now increased to more than 60% causing US equities to fall across the board. Both bBitcoin and ethETH were down about 2-3% following the Fed minutes.

Public companies increasing their exposures in the blockchain industry: In a research report published by Blockdata, forty publicly listed corporations invested in companies operating in the crypto space from September 2021 to mid-June 2022. The most active investor was Samsung with 13 investments, followed by UOB, Citigroup and Goldman Sachs. The biggest funding came from Google which invested $1.5 billion.

Venture capital investors unfazed by bear market: Venture Capital Crypto Firm Shima Capital raised a $200 million fund to support early-stage Web3 startups. On the same day of the announcement, CoinFund inaugurated a $300 million venture capital fund to back early-stage blockchain projects. It is a sign that investors remain bullish in the crypto industry despite the uncertainty. According to crunchbase data from late 2021, there is approximately $23 billion of sideline capital waiting to enter the crypto markets.

Matrixport Stories

Matrixport introduced a new price trigger setting function to the Dual Currency Product (DCP). The new setting will enable you to set a custom price at which you want the order to be executed, giving you the flexibility to control the trigger price for Dual Currency orders based on your risk appetite and views of the market direction.

Matrixport News

With crypto’s TVL taking a significant knock, Matrixport’s Benjamin S. shares his thoughts with Forecast.News.
(1) Real health of cryptomarkets is more important than TVL metrics – also evaluate developer commitments and transaction fees.
(2) Latest TVL fall reflects industry capitulations and disappearing liquidity mining incentives on a big scale.
(3) Sentiment outlook is highly dependent on macroeconomics and the ethereum merge.

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