How much ETH will be destroyed by EIP-1559, will it bring deflation? ｜Snap Finger Institute Weekly #06
Highlights of this issue:
Highlights of this issue:
Calculate the inflation level after the implementation of EIP-1559 based on the actual network transaction fees in 2021. In the three cases where the basic fee accounts for 75%, 50%, and 25% of the total transaction fee, the inflation rate is between 1.26% and 2.66%, and the lower limit of this range is 1.26%, which is lower than Bitcoin's inflation rate of 1.77%.
Terra has successfully constructed on-chain scenarios and real-world usage scenarios for its stablecoin UST. TerraUSD (UST) has broken into the top 5 stablecoins by market capitalization and is the only algorithmic currency in the top 9.
NFT weekly trading volume exceeded $300 million for the first time, reaching $339 million (8/2), up 70% in half a month since mid-July.
No.1 Agency Report
No.1 Agency Report
How much ETH will be destroyed by EIP-1559, will it bring deflation?
In anticipation of an upgrade in London, ETH rose 17% last week, much higher than BTC's weekly gain of 6.7%. After the London upgrade was completed at 20:00 on August 5, ETH stepped out of an obvious upward trend.
After the implementation of the EIP-1559 proposal, watching the number of ETH burnt on the ultrasound.money website gradually increase, people have a good feeling that "ETH deflation is just around the corner". What is the actual impact? Is the EIP-1559 proposal really deflationary? Ben Giove, president of Chapman Crypto, wrote an article to calculate.
1. Additional issuance of ETH in 2021
In the first seven months of 2021, 2.24 million ETHs have been newly issued, that is, 10,418 ETHs are newly issued every day. On an annualized basis, this equates to an increase in Ethereum supply of 3.8 million ETH in one year, with an annual inflation rate of 3.33%.
2. Estimated amount of ETH destroyed in 2021
The figure below shows the amount of ETH burned based on the actual total network transaction fees in 2021. Assuming that EIP-1559 has been activated since the beginning of this year, and the basic fee accounts for 75%, 50% and 25% of the total transaction fee, the trend chart of ETH burning volume is as follows. (Source: Coin Metrics)
Corresponding to the total amount of ETH destroyed so far will be 1.4 million ETH, 935,000 ETH and 467,000 ETH respectively. Converted into daily burns, they are 6,511 ETH, 4,348 ETH, and 2,172 ETH.
3. Estimated annual net additional issuance
ETH daily net increase issuance = daily newly issued ETH total amount - daily destroyed ETH total amount
In the three cases where the base fee accounts for 75%, 50% and 25% of the total transaction fee, the daily net increase in circulation is 3907-8246 coins. On an annual basis, the annual net issuance of ETH ranges from 1.44 million to 3.04 million. ETH's net inflation rate will be between 1.26% and 2.66%, with the lower end of the estimated range of 1.26% lower than Bitcoin's inflation rate of 1.77%.
4. What about after ETH 2.0 implements PoS?
The second column shows 5 kinds of ETH pledge amount, corresponding to 75%, 50% and 25% of the three basic fee ratios. There are a total of 15 inflation results, of which the green background is deflation. It can be seen that there are 9 cases of deflation . And a pledge of 100 million ETH is basically impossible (the last row).
https://mp.weixin.qq.com/s/uF4MNHu7vXep_P95d7bqqg
https://newsletter.banklesshq.com/p/how-much-will-eip-1559-burn-
ETH has started the destruction mechanism. In the future, as the consensus is converted to PoS, it may become a "super-sound currency".
No.2 project attention
Terra's Holy Triangle
Terra, a blockchain built with the Cosmos SDK, bootstraps its ecosystem by doing three things:
They created their own stablecoin, using a two-token elastic supply mechanism: UST and Luna.
They launched two native projects, Mirror (synthetic asset) and Anchor (yielding UST), creating an immediate use case and demand for their stablecoin.
They created off-chain access to UST by partnering with Chai and Memepay to build a deep real-world usage network among online and offline merchants in South Korea (used by 5% of the population) and Mongolia (used by 3% of the population) need.
What's so special about Terra's stablecoin UST?
UST is an algorithm-linked stablecoin that maintains the peg using the minting and burning mechanism. When the price deviates from the anchor value by 5%, by destroying UST, Luna (a token for Terra governance, pledge and verification) will be issued; or Luna will be destroyed , additional issuance of UST, making the price return to a stable value. The obvious problem with this mechanism is that Luna's high volatility, especially when Luna falls will leave UST without any support. Once trust in the protocol is broken, the “death spiral” that is the natural enemy of algorithmic stablecoins can occur in just a few hours.
Terra's solution is to make UST backed not by dollars or cryptocurrencies, but by the growth of the Terra ecosystem itself. In order for Terra to grow, it needs more adoption of UST. And by making Luna more valuable it strengthens its support for UST. Luna becomes more valuable with more network usage.
Note: Luna's main source of income is usage of the network itself, burning Luna helps give it more value.
Cycle on chain
Anchor and Mirror are on-chain loops funded and launched by Terraform Labs to channel demand for UST.
Anchor is a fixed APY savings product and the most important protocol in the Terra ecosystem. It offers a fixed annual interest rate of 20% on cash deposits, which is the highest rate among stablecoin savings.
On July 14th, Anchor Protocol received a grant of 50 million SDT (approximately 70 million UST) from Terraform Labs (TFL), which will enable Anchor to maintain an annual interest rate of $500 million worth of deposits in the next 1.5 years. 20%.
Specifically, users deposit Luna or ETH to Anchor, and can lend up to 50% of the deposit assets to mint UST. These UST can be used for any purpose, or can be deposited back to Anchor to obtain a 20% fixed interest, and Anchor can deposit The asset's certificate token (bToken) is put into the market to earn income. Therefore, unlike the traditional savings model that earns interest, Anchor essentially pays the income of savings assets to UST minters. Anchor’s governance token, ANC, is used in the liquidity mining program and pays out APR% to borrowers over a period of time.
Mirror Finance is a synthetic asset protocol. Users mint mAssets by putting UST, aUST (yield certificate deposited in UST on Anchor) or mAssets into a Collateralized Debt Position (CDP). mAssets on Mirror can be traded 24/7, meaning you can trade synthetic assets on the platform outside of market hours. When oracle prices and market prices diverge, it can often provide interesting trading opportunities. Mirror V2 also provides long and short markets.
Like Anchor, demand for synthetic assets drives demand for UST, thereby providing a value base for Luna and UST. Mirror also has its own native token called Mirror Token (MIR), which can be used to reward liquidity providers, and can also be used for governance voting and to obtain a part of CDP withdrawal fees.
off-chain loop
If the market falls sharply, yields will also fall, and investors' appetite for borrowing will also decrease, making it difficult to guarantee Anchor's 20% annual interest rate. Chai and Memepay provide organic demand for Terra's native stablecoins such as TerraUSD and TerraKRW.
Chai, the premier payment network on the Terra blockchain, has only one goal: to become the payment app of choice for merchants in South Korea. At present, more than 1,700 merchants in South Korea have integrated Chai. As of August 3, the cumulative number of users has reached 2.47 million, equivalent to about 5% of the South Korean population, and the annual transaction volume exceeds 2 billion US dollars.
No.1 Market Data
No.1 Market Data
#stablecoin
USDC newly issued 227 million in a week (8/2-8/8, debank). The previous week's additional issuance was 226 million.
#bitcoin
#bitcoin
Glassnode: The net outflow of bitcoins from centralized exchanges exceeded 100,000 in July, and the ratio of holdings to total circulation dropped to 13.2%, both hitting records this year.
Glassnode: Long term holders (LTH) BTC holdings as a percentage of supply continue to trend upward, currently at 66%, as tokens are dormant. (8/5)
According to past data, a bull market is triggered when the LTH holding ratio reaches between 63.6% and 71.5%, although it is often delayed by several months.
On the evening of August 1, there were a large number of BTC call option buy orders with strike prices of $140,000 and $200,000 due on December 31.
#NFT
British "Guardian": According to data from the Bitcoin trading platform Paxful, Nigeria is now second only to the United States in terms of Bitcoin transactions. A combination of political repression, currency controls and rampant inflation have fueled the rise of cryptocurrencies in Nigeria.
https://www.theblockcrypto.com/linked/113252/weekly-nft-trade-volume-surpasses-300-million-for-the-first-time
The Block: NFT weekly trading volume exceeded $300 million for the first time, reaching $339 million (8/2), up 70% in half a month since mid-July.
The release of Animetas’ NFT on July 31 triggered a surge in Gas fees in Ethereum, which once exceeded 1250 GWei, while the current gas fee in normal hours is around 25 GWei.
On August 2, the CEO of OpenSea tweeted: The platform processed transactions worth $95 million in two days, more than four times the transaction volume for the whole of 2020 ($21 million).
#Exchange#Liquidity#Fund
On August 2, a new law in Germany that allows institutional funds to invest up to 20% of their assets in cryptocurrencies came into effect, and investments worth up to $415 billion may flow into cryptocurrencies.
Bitwise launches crypto funds for Aave and Uniswap.
The exchange FTX signed a seven-year sponsorship agreement with Riot Games, the developer of League of Legends, to obtain brand display rights during the league, the largest sponsorship agreement ever recorded in e-sports.
No.2 Project progress
#Ethereum expansion
Ethereum has completed the "London" hard fork upgrade, and EIP-1559 has been launched. Within 2 days after the upgrade, the amount of Ethereum destroyed accounted for 36% of the new coin issuance during the same period.
Ethereum expansion network Arbitrum plans to open the main network to users before the end of August.
DeversiFi cooperates with Polygon to launch an instant deposit and withdrawal bridge for stablecoins. Using Polygon's full-stack Ethereum scaling solution, users will be able to quickly bridge USDC, DAI, USDT and other assets in the future.https://twitter.com/CelerNetwork/status/1423063796566929412
#DeFi
The cross-chain payment network Celer cBridge announced support for xDai, users can transfer stablecoins USDT, USDC, BUSD, Dai and token IF between xDai, Ethereum, Arbitrum and Binance Smart Chain and Polygon.
Aave Founder: Consider deploying on Solana and Avalanche.
No.3 CeFi·Traditional Finance·Large companies
#asset management
#asset management
Dekabank, one of Germany's largest asset managers, is considering investing in bitcoin.
High-frequency trading giant Virtu is making markets on crypto exchanges.
#channel#service
Coinbase plans to integrate Apple Pay and Google Pay to allow users to purchase cryptocurrencies.
JPMorgan Partners With NYDIG To Launch In-House Bitcoin Fund For High Net Worth Clients.
#CeFi #financing
Encrypted financial service platform Matrixport raised $100 million at a pre-financing valuation of $1 billion, led by DST Global and others
Cryptocurrency broker Voyager Digital has acquired crypto payment company Coinify for $84 million.
Voyager ranks fourth among listed companies holding BTC, and the top three are MicroStrategy, Tesla and Galaxy Digital.
Coinbase agreed to acquire Zabo for an undisclosed sum. Founded in 2018 to build tools to bring cryptocurrencies into mainstream finance, Zabo says its API can connect to any cryptocurrency exchange, wallet, protocol or account.
#NFT+ #encrypted payment
Louis Vuitton (LV) launched the NFT game "Louis: The Game". Players can collect 30 NFTs during the game, including the history and anecdotes of the founder's life, as well as the artwork of NFT artists Mike, Beeple, and Winkelmann. (CryptoDaily)
Audi announced that it will release NFT in cooperation with xNFT and others on August 10.
Burberry, in cooperation with blockchain game studio Mythical Games, plans to launch the first NFT series "The B Series", which will be displayed and sold through the blockchain game Blankos Block Party at 11:00 pm BST on August 11 .
Lionel Messi's NFT series "The Messiverse" will be available on the NFT platform Etherity Chain on August 21.
The Xiaomi Portugal store starts accepting cryptocurrency payments.
No.4 Voice · Viewpoint
Pantera Capital CEO: Ethereum upgrade, ESG and DeFi will help ETH outperform BTC.
No.5 encryption project investment and financing
#DeFi
No.5 encryption project investment and financing
TrustToken raised $12.5M led by a16z, Alameda, and BlockTower through the purchase of TRU (TrueFi’s native token). TrustToken is a TUSD operator with a lending agreement TrueFi.
Onramp Invest, a technology platform serving investment advisors, completed $6 million in financing, with Coinbase and WisdomTree participating.
#NFT
NFT trading platform MakersPlace completed $30 million in financing, led by Bessemer and Pantera.
Cent, an NFT creation and distribution platform, completed a $3 million seed round of financing, with participation from Galaxy Interactive and others.
#asset management
One-stop digital asset management platform Aspen Digital has completed $8.8 million in financing, led by British investment trust fund RIT Capital Partners and Liberty City Ventures.
Onramp Invest, a technology platform serving investment advisors, completed $6 million in financing, with Coinbase and WisdomTree participating.
#data service
CryptoQuant, an on-chain data and market analysis platform, has completed $3 million in financing led by Hashed.
CryptoQuant, an on-chain data and market analysis platform, has completed $3 million in financing led by Hashed.
#infrastructure
#infrastructure
U.S. blockchain startup TBCASoft completed a $25 million Series B round of financing led by Naver Financial and participated by SoftBank.
Snap Fingers Institute · Core Research Report Plan
——Snap Finger Research Institute will provide core research reports that are not open to the public for a small number of users.
- The research report is mainly divided into 3 parts:
First-level project recommendation: From more than 60 encrypted KOL Twitter and top institutions' new Portofolio, artificially select early projects worthy of attention.
Secondary data report: Provide professional market data and interpretation.
NFT Market Data: Provides important NFT market data.
(other important analysis data)
-Advantages of snapping research reports:
The media often release relevant information based on market hotspots, making it difficult for readers to establish a system. Regular reports have a fixed framework, can gradually form their own cognitive system, and can also become a source of high-quality information.
It is very difficult to screen first-level projects and must rely on continuous human input. For users who are concerned about early projects, they can use this as a high-quality information source, or conduct cross-validation with the projects they have mined.
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