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THE DAILY INDEX

Technology, AI, software, security, crypto and business

MARKETS & BUSINESS

TLDR Crypto

WHY ARE ALL THESE LOW FLOAT / HIGH FDV COINS DOWN BAD?

This thread scrutinizes the significant downturn of "low float, high FDV" cryptocurrencies listed on Binance, debunking prevalent theories about market manipulation by VCs or shifts in retail investor interest towards meme coins. None of the popular narratives convincingly explain the broad price declines. A combination of factors in a complex market environment, rather than a single culprit, is responsible for the observed trends. Free markets will eventually adjust these mispricings on their own.

PUREDAI: RETURNING TO THE IDEOLOGICAL ROOTS OF DAI

PureDai is a proposed stablecoin that aims to deliver cypherpunk ideals. It prioritizes extreme decentralization and resilience by leveraging decentralized collateral, maximally decentralized oracles, and minimal governance. The stablecoin will have a free-floating target price, permanent emissions to incentivize supply-side growth, and a governance token. It will interact with Maker SubDAOs, particularly the Spark lending protocol, to ensure efficient markets. It is not expected to be released for several years and will likely change significantly before then.

COINBASE MONTHLY OUTLOOK: EXPECTATIONS ON ETHEREUM

Ethereum has underperformed in 2024, with many questioning its role when L2s and competing L1s like Solana take market share. Coinbase still believes in Ethereum's long-term potential and its advantages surrounding the developer ecosystem, the proliferation of the EVM, ETH's utility as DeFi collateral, and its decentralization. ETH is uniquely positioned as a store-of-value and technology token and could outperform in the second half of 2024.

LIQUIDITY DYNAMICS: UNDERSTANDING UTILIZATION IN LIQUID RESTAKING TOKENS

The liquid restaking token sector continues to grow, but ETH has been down since the EIGEN airdrop, leading to speculation that ETH was overbought or leveraged to farm the token. EtherFi and Renzo are leaders in the LRT market, with a 73% market share. Still, Renzo's ezETH has been trading at a 2-3% discount since a depeg event a few weeks ago, making Puffer's pufETH the second-most liquid LRT behind eETH. 56% of EigenLayer's TVL is used in a yield generation protocol.

LOW FLOAT & HIGH FDV: HOW DID WE GET HERE?

A report from Binance Research reveals a substantial shift in the crypto market, with the circulating supply of tokens at launch decreasing significantly over the past three years, from about 41% to 12.7%. With $155 billion in token supply scheduled to unlock from 2024 to 2030, the study underscores the challenges and potential volatility facing projects with low float and high fully diluted valuations, highlighting the need for real utility to support such high initial valuations.

THE NEAR AND MID-TERM FUTURE OF IMPROVING THE ETHEREUM NETWORK'S PERMISSIONLESSNESS AND DECENTRALIZATION

Vitalik Buterin reflects on Ethereum's progress and the need to prioritize decentralization and permissionlessness as the network scales. He mentions concerns about MEV, liquid staking, and node hardware requirements and suggests potential solutions like inclusion lists, reduced withdrawal periods for stakers, single-slot finality, and peer-to-peer networks for storing historical data. While Ethereum has moved away from its 2021-era ideas about offloading responsibilities to centralized actors, there is still room for improvement to make Ethereum a strong base layer for L2s.

WHY L2 SCALING IS A LOSING STRATEGY

This thread criticizes the reliance on Layer 2 (L2) solutions for blockchain scaling, arguing that it leads to worse user experience due to ecosystem fragmentation, poor economics, and encourages centralization, which compromises trust and security. It advocates for scaling at the Layer 1 (L1) level, contending that L2 solutions often remain centralized, introduce significant security risks including potential theft by administrators, and ultimately do not solve the inherent problems but merely shift them onto a weaker model.

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