Staking

Web3 protocol Blast reaches $823M TVL despite bugs and controversy

Amid technical challenges and investor scrutiny, Blast’s staking model has propelled its total value locked to $823 million.

Web3 protocol Blast has reached $823 million in total value locked (TVL) just weeks after its controversial launch in mid-November, with a 26.5% gain over the past seven days, according to data from DefiLlama. 

Behind Blast’s speedy growth is its unique business model. The protocol is a scaling solution for the Ethereum network and offers native yields to users who stake their funds. Users staking are promised a 4% yield on Ether (ETH) and a 5% yield on stablecoins.

However, the protocol’s emergence has been marked by challenges and unpopular developments. On Nov. 30, Blast revealed that a user staking on the protocol saw $100,000 disappear after converting a deposit to Dai (DAI). The issue was caused by a misconfigured slippage parameter on the user interface, resulting in Blast paying the user $10,000 in compensation.

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Babylon Chain closes $18M funding round for Bitcoin staking

Polychain Capital and Hack VC led the Series A funding round of Babylon Chain, a protocol working on Bitcoin staking for proof-of-stake networks.

Polychain Capital and Hack VC led a $18 million Series A funding round for Babylon Chain, a protocol working on Bitcoin (BTC) staking, bridging the decentralized finance (DeFi) ecosystem with the Bitcoin blockchain. 

According to the Dec. 7 announcement, the funds will be used to support the development of Babylon’s Bitcoin Staking protocol, which enables proof-of-stake (PoS) networks to stake BTC, adding liquidity and security to emerging chains.

For context, a PoS chain is a type of blockchain that relies on participants to validate transactions. To be a validator and create new blocks, a participant must stake the chain’s native coin. The security and integrity of a PoS chain depend on the amount of coins staked. Bitcoin, however, uses a different mechanism, known as proof-of-work (PoW), where miners solve complex mathematical problems to validate transactions.

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Ethereum is up 15% versus Bitcoin since Shapella — More ETH price gains ahead?

Ether stakers have withdrawn $1.21 billion worth of ETH from Ethereum staking contracts since the Shapella upgrade.

Ether (ETH) entered a sharp price recovery a week after hitting a six-month low versus Bitcoin (BTC). 

On April 18, the widely-tracked ETH/BTC pair reached 0.0709 BTC, up about 15% from its local bottom of 0.0602 BTC six days ago. Now, the pair eyes a run-up toward 0.075 BTC by June, based on the fractal setup previously discussed here.

ETH/BTC daily price chart. Source: TradingView

Ethereum’s Shapella FOMO

Interestingly, Ether’s local bottom formation versus Bitcoin occurred on the day of Ethereum’s long-awaited Shapella upgrades.

The hard fork enables Ether stakers to withdraw their rewards — around 1.1 billion ETH — from Ethereum’s proof-of-stake smart contract. This update may have boosted ETH’s appeal compared to BTC, beating anticipations that a freshly unlocked Ether supply would increase sell pressure.

Stakers have withdrawn 574,700 ETH — worth about $1.21 billion — since the Shapella upgrades on April 12, according to data fetched by Nansen. Interestingly, Ether’s price in U.S. dollar terms has increased by 14.25% in the same period.

ETH deposits vs. withdrawals. Source: Nansen

It means that many stakers have decided to hold onto their Ether rewards. On the other hand, Bitcoin has failed to log a decisive breakout above its technical resistance of $30,000, possibly making ETH a more attractive short-term bet for traders.

Weak institutional inflows versus Bitcoin

Institutional investors have shown more interest in Bitcoin than Ether in the past week, according to CoinShares’ weekly report.

For instance, Bitcoin-based investment vehicles witnessed $103.8 million in inflows in the week ending April 14. In comparison, Ethereum funds attracted $300,000, showing that mainstream investors may have followed the “sell the news” strategy after the Shapella upgrades.

Net flows into crypto funds. Source: CoinShares

Ether’s price, meanwhile, is also at risk of a possible bearish reversal move due to its overbought daily relative strength index.

Related: Shapella could bring institutional investors to Ethereum despite risks

If ETH price retreats from its current resistance level of around $2,140, its immediate downside target appears at around $1,984, which acted as resistance in May 2022 and August 2022.

ETH/USD daily price chart. Source: TradingView

An extended sell-off could push Ether price down to its 50-day exponential moving average (50-day EMA; the red wave) near $1,800, down about 15% from its current price levels.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Less than 1% of staked ETH estimated to be sold after Shapella: Finance Redefined

The top 100 DeFi tokens surged along with the broader crypto market as the total value locked peaked at a new yearly high of over $54 billion.

Welcome to Finance Redefined, your weekly dose of essential decentralized finance (DeFi) insights — a newsletter crafted to bring you significant developments over the last week.

The past week in DeFi was filled with anticipation leading up to the Shapella upgrade on the Ethereum mainnet. The hard fork was successfully completed on April 12, allowing validators to withdraw their staked Ether (ETH) after three years. However, only 253 validators have signed up to fully exit their staked Ether position, with analytics firm Glassnode predicting that less than 1% of the staked ETH will be withdrawn.

Amid all the rejoicing post-Shapella upgrade, an Ethereum researcher has revealed that staking Ether could become a privacy concern, as he had “internally” discovered that staking Ether shows a user’s IP address information.

A hacker minted 1 quadrillion Yearn Tether (yUSDT) after exploiting an old Yearn.finance contract, and then swapped the yUSDT to other stablecoins, allowing them to take hold of $11.6 million worth of stablecoins.

DeFi-based financial inclusion serves to increase liquidity and earning opportunities for African micro-entrepreneurs through Fonbnk’s partnership with Tanda.

The top 100 DeFi tokens had another bullish week, thanks to a late surge in the crypto market after Ethereum’s much-awaited upgrade. Most DeFi tokens traded in green along with the rest of the market.

Less than 1% of staked ETH estimated to be sold after Shanghai upgrade: Glassnode

Just 170,000 Ether of the 18.1 million ETH staked on the Beacon Chain will be unlocked within the first week of the Shanghai hard fork being executed on Ethereum, Glassnode has predicted.

The figure comprises 100,000 Ether ($190 million) worth of staking rewards and 70,000 ETH worth of staked Ether ($133 million), the on-chain intelligence platform predicted in its April 11 report.

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Ethereum researcher says staking reveals IP address, sparking privacy concerns

A researcher at the Ethereum Foundation (EF) showed that the IP addresses of ETH stakers are monitored as part of a broader set of metadata, causing the cryptocurrency community to flag Ethereum for privacy concerns.

In an April 12 interview on the crypto podcast Bankless, EF researcher Justin Drake revealed that he learned this information “internally.” The metadata Drake referred to tracks a wide range of information.

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Web3 economy to gain more traction in Africa through DeFi-based financial inclusion

Web3 in Africa began with cryptocurrency, with blockchain technology bringing a lot of transformation regarding transparency and people’s control over their finances. The Web3 economy in Africa continues gaining traction with decentralized finance-based financial inclusion.

Fonbnk, the Web3 on-ramp that allows Africans to obtain cryptocurrency assets by exchanging their airtime credits, has partnered with Tanda, a merchant network platform in East Africa, to launch an airtime trading marketplace across Tanda’s network of agents.

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Hacker mints 1 quadrillion yUSDT after exploiting old Yearn.finance contract

Blockchain security firm PeckShield recently detected a hack that allowed the attacker to mint over 1 quadrillion yUSDT from $10,000 in the latest DeFi exploit.

According to the security firm, the hacker then swapped the yUSDT to other stablecoins, allowing them to take hold of $11.6 million worth of the tokens. This includes 61,000 Pax Dollar (USDP), 1.5 million TrueUSD (TUSD), 1.79 million Binance USD (BUSD), 1.2 million Tether (USDT), 2.58 million USD Coin (USDC) and 3 million Dai (DAI).

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DeFi market overview

Analytical data reveals DeFi’s total market value crossed $54 billion this past week. Data from Cointelegraph Markets Pro and TradingView shows that DeFi’s top 100 tokens by market capitalization had a bullish week, with most of the tokens trading in green, barring a few.

Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education in this dynamically advancing space.

Ethereum on-chain data forecasts the withdrawal of 1.4M ETH over the next few days

ETH price rallied as deposits briefly surged after the Shapella upgrade, but on-chain data suggests that 1.4 million ETH will be withdrawn in the short term.

Ethereum’s long-anticipated Shanghai and Capella upgrades were activated on April 12, and the total withdrawals in the first 40 hours following stood at 142,425 Ether (ETH), per Nansen data. This falls in line with previous estimates. 

For a brief moment on April 12, when Shapella was activated, the deposits to ETH staking contracts outpaced withdrawals. However, deposits have slowed down come April 13, while withdrawals are going strong.

ETH moved for withdrawals

Validators are required to update their staking software clients with withdrawal credentials changed to 0x01 from 0x00 and point to a valid Ethereum address. Once validators do that, partial withdrawals —i.e., withdrawals of rewards above 32 ETH — will be processed automatically.

At the time of writing, 70.1% of validators have changed to 0x01, with 407,851.20, worth over $850 million, set for withdrawal.

Additionally, 875,325 ETH (worth $1.85 billion) is waiting for full exit. Adding to the amount already processed in the first 40 hours, over 1.42 million ETH will be withdrawn from the staking contract.

ETH withdrawals will be rate limited to 1,800 validators per day, translating to a daily withdrawal of 57,600 ETH per day based on 32 ETH per validator. With 875,325 ETH waiting for full exit, it corresponds to potential daily selling pressure of between $120 million.

Validators moving to withdraw their ETH. Source: Nansen

In the first three days, when partial withdrawals will be processed as well, the total daily withdrawals will be 136,000 ETH and 173,000 ETH per day.

However, the above statistics must be taken with a grain of salt because 62.8% are forced withdrawals from the U.S.-based crypto exchange Kraken in response to a $30 million settlement with the U.S. Securities Exchange Commission to discontinue staking services.

There is a chance that a significant portion of Kraken withdrawals will move to decentralized liquid staking platforms like Lido, Frax and Rocket Pool instead of being sold on the market.

Breakdown of ETH waiting for withdrawals by entities. Source: Nansen

Interestingly, Lido accounts for 56.07% of the withdrawals processed so far, which is slightly concerning, as previous estimates suggested that withdrawals from liquid staking derivative platforms like Lido would be minimal.

Currently, 9.6 million staked ETH is in profit, which will remain most vulnerable to a sell-off. It also remains to be seen if more illiquid stakers will move to withdraw their ETH, as they represent over 34% of the 17.4 million ETH deposited in total.

Ether price analysis

Technically, the ETH/USD pair looks bullish, having broken above the $2,000 resistance level. Buyers will look to target the support and resistance levels around $2,300 and the May 2022 breakdown levels at around $2,900. Short-term support to the downside lies at around $1,725.

ETH/USD daily price chart. Source: TradingView

Related: Shapella could bring institutional investors to Ethereum despite risks

The funding rates for ETH perpetual contracts are in neutral territory, deposit the price surge, per Coinglass data. Usually, neutral positioning of the perpetual market after a major price surge means that traders are not yet excited with the present rally, which is represented by a spike in positive funding rates. It also allows more upside room for prices.

ETH perpetual futures funding rate. Source: Coinglass

However, given that there could be some spot selling pressure from the ETH withdrawals, it will likely restrict the uptrend in the market.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Ether staking withdrawals: Crypto exchanges set calendar for unstaking

A majority of the validators are withdrawing their staking rewards rather than the whole 32 staked ETH.

Ethereum mainnet successfully completed the Shapella upgrade on April 12, meaning that Ethereum validators can finally withdraw their staked Ether on the Beacon Chain.

A total of 126,955.07 ETH were withdrawn by validators at the time of writing. Presently, 248,043 out of the 559,549 active validators, or about 44% of them, have the ability to request a partial or full withdrawal. The majority of withdrawals currently vary between 2.8 to 3.2 ETH (ETH), indicating the majority of the validators are only withdrawing their staking rewards.

Total staked ETH withdrawal. Source: beaconcha.in

The average price of staked ETH is $3,149 and it could be another reason why validators are not withdrawing the whole amount. The ETH price is currently trading just under $2,000 with the price acting as key resistance.

Staked ETH data and exchange holdings. Source: Nansen

Major crypto exchanges have announced their support for the ETH unstaking with several exchanges already processing withdrawal requests. Coinbase, the world’s first publicly listed crypto exchange announced that ETH unstaking is now live on their platform.

BitGo chief operating officer Chen Fang took to Twitter to announce that the custodian has upgraded to Shapella successfully, and ETH withdrawals are now live on the platform.

Kraken, on the other hand, started withdrawing validators for their United States customers on April 11 and began processing withdrawals of ETH after the completion of the Shapella upgrade. The early withdrawal of validators by the exchange is caused by the U.S. Securities and Exchange Commission action brought against Kraken’s Ethereum staking product back in February.

Related: Upcoming Shapella upgrade fuels liquid staking growth — AMA with Swell

Kraken Australia Managing Director Jonathon Miller told Cointelegraph that even though such a high quantity of ETH unstaking might cause some price volatility it will bring users to the ecosystem in the long run. He explained:

“Whilst this unlocking event may create conditions for an exodus from the staking protocol, the ability to freely stake and unstake (in accordance with bonding periods specified by the protocol) could equally attract many ETH holders. The move to unstaking could see a massive movement of assets into Ethereum staking pools.”

Binance, the leading crypto exchange by trading volume, said it would support the Shappela upgrade and start the withdrawal processing requests starting from April 19. The crypto exchange also added that the withdrawal request could take up to 15 days to process due to processing limitations.

Bitfinex, one of the leading crypto exchanges, congratulated the Ethereum community on the successful upgrade and said the ETH withdrawal details will be shared soon.

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Ethereum staking deposits dip due to regulatory pressure and Shapella upgrade

The amount of ETH being staked monthly has recently dipped according to the on-chain analytics platform Glassnode.

Ethereum staking deposits have declined slightly in recent weeks due to increased regulatory pressure and the Shapella upgrade slated for April 12.

On April 9, on-chain analytics provider Glassnode reported on the current state of the Ethereum staking ecosystem.

The data revealed that deposit activities are currently low, “due to regulatory pressure and the Shanghai upgrade.”

Financial regulators in the United States have been coming down hard on crypto this year. The Securities and Exchange Commission is adamant that Ether (ETH) is a security and has cracked down on staking despite there being no official legislation from Congress classifying ETH as such.

The Ethereum network will undergo a long-awaited upgrade on April 12. The Shapella hard fork, also known as the Shanghai hard fork, will enable the phased release of ETH staked on the Beacon Chain.

These two factors have caused the dip in Ethereum staking deposits, according to Glassnode.

The firm also noted that major centralized exchanges such as Coinbase, Binance and Kraken have lost a lot of market share to the liquid staking platform Lido.

“As the dust settled between the three giants, it was Lido who emerged victorious, continuing to dominate deposit inflows as of present,” it noted.

Lido currently accounts for almost a third of the total amount of ETH staked. This equates to around $11 billion from the 5.9 million ETH on the platform.

Centralized exchanges such as Coinbase take a hefty 25% commission from the staking rewards, with Coinbase’s commissions being even higher for other assets such as Cardano (ADA) and Solana (SOL).

Lido takes a 10% commission and offers the potential of earning additional yields on DeFi platforms through its staking token Lido Staked ETH (stETH). This explains the shift over time as savvy stakers switched to more profitable platforms.

Analysts have predicted that liquid staking platforms such as Lido will get a boost when ETH is released from the Beacon Chain after the Shapella upgrade.

Related: Analysts debate the ETH price outcomes of Ethereum’s upcoming Shapella upgrade

According to the Ethereum metrics tracking platform Ultrasound.Money, there are currently 18.1 million ETH staked in total currently valued at around $33.7 billion and representing 15% of the entire supply.

After the Shapella upgrade, this will be slowly released for withdrawal in the weeks and months that follow.

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How will the Shanghai upgrade impact ETH price? Expert explains

While it may cause downside pressure in the short run, the Shanghai upgrade will be highly bullish for Ether’s price in the mid-to-long term, according to Vivek Raman.

While it may have some short-term negative impact on the price of Ether (ETH), the upcoming Shanghai upgrade will be highly bullish for Ethereum’s native token, as it will attract more capital to staking and increase the network’s security, according to Ethereum researcher Vivek Raman. 

The Shanghai upgrade, scheduled for April 12, will allow network validators to withdraw funds that have been locked to secure the network since December 2020. The upgrade will complete the network’s transition to a proof-of-stake system, which started in October 2022 with the Merge.

Around 18 million ETH will be available for withdrawal following Shanghai. According to Raman, that may lead to some selling pressure on ETH’s price in the short term.

However, in the long run, the ability to unstake Ether will “de-risk the ETH investment in a tremendous way,” he pointed out. In particular, institutional investors that couldn’t get involved earlier in staking will feel more comfortable once ETH can be unstaked. More capital entering ETH staking will improve the Ethereum network in the long run.

“The more native proof-of-stake asset that’s staked, the higher the cost to attack the chain,” Raman pointed out.

To find out more about the implications of the upcoming Ethereum upgrade, check out the full interview on our YouTube channel and don’t forget to subscribe!

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Ethereum ‘re-staking’ protocol EigenLayer launches on testnet

The re-staking collective aims to address Ethereum validator economic incentives.

A new protocol that allows Ethereum validators and stakers to “re-stake” their assets onto other emerging networks has just launched on testnet.

The mainnet launch of the EigenLayer protocol is not expected until Q3, however, and testing will be phased in three stages to onboard various participants into the ecosystem. The first stage is using Ethereum’s Goerli testing network.

The project has some serious backing and announced $50 million in a Series A funding round in late March led by crypto venture firm Blockchain Capital, along with Coinbase Ventures, Polychain Capital, Electric Capital and Finality Capital Partner.

EigenLayer aims to become a decentralized marketplace for Ethereum node operators and validators to earn fees on additional services. It allows them to restake assets they received in exchange for staking Ether on platforms such as Lido (stETH) and RocketPool (rETH). The assets can be reused to validate and secure other networks, such as sidechains or non-EVM blockchains.

According to the white paper, EigenLayer also has plans to enable restaking for ETH withdrawn from the Beacon Chain following the Shapella upgrade.

“Ethereum validators can set their beacon chain withdrawal credentials to the EigenLayer smart contracts, and opt-in to new modules built on EigenLayer.”

The protocol aims to address issues with validator economic incentives. EigenLayer founder Sreeram Kannan said that facilitating the moving and re-staking of ETH onto other networks would incentivize validators and stakers with additional yields and allow smaller networks to grow securely.

In late March, Ethereum co-founder Joseph Lubin said that “[t]he Eigen Labs team is at the forefront of some of the most exciting work happening in Ethereum.”

Related: MetaMask Institutional unlocks solo ETH staking marketplace

“Eigenlayer is a new paradigm for fostering protocol-centric innovation through a programmatic, decentralized trust marketplace,” he added. High praise, but it’s worth noting that Lubin’s Ethereal Ventures fund has invested in EigenLayer.

There are currently 17.9 million ETH staked on the Beacon Chain, according to the Ultrasound.Money tracker. At current prices, this is valued at around $33.6 billion, which is more than the entire market capitalization of USDC. It represents almost 15% of the entire Ethereum supply.

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Chinese state insurance firm launches two crypto funds in Hong Kong: Report

The Chinese government-backed CPIC Investment Management is launching two crypto funds related to blockchain investment and staking.

The Chinese government appears to be more bullish on the cryptocurrency industry than one might think, as a major state company is reportedly launching new cryptocurrency funds.

CPIC Investment Management, a subsidiary of China Pacific Insurance (CPI), is launching two crypto funds in partnership with the investment firm Waterdrip Capital, the local tech-focused news agency 36Kr reported on April 3.

Owned by the central government of China, the Shanghai municipal government and China Securities Finance, CPI is the second largest property insurance company in mainland China after the People’s Insurance Company of China.

The new crypto funds reportedly include a venture capital fund called the Pacific Waterdrip Digital Asset Fund I, which will focus on investments in early-stage blockchain projects. The second fund, the Pacific Waterdrip Digital Asset Fund II, will reportedly manage proof-of-stake digital assets.

According to the report, the new crypto funds will target institutional and wealthy private investors.

Waterdrip is a global investment institution supporting blockchain-related projects and crypto startups. Founded in 2017, Waterdrip is known for supporting the Chinese crypto mining industry and investing in projects like Polkadot-based decentralized Web3 network Peaq.

Related: Hong Kong’s crypto rules set a high bar for ‘good reason,’ says SFC adviser

The firm took to Twitter to confirm the news on Monday, stating that the launch of the two joint crypto funds relates to the implementation of incentive policies related to virtual assets by the Hong Kong government.

CPIC did not immediately respond to Cointelegraph’s request for comment. The article will be updated pending new information. 

The news comes amid the government of Hong Kong growing increasingly committed to developing local cryptocurrency infrastructure, distinguishing its crypto regulation approach from China’s crypto ban enforced in 2021. In late March, online reports suggested that some crypto firms in Hong Kong have been increasingly attracting interest from Chinese state-owned banks.

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