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GM. This is Milk Road, the newsletter that’s like a piñata - whack it open and savor the sweet, sweet pieces of crypto knowledge.

Here’s what we got for ya today:

THE 4 MOST INTERESTING CHARTS WE SAW DURING CHRISTMAS 👀

1/ Solana is dominating stablecoin volume.

Last week, Solana made history... it passed all other blockchains in daily stablecoin transfer volume, for the first time ever.

And for 7 out of the last 10 days, Solana has kept that lead. Including $12B in stablecoin volume yesterday alone.

Why this matters: Stablecoin transfer volume is a good sign that investors are loading up funds to do stuff on a blockchain - i.e. buy tokens/NFTs, provide liquidity to protocols, etc.

Think of it like going to Chuck E. Cheese as a kid. (Btw, if you aren’t familiar, it’s the Las Vegas strip for toddlers - except instead of poker, roulette, and alcohol, it has juice boxes, ski-ball, and claw machines).

It’s awesome. But every time you’d go, you’d have to swap your (parents) cash for some tokens to play.

Well, stablecoins are like the Chuck E. Cheese tokens of crypto. More stablecoin supply on Solana = more money people are likely to spend “playing” there.

2/ Ethereum’s next big upgrade is coming in early 2024…

There’s no official date for when the upgrade will go live on Ethereum’s main network, but developers did release a preliminary schedule for the tests.

Think of it like clinical trials - a drug has to go through phase 1, phase 2, phase 3, etc. before it gets to humans.

Same thing with Ethereum. And here are the dates for the tests:

Crazy, I know. The testing networks all sound like STDs you tried avoiding in college…

Anyway, why does this matter? “Dencun” will be the first major upgrade for Ethereum in a year. And it includes something called EIP-4844 (AKA “proto-danksharding”).

We won’t get into all the nerdy, technical details today (wouldn’t want you to proto-dankshard-your-pants the day after Christmas), but we’ll dive deeper in future editions.

The #1 thing you need to know right now is… the upgrade is supposed to significantly reduce gas fees for Ethereum’s Layer 2 rollups - like Optimism, Abritrum, Polygon, etc.

Check it out:

Milk Road Prediction: L2 tokens ($MATIC, $ARB, $OP, etc.) could perform well as the Dencun upgrade gets closer and the narrative around it gets stronger.

3/ Bitcoin’s security budget.

Here’s a crazy stat for ya… (courtesy of our pal, Kofi).

Why this matters: According to Kofi, this will be the first year where Bitcoin’s annual security budget as % of the market cap will be higher than the year before (from 1.8% to 1.9%).

This is a good thing. Think of the security budget as the amount miners earn for securing the network…

4/ VCs invested over $10B into crypto startups in 2023.

We’ve got good news and bad news…

The good news: Crypto startups raised $10.7B this year.

The bad news: That’s down 68% from last year ($33.3B was raised in 2022).

Milk Road Take: Crypto startups raising $10.7B during a bear market is pretty impressive (even if it was technically a “down” year)…

And with the market heating up again, we predict this number will 3x in 2024 and hit a new all-time high. You heard it here first.

BITE-SIZED COOKIES FOR THE ROAD 🍪

Crypto court cases will heat up in 2024 - here are the ones to watch. From FTX to Binance to Coinbase, next year is set to be a big one for crypto court cases. —DL News

Mt.Gox creditors have started receiving reimbursements. After almost a decade, the wait is finally over!

Industry leaders see Hong Kong as the next Bitcoin ETF hub. Many speculate Hong Kong could join the race if, and when, the U.S. accepts its first Bitcoin ETF applications.

Japan seeks to exempt companies from tax on unrealized crypto gains. Japan’s cabinet approved the 2024 tax regime revision on Friday but it still needs to go through legislative approval.

Nigeria has lifted restrictions on bank accounts for crypto firms. Fun fact: Nigeria is the country with the most crypto holders (47% of people hold crypto) according to Chainalysis.

Paxos receives approval from New York regulators to expand to Solana. Paxos said it plans to offer USDP, a USD-backed stablecoin, on Solana to the public on Jan. 17.

MILKY MEMES 🤣

ROADER REVIEW OF THE DAY

VITALIK PIC OF THE DAY

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.