SEC Probes DeFi, Gas Fees Stabilize

Breaking down Ethereum 2.0 and its sweeping impact on crypto markets

By Teddy Oosterbaan

September 8, 2021

Sponsored by

ETH Price

$3,456.06

Market Cap

$408.41B

Volume (24H)

$34.09B

(As of 9/07/21 @ 16:15 UTC. ETH price % change over 24 hours.)

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There is truly never a dull week in the world of Ethereum.

This week, I cover the rise of Layer 2s, a comeback in total value locked (TVL) on Ethereum and the SEC making its way into DeFi.

While NFT mints and trading are keeping gas prices high, we’ve been able to get a glimpse of the real effects of EIP 1559. The most notable takeaways from the upgrade are that gas fees are consistent, even if consistently high, and the burn mechanism works. As of Tuesday afternoon, over 228,000 ETH has been burnt, with a dollar value quickly approaching $1 billion.

Feel free to reach out with your thoughts and ideas for the newsletter by responding to this email or commenting on Twitter.

Welcome to another edition of Valid Points.

–Teddy

Pulse check

The following is an overview of network activity on the Ethereum 2.0 Beacon Chain over the past week. For more information about the metrics featured in this section, check out our 101 explainer on Eth 2.0 metrics.

Disclaimer: All profits made from CoinDesk’s Eth 2.0 staking venture will be donated to a charity of the company’s choosing once transfers are enabled on the network.

A message from Masterworks.io

As deep as a puddle, as wide as an OpenSea

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Validated takes

The U.S. Securities and Exchange Commission reportedly opened an investigation into Uniswap Labs, the developer of decentralized exchange Uniswap. BACKGROUND: The SEC claimed it is investigating how investors use Uniswap and how it is marketed. Uniswap is a DeFi cornerstone, having the highest trading volume and being responsible for popularizing decentralized exchanges. Uniswap Labs delisted synthetic equities tokens this past summer in a move to avoid this type of oversight.

Coinbase plans to integrate Polygon’s Layer 2 scaling solution to reduce high gas fees and settlement times. BACKGROUND: Coinbase users will soon be able to withdraw funds to Layer 2 scaling solutions, which will make DeFi more accessible to the masses.

Ethereum hit a new all-time high for total value locked in DeFi platforms after a three-month bear market. BACKGROUND: Data from Glassnode shows that DeFi TVL broke a previous all-time high of $155 billion. A much larger percentage of the value locked comes from stablecoins than the previous high, as governance tokens have yet to fully recover in price.

High gas prices on Ethereum have pushed users to Layer 2 solutions, which processed more transactions than Bitcoin last week. BACKGROUND: The launch of Arbitrum and Optimism brought light to the demand for cheaper transactions that still use Ethereum’s base-layer security. Users are now able to reasonably transact with small amounts of capital and interact with most of the popular applications built on Ethereum.

Gas price volatility has slowed post-EIP 1559, bringing stability to Ethereum’s fee market. BACKGROUND: EIP 1559 was not aimed at lowering gas prices, but more at adding a measure of predictability to transaction costs. High-demand blocks are followed by a 12.5% increase in the base fee and the opposite is true for low-demand blocks, removing the possibility of drastic base fee changes throughout the day.

A message from Messari

Mainnet is an immersive, agenda-setting annual summit hosted by Messari taking place September 20-22 in NYC. The summit gathers crypto leaders, operators, builders, and investors for three days of future-focused collaboration, networking, and programming. Attendees should expect interactive discussions, hands-on product demonstrations, and one-on-one meeting opportunities with leaders in the space. Learn more by visiting mainnet.events and receive $450 off your pass using offer code coindesk at checkout.

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Factoid of the week

Open comms

Valid Points incorporates information and data about CoinDesk’s own Eth 2.0 validator. All profits made from this staking venture will be donated to a charity of our choosing once transfers are enabled on the network. For a full overview of the project, check out our announcement post.

You can verify the activity of the CoinDesk Eth 2.0 validator in real time through our public validator key, which is:

0xad7fef3b2350d220de3ae360c70d7f488926b6117e5f785a8995487c46d323ddad0f574fdcc50eeefec34ed9d2039ecb.

Search for it on any Eth 2.0 block explorer site!

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