The moment of “Dial-Up to Broadband” has arrived for the cryptocurrency industry.
In the early days of the internet, the speed was slow, clunky, and unreliable. When broadband replaced dial-up connections, the internet experienced explosive growth in new activities and products. The significant upgrade in bandwidth unlocked the full potential of the global information network. Now, a similar upgrade is happening on the blockchain network.
In the past two years, the Ethereum ecosystem has grown about 10 times with the push of Layer 2 (L2) solutions. L2 enables faster speeds and lower costs by settling transactions on a separate blockchain (L1) through batch processing. This scaling method is called “rollup chains.”
Currently, the total transaction throughput of Ethereum-based L2 exceeds 140 TPS (transactions per second), while L1 only has 14 TPS.
Arbitrum is currently the leading L2 solution. Since its launch in 2021, Arbitrum has been leading in all key metrics in the L2 space, including transaction volume, developer activity, and on-chain fee revenue.
The design of the L2 protocol prioritizes Ethereum compatibility. Users and developers can have the same user experience and building experience on Arbitrum as they do on Ethereum, but with lower costs and faster speeds.
This advancement marks a significant step forward in Ethereum’s scalability. In the past 30 days, Arbitrum’s network has processed four times the transaction volume of Ethereum. Compared to a year ago, Ethereum’s 7-day transaction volume has increased by 20%, from 7.7 million to 9.2 million transactions. Similarly, L2’s 7-day transaction volume has grown by 850%, from 18.6 million to 163 million transactions. The “broadband moment” for the blockchain network has arrived.
Arbitrum’s success can be attributed to its native team, which has achieved impressive developments in both the DeFi and gaming sectors.
Bitcoin, a scarce digital currency, serves as a hedge against inflation and currency depreciation, leading to a continuous increase in its price. However, Bitcoin still faces regulatory challenges, as evidenced by the investigation launched by the U.S. Securities and Exchange Commission into the cryptocurrency platform Kraken. The trend of regulatory agencies taking action against participants in the cryptocurrency market is expected to continue.
Arbitrum’s ecosystem has attracted over 500 projects and more than 1,800 active developers since its launch in 2021. Many teams have successfully migrated from other chains to Arbitrum, such as Uniswap, the market-leading decentralized exchange. Arbitrum’s greatest advantage lies in its native team, which has achieved success in both the DeFi and gaming sectors.
As the L2 space continues to expand, we believe Arbitrum’s ecosystem will further accelerate its development. The roadmap includes expanding the developer base and attracting new builders, such as the development of Arbitrum Stylus, a customized programming environment for writing smart contracts on Arbitrum using Rust, C, and C++.
Arbitrum’s ecosystem has demonstrated its technical strength and quality community, positioning itself as a leading competitor in the L2 space.As a professional translator, I would translate this news article into English as follows:
pDAO is an entity independent of Uniswap Labs, a US-based company headquartered in Brooklyn, New York. The team of Uniswap Labs split from the company over a year ago and operates as a third-party service provider for the protocol, not involved in this decision. We can assume that the Uniswap Foundation conducted a legal analysis and determined that this is a path acceptable to regulatory authorities. Legal considerations likely played a role in the cautious approach of returning protocol value to token holders. The regulatory environment for DeFi is complex and constantly changing, but we see this as a positive signal for protocols seeking to implement value accumulation mechanisms for their underlying tokens.
Pantera’s liquid token fund has invested in many protocols that have started to explore Uniswap’s proposal and are considering establishing their own similar value accumulation mechanisms. We believe this will be a positive fundamental progress for our investments.
Market Reaction:
We believe that the market’s reaction to this news highlights the importance of proper economic adjustments and incentive mechanisms for token holders, especially as this could translate into the protocol’s long-term sustainability and continued growth through strong governance. The trading volume of UNI tokens has increased by 60% within a few hours of the initial announcement of this proposal and has currently risen by 50%.
Who Pays for This Drivel?
In November 2022, shortly after the collapse of FTX, the European Central Bank published an article that was not so prescient, titled “Bitcoin’s Last Hurrah,” predicting that Bitcoin would soon become irrelevant. This turned out to be untrue. In fact, Bitcoin’s trading volume has increased by 320% since the article was published.
In a recent blog post, the European Central Bank not only did not admit defeat but reiterated some of the arguments cited in the 2022 article, expressing even more doubt.
We want to take a moment to respond to these statements, including other points they raised in their latest blog post, and provide an alternative perspective.
European Central Bank Viewpoint 1: Bitcoin is hardly used for payments apart from illicit activities on the dark web.
Firstly, the misconception that Bitcoin is a useful tool for funding terrorism or money laundering originated from its early association with the Silk Road and dark web markets. As the world has become more familiar with Bitcoin, it quickly became apparent that the public ledger is not the best means for discreetly transferring funds. Bitcoin’s traceability and traceable nature are a dream for financial fraud investigators. The US Department of Justice was able to successfully trace the responsible party for the 2016 Bitfinex hack precisely because of Bitcoin’s public ledger.
Today’s arrests and the largest-ever financial confiscation operation by the department demonstrate that cryptocurrencies are not a safe haven for criminals.
In order to maintain digital anonymity, the defendants attempted to launder the proceeds through labyrinthine cryptocurrency transactions, to no avail…
“Today, federal law enforcement agencies once again proved that we can track funds through the blockchain, that we will not allow cryptocurrencies to be safe havens for money laundering, and that we will not allow cryptocurrencies to be unregulated areas in our financial system…”
– Deputy Attorney General Lisa O. Monaco
According to Chainalysis’ “2023 Cryptocurrency Crime Report,” illegal activities conducted through cryptocurrencies accounted for only 0.24% of transactions in 2022. Not to mention, according to a senior legal official from the Counter-Terrorism Executive Directorate (CTED), cash remains the primary means for terrorist financing.
The European Central Bank’s second point that Bitcoin is not a successful means of payment is actually correct. But they overlook one thing.
Yes, Bitcoin was initially promised as a “peer-to-peer electronic cash system” that would enable fast and inexpensive value transfer without the need for third-party involvement. Another advantage of Bitcoin is that, due to its limited supply, it is supposed to be a hedge against inflation and currency depreciation. Governments around the world keep printing money, eroding the hard-earned savings of citizens. Holding Bitcoin offers a potential solution to this problem—it has already done so successfully, currently storing over $14 trillion in global wealth. In its exploratory phase, Bitcoin has become a “digital gold,” and its simple design optimizes Bitcoin’s robustness.
It is worth noting that Bitcoin’s layers, such as the specialized payment layer Lightning Network and the programmable layer stack Stacks, may eventually enable payment functionalities in the future. Sometimes people compare Bitcoin to the Fedwire, the underlying payment layer for settling all transactions, while additional layers like Lightning are similar to Mastercard or Visa. The first layer of Bitcoin has proven not to be the preferred choice for morning coffee or pizza payments. We believe Bitcoin doesn’t need to become a payment tool. The gap can be filled by stablecoins built on faster and higher throughput networks, whether it’s the second layer of Bitcoin or other blockchains. You can read more detailed content here.
European Central Bank Viewpoint 2: Bitcoin is still not a suitable investment.
It is an odd claim to say that an asset, especially one that has nearly doubled in value every year for the past 11 years, “is still not suitable as an investment.” Furthermore, in our view, the lack of cash flow, the absence of social benefits like jewelry, or the inability to subjectively appreciate it like art does not disqualify Bitcoin as a suitable investment.
In fact, most wealth storage or exchange mediums, including the US dollar, have little intrinsic value. Some may argue that the government’s requirement for dollars to fulfill tax obligations gives the currency some value. However, if you were to genuinely attempt to obtain the true intrinsic value of US currency by melting coins, for example, to obtain the value of their mineral content, it would actually be a felony. Some may argue that the dollar itself is a trust scheme, and the level of US debt as a percentage of GDP has reached record levels, so confidence in the value of the dollar may not be as rational as confidence in the value of Bitcoin.
There is also significant wealth with very low intrinsic value, such as Jackson Pollock’s paintings. The actual value of the paint and canvas in a Pollock painting is $40. Yet, they are traded for $100 million because people believe they will be able to sell them for at least that price or even higher in the future. Bitcoin is in a similar situation; people can store wealth in Bitcoin and expect its future value to be at least equivalent to or higher than that.
As for cash flow and dividends, protocols that generate actual income, such as Uniswap, are emerging, allowing traditional and more fundamental valuation frameworks to be applied to digital assets.
European Central Bank Viewpoint 3: Bitcoin’s price is subject to manipulation.
In our view, concerns about price manipulation are far beyond reasonable. Just like the outdated misconception that Bitcoin is used for illegal activities. We believe the same applies to market manipulation. We have not seen any evidence that market manipulation in the Bitcoin market is more severe than in any market of similar scale. In the past 30 days, Bitcoin’s average daily trading volume reached $47 billion. In comparison, only one stock among the “Glorious Seven,” Nvidia, exceeded this number. Bitcoin’s total market capitalization is $1.4 trillion.
Smaller exchanges outside the US and Europe may exaggerate their trading volumes to push themselves up the rankings and attract new customers. False trading volumes clearly do not have a directional impact on the market. Most importantly, they do not exist in the activities reported by regulated exchanges like Coinbase and Bitstamp.
New Records in Bitcoin Price Action
In February of this year, Bitcoin experienced its largest monthly price increase in history. The price of a single Bitcoin rose by $18,600. It took nine years for Bitcoin to reach this price for the first time in December 2017, and just a year ago, the price of Bitcoin was $18,600.
In addition, Bitcoin has set a new record for the longest consecutive seven-month period of good performance in history. The previous longest streak was six months, which occurred three times in the past 14 years.
Regulatory Update
Regulatory agencies in various US states and federal courts continue to be active in the cryptocurrency space. The Securities and Exchange Commission (SEC) continues its investigations into cryptocurrency asset platforms, with Kraken being the latest target of its lawsuit. Binance reached a staggering settlement agreement with multiple regulatory agencies, including the Commodity Futures Trading Commission (CFTC) and the US Treasury, but has not reached a settlement with the SEC. Additionally, the New York Attorney General has expanded the already severe lawsuit against Genesis, Gemini, and Digital Currency Group, now accusing investors of being defrauded of approximately $3 billion through lending projects.
Regulatory actions outside of the courts also continue at the state and federal levels. The SEC is attempting to clarify the definition of “traders” in the 1934 Securities Exchange Act, which will likely require many cryptocurrency market makers and trading firms to determine whether they need to register with the SEC and the Financial Industry Regulatory Authority. The Consumer Financial Protection Bureau (CFPB) has proposed a rule that, if finalized, will bring certain large non-bank companies that facilitate “covered consumer payment transactions” through digital wallets, payment apps, and other payment functionalities under the CFPB’s oversight. California has finalized a broad rule to regulate entities engaged in “digital financial asset” transactions, which could potentially involve many gaming companies and other cryptocurrency firms.
Key points:
– The SEC continues its lawsuits against cryptocurrency asset trading platforms, with Kraken being the latest target. Lawsuits against Binance and Coinbase by the commission are also ongoing.
– State-level regulatory agencies, particularly in New York, are also active, with the New York Attorney General recently expanding the severity of lawsuits against Gemini, Genesis, and Digital Money Group. The trend of regulatory agencies taking action against participants in the cryptocurrency market is expected to continue in the medium term.
– In addition to enforcement, federal and state regulatory agencies continue to propose and finalize rules that have a significant impact on cryptocurrencies. Recent examples include proposed rules by the Consumer Financial Protection Bureau (CFPB) targeting large entities that offer wallets and payment functionalities, the SEC’s final rule defining which entities, including cryptocurrency trading entities, constitute “traders” under the Securities Exchange Act, and a broad new law enacted in California governing “digital financial assets” transactions.
Tags:
Arbitrum
DeFi
Pantera Capital
SOL
Uniswap
Ethereum
Platform Token
Bitcoin
Bitcoin
Source link:
https://news.marsbit.cc/20240411192219972703.html
Disclaimer: The views expressed in Bitpush News articles represent the author’s opinions and do not constitute investment advice.
Original article link:
https://www.bitpush.news/articles/6597592
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