🍎 Apple on Crypto

$30B ETH Re-staking Risks | LDO Proposes Buyback

Marco Manoppo & Karon Pangestu
May 24, 2023

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Good Morning,

It’s an eventful hump day.

Reuters reported that Binance allegedly commingled customers’ funds, FTX CEO hints at a possible 2.0 exchange reboot, and Ledger admits that Government subpoena is a real concern. Boy oh boy.

Shout out to Fred Wilson from Union Square Ventures for beating the drums:

Simply amazing.

In Today's Email:

What Matters: App Store crypto stance 📱
Case Study: ETH re-staking risks ⚠️
Governance & Features: LDO proposes buyback 📈

Narratives: LSDfi, DeFi primitive built on top of staked ETH will soar — market wise, wait for the debt ceiling talks outcome.

WHAT MATTERS

Apple Softens Crypto Policy… Not Really

A concept image

State of play: Positive signs are coming from Apple regarding its App Store crypto policy. Axie Infinity and STEPN were able to launch their apps on the App Store.

Apple is known for trying to implement its 30% take rate even for crypto applications on the App Store — which is not a suitable fit because of blockchain technology’s permissionless nature.
Axie was able to launch on the App Store but without any links or mention of Axie’s NFT marketplace.
Stepn was able to launch on the App Store while allowing for in-app purchases of NFTs via Apple Pay.

That said, ZenGo’s founder stated that Stepn is still paying the 30% take rate to Apple. It’s simply using the same method that Reddit used for its Reddit coins.

Stepn is basically using the exactly same technique Reddit has been using for sometimes for Reddit coins
— Ouriel @ZenGo (@OurielOhayon)
2:05 PM • May 22, 2023

Why it matters: If Apple is warming up towards decentralized applications, it might just be the catalyst that the crypto space needs to rejuvenate founders’ spirit.

For builders: If you’re building a dApp, you automatically have a smaller reach compared to web2 apps because it’s not easy to get listed on the App Store (or Google Play Store), while enabling real-time crypto transactions.

Think strategically about how you can leverage mobile platforms, even with limited capacities like Axie.

For investors: Projects building at the intersection of hardware and crypto is an interesting vertical that hasn’t been explored as much.

It’s difficult, but crypto will eventually need its own hardware players, otherwise, the consumer-facing side of the industry would always be at the whims of Apple and Google.

CASE STUDY

Vitalik Warns ETH Re-staking Risks

Vitalik Buterin

State of play: Ethereum co-founder Vitalik Buterin warns of ETH re-staking risks in his latest blog post. He specifically cautioned against expanding Ethereum's consensus beyond its core functions.

ETH re-staking increases mandates for the ETH community and validators in the long run — which in turn means more risks, complexities, and responsibilities.
Dual use of staked ETH for lower risks use cases is fine, but applications shouldn’t attempt to leverage Ethereum’s social consensus for the exclusive benefit of the applications.
The project building ETH re-staking infrastructure that’s at the center of Vitalik’s blog is EigenLayer.

Our take: Both Vitalik and EigenLayer’s founder agree that re-staking shouldn’t be utilized to build complex financial primitives.

However, the crypto space greed is insatiable. It’s extremely likely that somebody will build a yield rehypothecation protocol akin to Abracadabra’s UST-MIM degenbox.

Take a peek at our new referral reward at the bottom of this issue. Share this newsletter and receive our list of 100 smart crypto investors' wallet addresses 👇

INSIGHTS

Litecoin Halving

@thiccythot_

Similar to Bitcoin, Litecoin has a halving mechanism that happens every 4 years. It will reduce the blockchain’s block rewards by 50%.

We’re approximately two months away from the next Litecoin halving.
Historically, it has been good for the LTC price.
In the past, LTC prices peaked around 50 days before halvening.

Full thread by @thiccythot_

FEATURES & GOVERNANCE UPDATE

Lido Proposes Staking and Buyback Program

Lido.fi

Lido DAO proposed a staking mechanism for its native token, $LDO. The proposal addressed the direct utility of $LDO concerns and the Lido DAO revenue-sharing mechanism.

The signaling vote on Snapshot is expected to be held on May 25th.
Lido DAO currently holds ~$280 million in its treasury.
The DAO annual operating costs are ~$16 million, securing an estimated runway of 17.5 years.
Stakers would earn between 20-50% of the Lido DAOs revenue.
Stakers will receive tokens weekly, which will be vested for 6 months before distribution.

Why it matters: If passed, the new tokenomics would accrue more value toward the LDO token, while also bringing regulatory attention to it.

This is because buyback and revenue-sharing mechanisms will make LDO tokens much closer to security.

Other notable feature updates:

Aevo launches perpetual futures.
Curve launches the UI for crvUSD.
X2Y2 launches X2Y2 Fi and the v3 upgrade.
Reserve Protocol launches hyUSD.
Origin protocol launches Origin Ether (OETH).
Ripple introduces its CBDC platform.
Lightning Labs introduces an upgrade on Taproot Assets Protocol.
Kava 13 goes live.
MetaMask supports Lido withdrawals.

QUICK BITES

Binance fights allegation of commingling customer funds.
FTX CEO hints at 2.0 exchange reboot.
Apple softens its crypto policy.
Vitalik warns of ETH re-staking risks
Ledger paused the rollout of its recovery service.
Coinbase hits back at SEC in an ongoing lawsuit.
HK becomes the testing ground for China’s crypto regulations.
Solana integrates ChatGPT plugin.
BlockFi withdraws reorganization plan statements.
Malaysia’s SEC orders Huobi to Halt Operations

MEME & NOTEWORTHY READS

@ramahluwalia’s thread on the DCG-Genesis-Grayscale-Gemini saga.
@anninwt’s read on Ordinals, BTC-20, and the future of Bitcoin.
a16z crypto’s read on business strategy, design, and decision-making in web3.

The stocks in your portfolio waiting the government to announce a default
— Not Jerome Powell (@alifarhat79)
8:39 PM • May 23, 2023

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.