Lido DAO Governance Token Down, Staked Ether Stable, as Withdrawal Proposal Finalized; Bitcoin Rises Ahead of Fed Rate Decision

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Hello. Here is what happens:

Price: Bitcoin and other cryptocurrencies closed a successful January. Will the rest of the Year of the Rabbit in the lunar zodiac see the momentum continue?

Insights: A Lido DAO proposal is subject to criticism, even before it is officially presented. Lido governance token is down. And after?

Prices

CoinDesk Market Index (CMI)

1,086.99

+17.1 1.6%

Bitcoin (BTC)

$23,086

+286.3 1.3%

Ethereum (ETH)

$1,585

+16.8 1.1%

S&P 500 daily close

4,076.60

+58.8 1.5%

Gold

$1,943

+19.8 1.0%

10-year Treasury yield

3.53%

0.0

BTC/ETH Price by CoinDesk Indices; gold is the COMEX spot price. Prices from around 4 p.m. ET

Bitcoin Ends January Up 40% as Crypto Jumps into Year of the Rabbit

By Sam Reynolds

Happy February.

Bitcoin is at $23,129, up 1.3% in the past 24 hours while Ether is up 1.2% at $1,586.23.

The two biggest digital assets wrapped up a monumental January, beating expectations, posting double-digit gains for Bitcoin of 40% and Ether of 32%.

January also turned out to be altcoin season with Cardano (ADA) up 56%, Dogecoin (DOGE) up 37%, Solana (SOL) up 140% and Avalanche (AVAX) up 82%. %.

While most crypto investors turn to the stock market and US central bank meeting minutes for guidance, just for a minute, we’d like, for a sense of lightheartedness, to look skyward for see what the stars could tell us.

Most East Asian countries have returned to work after celebrating the Lunar New Year. In the lunar zodiac, 2023 is the year of the rabbit, and legend says that this year should be as calm, peaceful, and tender as the animal itself.

CLSA, a major Hong Kong-based brokerage firm, wrote in a January note that all macro indicators point to this year being the year the market “jumps”.

Gentle, quick and responsible, the Rabbit is the fourth animal in the 12-year cycle of the Chinese horoscope. Along with yin water, this combination bodes well for a calmer 2023 compared to last year’s tumultuous experience, the brokerage wrote, while reminding investors to seek professional advice before to make a decision. This year, the bazi, or card of destiny, advises us to get out of our comfort zone but to remain aware of the dangers that await us. After all, a rabbit’s foot is lucky for everyone except the fluffy woodland creature.

The story continues

The Tiger years, of which 2022 was one, are marked by competition and unpredictability and we all know how it went.

The biggest winnersThe biggest losersInsights

A proposal by Lido DAO is subject to criticism, even before it is officially presented. And after?

By Sam Reynolds

As the Ethereums Shanghai fork, which will enable the withdrawal of staked ether, draws closer, Lido DAO, the entity behind the liquid staking token stETH, is preparing a proposal to enable withdrawals of stETH. Although the proposal was not put to a vote by the DAO, it found criticism in Galaxy Digital and its governance token fell 15% last week despite Ether’s strong performance.

At first glance, the Lido DAO’s proposal to allow stETH withdrawals seems routine and follows what is expected in the Shanghai hard fork. Users will send a withdrawal request to a smart contract called WithdrawalQueue, which will reserve the amount of ether required for redemption and calculate the redemption rate, then withdrawals will be processed in the order they are received.

But Galaxy recently highlighted some issues with the proposal as it stands, which could lead to a few worst-case scenarios.

Within Ethereum’s staking economy, slashing is something of a sanction against a validator accused of breaking the rules. The validator is penalized and either expelled from the Ethereum network or briefly censored. You can think of it as OFAC by democracy.

Usually, the slash only occurs when validators engage in technically poor behavior, such as proposing multiple blocks, submitting cross-votes to proposals, or going offline for an extended period of time. But as CoinDesk columnist Nic Carter pointed out in a recent article, there has been a serious grassroots effort to curb validators like Coinbase that have complied with sanctions to refuse Tornado Cash transactions. This is not good for institutional adoption.

Galaxy notes that Lido could be the target of a mass event, knocking its validators off the network. If that happens, Lido would enter bunker mode, where things are delayed for up to 36 days for Lido to recalculate the stETH redemption rate and assess the damage done to the network. Worse still, writes Galaxy, there is the possibility of a complete shutdown of withdrawals under what Lido calls the Gate Seal smart contract.

There are edge case scenarios that alter withdrawal dynamics on Lido and highlight the unique risks associated with staking through an intermediary, writes Galaxy, saying there are inherent risks of using a staking service. intermediary beyond the risks that come from Ethereum.

The success of the entire protocol, according to Galaxy, relies entirely on the price performance of stETH and the continued availability of liquidity in the stETH:ETH trading pair.

In the event that Lido validators are penalized or reduced, reducing the total amount of ETH staked in the protocol, users may receive less ETH for their stETH than they originally submitted, writes Galaxy.

Then there is also the risk of delays.

The Lido withdrawal queue is an additional queue that operates separately from the withdrawal queue and the exit queue imposed by the Etheruem protocol, writes Galaxy. Therefore, there may be additional delays that users are subject to when withdrawing their staked ETH due to procedures established through staking.

Granted, Galaxy isn’t trying to discourage anyone from using an intermediary like Lido. On-chain data shows that using an intermediary is how the vast majority of staking is done: Lido, Coinbase, Kraken and Binance control almost 50% of this market.

It’s just that there’s a new layer of risk introduced, and in this market, that’s something investors need to be more aware of.

Important events.

9:00 a.m. HKT/SGT (1:00 a.m. UTC) Eurozone Basic Harmonized Consumer Price Index (Annual/January)

12:15 HKT/SGT (04:15 UTC) US ADP Job Change (January)

6:00 p.m. HKT/SGT (10:00 a.m. UTC) US Fed Interest Rate Decision

CoinDesk TV

In case you missed it, here’s the most recent episode of “First Mover” on CoinDesk TV:

CFTC Commissioner on Crypto Regulation; Analysts expect Fed decision to trigger ‘healthy pullback’ in Bitcoin

“First Mover” covered the latest crypto markets and regulations as the Federal Open Market Committee (FOMC) meeting kicked off Tuesday ahead of an interest rate decision on Wednesday and the fight over crypto regulation s is intensified. Joining the conversation were CFTC Commissioner Kristin N. Johnson, Chamber of Digital Commerce Founder and CEO Perianne Boring, and 21.co Co-Founder and CEO Hany Rashwan.

Securities

Strike expands Lightning Network-powered remittances to the Philippines: The Philippines is one of the largest remittance markets in the world, at $35 billion, and Strike says it will use its service, powered by the Bitcoin Blockchain Lightning Network, to make international payments faster and cheaper. than those available in the traditional financial system.

Hong Kong to Require Stablecoin License Starting This Year: Algorithmic stablecoins like terraUSD will not be accepted under the planned regulatory regime, the Hong Kong Monetary Authority has said.

Celsius used new client funds to pay for withdrawals: Independent Reviewer: Shoba Pillay was appointed by a New York bankruptcy court to determine whether the cryptocurrency lender operated as a Ponzi scheme

NFT Marketplace Sudoswap Airdrops Tokens to Liquidity Providers and 0xmon Holders: SUDO holders can vote on on-chain governance proposals, and the tokens are initially non-transferable.

Fed Insight: Powell Will Trigger ‘Healthy Pullback’ in Bitcoin, Experts Say: Financial conditions have eased to such an extent that Fed Chairman may detail extent of easing is unwarranted, says an observer, warning of a pullback in risky assets.

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