What Ethereum's Dencun Upgrade Means For You

GM, Anon! Memecoins took a wild ride, followed by a flash crash that wiped out a ton of leverage. Now, we're witnessing a swift recovery back to ATHs. BTC isn't the sole focus anymore; ETH is also displaying remarkable strength as it continues to climb. Could both coins reach significant new ATHs before the halving? We believe so! 

Today, let's delve into the world of ETH. We’ll be covering:

• Key ETH metrics

• The Dencun upgrade and Protodank Sharding

• How to farm Ethena (for cheaper)

Key ETH Metrics

Liquidity Is King

Among all the ecosystems, Ethereum stands out as the primary hub for liquidity. Why is this distinction crucial? Liquidity serves as the lifeblood for ecosystems and their protocols. Major players in the crypto sphere anchor their liquidity on Ethereum's mainnet, prioritizing security and reliability over transaction costs, often paying hefty gas fees without hesitation. 

These institutional players operate differently from retail traders, who tend to prioritize transaction costs. As financial institutions increasingly engage in staking and other DeFi activities, they are likely to continue utilizing Ethereum's mainnet for liquidity. 

Conversely, retail traders may gravitate towards Layer 2 solutions like Arbitrum and Optimism, as well as the Solana ecosystem, where transaction costs are lower, albeit with some compromises in security and reliability.

TVL on Ethereum currently sits at roughly $55B, well ahead of most chains. Source: DefiLlama.

Ethereum is Deflationary

In addition to providing significant liquidity and security, Ethereum has transitioned into a deflationary asset. Many users may not fully grasp the implications this will have on Ethereum's price. 

As Ethereum establishes itself as the benchmark for yields within the ecosystem, often considered the risk-free rate, major players are increasingly locking up their ETH to earn yields ranging from 2% to 4% on average. Moreover, with Ethereum now being burned at a rate that reduces its supply, ETH is poised to face a supply shock, leading to substantial price appreciation in the future.

The burn, initiated with the EIP-1559 upgrade, has surpassed 1.5M ETH, equating to over $5.6B at current prices.  A comparison below illustrates Ethereum's deflationary nature relative to Bitcoin.

Builders and Ethereum

Builders overwhelmingly prioritize the Ethereum ecosystem, a pivotal metric given their role in creating the products integral to our daily crypto interactions. Ethereum has been a hub of innovation, hosting developments like NFTs and DeFi. The upcoming major revolution in DeFi, Liquid Staking and Liquid Restaking, is poised to further solidify Ethereum's position as a leader in blockchain innovation. 

Ethereum’s Fees & Revenues

Overwhelmingly, Ethereum stands out as the primary generator of fees within the crypto realm, thanks to the protocols built within its ecosystem. This not only signifies that a vast number of users are actively engaging with these products but also serves as a testament to Ethereum's sustainability in the long run. The consistent ability of Ethereum to generate significant revenue over extended periods is a strong indicator that its ecosystem is set to continue flourishing. 

ETH ETF On The Horizon

The SEC has once again decided to delay its verdict on the approval of Ethereum ETF proposed by BlackRock and Fidelity. In response to the delay, the SEC has initiated a period for public commentary, inviting stakeholders to share their perspectives on the matter.

Market analysts and ETF experts have closely monitored the SEC's actions, with many believing that the commission will likely make a definitive ruling on the ETFs as the final May deadline approaches. Bloomberg ETF analyst James Seyffart has identified May 23 as a critical date, particularly concerning VanEck's spot Ethereum ETF application, which could set the tone for the broader Ethereum ETF landscape.

Ethereum Dencun: Underneath The Hood

Post-Merge, Ethereum is expected to go through multiple stages as it approaches completion.

Cancun-Deneb, or "Dencun," is the pivotal update of the “Surge” phase. It is expected to go down on March 13.

But wait..why should I care about Dencun?

One of the biggest weaknesses of Ethereum is its gas fees.

During periods of high traffic and demand, Ethereum gas fees spike so much that the network becomes almost unusable. With layer-2 solutions, it will be possible to do transactions with near-zero transaction fees at all times!

This is why the Ethereum Dencun upgrade is so important.

At the heart of Dencun lies the groundbreaking introduction of proto-danksharding via Ethereum Improvement Proposal (EIP) 4844, designed to dramatically enhance network scalability and reduce operational costs, marking a pivotal evolution in Ethereum's infrastructure.

What is Proto-Danksharding?

Sharding is a technique designed to enhance the efficiency and speed of a network by distributing its workload across multiple groups or "shards". Each shard is responsible for handling a portion of the network's transactions, allowing them to be processed in parallel. 

Sharding is particularly important for Ethereum's goal of scaling its network without compromising decentralization or security.

Proto-Danksharding is a step towards achieving full sharding on Ethereum. It introduces a foundational structure and set of rules needed for sharding but doesn't implement sharding itself. It also makes it simpler and cheaper for layer 2 solutions, which build on top of Ethereum to increase scalability. 

Oh Cool! What else will Dencun do?

Dencun will also introduce these upgrades:

• EIP-4788: Bridges the communication gap between Ethereum's execution and consensus layers, enhancing overall network interoperability and efficiency.

• EIP-6780: Revises the use of the ‘SELFDESTRUCT’ function in smart contracts to improve security and prevent potential vulnerabilities associated with this feature. The SELFDESTRUCT command lets a smart contract on the Ethereum blockchain delete itself, clearing its data and sending any Ether it has to a specified address. While it's a way to end a contract and free up space, it can also lead to security issues by creating unpredictable behavior in the blockchain.

• EIP-5656: Introduces a new opcode for more efficient memory copying within smart contracts, improving the network's efficiency and cost-effectiveness.

• EIP-7044: Addresses aspects of voluntary exits in the staking process, aiming to provide a smoother and more flexible experience for stakers on the Ethereum network.

• EIP-7045: Focuses on attestation inclusion, further enhancing the staking experience by facilitating a more efficient and user-friendly participation process.

Ethena Airdrop Guide

Ethena's integration with Injective addresses a critical issue in the DeFi space: the high transaction costs associated with Ethereum. By partnering with Injective, Ethena offers an alternative platform where users can engage with its synthetic dollar, USDe, while benefiting from Injective's near-zero transaction fees.

This collaboration not only expands USDe's accessibility outside of the Ethereum ecosystem but also presents a cost-effective solution for users affected by Ethereum's high costs. The ability for Ethereum wallets to connect with Injective further streamlines this process, making it easier for users to transition and take advantage of the lower fees on Injective. This move is significant as it provides a practical solution to the high expense barrier in Ethereum, offering a more accessible and affordable DeFi experience. ⏬ 

But, what is Ethena?

Ethena, utilizing Ethereum's technology, has rolled out $USDe, a pioneering synthetic dollar to revolutionize the traditional banking system with a decentralized, scalable, and censorship-resistant monetary solution. 

Ethena, a startup headquartered in Portugal, has successfully secured $6 million in seed funding to advance its innovative projects, which include an online savings bond and a novel stablecoin built on the Ethereum network, backed by derivatives. 

The funding round was spearheaded by Dragonfly, a venture capital firm with a focus on cryptocurrency investments. The proceeds from the round will be directed towards the upcoming launch of Ethena's stablecoin and bond offering, slated for the third quarter. 

The investment round saw participation from a notable array of investors, including Arthur Hayes, the founder of BitMEX, through his family office, Maelstrom, as well as a selection of prominent crypto derivatives trading platforms such as Deribit, Bybit, OKX, Gemini, and Huobi, among others.

Remarkably, since its inauguration on February 19, 2024, $USDe has rapidly attracted significant attention, with its circulating supply soaring past $565M and its community expanding with a sizeable participation.

This surge is primarily driven by Ethena's strategic Shard Campaign and the enticing high yields that $USDe offers, cementing its position in the decentralized finance (DeFi) landscape.

Moreover, Ethena is set to introduce the Internet Bond, a groundbreaking dollar-denominated savings tool, leveraging staked Ethereum to deliver an uncensorable yield, further enhancing its DeFi ecosystem. 

This blend of innovative features and robust community engagement underscores Ethena's impactful entry into the crypto space. Don’t miss out on this opportunity! Engage with the following now! 👇🎬

To participate in the Ethena Airdrop, simply follow these instructions:

Join Ethena: Head over to the Ethena Join Page to get started.

1. Connect Your Wallet: Sync your digital wallet with the platform. We recommend Rabby Wallet as it comes highly recommended for its compatibility.

2. Accumulate Shards: Increase your shard balance through various activities:

   • Lock LP Tokens: Earn 20x shards each day by locking liquidity provider tokens.

   • Pendle Token Holdings: Daily, secure 10x shards by holding USDe YT or LP tokens on Pendle.

   • USDe Lock-In: Get 10x shards every day by locking your USDe.

   • Buy and Hold USDe: Maintain USDe in your holdings for a daily reward of 5x shards.

   • Stake USDe: By staking and keeping your USDe, earn 1x shard each day.

   • Referral Rewards: Enjoy a 10% bonus in shards for every referral

Following these steps will guide you through maximizing your rewards within the Ethena ecosystem. Happy farming!

Farm safely, stay degen!