There’s more to Ether

Welcome to The Daily Moon. Drone deliveries could become commonplace, but what about mid-air collisions? A blockchain project has an answer. Heathrow Airport and Oxford University are part of a 13-member consortium researching how blockchain technology can prevent collisions. Another one for the blockchain-can-solve-it pile.

The markets witnessed volatility, with Bitcoin at $23,000 and Ethereum at $1,650. Nasdaq fell in early trade. Back home, Sensex and Nifty gained on the rise in auto and bank stocks.

There’s More Beyond The Merge

Ethereum’s move to a proof-of-stake (PoS) has meant interest in the token has zoomed. From $1,050 at the beginning of July, Ethereum’s prices have moved to ~$1,700. An easy guess is that The Merge is what is getting investors excited. But the Ether’s value is not just the move but also what’s being built around it.

More moolah comingEthereum’s Layer 2 scaling solutions such as Polygon and Optimism have more takers. Polygon, which helps developers build decentralised applications on Ethereum, is expected to see new projects.

Existing business models have also seen an uptick. An Optimism project, VelodromeFi, saw a 600% rise in user funds. Amazon has an Ethereum-linked service to launch new decentralised applications. Lido Finance will also expand to the Layer 2 space through more yield-led products. American Express has said it will use the Ethereum blockchain to dispense reward points. It has also shown a willingness to let its users cash out rewards for Ethereum.

Ethereum also seems well suited to handle attacks. That means more businesses could switch to the platform. Corporates are hooked too. EY, for instance, has built an ETH product to manage carbon footprints.

Killing the killersEven crypto tokens such as Solana, perceived to be an Ethereum killer because of lower transaction fees, have declined. Hedge funds have pumped money into Ethereum, with predictions for the $2,000 level post the PoS switch. Ethereum derivatives have become popular to hedge against extreme price fluctuations.

The impact is visibleBetween July 1-31, Bitcoin rose 21% amidst multiple phases of fluctuation. Ethereum rose 62% in the same period. Simultaneously, there is a decrease in selloff pressures for Ethereum, with a decline in ETH deposits on exchanges.

Meanwhile, ETH supporters have raised hopes for flippening, a scenario where Ethereum would overtake Bitcoin.

Can You Lose Everything?

You could lose all your money. This is a line that could be part of all crypto pitch statements in the UK. The country’s Financial Conduct Authority has asked crypto companies to warn customers about their investment risks. Caps could be also introduced soon.

What’s FCA saying?The financial regulator wants to remove referral bonuses for clients and limits on how much can be invested in crypto. Exact caps will be disclosed after the new government takes over.

And the global hub plans?UK PM hopeful Rishi Sunak proposed to make the country a global crypto hub. However, after Boris Johnson’s resignation, crypto has been put on the back-burner. The UK is in talks with the US to design a consolidated crypto regulation. The launch of a government-backed CBDC is also on the agenda.

Your Crypto Insurance Is Invalid

Crypto assets kept in bank accounts are not insured. The US insurance body has clarified that it only protects customers of banks against financial failure. So even if crypto is deposited with a bank, it is not protected.

What’s the deal?With mass advertisements about insurance, crypto customers were under the impression that their assets were protected. Voyager Digital, for instance, has already been asked to stop making claims that cryptos are insured.

So, what’s covered?The US insurer covers bank deposits up to $250,000 per depositor, per insured bank. But this is only cash deposited directly into the bank account.

All Over For Doge?

Dogecoin has little correlation with Bitcoin. The meme crypto has decoupled from Bitcoin from July onwards.

Why does it matter?If Doge followed Bitcoin, it would rally when Bitcoin rallied and fall if Bitcoin slumped. Dogecoin’s lack of liquidity has made it shaky, which indicates that there is no inherent value. So anything from tweets by social media celebrities (read: Elon Musk) to Reddit recommendations can alter its price.

Value erosion Analysts are not bullish on Doge. With a 58% drop in prices since the beginning of 2022, the crypto meme asset is expected to shed its value. Guess only Elon Musk and Tesla will be its HODLers.

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Who are we? There is a lot happening in our world. Everything has layers, and each layer has to be carefully peeled so you, the reader, know how the world of money is changing every day. That’s our promise. Help you unpeel the onions, which are the public markets in the US, India, and crypto, so that you know just a little more.