Crypto Weekly: Ethereum rhymes with proof-of-stake Crypto Weekly: Ethereum rhymes with proof-of-stake Crypto Weekly: Ethereum rhymes with proof-of-stake

Crypto Weekly: Ethereum rhymes with proof-of-stake

Mads Eberhardt

Cryptocurrency Analyst

Summary:  Ether holders are largely hopeful about the future of Ethereum upon a successful test last week. If you ask El Salvador, investors are also hopeful on its Bitcoin Bond with it allegedly being oversubscribed, but the country’s doubling down on Bitcoin is not without risks. Following in the footsteps of Twitter, Instagram is adding support for non-fungible tokens (NFTs) in the near term.


The first public Ethereum test of the awaited merge was successful

Ethereum’s highly anticipated – and long-awaited transition from its present proof-of-work consensus mechanism to a proof-of-stake consensus protocol, known as the merge, is one step closer. Ethereum managed last week to orchestrate the merge on its first public testnet called Kiln. Based on the fact that the Kiln merge was largely successful except for some minor issues, it seems likely that a true merge by June is possible.

Ethereum’s transition from proof-of-work to proof-of-stake will decrease its energy usage by as much as 99.98%. Not to mention that the Ether supply will likely turn deflationary, although Ether holders are expected to receive rewards of up to 10% yearly, providing they stake their Ether, thus verifying transactions on the network. It seems Ether holders are pleased by these economics and by the fact that the merge is likely to be around the corner due to a notable increase in Ether staked last week, while the Ether balance on exchanges is the lowest since 2018. The latter often indicates a possible milder sell pressure. In case you are interested, we wrote last week a more detailed commentary on the prone economics of Ethereum following the merge.

El Salvador’s Bitcoin Bond is allegedly oversubscribed but delayed

El Salvador was last year the first country to make Bitcoin legal tender. This happened upon great worldwide attention in September 2021. Six months in, the country has multiple times doubled down on its commitment towards Bitcoin. El Salvador has since kept acquiring Bitcoins for its treasury, now counting over 1,500 Bitcoins. At a presentation held in November, the country’s president Nayib Bukele announced the construction of a new city to be called Bitcoin City to further enhance the country’s position on Bitcoin. Following the presentation, Bukele announced that El Salvador will issue $1bn in bonds with an annual coupon of 6.5% to fund the construction of the city and purchase additional Bitcoins, respectively. The bonds quickly came to be known as Bitcoin Bond.

It was earlier reported that the bond issuance could come as early as last week. However, according to the Finance Minister of El Salvador Alejandro Zelaya, the Russian invasion of Ukraine has slowed down the process. As of last week, the laws required to be passed had not been sent to the Salvadoran Congress yet, so the issuance will likely not occur within the next month. On the other hand, according to Zelaya, El Salvador has allegedly demand of up to $1.5bn worth of Bitcoin Bond. If this is true, the bonds are likely to be oversubscribed. Nevertheless, with El Salvador continuing to double down on Bitcoin, it likewise boosts its risk further, as this is largely a great experiment not guaranteed to succeed, for instance, if broad Salvadoran adoption of Bitcoin is nowhere to be seen or the Bitcoin price tumbles further.

Instagram to add non-fungible tokens, joining Twitter

According to Meta co-founder and CEO Mark Zuckerberg, the company will soon support non-fungible tokens (NFTs) on Meta-owned Instagram. Zuckerberg said last week that the support of NFTs is expected to occur in the near term. However, Zuckerberg did not clarify plenty more than that: “I’m not ready to announce exactly what that’s going to be today, but, over the next several months, the ability to bring some of your NFTs in, and hopefully over time be able to mint things within that environment.” Nonetheless, it seems Instagram joins Twitter shortly in supporting NFTs in one way or another. Twitter launched in January the option to verify an NFT and use it as a profile picture. This suggests that web2 companies slowly embrace web3 projects.

Bitcoin/USD - Source: Saxo Group
Ethereum/USD - Source: Saxo Group
Disclaimer

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-sg/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.