Standard Chartered Bank predicts Ether (ETH) could rise nearly 70% from current levels and hit $4,000 by May as applications for spot-based ETFs will likely win regulatory approval in the U.S. Alchemy's protocol specialist Jason Windawi weighs in on the state of Web3 and expectations for 2024.
How would you describe Web three to someone like my mom? And the caveat is my mom has no idea what like she cannot understand what I do. Uh Well, I think we all have that mom. Um We, how do we describe it, the ability to transact and do new things economically that you couldn't before using new technology. That was alchemy protocol specialist, Jason, we dai explaining Web three to my mom. I've needed this video for my entire career. So I'll be sending that to her later on today. And if you want to watch the interview, that's going to be on this show in just a few minutes. So stick around. Welcome to first mover. I am Jen Sani. And on this show, we bring you the top headlines and interviews with industry heavy hitters. All right, let's take a look at what's going on in the news this morning. Bitcoin is trading slightly lower around $42,700 on Wednesday. As one analyst thinks Ether could have a banner year. A new report from Standard Chartered Bank predicts the second largest Cryptocurrency by market value could rise nearly 70% from current levels and hit $4000 by May as applications for spot based ETF S will likely win regulatory approval in the United States. The research goes on to state that this is because the market currently underestimates the odds of an approval. But there's no fundamental reason for the SEC to treat it differently than Bitcoin. We were on Blockchain. SUI became a top 10 DFI Blockchain in less than a year on Tuesday. According to data from DFI Lama, the total value locked has jumped by more than 1000% in four months. Catapulting the Blockchain above more established incumbents like Bitcoin Cardano and Coinbase layer two face and the Jack Dorsey led Blockchain and payments company block confirmed to Coin Desk. It has started laying off employees this week as part of their previously disclosed plan to cut head count by as much as 10% by the end of 2024. The exact size of this week's layoffs weren't clear but block did say its overall targets hadn't changed and would be reached gradually through a combination of performance adjustments and other reorganizing measures. Block is the parent company to Square Cash App and Title Web three saw a lot of highs and lows last year. Joining us now to discuss is Alchemy protocol specialist, Jason Winda Jason, welcome to the show. Thank you. It's so good to be here, Jen. Great to have you here a lot going on in the headlines. This morning, quick reaction to the news, anything standing out to you this morning. Um, I, you know, I think it's super interesting that, um, what we call Trad I, which is, you know, one of those names we come up with names for everything in Web three, right? But traditional finance is starting to get so involved in Web three that now they're doing analyst reports as though these are traditional companies which, um, you know, those reports are sometimes on sometimes not. But it's really interesting to have that perspective coming into a space that has historically been focused elsewhere. Jason, I used to host a show on coin desk called the hash. And every time we had an analyst report, we kind of did a collective eye roll like WW tell us something. We, we didn't know, but I think your perspective is um is a good one. Trad F is really starting to pay attention and starting to make sense of what's happening in this industry to a broader audience. So regardless of that collective eye roll, I think that's probably a good thing. Agreed, agreed. Now you co-authored uh web three report over at alchemy, talk to us about some of the trends that you're watching heading into 2024. Sure. Yeah. So it was um an interesting year in 2023. Looking back at 2023 we saw a lot of the groundwork being laid for the things we expect to happen. In 2024. So there's an old truism that bear markets are for building, which we're probably all tired of hearing. But in truth, it actually happened. So that's evident in our data that developer activity continued growing, smart contract deployments, continue growing. Um wallets in particular were a growth space. And so we expect these investments in building and in creating new capabilities to start bearing fruit in 2024. In fact, they already are. But a few areas that we're looking at are really the coming to fruition of Ethereum roll up centric road map. So with the proliferation of new L Twos and perhaps inspired by this, lots of new L ones like sui that you were talking about earlier. Um We expect to see a lot more of that and a lot more, you know, if last year was the year for building a lot of these, we're seeing a lot of interesting things happen now, like competition for hosting these by L Twos or competition for hosting them across L ones or new developer tool kits, new kinds of applications, really exciting new things developing like forecaster on base. Um These are all made possible by the investments and building that happened last year. So that's one of the things we're looking at player two is really uh stole the headlines last year and this year it seems like we're talking about Real World assets a lot. I think the two kind of work hand in hand and also with the Ethereum ecosystem, what do you think? What do you think is going to drive headlines? What do you think is driving the narrative this year? Yeah. So I think you hit the nail on the head with um real World assets. I really think about it as sort of this melding of traditional finance and web three. So you have things like the you can think about as the tokenization of securities. So Hondo offering tokenized, you know, Black Rock Treasury, ETX, for example, that's uh securities in the real world that are being tokenized and brought on chain, which is incredibly exciting and a big growth area. Another area going in the opposite direction is the securitization of tokens, um which is a very sort of broadway saying, taking tokens and finding a way to represent them on chains so that traditional finance can invest through things like ETF S. So this sort of merging is happening a lot. And we're also seeing a lot of, we talked to a lot of institutions, obviously and behind the scenes, there's an enormous amount of building going on around things like what Larry Fink talked about most recently in terms of being able to put all of your securities onto a ledger for incredible efficiency and cost savings on just a general improvement in in the technology. So, yeah, I fully expect to see a lot more of that this year. What do you make of Larry Fink's uh comments about Bitcoin and the crypto space changing. I know that this change happened over some time. It was an overnight and of course Blackrock has the spot, Bitcoin ETF. Now they are vying for a spot Ether ETF later on this year. Talk to me about like how you've been watching that trad five perspective shift and change and what part of the industry might they be interested in next? Um Yeah, so it's a, a topic near and dear to my heart because I come from Trad fly before. Um And so I've been watching this for a very long time and it has been fascinating to watch the the progression from, oh, this is all Bitcoin and Bitcoin is terrible and bad for the environment too. Well, maybe we might be interested in Bitcoin but only because our clients are interested in right to now suddenly a broadening of that to look at Bitcoin Ethereum for ETF S for their clients, but also looking at it on the infrastructure and technology side where it may not involve the traditional chains that we're we're used to talking about and dealing with. But there are still major investments happening around, around really bringing Trad five processes themselves, regardless of the securities and tokens and what gets offered to the public. But really bringing those incredibly huge and massive and kind of outdated processes on chain. Um It's likely to see some significant advances in the next year or two, I would imagine. Ok, we have to talk about NFTS now. They were all the rage for a very long time. Your report notes that trading volume fell 76% year over year while token prices rebounded, unpack that for us are NFTS dead. No, they're not dead. I, I think NFTS are one of the most interesting spaces. So it's, and that's for a couple of reasons. So one traditional Nfts, yes, the Nfts we think about as being on Ethereum were, were in decline last year. I don't think anybody can, you know, would contest that. But by the same token, several other things have happened that are innovations that have, I wouldn't say taken their place but have started showing us some different possibilities. So one of them was inscriptions starting with Bitcoin ordinal and then rotating across a number of chains last year, you know, as infrastructure providers, we certainly saw the impact of that on the underlying chains trying to process the traffic surges. Um And that is likely to continue. So Lana has become a, a um a growing hub for NFTS in a way that it wasn't for, for a lot of the recent history and it's, it'll be exciting to watch how that develops. Um I would also say, as I talked about earlier in terms of the melding of the traditional sort of online businesses and web three in finance. We're also seeing that on an LTs. So we're seeing a lot of deals um and partnerships being struck between major Corporates. Um a lot of whom are hosting these on the polygon chain around creating loyalty programs and other, you know, other sorts of applications that actually use the uniqueness of an NFT to tie it to the uniqueness of something in the real world. So they are far from dead. It's interesting you bring that up. I remember when Starbucks launched their program, I was living in Canada at the time, so I couldn't participate in it. Curious if you, if you've taken a deep dive into any of these programs are folks who are not operating in the web three space actually participating or understanding what they're participating in. Yeah, that is a great question. And I, I wish I had like the survey or ethnographic data on that from the user perspective, but I don't, but I would imagine part of, you know, one of the things we haven't had a chance to talk about, maybe we will is um account abstraction, which is this new sort of approach to transactions online that enables you to transact with sort of the ease of web two. But with all the autonomy and self ownership and data ownership that you get in Web three. And so um I'd have to think to the extent that people aren't aware of it, the project sponsors might view that as a good thing because their focus is on the loyalty program or on the customer experience or whatever they're focused on as a business that's different from making sure everyone knows exactly what technology they're dealing with and that they're dealing with in NFT. And when you say account abstraction, I just want to unpack our audience. You're talking about abstracting away the complexity. Maybe not even calling it an NFT. Maybe calling it something that's more recognizable to an everyday person, like a collectible or a stamp or something of that nature. Yeah, absolutely. It's a, it's a very sort of category of things that as you, if you put it very well, it's, it's oriented to abstracting away the experience of working with a wallet. So those of us who've worked with traditional web three wallets are accustomed to the challenges of storing your seed phrase and trying to recover an account that you've lost and gas feeds and all sorts of things that really kind of their friction that becomes very steep. It's a very steep thing for a brand new user to overcome and come back and use web three over and over again. And so account abstraction is really a series of technologies that are designed to address all of that and it's very easy to sort of fall into too much technical stuff. So I'll avoid it there. But it, it's a fascinating space and it started, um it's various chains or at various levels of it. But it's, it's something that's being very actively pursued and something we're certainly building for as well. Jason just before we wrap. Uh, what do you hope if you could pinpoint one thing, one piece of data from this report? What do you hope folks take away about Web three as we head into the rest of 2024? Yeah. You know, I, I working on this report made me such a booster and that's not normally my way. So forgive me if I'm a little overly enthusiastic, but I think that um it's an incredibly exciting time. We had so much groundwork being laid in 2023. You know, it was such a bear market. We had FTX, we had B flowing, we had regulatory headwinds, we had all of these problems and yet builders still showed up and all of that building happened and 2024 is gonna be a great year to start um building on that foundation. We're very excited for it. Web Three is here to stay and I have to mention the pudgy penguins are noted in the report and I love pudgy penguins. I don't know if I'm allowed to say that on air as like maybe I should reveal. They've also sent me pudgy penguins. So there's my disclosure, but I just love them and love everything that they're doing. I think that is definitely, you know what? And I think I'm so glad you brought them up, Jen because I think they're a great example of this sort of this hybridization of web three in the real world, right? So Pudgy Penguins did that amazing toy launch in Walmart. Pudgy Penguins is maybe I, I happen to see on Instagram, they have an Instagram collection, which is really unusual, right? For a, an NFT project. So they're, they're building something that's very exciting and it's much more than just A and the pfps along are great, but they're building something that's much more robust and interesting and community led um and richer them all and it's, it's an exciting thing to see. Mhm Definitely a project to watch Jason. Thanks so much for joining the show today. Thanks so much, Jane, great chatting with you. That was alchemy protocol specialist, Jason Win Dai. It's now time to talk about crypto crime. Let's take a look at the chart of the day. The chart of the day is presented by crypto.com. The leading crypto platform trusted by over 80 million users worldwide. Immune is out with a new report that unpacks crypto losses in January 2024. The bug bounty and security services platform reviewed instances where hackers exploded web three projects and found that there was a total loss of 100 and $26 million in the first month of the year. This represents a six time increase from January 2023 and an almost three time increase from December of last year. So what projects saw major losses. Orbit Bridge lost over $81 million at the start of the year followed by Gy which lost 15 million and coins paid with $7.5 million lost. When compared with scams came out on top as the predominant cause of loss with over 100 and $22 million lost due to hacks and about $4 million lost due to fraud. The Ethereum Blockchain was the most targeted chain according to the data presented by immun five. Speaking of Ethereum, the blockchains biggest upgrade since early 2023 went live on the second of three test networks bringing the much anticipated DK project and its proto Denk sharding feature. A step closer to reality. I spoke with coin desk's Ethereum protocol reporter Margot Neikirk about the developments yesterday ahead of the upgrade, it kicked off the conversation about why Ethereum upgrades are such a big deal. Let's take a look. Ethereum goes through a lot of these upgrades just because there's always been this road map and there's vision to make the Blockchain more scalable, more user friendly. And as the network gets bigger and bigger it matures there is this need for to make these improvements so that as you know, as activity grows and as the user base grows, it could be more easily used. And so that's why we're seeing at this point. Um, you know, upgrades happening on Ethereum basically almost once a year the biggest one, you know, I think was the merge, we can all recollect that was sort of happening um or was in the making for a while. Um Since then, we've had, you know, Chappelle, we talked about this last year on here where, where the uh ether withdrawals or staked ether withdrawals um were enabled. And so now this next one, it's called Den Coon. It's supposed to mostly help roll ups the layer two blockchains that sit on top of Ethereum over the last few years, there's been a growing ecosystem with the with the layer twos. So it's important to address those issues too and I unpack this for us a little bit more. What functionality does this unlock for users? Sure. So um high level uh basically, if you're transacting on a roll up or layer two, the transaction fees are supposed to lower with this. Mostly thanks to a in the code, the more official title is called E IP 4844. But everyone knows it sort of as proto D Shorting, which is this weird terminology that the devs have come up with. But basically what it's supposed to do is supposed to make extra available room for blobs of data of what they call it. But that sort of enables for transactions to happen on um roll ups or those fees to to, to become cheaper. And also, you know, like I would mention that as more and more people use the Ethereum Blockchain, the availability like the data available to store and track what like and download those transactions. Like the info of those transactions has become more and more expensive. And so this upgrade is supposed to also help make that cheaper when you want to sort of download that data. Um Yeah, so that's sort of what, what the main, there are some other minor protocol changes happening in these packages, like usually they'll ship something that's a big um technical change with a bunch of other little ones, but that gets very into the weeds. That's sort of like what we like to call the star of the show. I was going to ask you to explain proto dank shouting to me like I'm five and so I'm going to do it anyway, just humor me. I'm five years old, just break it real down for me. Sure. So the doves actually have this really great analogy that I think of proto dank shorting. It is the first iteration of one of these technical features that the developers want to tackle cold charting, which is basically splitting up the Blockchain into mini blocks to or blockchains to sort of be able to process more data or process more transactions. Now, what does that mean? Like, how can we sort of think of this in a more basic level, let's say like you're driving a car on a highway, right? And you add more lanes to the highway to be able to process more cars. And in theory, that's supposed to get more cars through, get you through faster because it's able to handle a bigger load of cars. That's sort of the same thing that's happening here on the Blockchain. We're adding more mini shards or we, that's the eventual goal is to add more shards to make split off of many blockchains to be able to transact or handle more transactions and therefore make those transactions hopefully cheaper. Because right now if there's more congestion on the Blockchain, like as if there's more congestion on the highway tolls might be higher. So, you know, gas fees might be higher. It all sort of is like a great comparison. Um But that's sort of, if you're going to picture it, that's sort of the way to go about or to think about this. Ok. And the test net is like a dress rehearsal for the devs. What happens if something goes wrong? Well, that's why they have these test nets to make sure that things can go wrong because they can address those bugs in their, in their tests and therefore patch it out before it gets onto the main net Blockchain where there's a lot more at stake, right? There's like a ton of apps, a ton of crypto locked into the smart contracts and we've had already one test. The first one was on girly that happened about 10 days ago and there was some slight issue in it. There was a bug that basically the, the terminology they use meant that they weren't able to finalize transactions, which sounds a lot scarier than it is. But basically, you know, when you, when you transact on the Blockchain, it happens and then it sort of gets written in ink and it becomes immutable on the, in this case, it wasn't able to come immutable until like a few hours later. So they were figuring out what happened with that bug. So they go through these dress rehearsals like three times in order to ensure that, you know, once this hits Main Net, it's not going to create such big issues. Um But yeah, that now is the time to make mistakes basically, like that's why they have these dress rehearsals. And if there's a mistake that could push out the main Net launch, yes, if there's a mistake, there could put, put that the main Net launch, even there's like there's a test next week that could push back that. But right now, they haven't really scheduled the date yet for the main Net. It's projected to happen sometime of end of February, maybe early March. And that really just depends on how these tests run and how comfortable the developers feel shipping it. If you look at Ethereum history, they like to lean on the safe side. They postponed the merge for years and years because they want to make sure it ran smoothly. So my guess is this is just a judgment call is that, you know, they want to try and push it um for us like a safe a time as possible. Ok. And Margot, it's 2024. I can't believe it's already almost February. But what are the other big expectations from Ethereum as we head into 2024? Yeah. So this is going to be definitely the biggest change happening right now in 2024 they are already planning their next big upgrade. But otherwise, I think a lot of the conversation is still happening around the layer twos on Ethereum, um especially, you know, this upgrade is catered towards those layer two roll ups. Um So we're gonna have to sort of see what the aftermath of all of this is. Um Once this goes live, Margo, thanks so much for joining the show and thanks for explaining that to us using just normal words. I think it's, it's starting to make a lot of sense. Thank you to Margo for joining us and that's a wrap for first mover today. Thank you so much for watching and thank you to our guest today, Jason Wini. As a note on the show, we do sometimes edit interviews for clarity and length. We are on a journey to make this show the best so that it could be. So if you have feedback, send me ad M on Twitter, my handle is on the screen now and we will try to implement your feedback and make this show relevant informative and entertaining for you. Get all of your crypto news updates on crypto.com. I'm Jen San Asi. This is first mover. We'll see you tomorrow.