Ethereum continues to post strong gains, breaking through the psychologically important $200 level, while at the same time Bitcoin trading has been treading water, albeit just above the $10k level. In the options market, trading remains concentrated on the Dec19 maturity with strikes between $520 and $680.
Not long ago, the team behind the Compound protocol announced a community vote to select the next Compound asset. The results are in (USDT and MKR coming soon on Compound) and the implications for both the DeFi market as a whole, together with the broader Ethereum network are gravely understated. To wit, since July, the number of Ethereum-based Tether transactions has increased from around 18,000 per day to 187,912 as of September 9, according to data from Coin Metrics. These transactions now account for 25% of all Ethereum activity. At the same time, USDT Omni layer has around 40,000 daily transactions.
The unintended consequence, of course, is network clog up and the amount of Gas used per day has risen to 50 billion Gas ($183,000). This is up 152% since its lows in July and is on track to surpass Bitcoin's daily transaction fees, which currently sit around $186,000. In response, Ethereum miners are considering raising gas limits, to allow for more transactions per block. This is roughly equivalent to increasing the block size for Bitcoin blocks.
The raft of upgrades that the blockchain is due to undergo as it transitions away from PoW to PoS has prompted Bitcoin maximalists to question the sustainability of the recent surge in demand for Ethereum. However, these misgivings have been dismissed by some as “First World Problems,” and one should keep in mind the implications that USDT has had on the price of BTC over the years. Could it be Ethereum’s time to shine?
In other news, Cboe BZX Exchange withdrew its VanEck/SolidX bitcoin exchange-traded fund (ETF) proposal. According to a filing dated Sept. 17, the proposed rule change to publicly list shares of the VanEck SolidX Bitcoin Trust was withdrawn on Sept. 13. A decision on the proposal had already been delayed a number of times, and the U.S. Securities and Exchange Commission (SEC) faced a final deadline of Oct. 18 to determine whether to approve or reject what could have been one of the first bitcoin ETFs in the country.
Elsewhere, Wells Fargo is planning to launch a pilot of a distributed ledger technology (DLT)-based internal settlement service in 2020. The bank described a DLT-based platform designed to perform internal book transfers of international payments within its global network using digitized cash. The company claimed that it has already successfully tested the concept of money transfers between the United States and Canada.
Thank you for reading,
The BeQuant’s Analytics team