crypto strategy

How the Ethereum Merger Boosted Ecosystem Adoption, According to Polygon Co-Founder

Hello, welcome to Distributed Ledger, our weekly crypto newsletter that hits your inbox every Thursday. I’m Frances Yue, crypto reporter at MarketWatch. I’m going to introduce you to the newest and greatest in the world of digital assets this week.

Find me on Twitter at @FrancesYue_ to send feedback, or tell us what you think we should cover. You can also reach me via email to share your personal stories with crypto.

Crypto at a Glance

BitcoinBTC USD,
+0.12%
was down around 5.6% over the past seven days and was trading at around $19,159 on Thursday, according to data from CoinDesk. Ether ETHUSD,
-0.00%
fell 18% over the seven-day period to around $1,306. Dogecoin DOGEUSD Meme Token,
+1.15%
tanked 2.8% while another dog-themed token, Shiba Inu SHIBUSD,
0.18,
traded 8% less than seven days ago.

Cryptographic metrics
The biggest winners

Price

%return in 7 days

XRP

$0.46

30.7

Chiliz

$0.25

27.7%

Algorand

$0.36

20.9%

Stellar

$0.12

14.4%

ApeCoin

$5.81

14.2%

Source: CoinGecko as of September 22

The biggest declines

Price

%return in 7 days

Ravencoin

$0.039

-44.3%

Classic Ethereum

$28.35

-28.5%

rocket pool

$24.01

-22.7%

cETH

$25.65

-22.6%

Ethereum

$1,297

-21.6%

Source: CoinGecko as of September 22

Fusion benefits from the second layer

Ethereum’s highly anticipated Merge upgrade, which was completed last week, has helped layer two blockchains built on top of Ethereum, providing solutions for scaling, a reduced carbon footprint, and a push institutional adoption, according to Mihailo Bjelic, co-founder of Polygon.

Polygon aims to address Ethereum’s limitations, such as high transaction costs and low transaction speed.

The merger moved Ethereum’s consensus mechanism from proof-of-work to proof-of-stake. Previously, under proof of work, the blockchain was secured by miners, which required a lot of computing power. Now, under proof of stake, the network is secured by stakers or Ether holders who lock their tokens.

Such a transition is expected to reduce Ethereum’s carbon footprint by more than 99.9%, according to the Ethereum Foundation.

It also reduced Polygon’s carbon footprint by 95%, Bjelic told MarketWatch in an interview. Although Polygon has always been operated under the proof-of-stake mechanism, “Ethereum is our foundational layer and you also have to consider those checkpoint costs and the carbon footprint of all of this,” Bjelic told Distributed Ledger in an interview.

Lower energy consumption has helped facilitate more institutional adoption of Polygon, as some companies have environmental, social and corporate governance, or ESG, mandates, Bjelic noted. In recent months, Polygon has announced partnerships with Coca Cola, Starbucks SBUX,
-4.40%
and Meta META,
+0.49%,
among other things, with more companies showing increased interest ahead of the merger, according to Bjelic.

Prohibition of algorithmic stablecoins?

The US House of Representatives has drafted legislation that could ban coins like TerraClassicUSD USTUSD,
+2.19%,
formerly known as TerraUSD, an algorithmic stablecoin that collapsed in May and led to the evaporation of around $50 billion worth, according to a Bloomberg report.

It would be illegal to issue or create new “endogenously backed stablecoins,” according to the latest version of the bill, Bloomberg reported. The definition applies to stablecoins marketed as being exchangeable for a fixed value and backed only by another digital asset from the same creator, according to the article.

TerraUSD, for example, is supposed to always trade one-to-one for US dollars and was backed by another cryptocurrency Luna.

MarketWatch’s Chris Matthews wrote more about it here.

Nasdaqthe crypto push of

Nasdaq Inc. COMP,
-1.37%,
owner of the second-largest US exchange, is looking to provide crypto custody to institutional investors, in its first major push into the rather fledgling industry, despite a drop in the asset’s prices.

The service is subject to regulatory approval, according to a Nasdaq statement on Tuesday. Ira Auerbach, senior vice president of Nasdaq and head of digital assets, will lead the company’s new digital assets business, according to the release.

Kraken CEO resigns

Jesse Powell, co-founder of crypto exchange Kraken, will step down as the company’s chief executive, the company announced on Wednesday. Dave Ripley, the company’s chief operating officer, will succeed Powell as CEO, according to a Kraken blog post.

Powell made the decision to focus more on company products, user experience and “broader industry advocacy,” he said in the blog post. “As the business gets bigger, it gets more exhausting for me, less fun,” Powell told Bloomberg News on Wednesday. Powell will become chairman of Kraken’s board of directors.

In June, a New York Times report said Powell sparked a “culture war” within the company as he questioned the use of preferred pronouns, debated who could use racial slurs and called “brainwashed” American women.

Powell then responded by saying that “the New York Times bestselling article has completely selected small snippets of text from weeks of conversations and reconstructed its own sentences into this bestselling article”.

Crypto companies, funds

Shares of Coinbase Global Inc.. PIECE OF MONEY,
-6.95%
plunged 6.9% to $63.00 on Thursday and is down 18.5% over the past five trading sessions. by Michael Saylor MicroStrategy Inc.
MSTR,
-1.84%
fell 2.6% on Thursday to $190.78, contributing to a 12% loss over the past five days.

mining company Blockchain Riot Inc. RIOT,
-0.47%
shares were down 1.7% at $6.25 on Thursday, and they are down 15.2% over the past five days. Shares of Marathon Digital Holdings Inc.
MARA,
-3.04%
lost 3.9% to $10.42, down 13.7% in the past five days. Another miner Ebang International Holdings Inc.. EBON,
-4.53%
saw the shares drop 5% to $0.40 on Thursday, for a loss of 17.9% over the past five days.

Overstock.com Inc.
OSTK,
-4.86%it is
shares fell 4% to $24.05. The shares traded down 11.5% in the five-session period.

Shares of Block Inc.
SQ,
-5.92%
formerly known as Square, was down 5.6% at $56.12 and down 18.8% for the week. Tesla Inc.. TSLA,
-4.06%
shares fell 3.7% to $289.73, down 4.6% in the past five days.

PayPal Holdings Inc.
PYPL,
-3.86%
fell 3.4% to $88.05, contributing to an 8.6% loss in the five-session period. Nvidia Corp.
NVDA,
-5.28%
shares fell 4.4% to $126.90, a loss of 1.9% last week.

Advanced Micro Devices Inc.
AMD,
-6.69%
shares fell 5.7% to $70.17 on Thursday, down 8.4% from five trading days ago.

Among crypto funds, ProShares Bitcoin Strategy ETF
BITO,
+1.71%
gained 2% to $11.90 on Thursday, while its Bitcoin Short Strategy ETF
COCK,
-1.73%
fell 1.9% to $38.71. Valkyrie Bitcoin Strategy ETF
BTF,
+1.39%
added 1.5% to $7.42, while VanEck Bitcoin Strategy ETF
XBTF,
+1.90%
advanced 1.5% to $18.78.

Grayscale Bitcoin Trust
GBTC,
+0.69%
slipped 0.3% to $11.60.

Required readings

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