The Merge Is Coming
Dear Bankless Nation,
Here’s a recap of the biggest news in crypto for the second week of June, 2022:
Ethereum completes “dress rehearsal” for The Merge
The Ethereum network completed a test-run of its ETH2.0 upgrade on the Ropsten testnet this Wednesday, June 8.
The transition was a major success! It featured near universal validator coordination and ironed out some bugs. Many Activation Pandas were achieved.
Let Parithosh walk you through some details:
ETH 2.0 lead Danny Ryan was elated, calling it a major success, adding: “If this were mainnet, I’d be jumping for joy.”
Ethereum core dev ringleader Tim Beiko appeared on State of the Nation this week, where Ryan and David peppered him with multiple versions of the question: “Wen merge?”
Beiko reiterated its imminence.
To paraphrase his response: the tech could be deployed right now and it would operate normally. Current testnet runs are mainly for coordination among node operators and validators.
On Friday’s Ethereum Core Dev call, the decision was made to delay the Difficulty Bomb for Proof of Work miners as a precaution, but remain on course for a late Summer Merge.
Devs were quick to state that the move “does not mean we will delay the Merge. The Merge will not be delayed. This does not impact the Merge at all.”
Ropsten was the first of three dress rehearsals for The Merge on public testnets scheduled for the coming weeks.
Sepolia and Goerli are next. Then comes the big one.
New Crypto Bill Drops in US Congress
U.S. Senators Gillibrand and Lummis introduced a long-awaited crypto bill that seeks to establish a robust, bipartisan regulatory framework for digital assets.
It’s not bad. Could this be? Some regulatory clarity? Perhaps…
Here are some highlights:
- Defines the difference between crypto securities and commodities
- Requires DAOs to be registered entities in a jurisdiction
- Calls on the IRS to provide clear tax guidance in line with the legislation
- Proposes that staking revenue isn’t taxable income until you sell it
- Grants the CFTC with exclusive regulatory powers over crypto assets that are not securities (mainly crypto commodities like BTC & ETH)
- All banks and credit unions will have a clear pathway to issue regulated stablecoins
Generally speaking, outside of requiring DAOs to become registered entities — doesn’t that kinda take the D out of DAO? — this bill is pretty bullish.
Clarity is key. That’s exactly what Shark Tank’s Kevin O'Leary argues for in Monday’s upcoming Bankless podcast episode.
How this bill fares in the meatgrinder of Washington politics is yet to be seen, but we’ll be watching this sausage gets made very closely.
US Inflation Hits 40-Year High
U.S. inflation is now at 8.6%.
For central bankers, this metric is obviously running hotter than expected. Literally nobody else is surprised at all.
Mortgages, rent, groceries, gas — all going up.
Something else is going up as well: interest rates. The Fed will likely raise rates again next week. Whether Jerome and the Gang want to stay on course with 50 bps rate hikes — or even get more aggressive — there’s really no other way than up.
The Fed has to fight inflation. They will continue to be hawkish.
What does this mean for investors?
Stocks and crypto have taken a sharp downturn.
The S&P sank nearly 3% following the release of these numbers. Major crypto assets like BTC and ETH tumbled even harder.
The investing environment is risk-off. While crypto fundamentals are strong, we’re dealing with some mega-macro drama.
There’s a lot of volatility out there. Stay calm and weather the storm. ETH’ll all be worth it on the other side.
Here’s what’s lined up for next week:
- Shark Tank’s Kevin O’Leary joins us on the podcast (early access here)
- David shares his favorite Build market projects
- We answer “Is DeFi dead?” (hint: it’s not.)
Have a great weekend everyone.
— Bankless