Crypto Clarity #1
Every Tuesday I bring you the latest news and resources from the world of Crypto. My goal is to provide updates on the space, while making it accessible to everyone, regardless of experience level.
Welcome to the Crypto Clarity Newsletter! As we near the end of a wild 2022, I have been taking some time to reflect on the past year and think about what I hope to achieve in 2023. During this reflection, two thoughts that stuck with me inspired the writing of this newsletter:
The repetition and consistency of reading newsletters over time was a key driver to me being up to date in this sector and finding the best resources to dive further into my research.
The majority of the newsletters that I read and find beneficial are only catered to a crypto native audience.
As a result, the main goals of this newsletter are to:
Provide readers with top stories, key information, important resources, and thoughts on a weekly basis.
Appeal to all knowledge levels of readers, from those who invest in Crypto to those who are learning about it for the first time.
Serve as a resource for those who want to stay informed on the world of Crypto but don't have the time to dedicate to it.
“More is lost by indecision than wrong decision. Indecision is the thief of opportunity. It will steal you blind.” - Cicero
Content / Sections to Expect:
Opening Statement + Quote (The Section Above)
Weekly Price Performance:
Top Stories: This section will consist of the top headlines from the Crypto world each week. For the purposes of this first edition, I have highlighted some of the biggest events that occurred in 2022:
Ethereum (ETH) Merge: “The Merge” refers to a network upgrade that enhanced the ETH blockchain’s security, sustainability and supply emissions. It is important to understand that Ethereum and blockchains in general are newer technologies and are not perfect.
The car, internet and other breakthroughs that have changed society were far from perfect when they were first released. “The Merge” is only the first of several upgrades in a long and ambitious roadmap.
The main outcomes of the Merge are:
ETH changed its consensus mechanism from “Proof of Work” to “Proof of Stake”. In plain English, here are the main benefits:
The network’s energy usage has been reduced by 99.9%. Not only is this great for the environment, but it clears the path for more institutions to use and invest in the Ethereum ecosystem.
Holders of Ether (the token that powers the Ethereum blockchain) are now able to “stake” their tokens and earn interest. More stakers on the network improves security (Metcalfe’s Law) and also offers up a cash flow stream for investors, which is appealing to institutions. (These fees are generated by validating transactions on the network)
New supply issuance is reduced by 90%: This, along with the coin burn mechanism built into ETH’s code has given Ether the ability to be a deflationary asset (Was inflationary by 4-5% before). For this to be fully realized in the price, we will need demand to return. However, this sets the stage for Ether to perform very well in a high-demand environment.
Steps towards scalability and future upgrades: One of the most anticipated is the ability for the network to process more TPS (transactions / second), which will help to mitigate the fees that users pay on the network (called “gas fees”)
The Fall of FTX + Contagion: A lot of big players in the Crypto sector collapsed throughout 2022, with no bigger than the fall of FTX. While this was a tragic event with some users losing their life savings, it is imperative to note that this was an instance of fraud, and not a failure of anything crypto-related (other than the lack of regulatory clarity that has been provided to the space).
An interesting comparison is the scandal and collapse of Enron in 2001. Enron was a massive player in the Energy sector who engaged in accounting fraud and misleading investors. Their bankruptcy filing with over $60 Billion in assets was the largest ever at the time and a main reason for the passing of the Sarbanes-Oxley Act of 2002.
Fraud is present in every industry and bad actors often look to take advantage of new technologies and unregulated sectors. While some think that regulation can be a threat to Crypto, I feel that clarity around regulatory policies is essential for this industry to continue to grow and become mainstream. Many institutions are on the sidelines anxiously waiting for this.
J.P. Morgan said it well:
Major Brands Continue Adoption: While it may be painful to look at your portfolio at this time, major corporations have not slowed down in their efforts to adopt blockchain technology and plan for an increasingly digitalized world.
Other Giants Fall: Amazing thread breakdowns (if you have time, if not keep scrolling for the rest of the content)
LUNA / Terra:
Celsius:
3 Arrows Capital:
Thread / Read(s) of the Week:
Visual of the Week:
Looking Ahead: This section may include the following:
Important global events and developments that are coming up
Market moving events, such as inflation or Federal Reserve data
Crypto themes and narratives to be aware of
Reader Corner: Q&A / Feedback from our Audience:
Leave your feedback / questions / any other comments below!