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Ether Turned Deflationary

Weekly Market Highlights - Binance Research
2022-10-14 12:08
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14 October 2022
Happy Friday! The Weekly Market Highlights is an initiative from the Binance Research team to round up the week, summarizing key market events and views from the team.
🔎 Macro / TradFi
  • U.S. inflation in September increased by 8.2% year-on-year, stronger than expectations of 8.1% year-on-year. Despite a hot consumer price index (“CPI”) print, stock markets staged a turnaround during the trading day and closed higher, suggesting that inflation concerns may have been somewhat priced in. After this CPI print, traders currently assign a 99% probability that the Fed will raise interest rates by 0.75% in November.
🔎 Crypto
L1:
  • Did someone say deflation? Ether turned deflationary this week (more ETH burned than issued) with a decline in supply of more than 6,000 ETH since 8 Oct. This was contributed by the launch of a token that resulted in an increase in gas fees. For context, Ether is estimated to be deflationary when gas price is 15 gwei or greater.
L2:
  • The race to launch a working zero-knowledge Ethereum Virtual Machine (“zkEVM”) is heating up. This week, Polygon announced the launch of its public zkEVM testnet. Aave, Uniswap, Lens and Midnight Society will be amongst the first protocols to deploy on the zkEVM Testnet.
  • Scroll released an upgraded version of their pre-Alpha testnet which enables smart contract deployment on Scroll and allows users to bridge ERC-20s and NFTs between Scroll's L1 and L2 testnets.
  • zkSync 2.0 is estimated to launch on mainnet at the end of October. Additionally, zkSync’s EVM-compatible L3 ‘Pathfinder’ prototype will be deployed to public testnet in 1Q 2023.
DeFi:
  • There were a few DeFi exploits this week. Mango Markets, a Solana-based DeFi platform, was exploited for over US$100M. TempleDAO, a yield-farming DeFi protocol, was hacked for over US$2.3M.
NFTs:
  • NFT royalties have sparked debate within the NFT community for a while now. Some support 0% royalties while others argue that royalties are a necessary source of income for creators. This week, DeGods, a popular Solana NFT project, has switched to a 0% royalty model as the founder cited the growing popularity of 0% royalty marketplaces as a major push factor.
  • OpenSea, an NFT marketplace, added support for Avalanche. This brings the total number of supported blockchains to seven: Ethereum, Polygon, Klaytn, Solana, Optimism, Arbitrum, and Avalanche.
Web2 x Crypto:
  • Google announced that it will allow selected customers to make payments for its cloud services with digital currencies starting next year.
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About Binance Research: Binance Research is the research arm of Binance, the world's leading cryptocurrency exchange. The team is committed to delivering objective, independent, and comprehensive analysis and aims to be the thought leader in the crypto space. Our analysts publish insightful thought pieces regularly on topics related but not limited to, the crypto ecosystem, blockchain technologies, and the latest market themes.
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