A weekly recap of the most insightful news, analysis, and capital flows in the wild west we call crypto.

Hello and welcome back to the Web3 Rewind! Per usual in this industry, lots has happened this past week. Here's what we have in store for you:

• Bull market requests

• Dencun upgrade

• USDC in Japan

• Blast goes live

• BTC ETF mania

The Latest

Bull market bull

Roadmap dept.

Ethereum’s next step forward

If by now you haven’t heard this, bear markets are for building. I was thinking about this recently and it seems that a lot of the time that adage is applied to developer teams or defi projects and not at first thought to the underlying Ethereum blockchain itself. But of course, Eth devs continue their work when prices crash.

The Dencun hardfork that’s expected to happen around March 13 is the most recent evidence of building during a crypto winter. The EigenLayer, which we wrote about last week, is another largescale effort to improve Ethereum. If you want to stretch a bit, I’d say zero-knowledge proofs also qualify as having made large gains in usability to help increase privacy on-chain. And I should mention The Merge, which switched Ethereum from proof of work to proof of stake in 2022, one of the most-impressive tech feats I’ve witnessed.

The Dencun upgrade promises to free up data on a blockchain so that transactions can be faster and cheaper. Layer 2 protocols pass along more than 90 percent of transaction cost to users because of the way they have to access and propagate on-chain data. Dencun should cut those fees significantly with a separate market for data storage costs that’s divorced from transaction fees.

The names, as always the case with Ethereum nerds, are one of the best parts. The data switch will be done by blobs, short for “binary large objects.” Dencun is part of the latest improvement period known as the Surge on the Ethereum progress roadmap, which comes after The Merge but before The Scourge, The Verge, The Purge and The Splurge. That last one, I think, when they get there Vitalik et al are just going to give everyone a million ETH. Who knows?

If you want to get all romantic this is an amazing time to be witnessing a global computer architecture be built right before your eyes. The cooperation and coordination among developers who work on Ethereum and Solana and other chains is also in stark contrast to the walled garden model of modern corporate structure. So a world-spanning network that’s trustless and maintained by projects and communities who want to work together to make it all better and stronger over time is the result.

I imagine it as though Ethereum is a twisting strand of DNA with layer 2 chains attaching to it at various points in order for layer 3 solutions to come in on top of them. It truly does feel like the beginning of a new type of Internet or web structure, which is a big idea to wrap your brain around. Here’s hoping Dencun comes off as well as The Merge and Ethereum keeps getting better. — ML

Quick Bits

USDC expands to Japan

• Circle said it had reached an agreement with Tokyo-based Coincheck to offer its stablecoin USDC in Japan. The move could be the first in a plan to expand throughout Asia, Circle said in a tweet.

• Circle has taken the route of releasing attestations prepared by accounting and consulting firm Deloitte that backs up its claims to hold cash or cash equivalents for every USDC in circulation. It’s larger competitor Tether for years refused to fully open the kimono to show what it held in reserve, but has more recently begun releasing more information about its holdings, which now include Bitcoin.

USDC posts market gain vs Tether

• Sticking with USDC and Tether for a moment, USDC is gaining market share on the world’s most-used stablecoin. Since Dec.1, the supply of USDC has grown 14.3%, Coinbase analysts said in a Feb. 26 report. In that same period Tether grew 8.7%.

• Crypto has entered a new phase of institutional and retail demand after the introduction of spot Bitcoin ETFs, driving up demand for stablecoins along the way, the report said.

Blast off

• The Ethereum Layer 2 protocol Blast launched on Feb. 29, a project created by the same team behind the NFT market Blur that led the cynical charge to cut NFT royalties. Blast is currently offering users who stake their coins “points,” which the protocol says will convert to tokens in May.

• All the best to the Blast team, and the folks who have $2.2 billion in Ether locked in the network as of now. It’ll be interesting to see how a regulator like the SEC views people giving a project their money (Ether) in return for a token, which is not too different from earning a yield on a bond. That’s a security every day of the week, so getting clarity on that will be welcome.

And last but not least

BTC ETF mania

So, this Bitcoin ETF walks into a gold bar. . .

Here’s a stat for you: BlackRock’s IBIT Bitcoin ETF is about to hold $10 billion. That’s the quickest that any exchange-traded fund has reached that level of assets under management. As in, ever. The SPDR gold ETF, as a comparison, took two years to hit that mark, according to Bloomberg Intelligence.

According to a different Bloomberg story, Bank of America is getting into the BTC ETF game by offering it to its Merrill brokerage clients. This is hilarious to anyone who’s followed the banks as they’ve kicked the crypto tires over the past several years, as BofA loathes digital currency and has never taken it seriously. Money trumps all on Wall Street, don’t forget. Wells Fargo, also not crypto-curious, is doing the same. Wouldn’t it be fun to be a fly on the wall in Gary Gensler’s SEC office as he’s realizing how vital his agency’s imprimatur has been to give banks the cover they needed to get into crypto assets?

Personally, it’s pretty wild to see the bulge bracket banks driving Bitcoin to near-record prices on the back of an SEC-regulated financial product. I remember the mostly deaf ears on Wall Street from 2015 to about 2020 when it came to blockchain technology. There were outliers like JPMorgan, but the majority of the street thought crypto meant buying drugs and hookers online. And now, again, to be a fly on the wall of the bank CEO suites as they realize they’re helping propagate and legitimize a technology that directly confronts their control of global payment rails. Oh, sweet justice. -- ML

Have you read the definitive history of Ethereum? No? Well then get your copy of Out of the Ether while you can.