Qrafty knows that ETH ETFs started off really slow, Friend.tech is 20% of Base, Ethereum is inflationary again and more

***Qrafty smiling the biggest smile*** Aloha, crypto curious! I am Qrafty - the crypto lovin’ honey badger 🦡 !

Welcome to Coinqraft – the daily crypto newsletter for busy but curious people who don’t have time for the crypto drama!🌟

🦡   Qrafty has fresh bits from the crypto jungle, so let’s dive in: 📰 🌟

1. Ethereum Is Inflationary… Again

2. Friend.Tech is 20% of Base transactions

3. Ethereum ETFs Started Off Slow

Bonus: Kenya is accusing WorldCoin of espionage

Ethereum Is Inflationary Again

ETH's shift to Proof of Stake (PoS) promised a rosy future, all thanks to a perceived scarcity of supply. But then, the bears came knocking, putting the altcoin king through its paces.

In this bear market scenario, Ethereum's usual vitality takes a hit. The degens of DeFi, NFTs and meme coins are gone and the volumes have crashed. The network's buzz has quieted, presenting a challenge for ETH.

When it comes to understanding Ethereum's inflation, it's like looking at it through different lenses. Depending on the timeframe, you might see it as either tightening its belt or living it up. Take a seven-day snapshot, and it's all about scarcity and deflationary. Zoom out to an annual view, and the story might change and it becomes inflationary.

Cue the grand entrance of EIP-1559 in August 2021. It's a mechanism that burns ETH with rising transaction fees - a real fire show, yeah… a digital one, so nothing fancy. But when congestion eases and transaction volume drops, it's a quieter affair. And everyone said “yaay! supply is going to fall, price gonna go boom, we’re gonna be rich!“.

So what happened, Qrafty?

What happened was that DeFi, memecoins and NFT’s imploded, the traffic dropped and transaction prices crashed → considerably less transaction fees. This means that the number of coins being burned now is lesser than the number of coins issued as rewards to validators.

And what does that mean?

It means that, up until recently, the number of ETH that was being burned from transaction fees was higher than the rewards issued to validators for participating in the network.

Which meant that more ETH got out of the system than it went in, get it?

So the total number of ETH was diminishing which led some to call it “Sound Money“. And now it’s funny to see that the thought was only forward looking, not backwards too. The implementation of EIP 1559 assumed that the network will always be used to a minimum certain level. Is it possible that if the ETH network slows down long enough, at one point there is so much ETH issued that it makes the price crash to the point it becomes worthless?

Highly unlikely, the ETH network has a lot of infrastructure built around it. If it will ever reach a point where ETH will go away, it won’t die this kind of slow death. But it’s not the case for Ethereum.

What is happening though, and will continue to happen, is that the supply will adjust itself according to usage. It will try to reach a sort of homeostasis based on ETH total supply and usage.

The only requirement? That the increase in network usage steadily rises over time. In other words, if the network is actually being used by someone willing to pay gas and transaction fees. That’s all. As long as that happens, Ethereum indeed becomes inflationary and its value grows.

What is more interesting to see is an automated monetary mass regulation system based on the cycles of usage of a particular asset. It’s rebalancing itself according to market forces. It’s alive, constantly changing and incentivizing the usage of the network. Interesting, innit?

🙃 Qrafty hopes that today’s main story brought brave badgery value to you! Now it’s time for a break, you deserve a bit of fun! 😇 👇️

Friend.tech revenue 20% of all revenue on Base

Qrafty wrote about Friend dot tech’s explosion in previous editions. But just to be clear, Friend dot tech is a social app that allows you to monetize your popularity in a gamified and quirky way. It lives on a blockchain network called Base, which is a Layer 1 network that belongs to Coinbase.

Alright, let me break it down for you. Friend.tech waltzed onto the crypto scene in August, and let's just say, it's been partying hard ever since. This app lets folks trade shares tied to X… you know, the platform that used to be called Twitter? Well, now it's the hottest ticket on Base.

Qrafty isn’t kidding, it's basically the Beyoncé of this network. Friend.tech's responsible for a whopping 21% of Base's transaction fees.

One out of every five transactions on Base is dancing to Friend.tech's tune! The runner-up, LayerZero? It’s waaay behind, at less than 4% transactions of the total amount.

And get this, it's not even out of beta yet! It's raking in fees like it's got a money tree. These guys are printing hard! Cash is flyi…

Qrafty! Snap out of it!

Ooops, sorry… So, DefiLlama's doing the math, and in the last month alone, the app has pulled in almost $27 million in fees and the total value of locked assets on the network is over $52 million. And daily trading? It's moving 7,160 ETH, which is about $12.3 million. These are REALLY good metrics! Good luck to them!

Futures ETH ETFs On A Limp Start

Oh, look… Nothing happened! Nine Ethereum futures ETFs started trading today, but demand has been lower so far than at the ProShares Bitcoin Strategy ETF launch in 2021.

Alright, throw away the gala gown, slip into something more comfortable and grab your popcorn because the Ethereum ETF debut party started today, and well, let's just say it's not exactly a blockbuster hit.

ProShares, VanEck, Bitwise, Valkyrie, Kelly, and Volshares threw their hat in the ring, debuting a whopping nine ETFs on the Chicago Board Options Exchange. But oh boy, did it stumble out of the gate. We're talking less than $2 million traded in the first few hours. Considering the hype, it's like expecting fireworks and getting a sparkler.

Remember when we heard daily that an Ethereum ETF would be better than the Second Coming? What happened to all that fanfare, Jose? Seems like the enthusiasm took an unexpected siesta.

The thing is… these futures crypto funds are like fortune-tellers, trying to predict Ethereum's future price rather than owning the actual digital treasure. It's a bit like betting on what the price tag will read down the road. That’s unlike the spot ETFs, where the underlying asset is actually being bought. But for now, we're in the futures game. Investors are still waiting for the SEC's nod for a spot Ethereum ETF, so, patience, my friends, patience.

Is Uptober Happening This Year?

The US delayed the government shutdown for a month and a half and markets printed green all over the place.

Of course, in the crypto jungle coins started popping like like that sweet butter popcorn you love so much. Does this mean that the bull market is back? No, definitely not.

As Qrafty is writing this letter to you, brave Bitcoin has already retraced most of the upwards move. Qrafty isn’t saying Bitcoin won’t rise, just… curb your enthusiasm, that’s all. Maintain a watchful eye and a desire to change your bias immediately.

Grayscale Wants ETH ETF

Grayscale's playing the 'ETF Conversion Game' again, now with their Ethereum (ETH) product. Their Ethereum Trust's like the Godzilla of all ETH investments, hogging 2.5% of all circulating ETH. Since 2019, it's been dreaming of becoming a spot ETF, its ultimate form.

But hold on to your hats, because right now, ETHE shares are partying at a 30% discount to the real ETH held by the fund. It's like buying designer shoes on a thrift store budget! The fund's ETH stash is flexing at $5.14 billion, but its shares are chilling at just $3.6 billion.

If they pull off this ETF magic trick, you'll be able to trade your ETHE shares for the real deal ETH. It's like trading monopoly money for actual cash. And guess what? It might just make everyone's numbers match. But, as usual, Grayscale's quest to turn their Bitcoin Trust into a spot Bitcoin ETF is still stuck in traffic. They'll get there eventually, it's just a matter of time... and some good old-fashioned politics... and of course, money, duh! But they’ll get their ETH ETF.

Hey hey 🙃 Qrafty hopes you are enjoying the experience here and would like to regularly get Qrafty’s letters!

If so, please click on the button below. Qrafty is really really grateful to have you here, so thank you!

Tomorrow's like a persistent party crasher, always showing up uninvited, whether you're ready or not, reminding us that inevitability is the ultimate RSVP!

Qrafty’s thougt of the day

Other stories

$686 Million lost to hacks in 3 months

It’s true that Mixin Network and Multichain, two major hacks, accounted for nearly half of the total stolen amount.

Venture Capital in crypto collapsed

AI stole the show… and money, while crypto venture deals plunged 33% in worst quarter since 2020. Then again, 2020 wasn’t so long ago, right?

Kenyan authorities accuse Worldcoin of espionage

Well, it seems like Kenya has given Worldcoin a stern finger-wagging! Kenyan authorities are pointing fingers and accusing Worldcoin of playing spy games and messing with the country's statehood.

Market Whispers

As we discussed on Friday, Bitcoin chose to show everyone that it's still the boss, even though the BTC ETF was not approved yet, just the ETH futures one.

So he started the pump on Sunday night with an almost $1,000 candle in an hour and continued to climb higher up until ~$28,600.

Currently is in a "correction mode" which looks like it will retrace all the pump, back to the month open at $26,960.

Everyone is high on the "bull market is here" drug, but Qrafty can't find many reasons to believe it just yet. It looks more like a squeeze higher before new lows. But Qrafty is just a badger and is here to tell you his honest opinion. Don't trust a badger, don't trust any crypto influencer!

Qrafty ends channeling his inner trader.

Today is GUARDIAN ANGELS DAY!

That’s all from Qrafty 🦡 for today! Qrafty thanks you and wishes you to live each moment as if you are listening to the music you love most!

If you enjoyed Qrafty’s letters, you can make Qrafty mucho happy happy and subscribe below 👇️ Wahaha!