Research Roundup Newsletter [September 2023]

We present to you our latest issue of Research Roundup, featuring trending market insights in September, charts of the month, and our insights on the Ethereum Dencun upgrade.

Oct 09, 2023 Crypto Research Roundup

Welcome to the Monthly Research Roundup Newsletter! Crypto Adoption Index Sep 2023

1. Market Index

The 30-day market cap index was positive at +5.54%, while the volume and volatility indices were negative at -16.73% and -24.07%, respectively. Monthly Market Index

2. Charts of the Month announced it has teamed up with PayPal and Paxos to establish as a preferred PayPal USD (PYUSD) exchange. has already listed PYUSD on its platform for both retail and institutional users, and is currently the crypto trading platform with the deepest liquidity for PYUSD trading pairs globally.PayPal introduced its Paxos-issued stablecoin PYUSD earlier in August as a contender to existing stablecoins. It is fully backed by US Dollar deposits, short-term US treasuries, and cash equivalents. PYUSD Market Cap

The Merge, or Ethereum’s transition to the Proof of Stake (PoS) consensus mechanism, was completed on 15 September 2022. Since the upgrade, the network has undergone several changes and improvements. These include a gradual decrease in ETH supply, reduced energy consumption, and growth in ETH staking boosted by the Shapella upgrade rolled out in April 2023.

Today, the circulating supply of ETH is 0.23% lower than it was a year ago, making it deflationary. This decrease in supply mainly resulted from the elimination of ~13,000 ETH issued daily for Proof of Work (PoW) mining rewards, and the burn mechanism introduced by EIP-1559 that burns  ~1,600 ETH daily.

Wondering what lies ahead for Ethereum? Read our latest report on the Dencun upgrade, the next major upgrade to the Ethereum network. ETH Supply after Merge

Casey Rodarmor, the creator and chief coder of Bitcoin Ordinals, proposed to change the numbering system of the protocol’s inscriptions. He suggested making the numbers ‘permanently unstable’ to simplify the codebase and facilitate future protocol changes. This is because maintaining a unique and stable inscription number for each Ordinal NFT has resulted in complicated code and hindered development.

Rodarmor also introduced a new Bitcoin-based fungible tokens protocol called Runes. The new protocol is designed to address the challenges of UTXO ‘junk’ as per BRC-20 standard, which tends to clog the network and increase transfer fees. Bitcoin Ordinals Weekly Inscriptions

3. Monthly Feature Articles Ethereum Dencun Upgrade

Monthly Feature Article | Ethereum: Dencun Upgrade and Proto-Danksharding

The Dencun upgrade is the next significant upgrade to Ethereum that is expected to be a major step towards achieving scalability. In Ethereum’s roadmap, Dencun is considered the beginning of The Surge, which aims to enhance ‘rollup-centric’ scaling in Ethereum via data sharding (Danksharding) while maintaining security and decentralisation.

Arguably the most anticipated feature of this upgrade is the introduction of EIP-4844, also referred to as Proto-Danksharding, as it provides a cheaper way for Layer-2 (L2) rollups to add data to blocks. As part of EIP-4844, a new type of ‘blob-carrying’ transaction will help the network achieve higher scalability. Essentially, blobs are sent and attached to Ethereum blocks, and blob data are automatically deleted after one to three months. 

In this report, we discuss in detail the features to be implemented in the Dencun upgrade, Ethereum’s architecture before and after Dencun, how Proto-Danksharding will help achieve scalability for Ethereum, and Ethereum’s long-term vision for full Danksharding. Check out Ethereum: Dencun Upgrade and Proto-Danksharding

Key takeaways:

  • Ethereum’s upcoming Dencun upgrade will further increase its scalability. Dencun is a term that combines two upgrades — Cancun, the upgrade to the execution layer; and Deneb, the consensus layer upgrade. The Dencun upgrade consists of several EIPs, including the prominent EIP-4844 (Proto-Danksharding).
  • Proto-Danksharding serves as an intermediate step towards full Danksharding, with the introduction of its key feature: ’blob-carrying’ transaction. These data blobs aim to lower fees for rollups by offering more affordable storage for transaction data.
  • Full Danksharding uses distributed data sampling across blobs instead of traditional ‘shard chains’ to scale Ethereum further. This is achieved by proposer-builder separation (PBS) and data availability sampling (DAS), and more blobs can be attached to blocks.
  • The next steps in Ethereum co-founder Vitalik Buterin’s vision of the roadmap consist of ‘The Surge’, ‘The Scourge’, ‘The Verge’, ‘The Purge’, and ‘The Splurge’. The Ethereum Foundation also has a long-term roadmap, aligned with Buterin’s vision, that organises the upgrades in terms of benefits brought to Ethereum users. These include cheaper transactions, extra security, better user experience, and future-proofing. Blob Transaction Life Cycle

Monthly Feature Article | Deep Dive Into Ethereum Dencun Upgrade

Ethereum faces scalability issues like costly gas fees and low throughput, which ultimately made way for the emergence of L2 scaling solutions. The Dencun upgrade is expected to have positive impacts on L2 rollups. We know that it aims to lower rollup fees by offering more affordable storage for transaction data. But what exactly are the implications of the Dencun upgrade to these Ethereum-based L2 rollups? 

In our latest private report, we highlight the scope of Proto-Danksharding and the expected improvements it will bring, provide an overview of the current L2 market, and dive deep into how L2 rollups work right down to the potential impact of EIP-4844 on data availability and L2 rollup fees. Read our report on the Ethereum Dencun upgrade and Proto-Danksharding, exclusive to our Private members.

Check out Deep Dive Into Ethereum Dencun Upgrade

Key takeaways:

  • The Dencun upgrade is the next significant upgrade to Ethereum, marking the beginning of ‘The Surge’, which aims to enhance rollup-centric scaling in Ethereum via data sharding (Danksharding).
  • The key update in the Dencun upgrade is EIP-4844, also known as Proto-Danksharding, which introduces blob-carrying transactions, making way for lower transaction costs and increasing transaction throughput of Ethereum via rollups. Blobs significantly reduce the data availability cost of rollups by creating a storage space dedicated to Layer-2 (L2) rollups.
    • With EIP-4844, the blob size is 128KB; each Ethereum block includes a target of three blobs (~0.375 MB) and a limit of six blobs (~0.75 MB). Currently, Ethereum handles ~120KB/block — one blob handles the data size equivalent of three to six current blocks. Given that blob data is inaccessible from the Ethereum Virtual Machine (EVM), we can also expect demand to be lower than calldata, byte for byte. 
    • As blob transactions have their own gas market and are priced independently from other transactions, a new type of gas, called ‘blob gas’, is also being introduced as part of EIP-4844. The cost of a blob transaction is initially expected to be virtually costless. However, for every block confirmed where more than half of the blob block space is utilised, the costs for blob transactions will increase by 12.5%. Conversely, if less than 50% of the space is filled, the costs of blobs will decrease by 12.5% for each block.
    • The implementation of Proto-Danksharding is anticipated to stimulate the adoption of L2s in Ethereum, encouraging more users to directly engage with the Ethereum network through rollups. As a result, transactions in ZK rollups and optimistic rollups are anticipated to experience a significant increase in size.
  • The Dencun upgrade also brings the Beacon Chain block root to the execution layer, which allows liquid staking protocols to remodel their off-chain oracle processes, thus opening opportunities to build a trust-minimised infrastructure, such as a native ‘trustless oracle’ configuration. This supports the security of liquid staking protocols by reducing aspects of the technical risks introduced by oracles.
  • Proto-Danksharding takes Ethereum towards meaningful scalability by embracing modularity and delegating transaction execution to other protocols. This approach represents an early implementation of modular blockchain architecture, separating crucial blockchain functions like consensus, execution, and data availability. Ethereum Block Size and Block Count

Interested to know more? Access exclusive reports by signing up as a Private member, joining our Exchange VIP Programme, or collecting a Loaded Lions NFT.

4. Alpha Navigator

This institutional-focused report dives into macro trends, market-neutral pairs, style-factor screens, and events. Read the full Alpha Navigator report here.

  • Asset classes continued to drop in September, although Commodities managed to eke out a small gain. Alpha Navigator Institutional Report
  • BTC’s 1-month correlations with other assets are mostly negative. Alpha Navigator Institutional Report

5. Crypto Conference & Economic Calendar from Market Pulse

Crypto Conferences Calendar Conference Calendar

Economic Calendar Economic Calendar

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Research & Insights Team


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