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GM everyone. This is 2036, the crypto newsletter that pays you 💸
Today marks one of the most anticipated days in all of crypto this year.
Yesterday at 6 pm ET, Ethereum underwent a major upgrade. It is now live.
The upgrade - called Shanghai - marks a new era in crypto.
What is it? And what’s going to happen to ETH?
Let’s dig in.
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Here at 2036, we’re big fans of applying real-world analogies to crypto.
So to understand what actually happened yesterday, you first need to know that bitcoin and Ethereum are fundamentally different things.
Bitcoin is like the Catholic Church. It shuns innovation in favor of purity and security.
There can only be one God - and that god is bitcoin.
Ethereum, on the other hand, is like the US economy over the last 70 years.
It’s the fastest-growing large economy, and has:
the biggest property market (NFTs)
the biggest banks (DeFi)
the largest market capitalization (ETH)
companies (DAOs)
roads and infrastructure (layer 2s)
etc.
And in 2020, the Ethereum economy got a Central Bank.
This Central Bank was built to help secure the network.
Before, the Ethereum network was secured by “miners” - computers that solve mathematical problems at lightning speed.
But since “The Merge” of 2022, the Ethereum network is secured by people locking up their ETH at the Ethereum central bank in exchange for a reward.
the new Ethereum
You can think of these deposits as bonds. You give the central bank your money, and they give you a return.
This is a HUGE deal because it makes Ethereum the first mainstream crypto-bond that’s actually attractive.
Initially, you had to lock up your ETH for up to 2 years to be able to participate.
But as of yesterday, you can now lock up AND withdraw your ETH at any time.
This mechanism already exists in smaller, riskier crypto economies like Solana or Cardano. It’s called “staking.”
And across these economies, the number of coins staked is, on average, around 60% of all coins of the network.
But on Ethereum, only 15% of all ETH is locked up.
We expect that to change dramatically to align with other network averages.
Now that you can easily withdraw, we think it’s likely that a lot more people will stake ETH to get yield.
And that is very bullish news for Ethereum.
Of course, we don’t have a crystal ball, and a lot of the good news could already be priced into Ethereum.
But we are still very optimistic.
In the last bull market - from the lows of 2018 to the highs of 2022, Ethereum went up 46X.
So strap on your seatbelts ‘cause the whole crypto ecosystem just got a MAJOR upgrade.
And this is just the beginning.
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