👀 One coin trading at a BIG discount

GM everyone. This is 2036, the crypto newsletter that pays you.

Here’s what we’re serving up today 🍲: one year ago this week, Ethereum completed its most important innovation ever - The Merge. Since then, the price is up exactly 0% 😐 Was Ethereum just a dream that needs to step aside in favor of competitors like Solana?

Let’s dig in.

🥔 Today’s meat and potatoes

Get smarter on crypto in 2 minutes

For most of its existence, Ethereum verified transactions with the same mechanism as Bitcoin: proof of work.

Proof of work requires supercomputers (miners) to compete to solve complex mathematical equations.

In exchange for participating in the energy-intensive process, they earn rewards (that’s how bitcoins are created).

But on September 15, 2022, Ethereum transitioned from proof of work to proof of stake.

ETH holders can lock up (stake) their funds to secure their network in exchange for rewards.

The transition was one of crypto's most technically challenging feats ever accomplished.

Vitalik Buterin compared it to changing the engine of an airplane mid-flight.

The Merge came with a number of benefits:

1/ The energy usage of the Ethereum network dropped by 99.9%.

Miners were the main drivers of energy consumption and the primary reason behind crypto’s environmental concerns.

No miners = no problems.

2/ Investors could now earn passive income on their ETH.

This turned ETH into the first legitimate large-scale crypto bond.

Staking rewards generate ∼4-5% per year in annual income.

And today, 22% of all ETH (∼$44 billion) is staked.

Here’s our short guide on how to do it yourself.

3/ It set the stage for Ethereum’s scalability.

For Ethereum to thrive, it needs to be able to process a lot of transactions simultaneously (more than today).

And while The Merge didn’t directly address scalability, it set the stage for a number of upgrades (this year and the next) that’ll massively upgrade scalability using Layer-2s like Arbitrum and Optimism.

4/ It decreased the supply of Ethereum.

The Merge changed the way Ether is issued and burned, making it deflationary 📉

The total supply of ETH is down -0.24% since The Merge.

It would have INCREASED by +3.17% if Ethereum hadn’t transitioned to proof of stake.

That’s more money chasing fewer ETH - and why Ethereum has since been called ultra-hard money.

So a year ago, Ether was trading at the same price it is today, but:

• The Merge hadn’t been completed

• ETH’s annual inflation rate was >3%

• Scaling solutions (like Arbitrum and Optimism) were much less common.

So what happened? Did Ether become less valuable?

On the contrary.

Although the price hasn’t moved, Ethereum usage across its main net and scaling solutions is up over 5X:

As a result, one recent study estimates that ETH trading at a 27% discount to its fair value.

So, although the price of ETH looks like it’s not going anywhere, it’s more used and useful than ever.

If history is any guide, it’s only a matter of time before the price catches up with reality.

That’s why we think one of the best things you can do today is to accumulate as much ETH as possible.

And that’s what we’ll pay you to do today.

🍨 Dessert

Stories to read if you have FOMO

1/ Long-term holders are now buying bitcoin again

2/ ETH supply shrinks, but challenges remain

📈 Market opportunities

Yield - Beginners 🌾

• ETH: Earn 4% APR by staking ETH on Lido

• SOL: Earn 6.8% APR by staking SOL on Lido

• Arbitrage: $ETHE and $GBTC trading at -17% and -28% discounts to the value of their underlying ETH and BTC.

Yield - Advanced 🌾

• DAI - Earn 11%+ APY on $DAI

• ETH - Earn 17%+ APR with Hop’s ETH pool on Base

• BTC - Earn 14.9%+ APR with Umami’s BTC vault on Arbitrum

Upcoming Airdrops 🌬️💧

• Linea

• LayerZero

• ZKsync

• Polygon zkEVM

📝 Task

Earn $30 in ETH for a simple crypto task

Today’s task is a classic Wallet Wednesday with an ETH flavor.

Create an Ethereum-compatible wallet and send us your ETH address to enter a raffle to win $30 in ETH.

If you already have a wallet, you can submit that too.

This week, we’ll select TWO winners who’ll each get $30.

And if you’re looking for wallet recommendations, the easiest to get you started is Coinbase.

But if you want to participate in Web3, DeFi, NFTs and all the gateway drugs crypto has to offer, we recommend Rabby (here’s why).

If you still prefer Metamask, the choice is yours.

As always, we’ll tally all the participants in a Google sheet and mathematically choose two winners at random who’ll receive $30 in ETH.

We’ll announce the winner of today’s task in Friday’s email.

🖼️ Crypto meme of the day

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