?? DeFi Activity Surges, SPLs Grow on Solana, ETF Timing in Question

December 2023 marked a significant resurgence in the cryptocurrency market, with monthly spot exchange volumes hitting a new yearly high of $1.1 trillion. This rebound follows a period of subdued activity earlier in the year, with volumes remaining below $1 trillion from January to November. The uptick in spot volumes is attributed to growing optimism around the potential approval of a spot Bitcoin ETF and indications from global central banks signaling a shift away from rate hikes. The December figures represent the highest monthly volumes since May 2022, reflecting a broader recovery in the crypto market and renewed excitement for the year ahead.

Ethereum Co-founder Vitalik Buterin Proposes Solutions to Simplify Proof-of-Stake Challenges

Vitalik Buterin , the co-founder of Ethereum, has proposed three solutions to address pain points in Ethereum's proof-of-stake mechanism . The primary issue revolves around the cryptographic signatures used by validators, leading to increased network load with each upgrade. Buterin's suggestions include decentralizing staking pools, introducing two layers of stakers, and implementing a rotating set of participants to simplify and lighten the consensus mechanism. The proposals involve higher minimum ether requirements for validators, a division of stakes based on requirements, and the introduction of a random set of validators per slot to reduce workload and total signature count, albeit with added complexity.

DeFi Total Value Locked Surges to $52 Billion, Reaching Pre-FTX Collapse Levels

The total value locked (TVL) across decentralized finance (DeFi) protocols has reached a yearly high of $52 billion, a level not seen since before the FTX collapse in November 2022. In 2023, the TVL increased from approximately $38 billion to its current level, marking a 36% surge in dollar terms. The resurgence is attributed to market recovery, the rising values of major cryptocurrencies like Bitcoin and Ethereum, and specific improvements within DeFi protocols, such as MakerDAO's integration of real-world assets and the introduction of liquid staking protocols like Lido Finance.

Solana Witnesses Unprecedented Surge in Token Creation, Raises Concerns

Solana has experienced an unprecedented spike in new token creation , with 72,202 tokens minted in the last two weeks , a significant increase from previous periods. While Solana's ecosystem has seen overall growth, the surge in token creation raises concerns about potential abuse and the proliferation of fake or low-value tokens. Some tokens are created for short-term gains through pump-and-dump schemes, posing challenges for the network and indicating the need for measures to address such activities.

PancakeSwap Decentralized Exchange Votes to Reduce CAKE Token Supply by 40%

PancakeSwap , a decentralized exchange, has successfully passed a proposal to decrease its maximum CAKE token supply from 750 million to 450 million. The vote to remove 300 million tokens garnered 98% approval

Ether Options Market Gains Momentum: Reaches New Highs with Open Interest Surpassing $9.37 Billion

In recent months, heightened activity in the bitcoin options market has been notable, driven by increased bitcoin volatility, especially after BlackRock triggered a surge in spot ETF applications. Bitcoin's price surged in June, stabilizing until mid-October, with Grayscale's legal win adding to hopes for ETF approval. Bitcoin options witnessed record open interest towards the year-end as investors poured in. Meanwhile, ether options initially lagged but gained momentum as the broader rally extended to various assets. Ether options' open interest reached a new high of $9.37 billion in late December, reflecting increased ether prices and heightened options activity, especially as optimism grows around a potential bitcoin spot ETF approval in 2024, indicating positive sentiments for multiple assets, including ether.

Regulation

Up, Down, and Around ETF Approval

As the Jan. 10 deadline for the SEC's ruling on Ark Invest and 21Shares' spot bitcoin ETF proposal approaches, opinions on the likelihood of approval vary . Bloomberg Intelligence analysts estimate a 90% chance, but Matrixport's Markus Thielen believes all applications fall short of SEC Chairman Gary Gensler's compliance standards. Truflation's CEO, Stefan Rust, agrees, suggesting regulators seek more control over cryptocurrencies. Compass Point Research analysts see a base case for approval but acknowledge potential delays, while Van Buren Capital's Scott Johnsson is confident in approval between Jan. 8 and Jan. 10, claiming the SEC has no more room for further delays. If rejected, major firms like BlackRock and Fidelity would face setbacks alongside crypto-focused companies. See more: Financial advisers want a bitcoin ETF, but less than half expect approval: Survey

Dash, Monero, and ZCash Experience Slump as OKX Announces Delisting of Trading Pairs Over Privacy Concerns

Privacy-focused cryptocurrencies Dash, Monero, and ZCash faced a significant 10% drop in value following the decision by crypto exchange OKX to delist their trading pairs starting January 5 . While OKX attributed the move to user feedback and compliance with its token delisting guidelines, concerns arise about the impact on privacy coins, known for obscuring transaction details to preserve user anonymity—a feature that often conflicts with regulatory preferences.

FTX Bankruptcy Resolution Faces Prolonged Timeline Due to Complexities

The bankruptcy process for FTX, the failed crypto exchange, is expected to extend over several years , according to lawyer Alan R. Rosenberg. The complexity arises from numerous creditors, multiple clawback claims, and the sheer volume of individuals seeking to recover over $8 billion. The case involves settlements with more than 1 million FTX creditors, battles against a $24 billion IRS tax claim, efforts to retrieve funds from various entities, and legal challenges related to fraudulent transactions and lawsuits against former executives. The lack of definitive case law on valuing cryptocurrency adds further intricacy to the proceedings.

Steady Growth Sees $3.83B in Quarterly Deal Volume

In Q4'23, crypto fundraising demonstrated slow but steady growth, with a notable increase in quarterly deal volume by 81% QoQ, reaching $3.83 billion. The deal count also rose by 28% QoQ to 387, despite a downward trend in monthly deal counts during the quarter. Some noteworthy funding rounds include Blockaid with $33 million, Ritual with $25 million, Drift with $23.5 million, Blast with $20 million, and Privy with $18 million.

Other Domestic Regulation Updates

• SEC charges 'self-styled entrepreneur' with fraud after promising investments in crypto and pocketing the money
• Chair McHenry’s Retirement: What It Means

Other International Regulation Updates

• India's Financial Intelligence Unit issues compliance notices to offshore crypto exchanges including Binance, Kraken
• India to block URLs of Kraken, Binance, and 7 other crypto firms

Pain & Gain

Pain

• Xai Gaming Token Airdrop Delayed—Here's When It's Coming
• Former U.S. President?Donald Trump has reportedly divested $2.4 million in ETH
• Nvidia Makes a Slower GPU for China Under New U.S. Trade Restrictions
• Looking back at eyeball-scanner Worldcoin's tumultuous year
• Crypto wallet founder hit by phishing attack

Gain

• Cathie Wood's ARK Sells Remaining GBTC Shares
• The Avalanche Foundation, which supports the Avalanche blockchain ecosystem, said it is considering buying meme coins as part of a drive that recognizes the distinct niches of the cryptocurrency market
• The year in data: 5 charts that show how crypto changed in 2023