Blockdaemon Ethereum Newsletter || May 2024

Blockdaemon Ethereum Newsletter

By:

Freddy Zwanzger

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In this month's newsletter, we cover a recent trend in $ETH rewards, Smart Accounts via multiple standards, our recent support for Liquid Collective, as well as understanding the $EIGEN token launch.

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In this month’s newsletter:

Why stake $ETH while rewards trend down?

With gas fee levels receding, $ETH turned slightly inflationary again in April at +0.22%. This is one significant factor reducing net validator rewards. At the same time, the number of active validators has crossed the 1,000,000 validator milestone.

Both can fit together if you consider some very positive aspects:

  1. With the latest Dencun upgrade, the protocol delivered on its scaling roadmap.
  2. If the expected bull market returns, gas fee and MEV rewards will rise again.
  3. Increase in (institutional) liquid staking options and restaking enables increased capital efficiency by reusing staked ETH collateral. Read our recent announcement supporting Liquid Staked ETH (LsETH) minting, redemption, and custody with Liquid Collective.
  4. Changes to the max effective balance coming with the next fork in practice mean enablement for auto-compounding rewards.
  5. Staking risk will get significantly reduced with the next upgrade (the initial 1 ETH penalty is to be reduced 128x to ~25$), in addition to progress on DVT and client diversity.

Image Source: Beaconchain Charts

Smart Accounts via multiple standards

Many were surprised by the inclusion of EIP-3074 into the scope of the next hard fork. While it promises to bring important UX improvements to users, it can also be seen as a competing standard to Account Abstraction (also known as ERC-4337), which had already gathered support from many builders since its launch in February 2023. Many of these benefits can also be achieved via MPC technology, e.g. granular policy controls in our institutional wallet (even across multiple blockchains).

Blockdaemon is renowned for our holistic approach, based on specific institutional use cases - as it is clear that multiple trends are interconnected and benefit from our product portfolio breadth:

Image source: Blockdaemon presentation

Blockdaemon Launches Support for Liquid Collective

Blockdaemon is excited to announce the integration of the Liquid Collective’s ecosystem into our platform, where LsETH will now be the exclusive liquid staking solution in our Blockdaemon Wallet. This strategic move underscores our commitment to advancing staking solutions, especially tailored to the rigorous liquid staking requirements of institutional and enterprise clients. Read more about Blockdaemon joining the Liquid Collective in our blog.

Understanding the $EIGEN token launch

While deflating some overly optimistic expectations of airdrop farmers, the newly launched $EIGEN token is another very significant milestone for the EigenLayer restaking ecosystem. The token is stewarded by the newly formed EigenFoundation. They coined the term "Universal Intersubjective Work Token" for it, and it enables a whole new subset of use cases. However, these are mainly academic at this point, so it will likely take several months to materialize and mature.

We’ll keep you posted and welcome your questions - just reply to this email!

Image source: Jon Charbonneau on X