While blue chip crypto assets are up 30%+ to kick off 2023, governance tokens of liquid staking derivatives (LSDs) are on an absolute tear. We have been pounding the table on this narrative for months now, but once again, the Blockworks Research Team has little to no exposure. Sigh.

FXS, LDO and RPL are all up over 100% in the past month, with LDO — the kingmaker of LSDs — leading the way. A word of caution: These LSD governance tokens are all trading very similarly to how they did prior to the Merge.

We are roughly 2-3 months out from the Shanghai upgrade, whereby ETH withdrawals will be enabled. The LSD governance tokens saw a near identical bid from July-August 2022, or roughly 2-3 months prior to the Merge which took place on September 15, 2022.

The narrative around Frax’s (FXS) sfrxETH had not caught on at that point in time, so it acts as a good benchmark for the broader market over that time span. Does the LSD narrative have staying power this time, or is it another rotation ahead of a large Ethereum milestone?

Time will tell, but I am not overly eager to FOMO in. Steady lads.

- Sam Martin

OpenSea has reclaimed its dominance over Blur after removing volume flagged for wash trading. This comes just days after I released a 2023 thesis claiming that OpenSea’s demise is inevitable and that Blur is my favorite to claim the throne throughout the year; I am the best top signal out there.

In all seriousness, I firmly believe a decentralized NFT marketplace/aggregator will ultimately oust OpenSea as the top dog, given the revenue share opportunities that come with a decentralized trading venue over a centralized entity such as OpenSea. With the Blur airdrop coming to a close soon, it will be interesting to see how volume holds up.

The Bitcoin hash rate is hovering near all-time highs despite the bear market. In December of 2020, when BTC last traded in the 20-25k range, the hash rate was between 130-140 EH/s. Today the hash rate is nearly 270 EH/s, or roughly double what we saw at the end of 2020 during the raging bull market. So while the price is nearly flat since then, the competition to mine the same amount of BTC has doubled. This does not bode well for miner profit margins and will continue to put pressure on publicly traded miners if the price of BTC stays suppressed.

Ethereum Roadmap Part 1: The Merge

The Merge’s roadmap extends beyond the individual event, including further upgrades to establish a simple, robust, and decentralized proof of stake implementation

Agoric: Hardened Javascript for Easy dApp Development

Agoric is a smart contract platform that leverages Javascript to onboard the next wave of web3 developers

El Salvador Makes Good on $800M Debt Despite ‘Bitcoin Bet’

Previous calls to reverse bitcoin as legal tender in El Salvador have been met by derision from the country’s president

These Crypto Projects Are Still Hitting All-Time Highs

A number of tokens, including Rocket Pool, Aptos and Optimism have each hit all time highs so far this month, potentially setting the scene for a major 2023 turnaround

The insights, views and outlooks presented in the report are not to be taken as financial advice. Blockworks Research analysts are not registered broker/dealers or financial advisors. Blockworks Research analysts may hold assets mentioned in this report, further outlined in the Firm’s Financial Disclosures.

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🟣 LSD; Can't Stop, Won't Stop