🟣 Ethereum (and Curve) spending under the microscope
Plus, drawing a Starknet contrast
Macauley Peterson & Donovan Choy
August 28, 2024
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Ethereum Foundation funding drama
Starknet parallel execution
GHO branching out
Curve voting on funding itself
Amid the languishing prices of ETH relative to BTC/SOL, a 35k ETH ($94 million) transfer from the Ethereum Foundation to Kraken in the past week has riled up the usual suspects on Crypto Twitter regarding the lack of routine financial disclosures.
The backlash drove EF executive director Aya Miyaguchi to clarify that the transfer was all part of "treasury management" activities and not necessarily "equal to a sale." Due to "regulatory complications," the Foundation was prevented from sharing the plan in advance, but there will be "planned and gradual sales" going forward.
Yesterday, Josh Stark of the EF provided more clarity.
According to Miyaguchi, the EF has an annual budget of about $100 million a year. The Ethereum Foundation’s treasury has 273,273 ETH ($675 million), making the run rate of EF about six to seven years, assuming a constant ETH price.
The largest chunk of spending in 2023 is about $25 million to "L1 R&D," which entails internal spending on EF research teams like Geth, Privacy and Scaling Explorations, Solidity, Devcon and more.
The second-largest chunk of spending is about $37 million, going to "new institutions," or external grants to organizations like L2Beat, 0xPARC Foundation, Nomic Foundation, Decentralization Research Center and more.
In total, about 62% ($62 million) is allocated as external spending for grants by the Ecosystem Support Program. Based on EF’s latest Q1 2024 report, at least 109 different developer, research, events and community projects received $11.4 million in funding.
Just in case it’s important to anyone, Vitalik is paid $139.6k a year by his own accord.
To put the EF’s spending in context, Arbitrum DAO is spending $215 million in ARB on its gaming ecosystem fund, and has spent about $70 million in the Short-Term Incentive Program, a grant that ran for three months in November 2023. Blockworks Research’s platform tracks 443,360,903 million ARB issued into circulation historically, about $230.5 million at today’s prices.
The Interchain Foundation, which supports the Cosmos ecosystem, also spent $30.8 million in 2023. Its largest spend went toward the "IBC Protocol" (26.7%), based on the Interchain Foundation’s 2023 annual report.
— Donovan Choy (X: @donovanchoy | Farcaster: @donovan)
Starknet opens transaction "megastore"
Parallel execution has been a hot topic in cutting-edge blockchain networks. Major players — some already live, like Solana and others still to launch, like Monad — are pioneering approaches to enhance scalability and transaction throughput.
StarkWare announced Wednesday it is joining the ranks of parallel executors with its Starknet 0.13.2 upgrade.
Starknet's instantiation of parallel execution is explained by way of an analogy to a "megastore."
"L2s today are like minimarkets with a single checkout, as our sequencers can only handle one transaction at a time," said StarkWare CEO Eli Ben-Sasson.
Instead, the Starknet sequencer processes multiple transactions at once. In the case where two pieces of state conflict, Starknet re-executes the later transaction.
Another technique, which StarkWare calls "Block Packing," reduces the pre-confirmation times experienced by Starknet users to two seconds without increasing Ethereum mainnet data availability costs.
As parallel execution becomes the norm in blockchain technology, Starknet’s latest upgrade positions it among industry front-runners.
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GHO rises:
Aave’s GHO stablecoin is settling at all-time highs of $120 million this week, though it is still a fraction of DAI’s (soon to be USDS) $5.3 billion market cap. According to Intotheblock, GHO minted by Aave stakers makes up about 62% of the stablecoin’s total supply, suggesting that GHO as an Aave-centric collateral seems to be changing.
— Donovan Choy
Funding Curve development
Curve Finance’s lead development team recently updated its governance proposal regarding the funding of Swiss Stake AG. The company, led by Curve founder Michael Egorov, is responsible for developing Curve's technology. This includes its stablecoin, crvUSD.
Initially, the proposal faced community resistance due to a lack of clarity regarding proposed budget allocations, the management of CRV tokens and the implementation of protective measures like vesting, tied to project milestones.
In response to the community’s concerns, Egorov has updated the proposal with more detailed information. The revised proposal specifies that the requested funds, totaling 21 million CRV, will be allocated to developing key technical features such as scaling supply sinks for crvUSD and improving foreign exchange pools. The management of CRV tokens will involve staking with major liquid locker projects, and the tokens will be vested over one year to a smart contract, with safeguards allowing the Curve DAO to intervene if necessary.
Swiss Stake AG commits to producing biannual reports detailing the use of funds and the progress of ongoing initiatives. Additionally, the company plans to improve the user interface and governance site. All related code will be open-source.
The proposal is subject to a seven-day onchain voting process running through Monday, Sept. 2. A quorum of 30% is required for approval.
— Macauley Peterson
Last week, the Magic Eden Foundation formally announced the $ME token that will power Magic Eden’s cross chain ecosystem. Specifics on the token distribution and utility have not yet been detailed, but an airdrop related to the Diamonds points system is anticipated. Highlights from the announcement include requiring $ME tokens to be claimed in the official Magic Eden Wallet and a focus on the Bitcoin ecosystem.
Raydium generates more profits than any other DEX across all chains and is on track to earn approximately $83 million in 2024. Strong revenues and low token emissions have placed Raydium in a prime position. If Raydium’s P/E multiple were to increase to one similar to its peers (15x), this would represent a 270% upside potential.
Blockworks Research is conducting a survey to gain insight into the institutional staking landscape. This data will help industry leaders adopt their strategies as the industry matures.
If you're an institutional staker, we want to hear from you (and if you’re new to Blockworks Research, get 20% off of our service while you’re at it!)
OpenSea CEO Devin Finzer said in a post on X that the company is "ready to stand up and fight."
The Astar Network’s "evolution" includes a pivot away from Polygon to OP stack.
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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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