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Ethereum: Cheaper L2s and Upcoming Airdrops

The Dencun upgrade on Ethereum went live and significantly reduced transaction costs, with estimates pointing to a tenfold decrease for layer 2 (L2) scaling solutions. This paves the way for the proliferation of application-specific rollups, facilitated by Rollup-as-a-Service (RaaS) providers like AltLayer, which enables no-code deployment of advanced L2 chains.

Following the recent upgrade, gas fees on layer-2 platforms such as Optimism, Zksync, Base, and Zora have plummeted to less than a penny, marking a significant cost reduction. In contrast, platforms like Arbitrum, Linea, and Scroll are planning to incorporate this upgrade soon. Despite the widespread acclaim for the upgrade among most layer 2 solutions, Blast faced a hiccup. The launch of Blast Mainnet, boasting over $1 billion in total locked value, was briefly disrupted as block production halted due to upgrade complications, although the issue was swiftly resolved within a few hours.

ETH ETF Chances Waning?

Bloomberg's ETF analysis team, led by Eric Balchunas, has significantly revised the expected probability of an Ethereum ETF spot approval in May, bringing it down from a previous estimation of 60–70% to just 30%. Despite this adjustment, GSR, a key market maker, maintains a cautiously optimistic outlook, though it signals readiness to adjust expectations should no progress be evident in the coming month. Echoing this sentiment, Jake Chervinsky of Variant Fund, alongside analysts from J.P. Morgan and TD Cowen, also foresee a low likelihood of spot Ethereum ETF approvals by May.

Pranav Kanade, a portfolio manager at VanEck, which successfully launched the Bitcoin spot ETF HODL, believes that the potential market size for a spot Ethereum ETF could rival or even surpass that of Bitcoin's. This perspective highlights Ethereum's profitability and its potential appeal to a wider audience, even without the integration of staking services within ETFs, underscoring Ethereum's intrinsic value beyond mere speculation.

EigenLayer's Mainnet Launch Fuels Airdrops and Staking Opportunities

The highly anticipated EigenLayer mainnet launch in Q2 2024 is expected to trigger a wave of airdrops from liquid restaking protocols (LRTs) and Auctioned Validator Sets (AVS). This "wealth creation" effect, coupled with the reduction in Ethereum's liquid supply due to staking, could provide a tailwind for ETH's price in the near term.

However, the influx of airdrops also raises concerns about competition for limited attention and capital among protocols. Platforms enabling the trading of airdrop points, such as Whales Market and KelpDAO, are likely to see increased demand as investors seek to capitalize on these opportunities before the bull market subsides.

Ether.fi Airdrop

EtherFi, a leader in liquid restaking, has announced an eagerly awaited airdrop for March 18, targeting eETH holders, EtherFi points and EtherFans NFT owners, and individual Ethereum stakers. They'll share 6% of ETHFI's billion-token supply, with a 90-day claim period. This move coincides with EtherFi's DAO launch and its token's debut on Binance, where Binance Launchpool farmers will receive 2% of the supply, introducing 11.5% of the tokens at launch.

The EtherFi Foundation is excited about this advancement, aiming to deepen governance engagement and ensure the protocol's success. A second airdrop is planned, adding 5% more tokens to the community, incorporating unclaimed tokens from the first round.

EtherFi, with a $2.9 billion TVL and ranking as the 11th largest DeFi protocol, supports over 800,000 ETH across 250,000 wallets. The token is designed for governance and value accrual, with a governance proposal expected soon.

Tokenomics reveal an 11% allocation for user airdrops, 32.5% to investors (with a two-year vesting), 23.26% to contributors, 27.24% to the treasury (1% to the Ethereum Protocol Guild), and 6% to foundation partners. EtherFi plans to distribute all tokens by 2030, with a significant portion available at the first airdrop.