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This Week In DeFi – August 26

This Week In DeFi – August 26

This week, the Ethereum foundation confirms dates for the Merge, Coinbase announces liquid ETH staking, and Symbolic Capital raises $50M for "pioneering" Web3 apps.

August 26, 2022

This week, The Ethereum Foundation has officially confirmed dates for the long-awaited Merge. The process consists of two upgrades, the first of which (“Bellatrix”) is set to take place on Sept 6. The final and most important step of the Merge (“Paris”) will be executed at a specific terminal total difficulty – which is estimated to be hit between Sept 10 and Sept 20, depending on the hash rate leading up to that point.

The Paris upgrade is expected to take a total of 13 minutes to be executed, assuming everything goes to plan.

This is it: The Merge is coming.
UPGRADE 👏YOUR 👏 CLIENTS!
+ More👇
— Joseph Schweitzer | 🕯 (@JBSchweitzer)
12:27 PM • Aug 24, 2022

Coinbase has unveiled its own liquid staking token for Ethereum, as it seeks to provide stakers with utility and transferability on their staked Ether on the new network. The exchange will issue ETH stakers with cbETH tokens, which can be redeemed at any time for the underlying ETH plus accrued interest.

The token will be highly similar to stETH, the equivalent token issued by decentralized staking service, Lido.

Coinbase will add support for Coinbase Wrapped Staked ETH (cbETH) on the Ethereum network (ERC-20 token). Do not send this asset over other networks or your funds will be lost.
What is cbETH? Let’s dive in 🧵👇
— Coinbase Assets 🛡️ (@CoinbaseAssets)
4:27 PM • Aug 24, 2022

Symbolic Capital has raised $50 million for a new Web3 venture capital fund, targeting "pioneering web3 applications". The company was launched in May of this year by Polygon founder Sandeep Nailwal and Cere Network founder Kenzi Wang.

Nailwal says he is focused on founders from markets that are often passed over by traditional VC firms. Symbolic will utilize a special data platform to support its portfolio companies.

Polygon and Cere Network founders launch $50 million web3 fund
theblock.co/post/165671/po…
— The Block (@TheBlock__)
2:20 PM • Aug 25, 2022

The community around stablecoin project Fei is upset over an exit proposal from the project’s team, which seeks to only partially repay hack victims – despite the protocol being believed to have sufficient funds to cover all of the losses.

The shut-down comes as a result of “mounting technical, financial, and future regulatory risks.”

<FEI shutdown: Exploit Victims vs. $TRIBE Token Holders>
@feiprotocol released a proposal to shutdown the protocol. @samkazemian, the founder of @fraxfinance, criticized it as a "new low for DeFi"
Thread on the controversial treatment of FEI Labs for FUSE exploit victims
— alphanonce Intern (@alphanonceStaff)
7:05 AM • Aug 25, 2022

It’s finally happening! The merge is locked in for mid September and Ethereum is making its long-awaited transition to proof-of-stake.

For the next few weeks, we can expect all eyes to be on Ethereum as people place their bets on a successful switch – while others place their bets on hiccups or shortcomings of the new network.

One primary concern has arisen, following in the footsteps of the Tornado Cash saga. Will major stakers (such as exchange giants) begin to censor transactions in an effort to cover their own butts, while upholding the Ethereum network?

We’ve already seen some censorship happening, as some builders and miners make moves to become “OFAC compliant” (OFAC being the Office of Foreign Assets Control). In short, these parties have been excluding transactions related to sanctioned or risky contracts and addresses, to mitigate their own risks. A slippery slope, the network (and others) could slowly descend into a centralized system, as major network participants choose their own safety over keeping the blockchain censorship-free – an understandable, yet undesired outcome.

This has led to important discussions such as this one, which make a case for “slashing” censoring stakeholders – i.e. destroy or confiscate the stake of censoring stakers.

More turbulence will undoubtedly come from proof-of-work (PoW) proponents and forks, with Binance becoming the latest exchange to announce support of PoW forks. Although still a small threat, these forks trading on major exchanges will almost definitely attract a large amount of trading volume and drama within smaller communities.

Whether you’re in ETH or not, buckle up! The Merge is here, and there will be plenty of action coming along with it.