Friday, July 19, 2024
centralized convenience, countdown time for ETH ETFs, what happens if Biden drops out?
“Wisdom comes from experience. Experience is often a result of lack of wisdom.” – Terry Pratchett ||
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IN THIS NEWSLETTER:
The vulnerability of centralized convenience
Countdown time for ETH ETFs
What happens if Biden drops out?
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WHAT I’M WATCHING:
The vulnerability of centralized convenience
The colossal IT outage today that kept planes grounded, froze transfers and splashed the “blue screen of death” (ie. a Windows failure) on computers around the world sends several loud messages.
One is that it is crazy that one software upgrade can cause so much damage. It stretches credulity that the upgrade wasn’t rigorously tested in localized and semi-connected systems before launch. It also stretches credulity that key societal infrastructure (banking, travel, media) was collectively vulnerable to one element. And it stretches credulity that the paralysis cannot be easily fixed – the upgrade has been unwound, but apparently, from what I read, there’s a colossal amount of individual tweaks and resets needed to restore normality.
Another is that things could have been so much worse. We’re told this was not a cyberattack, which puts us in the surreal and unsettling situation of feeling relief that it’s “just” an astonishing vulnerability that we ourselves collectively chose.
There’s obviously much more to say on this, and much more investigation to parse through. Meanwhile, this should be, unfortunately, good for crypto (I say “unfortunately” because benefitting from the misfortune of others is always a bad feeling). Open blockchains continued working throughout.
And hopefully the rich publicity this incident is inadvertently giving the idea of decentralization will boost funding, especially for startups working on decentralized infrastructure (DePIN) projects. Their services may be cumbersome; but we are now seeing the downside of convenience.
Countdown time for ETH ETFs
We finally have the fee information for the ETH spot ETFs, which look on track to start trading on Tuesday.
Surprisingly, Grayscale is holding its 2.5% fee for its $ETHE fund, while others are starting with a fee waiver or a <0.25% cost. Given the flood of outflow from the GBTC bitcoin trust when it converted to an ETF, this is a surprising strategy.
The asset manager has been given the green light to list its new mini ETH ETF ($ETH) along with all the others, with a fee waiver for the first $2 billion or the first 6 months (whichever comes sooner), 0.15% thereafter. This new fund will be seeded with 10% of ETH from $ETHE – this essentially means that 10% of any $ETHE holding gets automatically converted (tax-free) into the lower-cost $ETH fund, which will slightly lower the overall fee for $ETHE holders. But not by much – if my math is correct, the average fee will be around 2.27% (after the waiver). And it’s worth noting that the new fund will start off with almost $1 billion in AUM, because of the 10% seed from $ETHE.
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