Technology

ETH-based futures ETFs on their first trading day: data and predictions

Ethereum is the second largest cryptocurrency in the world based on market cap measurements, second only to Bitcoin itself. Over the past years, investors have recorded considerable losses owing to the pressures of the bear market and crypto winter. They subsided only momentarily and were immediately replaced by other troubles in the form of steep inflation, interest rate hikes, and an environment keen on adopting stricter regulations. Regardless of all the negative aspects, investors are still looking to buy Ethereum and help their portfolios thrive.

During times of significant instability within the ecosystem, exchanges such as Binance advise investors to be mindful of the changes in value when looking to buy Ethereum. It is more important than ever for investors to remain attentive to what’s going on in order to come up with successful strategies that’ll help them retain the value of their holdings and even see more profit.

Futures ETFs

Nine new Ethereum futures ETFs were released on October 2nd, but the initial excitement many felt towards this addition seems to have mellowed. Exchanges had moderate yields in investments, and the first twenty-four hours brought less than $2 million. The products are designed to keep track of futures contracts that are tied to the intrinsic value of the blockchain’s native currency, Ether. However, only five are exclusive Ether holders, and the other four include a mixture of Bitcoin and Ethereum contracts.

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The most popular was Valkyrie’s Bitcoin Strategy, an ETF that tracks both Ether and BTC. In total, it gathered approximately $882,000 in overall volume. The product had been trading Bitcoin-only futures since October 2021 but recently adjusted to include Ethereum as well. Although some were disappointed in the resulting figures, other analysts took a more positive view. This is especially true when compared with the performance secured by traditional finance ETFs.

Streaming industry 

The blockchain is primarily recognized as the system powering the creation and trade of cryptocurrencies. However, analysts have started discussing the ways in which it could impact other business areas and sectors. Theoretically, using the blockchain would streamline processes and provide the introduction of a safer and more transparent business medium in which manufacturers, retailers, stakeholders and customers could feel more secure.

The latest environment that seems to benefit from blockchain tech is the film and streaming industry. The rise of Web3 functionality has changed the digital environment fundamentally, signaling the beginning of a gradual shift towards decentralization. Artists will have the opportunity to reclaim their authority and set the prices themselves. Following the Writers Guild Strike and the still ongoing SAG-AFTRA movement, studios and producers became more aware of the necessity of fair treatment in the entertainment industry.

Besides helping the creators, new technology could also be used for the fans, as Web3 would be more fan-centric than the current system. Crypto could even be used to innovate the landscape, providing viewers with watch-to-earn incentives providing tangible stakes for the content people enjoy. It’s not just for movies or TV series; music, vlogs and any other type of video could be integrated within the same blockchain system and benefit from the same functionality.

Gaming apps 

Given its fully digital environment, the gaming sector can also be intrinsically tied to the blockchain. Decentralized gaming apps have been gaining popularity among crypto users because of their transparency and permissions regarding user asset ownership. However, delivering high-quality experiences has often been troublesome for the ecosystem.

Scalability is one of the main issues, and large blockchains such as Ethereum have also been dealing with it. The upgrades promise to deliver a more streamlined experience. Still, it seems that the only way to achieve it is to make continuous steps towards ensuring that networks don’t become congested again. Performance is another potential issue. The games generally require high-performance computing as well as superior graphics. The existing DApps have yet to comply with the standards.

Developing the games is also resource-intensive, considering both the blockchain execution fees and the time that goes into creating a new product. Enter the actor model, a communication system that permits parallel computing and messaging within the blockchain protocol. The programs within this protocol send messages to each other, and each has a private state that no one can change.

Integrating this type of messaging in the blockchain offers considerable advantages, such as boosting reliability and efficiency, both crucial aspects of the decentralized digital experience. Unlike synchronous processes, the newer tech enables concurrent execution, enhancing performance and handling a much larger number of transactions simultaneously.

10% of profits 

The Protocol Guild, made up of 150 Ethereum core developers, will be the beneficiary of a VanEck donation set to include 10% of the profits derived from the Ethereum ETF. The reasoning is that giving back to the community is the ethical thing to do. It isn’t just a one-time occurrence either, but rather a continuous effort that will take place over the course of an entire decade. The announcement was made officially on September 29th.

The company has, therefore, joined other crypto-native communities that have been actively supporting Ethereum, including Arbitrum, Uniswap and Lido Finance. Over the past few years, the group of core developers has received nearly 5,000 contributions, with an accumulated value of $12 million coming only from donations. At the moment, the Protocol Guild is also working on the Ethereum Improvement Proposal EIP-4844, also known as proto-danksharding. The upgrade is set to launch a new transaction type on the Ethereum blockchain and reduce the fees on the layer-2 protocol.

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Post-Merge compliance 

Regulatory pressures have been the talk of the town since the beginning of 2023, and Ethereum has recently come under scrutiny again. The crypto coin has dipped by up to 45% in compliance in the aftermath of the Merge upgrade, according to the OFAC. The list includes several other exchanges and cryptocurrencies.

The shift from the proof-of-work protocol to proof-of-stake has resulted in the decline, and the Ethereum blocks that adhere to the standards have been censoring some transactions. Before the Merge, compliance had increased considerably and was on a gradual path upward. In November 2022, 78% complied with the standards. By September 2023, the figures had dropped to 30%.

Although Ethereum is one of the most well-known cryptocurrencies in the world, it was not immune to the negative implications of the cryptocurrency winter. So far, 2023 has been a year of recovery for the marketplace, and, likely, it will still be a while until there are sizable gains.