Ethereum Advocates: Why the $318bn Asset is Real Money

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GM, Tim here.

• The ‘ETH is money’ debate pitches developers against investors.
• Sky, previously MakerDAO, is moving to Solana.
• The SEC settles with a DeFi project two years after its closure.

The Ongoing Debate: Is Ethereum Money?

The discussion around whether Ethereum’s $318 billion asset can be considered money has been heating up recently. The faithful followers of Ethereum argue passionately that ETH is indeed a form of money. This notion has sparked widespread debates, creating a rift between Ethereum developers and its broader community.

Supporters of this view list multiple reasons why ETH should be seen as money, including its store of value and means of exchange capabilities. However, not everyone concurs with this perspective.

Diverging Opinions Among Ethereum’s Developers

“ETH was never meant to be money,” stated Ethereum developer and team lead Péter Szilágyi on social media platform X. “The original goal was to support a decentralized world, which does grant ETH intrinsic value, but the intention was never to position ETH as money.”

Many within the Ethereum community fear that without recognizing ETH’s value as money, it could be eclipsed by other emerging crypto projects. Financial institutions and investors often prefer Bitcoin as a store of value, while newer blockchains such as Solana outperform Ethereum in transaction costs, speed, and capacity.

Matt Huang, co-founder of Crypto VC Paradigm, offered his counterpoint: “Ethereum is a complex organism that can evolve beyond the original intentions of its creators,” he responded on X.

Sky Integrates with Solana

Sky, the rebranded DeFi protocol formerly known as MakerDAO, is planning to tap into Solana’s thriving $5 billion DeFi ecosystem. Sky founder Rune Christensen confirmed the news at the Solana Breakpoint conference in Singapore.

The protocol will leverage Wormhole, a crypto bridge, to bridge SKY and USDS tokens, among others. There will also be a substantial liquidity incentive program offering SKY tokens to users of Solana DeFi protocols integrating USDS and SKY.

Christensen’s proposal last year to explore a fork of the Solana codebase underscores Solana’s technical prowess and ecosystem resilience, even in the aftermath of the FTX collapse. Several DeFi projects have broadened their scope from Ethereum to Solana. Notably, PayPal’s PYUSD stablecoin launched on Solana in May, now exceeding its presence on Ethereum. However, not all expansions are successful; for instance, Lido discontinued its Solana version last year.

SEC Reaches a Settlement with Rari Capital

The U.S. Securities and Exchange Commission (SEC) has settled with the founders of the DeFi project Rari Capital almost two years after its closure. Pending court approval, the founders will pay an undisclosed fine and will be barred from holding executive or director positions for five years.

Rari Capital, a lending protocol and yield aggregator, was hacked for $80 million in April 2022 and subsequently shut down in October that year. The SEC claimed the founders participated in unauthorized broker activities, misrepresented the protocol’s operations, and misled investors on potential earnings.

This settlement illustrates the relatively slow pace of SEC enforcement actions against DeFi projects but also sets a positive precedent for future cases where DeFi projects face hacks and decide to shut down.

Pseudonymous crypto investor DCF GOD commented on X, “Because they did the right thing post exploit — gave all the profits the platform made back to users — they’re letting them off with a very very strong warning. This is a good thing.”

This Week in DeFi Governance

VOTE: GFX Labs petitions Optimism to open governance to token holders

PROPOSAL: Should Aave adjust Wrapped Bitcoin parameters over BitGo transition?

VOTE: Sky to initialize USDS stablecoin and transition MKR governance token

Post of the Week

Crypto Twitter once again exhibits its dark sense of humor.

What We’re Watching

Coinbase’s new DeFi-compatible version of Bitcoin — cbBTC — has raised concerns regarding its transparency.

Got a tip about DeFi? Reach out at [email protected].