10.26 AI Daily Cryptocurrency Industry News: Ethereum's The Purge Plan attracts follow, Japan considers launching BTC ETF

一. Headlines

1. Ethereum co-founder Vitalik Buterin releases a blockbuster article discussing the future development of the Ethereum protocol, The Purge

ETH founder Vitalik Buterin released his latest article ‘The Future Development of ETH Protocol (Part 5: The Purge)’ on October 26th, pointing out that one of the challenges facing ETH is that the expansion and complexity of any blockchain protocol will rise over time by default. This happens in two places: historical data and protocol functionality. In order to ensure the long-term sustainability of ETH, strong counter-pressure needs to be applied to these two trends, reducing complexity and bloating over time.

The article proposes that the key goal of The Purge is to drop client storage requirements by reducing or eliminating the need for every Node to permanently store all historical records or even the final state; and to drop protocol complexity by eliminating unnecessary functionality. Vitalik believes that two things need to be done to drop protocol complexity: stop making changes and make the protocol rigid; be able to actually delete functionality and drop complexity.

The article has sparked widespread follow and discussion. Insiders believe that Ethereum, as a leading public chain project, will have a profound impact on the entire cryptocurrency ecosystem with its future development roadmap. The drop storage requirements and protocol complexity help improve the scalability and efficiency of Ethereum, but also require a balance of inherent blockchain characteristics such as permanence. Overall, Vitalik’s new article points the way for the long-term development of Ethereum, leading the industry to think about the sustainable development of public chain projects.

2. Mainstream Japanese institutions support prioritizing the launch of BTC and ETH ETFs

According to Bloomberg, Japan is considering following overseas actions to allow ETF investment in Cryptocurrency, a move that has caught the attention of mainstream institutions in Japan. Some Japanese companies have expressed that the discussion should focus on major Tokens such as Bitcoin and Ethereum, including proposals from major trust banks such as Mitsubishi UFJ and Sumitomo Mitsui, Cryptocurrency exchanges such as Flyer, and organizations including Nomura Securities and SBI Securities.

These institutions believe that the huge Market Cap and “stable returns” of BTC and ETH make them suitable for investors to accumulate assets in the medium and long term. They advocate prioritizing the launch of BTC and ETH ETFs to meet investors’ demand for Cryptocurrency assets.

Industry insiders believe that the support of mainstream institutions in Japan for the launch of Cryptocurrency ETF reflects the increasingly important role of encryption assets in the Japanese financial market. As the world’s third largest economy, Japan’s measures in Cryptocurrency regulation and application will have a significant impact on the global Cryptocurrency industry. At the same time, BTC and Ethereum, as the leaders in the Cryptocurrency field, are expected to become the preferred choice for investors in ETF products.

Overall, the proposals from mainstream institutions in Japan highlight the rising status of Crypto Assets in traditional Financial Institutions, and also bring new opportunities for the launch of global Cryptocurrency ETF products.

3. Lido launches community stake module, dropETH Manor stake threshold

According to reports, the Community Stake Module (CSM) for Ethereum staking, launched by the Liquidity staking protocol Lido, has been launched on the Mainnet. The plan, approved by members of the Lido DAO community, aims to make Ethereum staking more inclusive and break down the high technical and financial barriers traditionally associated with solo staking.

Lido DAO technical lead and community member Dmitriy Gusakov said, “CMS will ultimately become Lido’s first permissionless stake module. At launch, this protocol will be limited to participants in Lido’s ‘early adopter’ phase, starting in early October, including independent stakers of Ethereum and Gnosis, Obol Techne certificate holders, etc. Once the Mainnet is live, anyone with 1.5 ETH can earn validator rewards by staking tokens and become a Node operator.”

Industry experts believe that Lido’s CSM module has lowered the threshold for ETH staking, making it more accessible for ordinary users to participate, which is beneficial for the development of the Ethereum ecosystem. At the same time, some analysts are concerned that if a large number of users rush into staking, it may exacerbate the centralization risk of the Ethereum network.

In general, Lido’s CSM module brings new options for ETH staking, and its impact remains to be further observed. Balancing network security and the degree of Decentralization while lowering the entry barrier for drop will be a key consideration for the ETH ecosystem.

4. Tether CEO Denies Rumors of US Government Investigation

On October 26th, Tether CEO Paolo Ardoino once again posted on social media in response to the Wall Street Journal’s report on the possibility of the US Treasury Department imposing sanctions on Tether. He stated that Tether regularly interacts with law enforcement officials to help prevent rogue states, terrorists, and criminals from abusing USDT. If Tether is under investigation, as reported by the Wall Street Journal, Tether itself would be aware of it. Based on this, it can be confirmed that the accusations in the reported article are incorrect.

Ardoino’s response is aimed at calming market concerns about the potential regulatory pressure on Tether. As the world’s largest stablecoin issuer, Tether’s operational status directly relates to the stability of the entire cryptocurrency market. Once a major negative event occurs, it may trigger a chain reaction and impact the cryptocurrency ecosystem.

Industry insiders believe that although Tether’s response has denied the rumors, it has not completely eliminated regulatory risks. In the future, Tether still needs to further improve transparency and enhance market confidence. At the same time, the regulation of Stable Coins will also become a focus of regulatory authorities worldwide.

Overall, the Tether incident has once again sparked regulatory attention to stablecoins. As an important infrastructure of the cryptocurrency ecosystem, the development prospects of stablecoins will directly affect the direction of the entire industry.

5. AI concept Memes coin carnival, LUNA’s 24-hour increase reached 326%

According to GMGN data, on October 26, the AI concept Meme coins surged across the board, including: LUNA (Luna by Virtuals) is now priced at $0.1899, with a 24-hour increase of 326%; HIGHER is now priced at $0.0425, with a 24-hour increase of 96.6%; CAI (ChasmAI) is now priced at $0.177, with a 24-hour increase of 85.5%; VIRTUAL is now priced at $0.4348, with a 24-hour increase of 70.9%; GOAT is now priced at $0.8583, with a 24-hour increase of 33.7%.

The big pump of AI concept coins has triggered widespread follow-up in the market. On the one hand, AI is considered an important direction for future technological development, and related concept coins are sought after by funds; on the other hand, some analysts question whether there is actual value support behind these currencies, warning investors to invest cautiously.

Industry insiders pointed out that the big pump of AI concept coins reflects the market’s enthusiasm for emerging technology concepts in the cryptocurrency market, but it also carries the risk of speculative trading. When investors pursue concept coins, they need to carefully identify the actual value of the project and avoid blindly following the trend.

Overall, the frenzy of AI concept coins has once again sparked market attention to the investment risks of Cryptocurrency. While chasing emerging technology concepts, investors also need to maintain rationality, invest prudently, and guard against the risks brought by speculative speculation.

二. Industry Data

1. BTC

Recently traded at $67,527.6000, up +0.6000% intraday.

2. ETH

Recently traded at $2484.9200, with a daily decline of -2.3000%.

3. PEOPLE

The recent transaction price is $0.0793, with an intraday increase of +0.4000%.

4. MOODENG

Recent transaction price 0.0750 US dollars, intraday increase +9.0000%.

5. GT

Recently traded at $8.7230, with an intraday decline of -1.1000%.

III. Industry News

1. BTC still faces downward risks in the short term, but the long-term outlook is still bullish

BTC fell below $67,000 in the past 24 hours, reaching a daily low near $66,500. The short-term downward pressure on BTC mainly comes from the unexpected US inflation data and the increasing expectation of Fed rate hikes. The market is concerned that the Fed will further increase interest rates, leading to a significant dumping of risk assets.

However, the long-term outlook for BTC remains bullish. Analysts point out that as a new asset class and store of value, the demand for BTC will continue to rise over time. In addition, with its limited supply and low inflation rate, BTC is expected to become an ideal choice for hedging inflation in the context of loose monetary policy worldwide.

On the other hand, institutional investors’ interest in BTC continues to heat up. Data shows that BTCSpotETF has continued to receive net inflows of funds since its listing, reflecting institutional investors’ favor for BTC. Analysts believe that with clear regulatory policies and continued layout by mainstream institutions, BTC is expected to attract more capital inflows.

In general, BTC may face certain fluctuations in the short term, but the long-term positive trend remains unchanged. Investors need to closely follow the macroeconomic situation and policy trends, exercise caution in managing risks, and maintain an optimistic outlook on the long-term prospects of BTC.

2. Ethereum suffers capital outflows, future development prospects questioned

Ether Square encountered a significant outflow of funds in the past week, raising doubts about its future development prospects in the market. Data shows that last week, the net outflow of funds from Ether Square spot ETF exceeded $24 million, and the ETF net asset ratio dropped to 2.28%.

The main reason for the outflow of funds from Ethereum is its recent poor performance. The price of Ethereum has been struggling to break through the $4,000 mark in this bull market, lagging behind the rise of Bitcoin. Some investors have doubts about the future development prospects of Ethereum and have chosen to withdraw their investments.

In addition, Vitalik Buterin, co-founder of Ethereum, recently published an article proposing the ‘The Purge’ phase goals for the future development of Ethereum, including storage demand drop and protocol complexity. This has raised concerns in the market about the development path of Ethereum and has also become a driver of capital outflow.

However, there are also analysts who are optimistic about the future of Ether. They believe that as a leading smart contract platform, the ecosystem of Ether is developing rapidly, and the rise of Layer2 networks will effectively enhance the processing power and efficiency of Ether. As long as Ether can successfully achieve the “The Purge” goal, its long-term value will be demonstrated.

Overall, Ethereum is currently facing some development challenges, but its position as an important force in the Crypto Assets field is difficult to shake. Investors need to be patient, closely follow the development trends of Ethereum, and carefully grasp the investment opportunities.

3. The Solana ecosystem continues to heat up, and the SOL price is rising against the market trend.

In the overall downturn of the Cryptocurrency market, the Solana ecosystem has been rising against the trend, with the price of SOL coin once breaking through $176. The continued heat of the Solana ecosystem has attracted widespread attention in the market.

The continuous growth of the Solana ecosystem is mainly due to its strong technical strength and active ecological construction. Solana has attracted a large number of high-quality projects to settle in with its advantages such as high throughput and low fees. In addition, the Solana Foundation continues to invest in ecosystem construction, injecting a continuous stream of power into the ecosystem.

Analysts pointed out that the prosperity of the Solana ecosystem is mainly due to its layout in popular areas such as Decentralized Applications (DApps), Non-fungible Tokens, Decentralized Finance, etc. Well-known projects such as Serum have emerged in the Solana ecosystem, bringing a large amount of traffic and capital to the ecosystem.

At the same time, the Solana ecosystem also faces some challenges, such as excessive concentration and lack of killer applications. But overall, the Solana ecosystem is still one of the star projects in the Cryptocurrency field, and its development prospects are worth looking forward to.

Investors need to closely follow the development trends of the Solana ecosystem and carefully grasp investment opportunities. At the same time, attention should be paid to risk control to avoid blindly chasing the market. Only rational investment can achieve long-term returns in the cryptocurrency market.

Four. Project Highlights

1. Vitalik discusses the key goals of the future development of the Ethereum protocol in The Purge phase

Ethereum co-founder Vitalik Buterin released the latest article “The Future Development of the Ethereum Protocol (Part 5): The Purge” on October 26th. The article points out that one of the challenges facing Ethereum is that the expansion and complexity of any blockchain protocol will rise over time by default, which occurs in both historical data and protocol functionality.

In order to keep Ethereum running in the long term, it is necessary to apply strong counter-pressure to these two trends, reducing complexity and bloat over time. At the same time, one of the great characteristics of blockchain, permanence, needs to be preserved. The key goal of The Purge is to drop the client’s storage requirements by reducing or eliminating the need for each Node to permanently store all historical records, and may even ultimately achieve; while dropping protocol complexity by eliminating unnecessary functions.

Vitalik proposed two things to be done in the complexity of the dropprotocol: stop changing and make the protocol rigid; be able to actually remove functionality and drop complexity. In addition, he also discussed more radical and more moderate ways to drop complexity.

This article aims to provide guidance for the long-term sustainable development of Ethereum, sparking a discussion in the community on how to reduce complexity while maintaining the permanence of the Blockchain. This move reflects the Ethereum team’s commitment to improving the scalability and efficiency of the protocol.

2. Breakpoint2024 Conference Highlights: Compact segments, debate format, and a vibrant community atmosphere

Breakpoint2024 conference is considered one of the best conferences this year, with the following main features: 1- Most speakers have only 5 minutes to share, so they must focus on the key points; 2- Adding debate format instead of boring group discussions; 3- Alternative award sessions, creating a vibrant community atmosphere.

Walking into the Solana exhibition hall, participants feel a superstore atmosphere, rather than just visiting an exhibition. In terms of projects, dozens of projects such as PYTH, Wormhole, Birdeye, etc., have released their new products, with no dull moments throughout. The conference is divided into two stages, and participants keep shuttling between the two stages to not miss any important moments.

The first day of the conference lasted from 10:30 in the morning until 6:00 in the afternoon. Thanks to the compact schedule and the almost ad-free agenda, almost every session was packed. This efficient conference format has received wide acclaim from participants.

The conference provides an excellent platform for projects within the Solana ecosystem to showcase the latest developments. By adding debate sessions and community interaction, the conference has created a lively atmosphere that helps drive innovation and development within the ecosystem.

3. Sui ecosystem has broad development prospects, and the Move project is worth following

During the TOKEN 2049 event, Sui, a blockchain project under the Move ecosystem, performed exceptionally well. Its Token, SUI, experienced a big pump, attracting widespread attention and follow. Sui Builder House was also one of the hottest activities before the conference.

In fact, since April this year, some people have been closely following Sui Network. There are three main reasons:

1. Solana’s ecosystem tends to be saturated, and developers and investors will seek the next opportunity;

2. The correlation between Move language and Rust makes it easier to switch from Solana to the Move system;

3. The technical staff approves Sui’s technical documents and designs.

At that time, SUI had not yet launched Token and stablecoin. Now, with the support of Grayscale Trust and Native USDC, the development prospects of SUI will be even broader.

In addition to Sui, Aptos and Movement, these two Move series projects are also worth following. The challenge for Aptos lies in the community’s understanding of its development direction needs to be deepened; while Movement, as the only Move series project that has not yet issued coin, hopes to see the birth of star projects as soon as possible.

Overall, the impression given by the Move ecosystem is that of strong technical capabilities and huge development potential, but currently there are relatively few assets available for trading, and more excellent projects need to be incubated and grown in the future.

4. Seeking new business models in the industry, long-term entrepreneurs may become the dominant force

During the TOKEN 2049 conference, there are significant differences in opinions from both inside and outside the industry regarding the current status and future development path of the We industry. Some viewpoints are worth following:

1. The industry currently has a tendency of ‘arbitrage’, lacking real users and sustainable business models, which is harming retail investors and draining industry liquidity.

2. The development of various tracks is unbalanced, and many tracks that have been touted as the future, such as blockchain games, Non-fungible Tokens (NFTs), social media, etc., have been debunked, leaving industry participants feeling uncertain about the prospects.

The AI track is seen as a new opportunity, but currently most AI+Web3 applications are still conceptual, and there are very few actual landing cases.

4. Some investors and entrepreneurs are calling for more attention to long-term entrepreneurs, creating a good innovation environment for them, breaking away from homogenization and Arbitrage mode, and promoting genuine innovation in the industry.

Overall, the industry is going through a period of painful adjustment, and the old business logic and models are being questioned, and new innovations are urgently needed to drive development. Long-term entrepreneurs with persistence and innovative ideas in the industry are expected to become the leading force in leading the industry out of the predicament.

五. Economic Dynamics

1. US initial jobless claims hit a three-year high

The data released by the US Department of Labor on Thursday showed that the number of initial claims for unemployment benefits climbed to 284,000 last week, the highest level since November 2021. This figure exceeded expectations, reflecting a slowdown in the labor market.

Economic background: The US economy is facing dual pressures of high inflation and rapid rise in interest rates. Despite the Rebound in GDP in the third quarter, signs of economic slowdown are becoming increasingly evident. After reaching a high of 9.1% in September, the inflation rate has fallen slightly but remains well above the Federal Reserve’s target level of 2%. The unemployment rate hovers at a low of 3.5%, but the labor market is gradually cooling.

Important events: In order to curb inflation, the Federal Reserve has raised interest rates six times since March, raising the federal funds Intrerest Rate target range to 3.75%-4%. Powell reiterated that interest rates will continue to rise until inflation cools significantly. This hawkish stance has intensified the risk of economic recession.

Market Reaction: US stocks closed slightly higher on Thursday as investors tempered their expectations of further rate hikes by the Federal Reserve. The US yield curve further inverted, reflecting concerns about the economic outlook. The US dollar index softened slightly.

Expert analysis: Jan Hatzius, Chief Economist at Goldman Sachs, said that the labor market is slowing down but still very tight. He expects the unemployment rate to rise to 4.1% by 2024, but there will not be a large-scale wave of layoffs. Citigroup warns that the U.S. economy may experience a mild recession in the second half of 2023.

2. The European Central Bank may achieve its 2% inflation target ahead of schedule

Fabio Panetta, a member of the Executive Board of the European Central Bank and President of the Deutsche Bundesbank, said on Thursday that the euro zone may achieve its 2% inflation target earlier than expected. His comments suggest that the European Central Bank may not end its rate hiking cycle prematurely next year.

Economic background: The euro area economy is facing dual pressures of energy crisis and high inflation. GDP growth slowed to 0.2% in the third quarter, and the inflation rate climbed to a new high of 10.7% in October. Nevertheless, the labor market remains robust.

Important event: The European Central Bank has raised the Benchmark Interest Rate three times since July, increasing it to 1.5%. Draghi previously stated that the European Central Bank may need to raise the Interest Rate to a “restrictive” level to control inflation.

Market reaction: The euro has edged higher against the US dollar. European stock markets are generally down as investors anticipate a faster pace of interest rate hikes. The yield on German 10-year government bonds has edged up slightly.

Expert analysis: Francis Yared, Head of Macro Strategy at Deutsche Bank, said that Lagarde’s comments suggest that the European Central Bank may raise the interest rate to over 3%. Goldman Sachs predicts that the European Central Bank will raise the interest rate to 2.5% in March 2023. However, they believe that the Eurozone economy will experience a mild recession next year.

Six. Regulation & Policy

1. The US Treasury Department is considering imposing sanctions on stablecoin issuer Tether.

Policy Background: The US Treasury is responsible for regulating the financial system and maintaining national financial security. In recent years, with the rapid development of the Cryptocurrency market, Stable Coins play a critical role in the encryption ecosystem. As the largest issuer of Stable Coins, Tether has always been closely followed by regulatory agencies.

Policy Content: According to reports, the US Treasury is considering imposing sanctions on Tether. The reason is that the US government suspects that Tether’s Stable Coin USDT is widely used by individuals and groups on the sanctions list, including terrorist organizations such as Hamas and Russian arms dealers. Once sanctions are imposed, it will prohibit Americans and sanctioned entities from doing business with Tether.

Market Reaction: As soon as the news came out, major cryptocurrencies such as BTC experienced a brief decline. Investors are concerned that sanctions will affect the circulation of USDT, leading to turmoil in the cryptocurrency market. However, Tether’s Chief Executive Officer Paolo Ardoino later responded on social media, stating that the company has been in contact with law enforcement agencies and has confirmed that it is not under investigation.

Expert Opinion: Cryptocurrency analysts believe that if the sanctions are implemented, it will have a significant impact on the issuance and circulation of USDT, potentially causing investors to dump USDT and switch to other stablecoins. However, some analysts also believe that even if Tether is sanctioned, other stablecoin issuance providers can quickly fill the gap, leading to limited overall market impact.

2. The mainstream Financial Institution in Japan prioritizes launching BTC and ETH ETFs

Policy Background: The Japanese Financial Services Agency has been reviewing the regulatory policies on Crypto Assets and considering following overseas practices by allowing the launch of Cryptocurrency exchange-traded funds (ETFs). This move will provide investors with more channels to invest in Crypto Assets.

Policy Content: According to reports, major trust banks such as Mitsubishi UFJ, Mitsui Sumitomo, mainstream financial institutions in Japan including Flyer Cryptocurrency exchange, Nomura Securities, SBI Securities, etc., have expressed that discussions should focus on major Tokens such as BTC and Ethereum. They believe that the huge market capitalization and ‘stable earnings record’ of these cryptocurrencies make them suitable for investors to accumulate assets in the medium to long term. At the same time, they also call for a review of the tax system, including separate taxation of income.

Market Reaction: After the news came out, the prices of BTC and ETH saw a small pump. Investors welcome the possibility of Japan relaxing its cryptocurrency investment policies. However, some people are concerned that the launch of a cryptocurrency ETF may intensify market fluctuations.

Expert Opinion: Cryptocurrency analysts say that mainstream Financial Institutions in Japan support the launch of BTC and ETH Exchange Traded Funds (ETFs), reflecting the dominant position of these two cryptocurrencies in the market. If the policy is implemented, it will provide institutional investors with a more convenient investment channel, which is beneficial for the development of the cryptocurrency market. However, it is also necessary to pay attention to potential risks and establish corresponding regulatory measures.