By Frances Yue
Hello, welcome back to Distributed Ledger, our weekly crypto newsletter that reaches your inbox every Thursday. I’m Frances Yue, crypto reporter at MarketWatch. I’ll walk you through the latest and greatest in the digital asset world this week.
Crypto in a snap
Bitcoin /zigman2/quotes/31322028/realtime BTCUSD +0.49% went down about 5.6% over the past seven days, and was trading at around $19,159 on Thursday, according to CoinDesk data. Ether /zigman2/quotes/108573964/realtime ETHUSD +1.65% lost 18% over the seven-day stretch to around $1,306. Meme token Dogecoin /zigman2/quotes/226077044/realtime DOGEUSD +3.84% tanked 2.8% while another dog-themed token, Shiba Inu /zigman2/quotes/231473891/realtime SHIBUSD +1.31% , traded 8% lower from seven days ago.
|Biggest Gainers||Price||%7-day return|
|Source: CoinGecko as of Sept. 22|
|Biggest Decliners||Price||%7-day return|
|Source: CoinGecko as of Sept. 22|
The Merge benefits layer twos
Ethereum’s highly-anticipated Merge upgrade, which was completed last week, has helped layer two blockchains built on top of Ethereum, providing scaling solutions, a lower carbon footprint and a push forward institutional adoption, according to Mihailo Bjelic, co-founder of Polygon.
Polygon aims to address limitations on Ethereum, such as high transaction costs and low transaction speed.
The Merge transitioned Ethereum’s consensus mechanism from proof-of-work to proof-of-stake. Previously, under proof-of-work, the blockchain was secured by miners which requires a large amount of computational power. Now, under proof-of-stake, the network is secured by stakers, or Ether holders who lock up their tokens.
Such a transition is supposed to lower Ethereum’s carbon footprint by more than 99.9%, according to the Ethereum foundation.
It also helped reduce Polygon’s carbon footprint by 95%, Bjelic told MarketWatch in an interview. Though Polygon has always been operated under the proof-of-stake mechanism, “Ethereum is our foundational layer and you also have to factor in those checkpoint costs and the carbon footprint of all that,” Bjelic told Distributed Ledger in an interview.
The decline in energy consumption helped facilitate more institutional adoption for Polygon, as some companies have environmental, social, and corporate governance, or ESG mandates, Bjelic noted. In the past few months, Polygon announced partnerships with Coca Cola, Starbucks /zigman2/quotes/207508890/composite SBUX +0.04% and Meta /zigman2/quotes/205064656/composite META -0.74% , among others, with more companies showing increased interest ahead of the Merge, according to Bjelic.
Ban on algorithmic stablecoins?
The U.S. House of Representatives has been drafting legislation that could place a two-year ban on coins like TerraClassicUSD, previously known as TerraUSD, an algorithmic stablecoin that collapsed in May and led to the evaporation of about $50 billion value, according to a Bloomberg report.
It would be illegal to issue or create new “endogenously collateralized stablecoins,” according to the latest version of the bill, Bloomberg reported. The definition applies to stablecoins marketed as being able to be redeemed for a fixed amount of value, and are backed solely by another digital asset by the same creator, according to the article.
TerraUSD, for example, is supposed to always trade one to one against US dollars, and was backed by another cryptocurrency Luna.