Watch Out For These RUG PULLS!

As crypto becomes an altogether happier place to be these days, sadly there’ll always be those looking to spoil the party. And no, I’m not talking about the SEC.

While we may get exasperated and enraged by the shenanigans of Gary Gensler and his gang, there are far worse characters out there. Crypto presents many amazing opportunities, however some of those are opportunities for the bad guys to make bank at the expense of the unwary. The rug pullers are lurking in the shadows and we must not let them win.

Today’s video is aimed at helping you steer clear of these scumbags. It gives a potted history of rug pulls and explains what they are and how they work. We then give you ten invaluable tips to help avoid becoming the victim of one.

As the bull market builds up steam, rug pulls will only become more common. The biggest weapon we have in our armoury to combat them is education. If we stay vigilant and keep our wits about us then we can protect ourselves. We can also make life harder and less lucrative for those who would seek to profit at our expense. Let’s fight the bad guys together.

You can watch today’s video here.

📈 Crypto Market Forecast 📈

It’s going to be an interesting week. For starters, the stock markets in the US will be closed on Monday due to Martin Luther King Day. This is going to be frustrating for anyone still feeling the FOMO about the spot Bitcoin ETFs, and it could have the peculiar effect of causing larger inflows on Tuesday as a result. This would be positive for BTC, as actual BTC is being bought.

It’s nice to finally have spot crypto ETFs, isn’t it?

Anyways, with the spot Bitcoin ETFs approved, all eyes are turning to the pending Ethereum ETF approvals. Of course, the SEC is signalling that the spot Ethereum ETF applications won’t be as clear-cut as the spot Bitcoin ETF applications were. To refresh your memory, SEC chairman Gary Gensler has implied that ETH is a security on many occasions, but hasn’t officially said so.

This is even more frustrating than wanting to invest in the spot Bitcoin ETF on a holiday. That’s because this creates a lot of uncertainty about whether the SEC will approve the spot Ethereum ETFs (with the next round of decisions due in May). Naturally, this has everyone looking for signs of certainty, like Blackrock’s ETF approval track record now being 576-1.

The good news is that ETH is likely to pump regardless. That’s because it’s got other catalysts besides the spot Ethereum ETF. For instance, there’s the upcoming Dencun upgrade, whose first testnet is scheduled to go live this week, specifically Wednesday, January 17th. We’re likely to see lots of green shoots from Etherem’s ecosystem, particularly from promising layer 2s.

Note that we recently covered a promising Ethereum layer 2 for our Coin Bureau Club members. You can find out which one it was and how high it could go using the link here.

Anyhow, if you’re unsure as to why Dencun is so significant, it’s basically because it will make Ethereum’s layer 2s faster and cheaper. This could have a profound effect on alternative EVM-compatible layer 1s, given that they’ve been used as de facto faster and cheaper Ethereum L2s. As such, we could see these layer 1s lose market share to Ethereum’s L2s after Dencun.

That said, many so-called Ethereum killers are expected to have major catalysts of their own in the coming weeks. The elephant in the room here is Solana. If you watched our recent Ethereum vs. Solana video, you’ll know that Solana will soon be adding a new validator client. Notably, this could make Solana much faster than it already is.

Even cryptos in Bitcoin’s ecosystem have upcoming catalysts in Q1. Speaking of which, it’s interesting to see that cryptos in Bitcoin’s ecosystem didn’t pump more after the ETF approvals, much less the actual listings. This could mean it was a sell the news event for these particular alts. Alternatively, it could be a consequence of rotation into BTC in the wake of these catalysts.

This ties into a somewhat hot topic among certain technical analysts (Ben Cowen), and that’s Bitcoin dominance. If you zoom out to the six-month or one-year timeframe, you’ll clearly see a head and shoulders pattern. If this plays out, then it could mean that Bitcoin dominance declines. This would be consistent with BTC levelling out after the initial spot ETF hype.

This would be the so-called ‘Goldilocks’ scenario for altcoins, and it’s likely that we would see lots of the recent BTC gains rotate into ETH, into Ethereum’s L2s, and then other blue chip altcoins like SOL. Eventually these gains would find their way into the most speculative plays of all. If history is any indication though, the degens could skip over these alts and right into memecoins.

🤔 Is Restaking The Next Big Thing? 🤔

The layers of DeFi are expanding. The latest to be placed on top of the Ethereum network is the ‘restaking’ layer facilitated by a project called EigenLayer.

Now, although some of our team members did share their thoughts on the narrative with members of the Coin Bureau Club last week, this is a project/narrative we have yet to cover on the main channel.

However, we believe restaking could turn out to be one of the biggest narratives to play out this year, if not this cycle.

If this is the first time you’re hearing of restaking or EigenLayer, the simplest way to explain it would be to think of EigenLayer as an infrastructure-cum-marketplace which allows projects or decentralised applications that need their own consensus layers to directly borrow the economic security of Ethereum.

In other words, EigenLayer creates a consensus/security layer for modular blockchains and dapps.

The process which enables this ‘renting’ of Ethereum’s economic trust is called ‘restaking’. For a technical description, restaking is nothing but the process by which ETH stakers on the Ethereum network assign their claims over their deposits and yields to the EigenLayer smart contract. This means that any unstaking of the underlying ETH (principal + rewards) would be received by the EigenLayer smart contract instead of the primary staker.

But, why would anyone assign their claims to EigenLayer?

Well, the simple answer is… additional yield. In exchange for the assignment of their claims on staked ETH, users are now eligible to delegate the value of the ‘economic security’ provided by the users’ staked ETH to an ‘Operator.’

Operators are registered users who help run the software built on top of EigenLayer. They provide ‘validation’ services in the EigenLayer ecosystem. These operators help users earn additional yield (in the form of token incentives) from the projects wanting to rent Ethereum’s economic security by delegating the value of said economic security provided by the users’ staked ETH.

This creates an entirely new ecosystem on top of Ethereum and allows Ethereum users to accrue more value, in addition to the rewards received by securing the base layer. Crypto X (formerly Twitter) has coined a new term called ‘Restake Finance’ (ReFi) to describe this new ecosystem.

If all of that still sounded complicated, we recommend you check out Gauntlet founder Tarun Chitra’s explanation of this concept. He presents an interesting analogy which compares the restaking layer to the bond market seen in traditional finance.

However, it isn’t all sunshine and rainbows for EigenLayer restakers. While many believe ReFi is one of the best innovations to come in recent times, others are worried that it exposes Ethereum stakers to an additional layer of risk – one that they believe could eventually place the base layer (Ethereum) at risk itself.

By assigning their claim over their staked ETH, users agree to allow EigenLayer to slash any portion of their stake for any malicious activity (errors, double-signing, etc) conducted by the operators to whom these users have delegated their stake.

On the other side, projects choosing to rent Ethereum’s economic security may also be exposed to risks, such as operator collusion and centralisation, if they design poorly-structured validation requirements.

For operators, the only way to mitigate these risks is through parameter optimisation and diversification. Under parameter optimisation, operators must select the projects they want to validate by optimising their decisions based on parameters such as TVL, slashing quantities, fee distribution, insurance or reserve quantities, etc.

Under diversification, users can mitigate malicious operator risk by opting into services such as liquid restaking tokens (LRTs). These LRTs act as on-chain funds whose governance community creates a list of projects to provide validation services. This allows restakers to choose their LRTs based on their specific risk profiles.

In summary, we believe Restake Finance could be the next great DeFi revolution. We’re already seeing the emergence of projects such as LRTs specifically designed to provide modular validation services to a specific ecosystem such as Cosmos, and LRTs which allow restakers to choose risk profiles based on modular restaking strategies.

If you want to learn more about the Restake Finance ecosystem, we recommend you check out this Google spreadsheet by Jinglingcookies, which contains a list of ReFi projects. Enjoy!

📺  The Coin Bureau Club  📺

Over the past 6 months, the Coin Bureau team has been working incredibly hard to bring you arguably the best crypto subscription service there is.  

And that service is the Coin Bureau Club

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* Exclusive small and mid cap altcoin reviews
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Due to the success of the club as well our requirement to fund further development, we decided to increase our prices on the 15th of January. That means you only have TODAY to lock in the best ever price for club membership!

Prices will go up within 24 hours!

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🔮 Video Pipeline 🔮

* 10 Things You MUST Know Before Buying Crypto
* DePIN Report: The Promising Projects
* Elections And the Crypto Market In 2024: Time for CRAZY volatility?
* Celestia Review: Where is TIA Going in 2024?

🏆 What's New at This Week? 🏆

* Bitcoin ETF Approved! What Now?
* Beyond Bounty: Zengo Wallet leaves 10 BTC on-chain for hackers to take
* Sweatcoin Review 2024: Can You Earn Crypto By Walking?
* GMX Review 2024: Why Is This DEX So Popular?
* The Dawn Of A New Age
* The State of On-Chain Privacy in 2024

📖 Quote of the Week 📖

The journey to a spot Bitcoin ETF has taken over a decade. Ever since the day back in 2013 when the Winklevoss twins filed the first application, the crypto community has been in pursuit of that elusive goal. What this week’s events show is that nothing is going to stop us. We are persistent. We have grit. We are the honey badgers.

“The only guarantee for failure is to stop trying” - John C Maxwell

Team Coin Bureau

Disclosure: Authors may own cryptoassets named in this newsletter. These are unqualified opinions, and a Coin Bureau newsletter, is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor. 

Guy Turner

Guy is one of the founding members and face of the Coin Bureau. Like many of us, he is just an average joe who became “crypto curious” back in 2013. After recognising the potential of blockchain technology, Guy set off on a mission to create crypto educational content, working with others to start the Coin Bureau website and released our first video on YouTube in 2019. You can learn more about him in his Who is Guy? blogpost.

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