A shaky debut

Six new spot Bitcoin and Ethereum ETFs launched in Hong Kong earlier today although you'd barely know it. 

The two biggest cryptos to which these products are tied are in repose, again. BTC lost 1% in the past day. ETH fell 4%.

Meanwhile, the new Hong Kong funds saw only about $HKD80 million worth of volume, which is equal to USD$10 million, or roughly a drop of spit in a stein relative to the USD$4.5 billion that poured into a bevy of new spot BTC funds on the day, back in January, these vehicles made their debut in the U.S. 

Possibly curbing Asian markets' enthusiasm were some cautionary remarks from Chinese regulators indicating a “we’ll be watching” stance. The ETF issuers, China Asset Management, Bosera Capital and Harvest Global, all have roots in mainland China.

Meanwhile, dog-related memecoins are baying for attention. WUFFI is up 200% in the past 24 hours. WUFFI now has a market capitalization of $50 million, making it the 625th-largest digital asset. By comparison, the original dog meme, Dogecoin, has a market capitalization of $19.3 billion.

WUFFI actually describes itself as an “incentive token for third-party game developers.” It initially began life via an airdrop on the WAX blockchain and more recently moved to Solana, distributing to BONK holders.

Another canine-meme-craze-capitalizing meme asset, Doge With Hat (DOGEHAT), launched today on Jupiter, a Solana-run decentralized exchange (DEX).

Okay, so it turns out the SEC secretly considers ETH to be a security.

Good to know!

Decrypt, citing a lawsuit filed by an Ethereum ecosystem player, reports that the agency classified ETH as a security last April.

The lawsuit, recently filed by wallet maker Consensys against the SEC, contained a reference to an internal order issued by the regulator's division of enforcement in March 2023 and which explicitly referred to the investigation of "certain securities, including, but not limited to ETH."

The "Formal Order," Decrypt says, stands in stark contrast to the regulator's public refusal to say whether it considers ETH a security. 

As of 7:52 a.m. (EST), ETH, the second-largest digital asset, saw its spot price fall 4.4% to $3,014.65, according to CoinGecko.

"The revelation that the SEC has officially considered ETH to be a security for over a year is a remarkable one," Decrypt said.

Sitting within the ranks of CoinGecko's Top 200 largest digital assets is Pendle (PENDLE). Until recently, it was doing so prettily, pumping hard on a points program leveraging the promise of future airdrops; PENDLE more than doubled from $3 in early March to more than $7 earlier this month.

Since its zenith of $7.50 was reached on April 11, PENDLE has plunged 42%.

Now airdrop farmers who used Pendle to gather EigenLayer points are upset about the coming EIGEN token airdrop set to be broken into two phases. The second phase is said to involve a relatively puny allocation for speculators who collected points via yield farming protocols like Pendle.

PENDLE fell precipitously after the Eigen Foundation released details of the airdrop. But fast-changing dynamics are part and parcel of the Pendle protocol's existence autonomously stripping out an asset's yield so as to separately tokenize it.

EigenLayer disappointment aside, Pendle confronts rate trading competition from the likes of Yieldster and Element Finance. And within the adjoining realm of Liquid Staking Derivatives (LSD), there's Ethena and Renzo.

Recent token distributions from these projects compressed implied yields across the DeFi landscape, resulting in a steep drop in transaction activity. Pendle's daily volumes shrank from $250M on average in March to barely $25M as of last week. "Compression in transaction activity has materially decreased yields for liquidity providers," Bankless said.

Capital is sloshing opportunistically as it is prone to do. Liquid staking remains the largest DeFi protocol category, per Cointelegraph.

Lido Finance, the largest such staking protocol, recently crossed a monumental milestone: one million validators. Scary right?

Possibly more so than you might think, we’re told.

Instead of having staked Ether locked up, unused, Lido offers users its Lido Staked ETH (stETH), which can be deployed across other DeFi protocols. "LSDfi" has become a brave new $48B world in terms of total value locked (TVL); Lido accounts for nearly two-thirds of that; Rocket Pool is in second place with $3.86 billion in TVL, according to DefiLlama.

The SEC is said to be hung up on the dense ETH2 staking sub-plot when it comes to the saga that is the agency's scrutinization of the suitability of ETH.

In addition, there are also concerns that have been raised by Ethereum co-founder Vitalik Buterin who last September blogged: “With the DAO approach, if a single such staking token dominates, that leads to a single, potentially attackable governance gadget controlling a very large portion of all Ethereum validators."

Lido, to their credit, has implemented safeguards against this, according to Buterin.

But he added, "one layer of defense may not be enough.”