In a groundbreaking move that signals a significant shift in the blockchain industry, Lisk, a Layer 1 blockchain platform launched in 2016, has announced its transition to the Ethereum ecosystem as a Layer 2 solution. With the Ethereum ecosystem's rising prominence and the need for scalability, Lisk's strategic move aims to align itself with industry standards and facilitate the adoption of blockchain technology.
In related news, the cryptocurrency community is eagerly awaiting the U.S. Securities and Exchange Commission's (SEC) decisions on several Ethereum Exchange-Traded Funds (ETFs). In a recent regulatory filing made on Dec. 18, 2023, the SEC revealed delays in its verdicts concerning Ethereum ETFs, including those proposed by prominent players like Hashdex, Grayscale, VanEck, ARK Invest, and 21Shares.
Lisk Transitions to Ethereum Ecosystem, Paving the Way for Layer 2 Solutions
In a significant move that has sent ripples through the blockchain industry, Lisk, a Layer 1 blockchain that was launched in 2016, has announced its transition to the Ethereum ecosystem as a Layer 2 solution. This transformation aims to align Lisk with industry standards and accelerate its mission of making blockchain technology more accessible to users worldwide.
Lisk's decision to transition to the Ethereum ecosystem is driven by a strategic shift in its approach. Once a top 20 cryptocurrency by market capitalization during the 2017 bull market, Lisk found itself in a less favorable position in 2023, falling to 272 in the rankings with its market capitalization shrinking by 83% from $919 million to $152 million. However, the blockchain landscape has evolved, and Lisk now sees a unique opportunity to revitalize its mission by becoming an Ethereum Layer 2 solution.
The newly revamped Lisk network will leverage OP Stack, Optimism's open-source framework designed for the development of Layer 2 chains. Additionally, it will be built using Gelato's rollup-as-a-service platform. Lisk's Layer 2 will place a special focus on real-world assets and decentralized physical infrastructure networks (DePINs), signaling its commitment to practical blockchain applications.
Lisk co-founder Max Kordek emphasized the importance of integrating with the Ethereum ecosystem, stating, "Integrating with the Ethereum ecosystem and aligning with industry standards brings us closer to our goal of making blockchain accessible than ever before."
One of the standout features of Lisk's Layer 2 transition is the promise of significantly reduced transaction fees. The testnet deployment of Lisk's Layer 2 network is scheduled for the first quarter of 2024, followed by a mainnet launch. This development is expected to enable developers to access transaction fees that are up to 90% cheaper than those on the Ethereum mainnet, offering a compelling reason for users to migrate to the new network.
In addition to its technical transition, Lisk is also migrating its native LSK token to Ethereum. This move is aimed at enhancing the token's usability across various decentralized applications (dApps) and decentralized finance (DeFi) protocols within the Ethereum ecosystem. Lisk has confirmed that existing reward-sharing mechanisms for LSK will continue, with the token also set to play a role in an upcoming Lisk DAO for on-chain governance.
Furthermore, Lisk has unveiled plans for an initial airdrop of LSK tokens to incentivize activity on the new chain. Details about this airdrop are expected to be disclosed leading up to the mainnet launch, adding another layer of excitement to the transition.
Lisk's transition to the Ethereum ecosystem includes joining forces with Optimism and Gelato, two prominent players in the Layer 2 space. Lisk becomes the first Layer 1 blockchain to contribute to the development of the Optimism Superchain network of Layer 2 blockchains. This collaboration underlines the belief that Layer 2 solutions are pivotal not only for Ethereum's scalability but also for the entire blockchain industry.
Ben Jones, Chief Scientist of the Optimism Foundation, commended Lisk's move, stating, "Lisk's transition to the OP Stack underscores our conviction that Layer 2s are the path to scaling not just Ethereum, but the blockchain movement itself."
The partnership with Gelato allows Lisk to easily deploy the OP chain without the need for additional coding efforts. Gelato's Rollup-as-a-Service platform will enable Lisk to integrate essential infrastructure and web3 services, including block explorers, bridges, and oracles, from the moment of launch.
Dominic Schwenter, Chief Project Officer at Lisk, expressed the benefits of this collaboration, stating, "Using Gelato’s Rollup-as-a-Service platform allows the Lisk research and development team to be primarily focused on building additional products and tooling that developers and end users love, while also committing resources to the Superchain’s development."
Gelato has also expanded its platform to include OP Stack support, further strengthening its collaboration with Lisk. Hilmar Orth, co-founder of Gelato, commented on the partnership, saying, "By embracing Ethereum's ecosystem and porting its existing community onto a powerful Layer 2 blockchain using Gelato, we are collectively shaping the future of web3 scalability. The Lisk ecosystem will benefit greatly from better access to liquidity, developers, and sequencing fee revenue generated from its Layer 2 blockchain."
SEC Delays Decision on Ethereum ETFs, Market Awaits Regulatory Clarity
In a recent development that has captured the attention of the cryptocurrency community, the SEC announced delays in its decisions regarding several Ethereum Exchange-Traded Funds (ETFs). These delays were disclosed in regulatory filings submitted on Dec. 18, 2023. Among the ETFs affected by this delay are the Hashdex Nasdaq Ethereum ETF, the Grayscale Ethereum Futures ETF, the VanEck spot Ethereum ETF, and a spot Ethereum ETF proposed by ARK Invest and 21Shares, spearheaded by renowned investor Cathie Wood.
One notable ETF, the Hashdex Nasdaq Ethereum ETF, stands out due to its unique approach. This ETF aims to integrate both spot Ether and futures contracts into its investment strategy. Grayscale's Ethereum Futures ETF, on the other hand, is seen as a strategic move by the asset management firm to eventually transition its Ethereum Trust into a spot Ethereum ETF. This transition has garnered significant attention within the cryptocurrency industry.
The SEC's decision to initiate proceedings to gather more public input on these ETFs underscores the agency's commitment to conducting thorough reviews and engaging with the public before reaching a final verdict. This move aligns with the SEC's ongoing efforts to regulate the cryptocurrency market effectively.
James Seyffart, an ETF analyst at Bloomberg, noted that these delays were widely expected. Market participants anticipate that the SEC will make its final decisions regarding these ETFs by late May. Seyffart's insights are in line with broader market expectations, as the cryptocurrency community closely monitors the SEC's stance on cryptocurrency-based ETFs.
It is worth noting that the SEC has previously approved Ethereum futures-based ETFs. However, it has refrained from granting approval for spot Ethereum or mixed fund ETFs. In a significant development in October, nine futures-based products received simultaneous approval, indicating a growing acceptance of cryptocurrency ETFs within the industry.
While the cryptocurrency community eagerly awaits clarity on Ethereum ETFs, the SEC's decisions regarding 13 spot Bitcoin (BTC) ETFs currently under review have also garnered significant attention. Bloomberg analysts Seyffart and Eric Balchunas have suggested that a decision on these Bitcoin ETFs could be announced as early as Jan. 10, 2024. They estimate a high probability, around 90%, of the approval of a spot Bitcoin ETF. This potential approval has injected optimism into the market, particularly concerning institutional access to Bitcoin.
Over the past six months, Bitcoin has witnessed a price surge of over 44%, while Ethereum (ETH) has also experienced significant growth, with a price increase of 16.8% in the same period, according to data from CoinMarketCap.
However, the delays in approving Ethereum ETFs have raised concerns among investors and industry experts. They argue that these delays hinder market development and restrict investors' access to diversified investment opportunities. Nevertheless, the SEC maintains its position on conducting thorough evaluations to safeguard against fraudulent activities and protect the interests of investors.
As the cryptocurrency community eagerly awaits the SEC's final decisions on Ethereum and Bitcoin ETFs, the agency encourages public participation in commenting on the proposed rule changes for these ETFs. Public engagement is considered a crucial element of the regulatory process, shaping the future landscape of cryptocurrency investments in the U.S. market. The outcomes of these regulatory decisions are expected to have a profound impact on the cryptocurrency market's accessibility and investor participation in the coming months.
