As excitement regarding the launch of the much-anticipated Ethereum Spot Exchange-Traded Funds (ETFs) brews, asset management company, Bitwise, in a groundbreaking move for the crypto industry is set to donate a portion of its profits from its ETH spot ETF to Ethereum open-source developers. This move by Bitwise demonstrates the broader understanding of the value of supporting open-source initiatives that encourage and develop blockchain technology.

Bitwise’s Ethereum Spot ETF Profits Goes To Open Source Developers

The asset management firm Bitwise disclosed its plans to support open-source developers with part of the profits, particularly 10% from its Ethereum spot ETF under the ticker (ETHW) on Monday evening.

It is worth noting that Bitwise’s ETHW fund is the newest addition to a broad range of 20 crypto products and the company’s eight publicly traded cryptocurrency funds. ETHW features an inexpensive 0.20% management charge. However, on the first $500 million in assets, the fee is set at 0% for the first six months. 

The fund will be traded on the New York Stock Exchange while making use of experienced service providers, such as KPMG as auditors, Bank of New York Mellon as administrators, and Coinbase Custody Trust Company as digital asset custodians.

Related Reading: Ethereum Spot ETFs Sparks Institutional Optimism, Surpassing Retail Sentiment

Following the launch of the fund, Bitwise has declared that two major firms would receive a donation of 10% of all ETHW earnings, along with the product’s introduction. The first organization listed by Bitwise is Protocol Guild, a community-based funding platform that assists over 170 key contributors to the research and development of the Ethereum Layer 1 protocol. Secondly, the PBS Foundation, a nonprofit that provides funding for open-source Ethereum block relays and surrounding research.

Hong Kim, the Chief Technology Officer (CTO) of Bitwise stated that a group of enthusiastic open-source developers currently manages Ethereum as an open-source technology. Therefore the goal of every ETHW investment is for ETH to keep expanding, and this donation program will assist in achieving this target.

Furthermore, the firm has highlighted its intention to promote transparency by making the ETH addresses of all ETHW holdings available, as it will enable any investor to confirm the fund’s holdings and transactions directly on the blockchain.

ETH Spot ETFs Launch To Drive Ether’s Value To New All-Time High

Given the impact of the Bitcoin Spot Exchange-Traded Funds inception on Bitcoin’s price, Bitwise is confident that the same will happen with the value of Ethereum following the introduction of the ETH spot ETFs.

According to the firm’s Chief Information Officer, Matt Hougan, after Bitcoin was made available through an ETF version, over $17 billion in new capital entered into the crypto space in just a few months, driving BTC to a new peak. Thus, with ETH attracting such significant inflow and potentially more after its spot ETF launch, Hougan expects the crypto asset to reach new all-time highs before 2024 closes.

Featured image from Medium, chart from Tradingview.com

Blockchain-based payment network Stellar has introduced the open-source “Stellar Disbursement Platform,” aimed at facilitating faster, cost-effective, and transparent digital disbursements worldwide. 

Developed by the Stellar Development Foundation (SDF) over the past year, the platform enables individuals and organizations to execute bulk disbursements using digital assets for various purposes, including gig worker payments and digital aid delivery. 

Initially deployed for digital aid disbursements in Ukraine, the turnkey payment solution is now open-source and available for use and further development by anyone.

Revolutionizing Global Payments?

According to the announcement made on Wednesday, the Stellar Disbursement Platform allows users to send funds to thousands of recipients swiftly within seconds. 

It offers numerous applications, including supplier payments, payroll management, and contractor payments, catering to diverse payment needs. 

Furthermore, the platform’s seamless integration with Stellar’s global network of on and off-ramps, covering over 180 countries, provides recipients with the convenience of converting digital currency to cash “easily.”

Denelle Dixon, CEO of the Stellar Foundation, expressed enthusiasm for the open-source release of the Stellar Disbursement Platform. She highlighted its success in facilitating digital aid disbursements in Ukraine and its subsequent evolution into a comprehensive payment solution. 

Dixon emphasized the platform’s potential to empower gig workers, global payroll systems, and creators, fostering a more inclusive and accessible financial future.

Jeremy Allaire, CEO of Circle, also acknowledged the impact of the Stellar Disbursement Platform on humanitarian aid disbursements. He praised the platform’s effectiveness in utilizing the USD Coin (USDC) and highlighted its potential to advance global disbursement practices. 

The open-source nature of the Stellar Disbursement Platform reflects a commitment to collaboration within the blockchain community. By sharing this tool with the world, Stellar aims to create a more accessible and transparent financial future, benefiting gig workers, global payroll systems, and creators.

Overall, Stellar’s launch of the open-source Stellar Disbursement Platform marks a significant step towards enabling faster, cost-effective, and transparent digital disbursements worldwide. The platform enables individuals and organizations to streamline their payment processes with its wide range of applications and integration with Stellar’s network. 

Stellar Secures Minority Stake In MoneyGram

On Tuesday, the Stellar Development Foundation announced its recent participation in the go-private transaction with Madison Dearborn Partners (MDP), solidifying its position as a minority investor in MoneyGram, providing cross-border P2P (person-to-person) payments and money transfer services.

As part of this investment, SDF has secured a seat on MoneyGram’s Board of Directors, granting the foundation an opportunity to contribute to MoneyGram’s future and digital strategy actively.

Per the announcement, joining a group of leaders from the payments, financial services, and technology sectors, SDF’s presence on the board will leverage its collective expertise to fortify and guide MoneyGram’s digital transformation.

Furthermore, the investment positions SDF to play a vital role in various aspects of MoneyGram’s journey, including the expansion of its digital business, exploration of blockchain technology, and support for the company’s overarching mission of facilitating secure and efficient global money movement for individuals and businesses across multiple countries.

SDF CEO Denelle Dixon expressed confidence in the growth and opportunities arising from this partnership. By fostering solid collaborations with organizations in the payments sector, SDF moves closer to its mission of creating “equitable” access to financial services.

This announcement signifies a mutually beneficial arrangement where SDF’s involvement will contribute to MoneyGram’s digital advancement while aligning with SDF’s vision of facilitating inclusive financial access.

Despite recent protocol announcements and developments, the native token of the Stellar protocol, XLM, has consistently declined over the past two weeks. Currently, the coin is trading at $0.1262, reflecting a 2.4% decrease in value over the past 24 hours and a 13.8% decline within the fourteen-day timeframe.

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In the Lightning Network, inbound liquidity is a precious resource. The Galoy Research team detected an irregularity, and, trying to fix it stumbled into a whole business model. Their elegant solution transforms a problem into dollars, which is remarkable. This case reads like a detective novel. Let’s dive in.

Related Reading | Lightning Speed: Podcasting 2.0 And Its Relationship With The Lightning Network

Liquidity Leechers And Inbound Liquidity

In the article “Galoy Research: Self-Balancing Fee Structures for Inbound Liquidity,” the company describes the problem to then lay on us the solution. Galoy are the creators of the Bitcoin Beach Wallet that Bitcoinist described here. The irregularity that the team detected was this one:

“Galoy CEO Nicolas Burtey noticed that the onchain hot wallet was being depleted by a subset of users. These users consistently sent offchain bitcoin to the Bitcoin Beach Wallet only to withdraw it again onchain.” 

The company had to “use submarine swaps to replenish our onchain wallet and regain some inbound liquidity.” The thing is, “inbound liquidity is a valuable resource on the Lightning Network. The “liquidity leechers” were using Bitcoin Beach Wallet as a less expensive alternative to a service like Loop from Lightning Labs.”

How Does Loop Manage Outbound And Inbound Liquidity?

The service’s official website describes Loops as “the easiest way to manage inbound and outbound liquidity on the Lightning Network”. The service has two sides. On the one hand, “Loop In enables typical users to “refill” their Lightning wallets when funds are depleted”. On the other, Loop Out is for:

“Merchants, services, and users who primarily receive funds via Lightning, Loop Out serves as a bridge, allowing funds to be sent out of the Lightning Network to “on-chain” destinations like exchange accounts or cold storage systems.”

Instead of trying to catch the people who were “using Bitcoin Beach Wallet as a less expensive alternative to a service like Loop,” Galoy developed a product for them.

BTC price chart for 03/16/2022 on Binance | Source: BTC/USD on TradingView.com

A Dynamic Fee

Back to the article, the adventure begins. “Nicolas and Galoy data scientist José Rojas Echenique set out to diagnose the issue and try to find an appropriate solution”. The duo “first looked at historical data to get a better sense of the problem”. Surprisingly, they found out that “the price of inbound liquidity is roughly similar, no matter how you get it.”

Here’s where the product appears:

“They then looked for a solution that would charge this roughly similar market rate across the full range of use cases – including those using Bitcoin Beach Wallet as a loop out service. The result is a dynamic fee structure (as described in the report) that charges each user a fair amount based on how they are using the service.”

Instead of excluding “those using Bitcoin Beach Wallet as a loop out service,” the company included them. They put a price tag on the service and kept it pushing. How does the actual report describe this “dynamic fee structure”?   

“From the perspective of user experience, this approach trades high fees for simplicity. It does not account for the balancing effects of a user’s previous or future transactions, and therefore over-charges users.”

“A smoother dynamic fee formula would take into account a user’s previous transactions, and charge users less if their current transaction balanced their previous transactions.”

Continues Business Operations As Usual

From a problem to a product in three easy steps. Back to the article, Galoy states their approach’s value proposition: 

“By solving the issue with fees, Bitcoin banks and other Lightning services can continue business operations as usual vs. attempting to detect and regulate actors who use their liquidity for looping.”

Related Reading | Lightning Speed: What’s The Lightning Development Initiative?

And, to close it off, the company summarizes the product’s advantages. “The result? An automated solution for Bitcoin banks, a good user experience for end users, and the right fees for all.”

Featured Image by Jason Dent on Unsplash  | Charts by TradingView