June Update

📈 Market Update: We’re So Back. Is ETH, too?

June’s Monthly Close:
BTC: 11% , ETH: 41% , SOL: 6%, SUI: -7.4%

With two months of newsletters behind me already, reading the previous ones is an interesting exercise. April and May have now fully alleviated the drawdown stress from earlier in the year, with May keeping up April’s momentum, and BTC making a new all time high of $112k on May 22nd.

May 8th in particular was a big day - BTC was up 6.4%, and ETH up 21%, but ETH decided to keep going, completing a 43% rally in the follow two days. Is ETH back? The Pectra upgrade certainly went smoothly, completed on May 7th with no notable issues. The ETH/BTC chart made an uptick this month, but zooming out to a two-year view shows how much ground ETH still has to make up.

Is this the beginning of the magical altcoin season everyone is waiting for? Or just another bump in Bitcoin’s increasing market dominance? As always, only time will tell.

Disclaimer: Nothing written in this newsletter should be construed as financial advice.

🔵 Sui’s $160M Hack & Governance Vote

As I’m sure you’ve heard, Sui’s largest dex, Cetus, was hacked for $160M - the 9th largest crypto hack ever, I’m told. Validators were asked “to consider” implementing a block on the hacker’s addresses, to stop the bleeding. We did this, along with the other validators, and managed to freeze the majority of the funds. Then, a proposal was distributed, outlining a plan to initiate a one-time transaction to transfer the funds  into a multi-sig, so that the funds can be returned by the Cetus team.
My old-school Bitcoin / Ethereum background tells me that immutability is the strongest property of a blockchain. (I’m surprised it’s even possible for us to seize the hacker’s funds without a chain fork…) However, no one in the Sui community is pounding the table about immutability and decentralization right now. It’s clearly in everyone’s best interests to return the funds and repair the DeFi damage. This was evidenced by the validator vote, which voted overwhelmingly in favor of the proposal. (Sui Foundation’s stake was excluded.) We voted yes.

The hack was a highly unfortunate event, but the speed, maturity, and professionalism which with the ecosystem sprang into action - especially leadership at Sui Foundation - once again demonstrates that adults are at the helm. Do I feel good about implementing on-chain censorship and moving funds out of someone else’s wallet? No. Do I understand that it’s the right thing to do in this circumstance? Yes. The real question is, now that we have used this power, what types of future events will justify its use again? Let’s see what comms the Sui Foundation releases in the coming days.

✈️ ETH Bratislava 🔜 Berlin Blockchain Week

I spent last week in Vienna, getting some facetime with my co-founder Daniel. We also ventured to Bratislava for ETH Bratislava, which was well organized but poorly attended. It’s hard to tell whether the broader Ethereum ecosystem is a bit “dead” at the moment, or whether Bratislava is just too far from the beaten trail. Maybe both? I would have to go back to ETH Prague to compare it to my 2023 visit, when I was representing Ultimate and traveling with my legendary colleague Henry Duckworth.

I’m looking forward to limiting my travel for the summer and fall, and with Berlin Blockchain week fast approaching, I’ll have plenty of conferences to attend here at home. After that, the jury is still out on DevConnect, but myself and Daniel are committed to attending Breakpoint in December in Abu Dhabi!

💪H2O Finance: Update

As we wait a few more weeks for the hackathon results, we’re transitioning the smart contract development of H2O Finance into more capable hands. More to come, but suffice it to say we’re laying the technical groundwork for the design of the protocol. It’s looking more like an LST, as we prioritize transparency for the user and composability. A leading yield trading protocol already requested that we ensure compatibility - they are very bullish on the idea, considering it as a way for traders to have exposure to the level of activity of the chain. (Smart folks over there!) Watch this space.

🛠️ Fully Bare Metal, Soon™️

Oh boy, here we go buying servers again! Three new servers will be deployed as a proxmox cluster, allowing us to move the last nodes away from rented hardware. A significant moment for us: soon we can say that ALL our nodes run on our bare metal. This is, hopefully, the last large infra investment we’ll make for a little while. Those servers aren’t cheap, but they pay for themselves in saved monthly rental costs. Investing in servers now keeps our costs low during the next bear market.

💰 We Invested in Kintsu

We’ve finalized our investment in Kintsu, one of the liquid staking protocols building on Monad. Their thesis is that Lido failed to grow beyond 33% market share on Ethereum primarily because of centralization concerns. Kintsu therefore hopes to dominate the liquid staking market on Monad by prioritizing transparent governance. Initially launching with a curated set of operators, the delegation of their stake will  transition to a token-voting paradigm. We’re very excited to join Kinstu on their mission, and are eagerly awaiting the launch of Monad’s mainnet.

🤝 SLAs Now Available

As we professionalize our offering, we’ve prepared SLAs for stakers. (You’ll notice our updated offering under the new “networks” pages of our website!) Please get in touch if you’re interested in signing SLAs, spinning up a whitelabel validator, or anything else we can assist with:

As the bull market (seemingly) continues, I wish you prosperity, but also sanity. Don’t forget to touch grass and enjoy the summer! As my former colleague Henry says: “the real profits are as always the friends you make along the way.”

Sincerely,

-Max Sherwood, H2O Nodes Co-founder