Jason Yanowitz

Santiago Santos

David Canellis

Fundamental insights and behind the scenes perspectives from the industry’s key operators and innovators

Empire

Timestamps
(00:00) Intro
(02:44) The State of Crypto Today
(10:21) How Has Crypto Evolved?
(19:18) Ads (VanEck, Geodnet,Uniswap)
(21:40) Why Privacy Matters
(35:55) Who Wins In Crypto Infra?
(45:56) Crypto's Identity Crisis
(52:52) Predictions For 2026
(55:49) When Will Espresso Launch A Token?
—
Disclaimer: Nothing said on Empire is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Santiago, Jason, and our guests may hold positions in the companies, funds, or projects discussed.

Empire Pod __ 12-22

This week, we discuss whether 2025 marks crypto’s dot-com moment. We deep dive into how to allocate capital as crypto and fintech continue to merge, crypto’s token-vs-equity dilemma, Coinbase’s recent product releases, who wins the stablecoin race and more. Enjoy!

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Follow Jason: https://x.com/JasonYanowitz
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This Empire episode is brought to you by VanEck.
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Timestamps:
(00:00) Introduction 
(04:06) Is 2025 Crypto’s Dot Com Moment?
(13:12) Crypto’s Token vs Equity Dilemma
(28:30) Ads (VanEck, Uniswap)
(30:12) Coinbase’s Product Releases
(35:25) Who Wins The Stablecoin Race?
(46:58) Vaults
(56:50) Content of The Week
--
Disclaimer: Nothing said on Empire is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Santiago, Jason, and our guests may hold positions in the companies, funds, or projects discussed.

Is 2025 Crypto's Dot-com Moment? | Weekly Roundup

This week, Dougie DeLuca joins the Hivemind team to discuss his recent piece "Crypto Is Dead". We deep dive into the shift that is happening within crypto as we head into 2026, why is sentiment so bad, where to allocate in 2026, where crypto has found PMF and more. Enjoy!
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Crypto Is Dead: https://x.com/DougieDeLuca/status/2000957512862884100
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Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter: ⁠https://blockworks.co/newsletter/⁠
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Timestamps:
(0:00) Introduction
(0:56) Is Crypto Dead?
(12:20) Why Is Sentiment So Bad?
(28:52) Crypto’s Path Forward
(34:21) Where To Allocate In 2026?
--
Disclaimer: Nothing said on Empire is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Santiago, Jason, the Hivemind team, and our guests may hold positions in the companies, funds, or projects discussed.

Hivemind: Crypto Is Dead with Dougie DeLuca

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire" target="_blank" rel="noreferrer noopener">subscribe</a>.



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VC firm 1kx has run the numbers on the crypto economy in a report shared with Blockworks ahead of its release later today.



After analyzing more than 1,200 protocols across 2020 and until Q3 2025, 1kx found that value distribution to token holders has returned to all-time highs, even if total revenues have yet to beat their 2021 tops.



1kx defined value distribution to token holders as the net sum of buybacks, burns and other accruals, minus emissions (validator rewards and so on).&nbsp;



That came to $1.9 billion distributed in Q3 this year, about on par with H2 2021, when fees paid by users had peaked.



“Applications drive most of the distributed value, driven by incentive reductions: top apps cut token incentives from $2.8 billion (90% of their fees) in H2 2021 to less than $0.1 billion in H1 2025, boosting net returns to holders,” the report stated.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="1133" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-152.png?w=1024&amp;h=1024" alt="" class="wp-image-109643" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-152.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-152.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-152.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-152.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-152.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-152.png?w=363 363w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-152.png?w=369 369w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-152.png?w=309 309w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-152.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Value accrual has gone up and to the right | Source: 1kx



The trend is not uniform across the space, however. Many protocols still distribute net zero value to token holders, particularly newer networks which emit more token incentives than they return to investors, “a common pattern e.g. amongst L1s,” per 1kx.



In total, 1kx placed the size of the crypto economy at an estimated $56 billion for the first half of 2025.



<ul class="wp-block-list">
<li>Onchan fees: $9.7 billion (+41% YoY);</li>



<li>Offchain fees: $23.5 billion (+25% YoY);</li>



<li>Other income: $23.1 billion (+5% YoY).</li>
</ul>



(“Other income” mainly consists of block rewards and the yield earned by stablecoin issuers on T-Bills etc.)



The crypto economy is also much more diversified now than in 2021. Ethereum alone did more than 40% of all onchain fees in that year, now less than 3% year-to-date, according to the report. “Their scaling efforts are a major driver of the 86% decrease of average blockchain transaction fees.”



This has given cover for the app layer to flourish, even if the top 20 protocols (2% of the total) are generating 69% of all onchain fees right now.&nbsp;



“Of 1,000+ protocols analyzed, 71 have exceeded $100 million in onchain ARR, and 32 reached that within a year of launch, a pace comparable only to top AI breakouts like Cursor,” 1kx analysts found. They added that Meta/Facebook took three to four years to achieve $100 million ARR.



While revenues for some examples have since fallen, the firm counted blockchains Base, Filecoin, and Linea, DePIN cloud computing platform Aethir, DeFi apps Ethena, GMX, Virtuals and SushiSwap, wallets and interfaces Axiom, Moonshot and Photon, and consumer apps friend.tech, LooksRare and pump.fun, among others.



And many early surges were propelled by massive incentive programs. LooksRare in particular generated $500 million in fees within its first quarter but emitted the same amount in token rewards during that time, and volumes largely disappeared when those programs ran out.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="1059" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-153.png?w=1024&amp;h=1024" alt="" class="wp-image-109644" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-153.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-153.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-153.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-153.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-153.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-153.png?w=388 388w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-153.png?w=394 394w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-153.png?w=331 331w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-153.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



The onchain economy has expanded far beyond Ethereum mainnet



It all points to an onchain economy that’s changing. User fees are increasingly coalescing around apps and protocols instead of the underlying chains.



But it might be that the market has yet to catch up to the new dynamics (read: the <a href="https://x.com/coinbase/status/1983575664700666181">revenue meta</a>). 1kx highlighted that “DeFi/Finance protocols account for 73% of all fees, though in aggregate their market cap share remains well below 10%.”



As for where it’s all headed, the app layer is tipped to continue growing — the DeFi/Finance sector could see YoY growth of over 50% from here (asset prices willing), with onchain fees exceeding $32 billion next year (+63% YoY).



And what would a crypto newsletter be without bullish predictions? Here’s five about revenues from 1kx:&nbsp;



<ul class="wp-block-list">
<li>Tokenized RWAs will generate $100 million fees (5x YoY):</li>



<li>DePIN protocols will rake in more than $450 million, sustaining triple-digit growth.</li>



<li>Wallets will grow slightly faster than DeFi (50%).</li>



<li>Consumer apps will see roughly a 70% YoY increase in fees.</li>



<li>Middleware will grow by 50% with many protocols about to start or boost monetization (e.g. WalletConnect).</li>
</ul>



TL;DR: We like the apps.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Empire Newsletter

Value distribution to token holders returns to all-time high: 1kx report

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire" target="_blank" rel="noreferrer noopener">subscribe</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Last week, I <a href="https://blockworks.co/news/polymarket-culture-chasm">wrote about</a> the three killer-est apps of the cycle: Polymarket, Hyperliquid, pump.fun.



Notice that none of them is on Base.



Base has now had two shots at facilitating a potential killer crypto app already this cycle: AI agent launchpad Virtuals Protocol, the “Wall Street for AI Agents,” and now social media platform Zora, with the latter seeing two decent runs in the past 18 months.



Between December 2024 and January 2025 — peak Truth Terminal hype — Virtuals generated almost $11 million in net revenue, according to <a href="https://app.blockworksresearch.com/analytics/virtuals">Blockworks Research data</a>, during which time more than 13,000 different AI agents were tokenized.&nbsp;



Last month: $105,000 revenue; 151 agents launched, even after Virtuals expanded beyond Base to Solana earlier this year.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1124" height="624" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-12.png?w=1024&amp;h=1024" alt="" class="wp-image-107039" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-12.png?w=1124 1124w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-12.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-12.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-12.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-12.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-12.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-12.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-12.png?w=80 80w" sizes="auto, (max-width: 1124px) 100vw, 1124px" /></figure>



Zora, which supports creator coins and turns every post into a tradable coin, has otherwise arrived at a key inflection point.&nbsp;



On one hand, August was a record month for <a href="https://app.blockworksresearch.com/analytics/zora?dashboard=94">Zora protocol revenue</a>, reaching $1.3 million, and number of posts, with 1.1 million pieces of content tokenized. But on the weekly scale, revenue has fallen by more than half and stayed there for the past fortnight running, with only $20,000 per day a regular occurrence right now.



The total number of posting accounts has also dropped to about 8,000 per day, down 60% from an August 14 peak of 21,000.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1124" height="624" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-11.png?w=1024&amp;h=1024" alt="" class="wp-image-107038" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-11.png?w=1124 1124w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-11.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-11.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-11.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-11.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-11.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-11.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-11.png?w=80 80w" sizes="auto, (max-width: 1124px) 100vw, 1124px" /></figure>



Of course, it’s too early to call time on Zora, and maybe these ups and downs will become mere blips on the path to mass adoption by content creators and consumers.



It’s more likely that both Zora and Virtuals have simply run headfirst into the same wall: There’s just not enough people in crypto who want to do more than trade on exchanges to consistently drive growth.



To be clear: Trading apps are apps too. With that in mind, Base does have a relatively popular app in Aerodrome, the AMM that’s pulling in anywhere from two-thirds to three-quarters of total app revenue on Base, per <a href="https://app.blockworksresearch.com/analytics/base?dashboard=62">BWR data</a>.



That’s around $15 million last month, which is decent but less than half the <a href="https://app.blockworksresearch.com/analytics/pumpfun">revenue made by pump.fun</a>. It’s enough to place in first place when it comes to Ethereum <a href="https://blockworks.co/tag/layer-2-2">layer-2s</a>, with about 40% of all <a href="https://app.blockworksresearch.com/analytics/ethereum?dashboard=77">blobs posted to Ethereum</a> mainnet coming from Base right now.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1124" height="624" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-10.png?w=1024&amp;h=1024" alt="" class="wp-image-107037" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-10.png?w=1124 1124w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-10.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-10.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-10.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-10.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-10.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-10.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-10.png?w=80 80w" sizes="auto, (max-width: 1124px) 100vw, 1124px" /></figure>



However, to the outside world, DEXs, AMMs, launchpads and so on are not “apps” in the traditional sense. Which, when we’re discussing heady concepts like massive mainstream adoption and widespread tokenization, is about all that really matters.



To the general public, an app needs to serve a purpose other than financial speculation, else it’s just a gaming venue in the minds of many and no different than PokerStars or DraftKings. Think Uber, AirBnB, Spotify, MyFitnessPal, Instagram, TikTok and Tinder, more than Robinhood and Trade Republic.



This dichotomy is why even Polymarket transcending the culture chasm might not be particularly satisfying, at least in a holistic sense.&nbsp;



While there’s certainly room for prediction markets to serve as “truth oracles” in our inevitable hyperfinancialized, media-minimized future, for now Polymarket is just a venue for betting on stuff happening in the culture. Markets related to politics attract about <a href="https://app.blockworksresearch.com/analytics/polymarket?dashboard=53">one-third of all open interest</a> right now, followed by markets related to crypto prices (15%) and sports (12%).



Zora and Virtuals are indeed cool in their own ways. Helping creators to monetize their work and build fan bases with crypto is compelling, and has been for the better part of a decade, dating right back to Steemit. And perhaps AI agents will indeed be the eventual gateway for regular humans to interact with blockchain protocols — why not gain exposure to the most popular ones?



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">if someone tells you creator coins on <a href="https://twitter.com/zora?ref_src=twsrc%5Etfw">@zora</a> are &quot;just a memecoin&quot; with no intrinsic value, they are either willfully misleading you or haven&#39;t taken 2 minutes to learn each post is a micromarket that drives value back to the creator coin &#8211; the more viral content, the more value&mdash; jesse.base.eth (@jessepollak) <a href="https://twitter.com/jessepollak/status/1959807771144257925?ref_src=twsrc%5Etfw">August 25, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Underneath all the branding and presentation, however, Zora and Virtuals are still launchpads, and generously assuming that active addresses translate to active users apparently means there are only at most 20,000 or so people in crypto today willing to experiment with them (and slog through the often tricky EVM user experience, at least).



That’s with the indirect support of Coinbase, the closest thing crypto has to a majorly influential corporate powerhouse.



Maybe next cycle, there will be 50,000 willing participants. But I have a feeling the outside world won’t be convinced.&nbsp;



In the crypto space, tokenization for tokenization’s sake makes sense — everything that can be digitally represented is technically valuable. And depending on how broad your definition of value, intrinsically so.&nbsp;



The real question is thus: to whom, and for how long?



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Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



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Base

Crypto needs more than launchpads for mass adoption

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire" target="_blank" rel="noreferrer noopener">subscribe</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



The “<a href="https://knowyourmeme.com/memes/its-all-so-tiresome">it’s all so tiresome</a>” meme also comes to mind. Except the context surrounding the original scene doesn’t really apply. Unlike in the Empire of Dust documentary, there are lots of people doing great work in crypto, tirelessly so, and there’s plenty about the state of blockchain development to be excited about.



Instead, crypto is psychological torture in the same way that medieval tickling might be. In the early 16th century, the Italian monk Franciscus Brunus de San Severino described a dastardly practice known as the goat’s tongue, whereby townspeople would coat the feet of a criminal locked up in the stocks with salt. A goat would then lick the salt off the feet while commoners tickled them with feathers.



It’s not clear whether the goat’s tongue was actually a real punishment. But I imagine that it’s familiar to anyone who is unfortunate enough to be unceremoniously pulled towards crypto for one reason or another, whether it’s interest, work, curiosity, academics or simply the potential to make serious money.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1216" height="1082" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-3.png?w=1024&amp;h=1024" alt="" class="wp-image-106950" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-3.png?w=1216 1216w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-3.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-3.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-3.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-3.png?w=289 289w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-3.png?w=293 293w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-3.png?w=246 246w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-3.png?w=80 80w" sizes="auto, (max-width: 1216px) 100vw, 1216px" /><figcaption class="wp-element-caption">A <a href="https://en.wikipedia.org/wiki/Tickle_torture#/media/File:Rothenburg_Germany_Torture_Museum_(4139740862).jpg">painting</a> at the criminal museum in Rothenburg, depicting the dreaded goat’s tongue</figcaption></figure>



<a href="https://x.com/post_polar_">Paul J. Dylan-Ennis</a> in 2021 <a href="https://www.coindesk.com/business/2021/11/10/the-trash-moat-when-the-media-lies-about-crypto">described</a> crypto as a world surrounded by a trash moat of information — a barrier of toxic clickbait sludge that regular people must wade through to reach anything worthwhile:



“What happens in the trash moat rarely reaches the shores of mainstream crypto. It occurs in the sweet spot just beyond the attention of the clued-in observer, who is typically focused on high-minded talk of regulation, venture capital funding and whatever is currently hot, like NFTs, and yet it happens right there in public.”



The tickling torture described by our monk Franciscus Brunus would certainly feel a lot like the tide of that trash moat ripping past my ankles while I soak my feet on the shore.



Objectively, the details surrounding World Liberty Financial, a project for <a href="https://worldlibertyfinancial.com/about">banking the unbanked</a>, are hilarious and excruciatingly painful, all at the same time.&nbsp;



<ul class="wp-block-list">
<li>The white paper is really a “<a href="https://static.worldlibertyfinancial.com/docs/intl/gold-paper.pdf">gold paper</a>.”</li>



<li>President Trump is “Co-Founder Emeritus,” and his face is all over the gold paper.</li>



<li>There is no live app, but the WLFI token has a $6.6-billion market cap and a $24-billion FDV.</li>



<li>Justin Sun was WLFI’s largest backer and now <a href="https://x.com/arkham/status/1962532967437242537">holds</a> more than 3% of the circulating supply.</li>



<li>WLFI is a governance token with a buy-back-and-burn strategy. Large holders, including a firm linked to the Trump family, decide when token allocations are unlocked and can be sold.</li>



<li>Binance <a href="https://www.bloomberg.com/news/features/2025-07-11/trump-s-crypto-link-with-binance-raises-conflict-of-interest-questions">reportedly</a> wrote the smart contract for USD1, a stablecoin in the World Liberty Financial universe, as CZ seeks a pardon (CZ denies Binance’s involvement).</li>



<li>The Trump family is technically $5 billion richer thanks to their stake in WLFI, per <a href="https://www.wsj.com/finance/currencies/trump-family-amasses-6-billion-fortune-after-crypto-launch-567faec5">WSJ</a>, making their crypto investments more valuable than their real estate.</li>
</ul>



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1230" height="946" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-4.png?w=1024&amp;h=1024" alt="" class="wp-image-106951" style="width:716px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-4.png?w=1230 1230w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-4.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-4.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-4.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-4.png?w=334 334w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-4.png?w=339 339w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-4.png?w=285 285w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-4.png?w=80 80w" sizes="auto, (max-width: 1230px) 100vw, 1230px" /><figcaption class="wp-element-caption">WLFI’s token claim temporarily pushed<a href="https://blockworks.co/news/wlfi-claim-eth-gas"> gas fees over $100</a> yesterday. Meanwhile, 26% of WLFI’s first-day trading volume occurred on Binance, with more spread across other offshore exchanges including Bybit, Upbit, MEXC and others. Uniswap contributed around 3%. (H/T: <a href="https://x.com/rod_data">Rod</a>, Blockworks Research analyst).</figcaption></figure>



We could unpack and debate the finer points of WLFI’s tokenomics all day. Perhaps at the end of it, we’d decide whether World Liberty Financial is a net positive for the crypto space, whatever that might mean. I’m just not sure it will matter anymore.&nbsp;



Those of us who have learned how to tune out the trash moat — the constant low quality noise sloshing around crypto — may find it vastly more difficult to do so from here. At least, until a lengthy bear market cleanses the waters once again.



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Donald Trump

Is World Liberty Financial good for crypto? It doesn’t matter anymore

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First, the really bullish stuff.



Pantera Capital managing partner Paul Veradittakit just put out a State of Crypto Venture Capital report with plenty to prick up your ears.



First, the industry is on pace to break 2021’s fundraising record of $29.17 billion. Crypto companies this year have raised over $16 billion — which is already more than the total deal value of 2024.



(BTW: Very cool that <a href="https://www.veradiverdict.com/p/e4aa8be1-52e2-477f-b687-7239522cde79?free_preview=false">Veradittakit’s report</a> is grounded in <a href="https://app.blockworksresearch.com/analytics/deal-flow">Blockworks Research data</a>, which covers all things deal flow, including fundraising, M&amp;A and debt financing.)



Veradittakit characterizes this year’s fundraising as a game-changer fueled by record M&amp;A and IPO activity.&nbsp;



He wrote: “2024 was a record year for acquisitions with over 100 mergers and acquisitions (M&amp;A) totaling $1.73 billion and 2025 is set to surpass 2024 in deal count. From January to July of this year it is already at 76 deals and $6.23 billion, which is 3.6× 2024’s full-year dollar volume and is on pace for 130 deals if the current run rate holds.”



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeqPJRPFKp5dO52iaq-GCg7cW-EdajU8JDyCB3oqCbxT-b8Y8pJJlyP1mEHF4aLDtVTDKa0NBEzjd2XSWaP7g5Kcq7NF34XP9vkKSAFv99l46kgsvGZgtY2eCaJo27Fy5N6qfEs?key=VUdjECCR-IQTKGtKSIld6A" alt=""/><figcaption class="wp-element-caption">Nice big green candles. Source: VeradiVerdict</figcaption></figure>



“The momentum in 2025 is less about unleashing pent‑up demand and more a sign of the industry’s natural maturation,” Veradittakit added.



Crypto IPO successes like Circle and Bullish, as well as others coming up (including Figure and BitGo) are making new entrants more comfortable with investing in the blockchain industry.&nbsp;



“This is a pattern seen in other major technological shifts, where a multi-decade build-out precedes explosive growth,” per Veradittakit.



Over on the Empire podcast, Rob Hadick, general partner at Dragonfly Capital, floated the notion that raises like M0’s $40 million and Rain’s $58 million Series Bs were probably the “tail end of the fervor” that came just before the Genius Act rolled out in June.



“I can tell you right now, there&#8217;s definitely some fatigue,” Hadick said.&nbsp;



<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="Stablecoins &amp; Prediction Markets, Nothing Else | Weekly Roundup" width="1024" height="576" src="https://www.youtube.com/embed/XuiL_EyEiEc?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>
</div></figure>



Interestingly, Hadick pointed out that the level of entrepreneurs that are now building in stablecoins is increasing.&nbsp;



One deal that Dragonfly is looking at right now involves founders that were executives at “some of the largest payment companies in the world and they just know how money flows — we haven’t seen that level of entrepreneur before.”



“And so I think we&#8217;ll see this kind of dip in the market, and then we&#8217;re going to see new novel, awesome entrepreneurs, an acceleration into maybe the end of the year [and] next year,” Hadick said.



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Dragonfly Capital

Crypto industry on pace to break 2021 fundraising record

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Whether you’re bullish, bearish, or channeling some other animal spirit, you’re forgiven for feeling the pressure right now.



It’s been two weeks since bitcoin’s last all-time high and only four days since ether set a new price after almost three years.



Bitcoin could trend sideways and even downward for all anyone would care.&nbsp;



ETH sets the tempo for the foreseeable future. Scary stuff.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">top signals are just apparently no longer a thing we had ETF&#39;s &#8211; now we&#39;re trading higher we had Trump election &#8211; now we&#39;re higher we had Trump token &#8211; now we&#39;re higher we had eth volumes flip btc volumes for over a month straight &#8211; now we&#39;re higher now we&#39;re issuing GDP…&mdash; merp (@0xMerp) <a href="https://twitter.com/0xMerp/status/1960790841632678300?ref_src=twsrc%5Etfw">August 27, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">This is good for ETH</figcaption></figure>



Before we zoom in on ETH, let&#8217;s see the momentum it&#8217;s inherited from bitcoin.



The chart below plots every bitcoin bull market together, as if they all started on the same day. Green dots point to cycle peaks, and each bull phase starts at the previous bear market’s lowest price.



By these (very basic) rules, bitcoin has now been on a bull market for 1,023 days — 2.8 years.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeVutT6n0LXr1uWqXJU0OboUaz2fRFwjZJqXtcC0HENCgLG4oAKSsHolLUIJrdkNCU0zguJQZC68hI7ff6LTnJQQyURFPq45JabxJfjyY7ExFiZPe8k8Q4YiAVCd26VTpWE2PM-og?key=LrYZb3WcbLF2uZa5P-FQPg" alt=""/></figure>



If the bitcoin top is not yet in, then bitcoin is on track to soon enter its longest bull market on record. It took another 40 days or so from here for bitcoin to reach its November 2021 peak.



Returns so far are about what you would expect, considering how large the market cap of bitcoin has grown.&nbsp;



At this point in the past two cycles, bitcoin had posted up to 100x and around 21x, respectively.&nbsp;



Two weeks ago, when bitcoin hit $124,100, that was the equivalent of about a 7x from the late 2022 bottom.



Here’s the same chart, but for ETH.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXev3LTC8Ptqp59Pvpz7CUbYIPhy6ApuYeCrJecljkR2w2zTAr-m7mybN7-YPtNYthREp0I4y5F64s7Hp210jMzzSp2f929SXUGmifQqItECtyVmdOd-YtvYU6cCRL4mcL6WFo9IZg?key=LrYZb3WcbLF2uZa5P-FQPg" alt=""/></figure>



It’s similar. But technically, ETH has now entered its longest bull market on record — or in other words, this all-time high took longer than ever before



What’s glaring is that ETH’s cycle returns are tracking far below the previous bull market.&nbsp;



Perhaps Solana has something to do with that, considering bitcoin has no analogous direct rival.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Yesterday, we published our note on the top holders of Ethereum ETFs. Advisors are dominating the known holders and have pulled away from Hedge Funds. <a href="https://t.co/qvP6ZGN3VI">pic.twitter.com/qvP6ZGN3VI</a>&mdash; James Seyffart (@JSeyff) <a href="https://twitter.com/JSeyff/status/1960726566406651920?ref_src=twsrc%5Etfw">August 27, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">The advisoooors have done something</figcaption></figure>



But if it’s true that ETH is the thermometer for where crypto is headed for the next year, year and a half, then the pink line will need to catch up to the purple line, fast.



Updated 8/28/2025 at 10:07 a.m. ET: ETH’s cycle returns and length have been corrected.



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ETH poised to set tempo for the rest of the bull run

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Like all good things, it turns out that killer apps come in threes.



Polymarket, Hyperliquid, pump.fun. These are the voyages of modern-day crypto enterprise.



And before you tell me that stablecoins are crypto’s fourth killer app, thereby ruining this airtight metaphor: No.&nbsp;



Stablecoins are a tool. Wallets are apps (but only barely). I will die on this hill.



For the sake of being pedantic, let’s separate Circle, with its <a href="https://blockworks.co/news/circle-ipo-price-execution-stablecoins">wildly successful IPO</a>, into a separate category: “fintech on the blockchain.”



There’s suddenly no question that Polymarket, Hyperliquid and pump.fun are the sole victors of this cycle.&nbsp;



Hyperliquid won perps, pump.fun won memecoins (although Bonk.fun <a href="https://app.blockworksresearch.com/analytics/launchpads">made it close</a>), and Polymarket won the concept of betting on random stuff. Polymarket had its <a href="https://blockworks.co/news/polymarket-performs-smoothly-on-election-day">breakthrough moment</a> during the US election, so it tracks that Donald Trump Jr’s 1789 Capital recent investment has cemented its status.&nbsp;



CNBC <a href="https://www.cnbc.com/2025/08/26/polymarket-secures-investment-from-trump-jr-backed-1789-capital.html">reports</a> the deal ranged in the double-digit millions, with Don Jr. also joining the firm’s advisory board.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Pleased to announce that my fund <a href="https://twitter.com/1789Capital?ref_src=twsrc%5Etfw">@1789capital</a> has invested in <a href="https://twitter.com/Polymarket?ref_src=twsrc%5Etfw">@Polymarket</a> and that I will be joining the team as a Strategic Advisor. Prediction markets have completely changed the way people follow the news. I&#39;m proud to support the industry and look forward to helping… <a href="https://t.co/C3QlMEKQFe">https://t.co/C3QlMEKQFe</a>&mdash; Donald Trump Jr. (@DonaldJTrumpJr) <a href="https://twitter.com/DonaldJTrumpJr/status/1960367380724351416?ref_src=twsrc%5Etfw">August 26, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



A longstanding criticism of the crypto space is that it’s too insular. That it’s all decentralized infrastructure for degenerate gambling apps, in one form or another. Crypto’s endless servicing of speculation largely overshadows the utility of peer-to-peer payments and freely accessible tokenized dollars.



Now, I don’t agree with that summation, but it exists, persistently so. And the fact that the current breakthrough apps express different degrees of degeneracy won’t do much to change that perception — Hyperliquid with its leverage of up to 40x; pump.fun with its gamified memecoin launches; Polymarket with its pop-culture wagering.



I have a theory that crypto is, for the most part, years ahead of the mainstream. Crypto knew that blockchain-powered prediction markets were interesting seven years ago, when Augur launched on Ethereum in 2018, causing <a href="https://www.newsweek.com/welcome-augur-cryptocurrency-death-market-where-you-can-bet-donald-trump-1043571">moral panic</a> over the potential for assassination markets and so on.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Not a very consequential thing, but kinda funny: a Polymarket user named &quot;romanticpaul&quot; (yes, his real username) started aggressively buying Taylor Swift to be engaged starting yesterday afternoon around 3pm. He nearly doubled the price from a 25% chance (this year) to 45%. You… <a href="https://t.co/IXVRqj0eB6">pic.twitter.com/IXVRqj0eB6</a>&mdash; Domer❤️‍🔥 (@Domahhhh) <a href="https://twitter.com/Domahhhh/status/1960394729176105077?ref_src=twsrc%5Etfw">August 26, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Do we need to bet on celebrity romance? No. Is it fun? Yes.



Bookies have obviously been taking bets on obscure stuff like the next James Bond or celebrity deaths long before crypto. But Augur, Polymarket and all the others have added immediacy to the mix — letting the public open the markets rather than the bookies themselves.&nbsp;



Anyone paying attention to sports betting would know that gambling on anything and everything would be the next evolution. And perhaps Bored Apes re-primed the normie-sphere for its next big arbitrary collectible in <a href="https://blockworks.co/news/labubus-succeeded-nfts-failed">Labubus</a>, some three decades after Tomagotchis and Beanie Babies ran wild.



With this in mind, 1789 Capital’s bet is clearly a solid one, even if Polymarket is what Russ Hanneman would call “<a href="https://www.youtube.com/watch?v=BzAdXyPYKQo">pre-revenue</a>,” in that it doesn’t collect any fees (yet), apparently subsisting only on venture capital money like the cash just raised from Don Jr, now amounting to hundreds of millions of dollars.



And for all of its pesky <a href="https://www.dlnews.com/articles/people-culture/bettors-say-some-polymarket-prediction-outcomes-are-gamed/">problems</a> with market resolutions, it’s certainly fitting that a crypto-native outfit in Polymarket could be a primary venue for mainstream degeneracy moving forward.&nbsp;



It all begs the question: Is there more money to be made by looking outward from crypto rather than inward, like Hyperliquid and pump.fun?&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXexJwFpr4mDV_hj8_jhEL05r_khSbMNJg33Ox-udU4moa1kZo3dmECJs1wqMy0m11gEwlc8fLQRmd0mcbCDTzN1va-qmcrjoLUq5b6WFeBX2hoqmFUFstbVjOxe4C1s5bzw3O7Szw?key=cfCdTcmo1Yyyag1GX4K42Q" alt=""/></figure>



Hyperliquid has averaged more than $55 million onchain monthly revenue over the past six months and pump.fun nearly $33 million, per <a href="https://app.blockworksresearch.com/analytics/application-comparison">Blockworks Research</a> data.&nbsp;



That’s far below a mainstream app like <a href="https://ir.roblox.com/news/news-details/2025/Roblox-Reports-Second-Quarter-2025-Financial-Results/default.aspx">Roblox</a> (currently about $360 million per month), but about in line with <a href="https://www.businessofapps.com/data/discord-statistics/">Discord</a> (around $50 million per month in 2023). Polymarket has otherwise seen over $1 billion in monthly trading volume for three months running, and is on track for a fourth in August. A hypothetical 5% fee would give it $50 million in monthly revenue right away, although perhaps a withdrawal fee might be easier to stomach.



In any case, it’s easy to make the argument that crypto and blockchain are worthwhile regardless of whether they only ever amount to reconstructing the traditional financial system to be more transparent and trustless, outside of the penchant for gambling.&nbsp;



But Polymarket is getting close to crossing the culture chasm in a way that Bitcoin, Ethereum and Solana never have. Those may be household names, but they’re still “crypto.”&nbsp;



Polymarket might just be “Polymarket.”



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dApps

Polymarket is close to crossing the culture chasm

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It’s certainly possible to be in crypto for the tech.&nbsp;



In fact, being in it for the tech — I mean, really in it for the tech; digital nation states on blockchain rails, smart cities, and the tokenization of all things — is the most effective path to alpha bull status.



John McAfee: big tech guy. Michael Saylor: huge on the tech. Same with Tim Draper, Marc Andreessen, Brian Armstrong and Balaji Srinivasan. And who’s been more bullish than them?



Fundstrat’s Tom Lee. That’s who.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Mark ⁦<a href="https://twitter.com/MarkNewtonCMT?ref_src=twsrc%5Etfw">@MarkNewtonCMT</a>⁩ again at it. ➡️Calling ETH bottom to happen in next few hours ⁦<a href="https://twitter.com/fs_insight?ref_src=twsrc%5Etfw">@fs_insight</a>⁩ ⁦<a href="https://twitter.com/FundstratCap?ref_src=twsrc%5Etfw">@FundstratCap</a>⁩ Tickers: <a href="https://twitter.com/search?q=%24BMNR&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$BMNR</a> <a href="https://twitter.com/search?q=%24GRNY&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$GRNY</a> <a href="https://t.co/038efU7cZH">pic.twitter.com/038efU7cZH</a>&mdash; Thomas (Tom) Lee (not drummer) FSInsight.com (@fundstrat) <a href="https://twitter.com/fundstrat/status/1960147287491154132?ref_src=twsrc%5Etfw">August 26, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">Lee has, as of 9:08 p.m. yesterday, called the ETH bottom — to happen right about now.</figcaption></figure>



Lee has actually been bullish longer than almost anyone still active today.



As far as I can tell, his first public predictions for crypto came in mid-2017. Bitcoin’s price had more than doubled in the first six months of the year, to $2,500, leading Lee to call bitcoin’s future price on at least 10 different occasions in the 10 months ending May 2018.&nbsp;



His first prediction actually came true. “Cryptocurrencies are cannibalizing demand for gold,” Lee <a href="https://www.businessinsider.com/bitcoin-price-ethereum-cannibalizing-gold-2017-7">wrote</a> to Fundstrat clients eight years ago, in 2017, when bitcoin was at $2,607. &#8220;Bitcoin is arguably becoming a scarcer store of value. Investors need to identify strategies to leverage this potential rise in cryptocurrencies.&#8221;



Base case: bitcoin would reach $20,000 by 2022. Nearly 10x.&nbsp;



Bull case: $55,000 by 2022. A 22x in five years.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd7vSXENdtL86bYIniWmAwc11OjQBVCy7UqTTWf_b8-5h_ZGkjfm8QHAtdVrKs2xdZ8TUYaW_vMMxziQX3y8tnwCSFHczpA80kYvHo_u8za6_IbXOyerUJWCOtKnnxUHlPsvmcb?key=En_UORTZOH0v8ML2nnDsbg" alt=""/><figcaption class="wp-element-caption">This handy graphic of bitcoin scarcity was included in Lee’s note.</figcaption></figure>



Lee was exactly right. Bitcoin crossed $55,000 for the first time in February 2021, a little earlier than expected, and topped out nine months later beyond $69,000.



What makes things complicated is that Lee kept making predictions after that first banger.&nbsp;



Some were ultimately correct, but too low or too early; others didn’t eventuate in the way he envisioned (like the rally around CoinDesk’s Consensus 2018 conference that <a href="https://www.bloomberg.com/news/articles/2018-05-18/crypto-bull-tom-lee-owns-up-after-bitcoin-prediction-goes-awry">never came</a>, or that bitcoin never reached $25,000 in 2018, as <a href="https://cointelegraph.com/news/tom-lee-holds-to-25000-bitcoin-price-prediction-cites-three-supporting-factors">predicted</a> multiple times in the first half of the year).



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcT1NkrAQrhcpn7xR5W0gM7s8dUG0cwdMLst9FkWGUmg1aSl7Zxq4VqqDGHCXzcNaWXnxyxoFWvjYwDyDwLc-iImsWcaPdV8vTZ-G_23BivqOvL_uy4SaOmQ0Oio4w3QXSBwIQy?key=En_UORTZOH0v8ML2nnDsbg" alt="" style="width:642px;height:auto"/></figure>



Still, there were a few other gems. In January 2018, he <a href="https://www.bloomberg.com/news/articles/2018-01-18/bitcoin-bull-tom-lee-goes-hyperbolic-on-latest-price-forecast">said</a> that bitcoin could reach $125,000 by 2022 (which it did, only three years after the fact).



At the end of 2020, he <a href="https://x.com/CNBCFastMoney/status/1344407640873562119">foretold</a> bitcoin trading between $100,000 and $150,000 by the start of 2025, which, all things considered, wasn&#8217;t too far off.



But if the worst criticism of Lee’s calls are that they’re too early, then you’ll dig his most recent ones: $200,000 to $250,000 <a href="https://cointelegraph.com/news/bitcoin-price-prediction-250k-still-possible-fundstrat-tom-lee">possible</a> in 2025 (from three weeks ago) and more than $1 million in the next few years.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Absolutely unprecedented. Tom Lee has acquired almost $10 billion ETH over the past 50 days. Over 1.7m ETH. 1.4% of all ETH supply. If Tom gets to his 5% target and ETH goes above $12k Bitmine would be larger than Microstrategy. <a href="https://t.co/DpIZv55DBC">pic.twitter.com/DpIZv55DBC</a>&mdash; RYAN SΞAN ADAMS &#8211; rsa.eth 🦄 (@RyanSAdams) <a href="https://twitter.com/RyanSAdams/status/1960030779267760133?ref_src=twsrc%5Etfw">August 25, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Not bullish enough? You might recall that Lee recently made his first publicly-reported ETH prediction, apparently ever, only about a month after he was <a href="https://blockworks.co/news/eth-treasury-companies-growth">appointed</a> chairman of BitMine, which has its own Ethereum-focused treasury acquisition plan.&nbsp;



Lee’s call: Between $15,000 and $16,000 per ETH is possible by the end of the year, which would be a 3x from here.



So, maybe add on a few more years from that, just to be safe.



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The worst and best part of Tom Lee’s predictions: they’re too early

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The Breakdown

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Today’s subject is an unsolved mystery of crypto market microstructure. We only have so many facts, and we’ll likely never know all the details.



To get up to speed with the fundamentals of what happened over the weekend, I recommend the <a href="https://x.com/i/broadcasts/1YqGolZBBRgJv">Empire livestream</a> from Sunday with Doug Colkitt, as well as Doug’s <a href="https://x.com/0xdoug/status/1976850615621107743">helpful X thread</a> on Auto-Deleveraging.



For those wanting the quick and dirty headline summary, here goes.&nbsp;



For some silly reason, Binance was using spot prices to value three tokens accepted as collateral for margin positions — liquid staking derivatives wBETH and BNSOL, alongside Ethena’s synthetic dollar USDE.



Not exactly a problem when Binance’s order books for those tokens were thick with bids on either side. But they’d quickly dried up around the time that bitcoin and other coins started dumping on word that Trump’s trade war with China would persist, leading prices to slip well below par, and in the case of the two staking derivatives, almost to zero.



Bad news for anyone using the affected coins as collateral for margin trading on Binance. Suddenly their collateral wasn’t considered valuable enough to cover their position — even though prices remained much more stable elsewhere — and they were liquidated.&nbsp;



At the same time, leveraged traders on perps DEXs like Hyperliquid, many incentivized to take margin by points campaigns for airdrops, were also hit as a result of second-order price effects.&nbsp;



So, if you’re after an analogy, it’s easiest to consider Binance as the epicenter of an earthquake. Had Binance valued USDE, wBETH and BNSOL using an index or some other pricing system, rather than its own illiquid spot markets, maybe there would have been no earthquake at all. The Ethena protocol was still redeeming USDE tokens for $1 value throughout the entire ordeal, for instance.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">While we share these suggestions privately with any partner we work with across both DeFi and CeFi, want to surface this publicly so there is zero doubt going forward on what we view as appropriate oracle design and risk management for USDe: <a href="https://t.co/lb4OeaGn9Y">pic.twitter.com/lb4OeaGn9Y</a>&mdash; G | Ethena (@gdog97_) <a href="https://twitter.com/gdog97_/status/1977302774636540403?ref_src=twsrc%5Etfw">October 12, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Now comes the mystery: As Colin Wu <a href="https://wublock.substack.com/p/opinion-is-this-crash-an-attack-on">pointed out</a> earlier this week, Binance had, only days before the liquidation quake, publicly <a href="https://www.binance.com/en/support/announcement/detail/d6deec042d784b6ba5d8710a8c69d79d?utm_source=chatgpt.com">announced</a> that it would be reconfiguring its price oracles away from its own spot markets for wBETH and BNSOL “to minimise the risk of depegging.”



Hypothetically, that opens the door to the whole situation amounting to a coordinated attack on Binance (or one of its market makers).&nbsp;



Whether Binance knew it or not, the announcement made it clear that there was a structural weakness in the way its oracles were valuing certain tokens used as collateral. Any malicious whale with a decent-enough position in the implicated spot markets could (again, hypothetically) dump enough coins to depeg those assets, triggering liquidations that shouldn’t be triggered at all.



Which, I suppose, could be the case. But for such a plan to work, it would take knowing that the order books were so thin that prices would actually collapse under a certain amount of acceptable selling pressure applied by the malicious whale.&nbsp;



As it so happens, there is data that suggests that this might’ve been possible.&nbsp;



The tip off came from an X poster by the name of Benson Sun, who has been unpacking the implications in a series of articles. Sun <a href="https://x.com/BensonTWN/status/1978083314121552360">wrote</a> that between 21:18 and 21:20 UTC, Binance underwent an “abnormal, synchronized withdrawal of liquidity,” through which “order books were nearly drained, leaving the market in a brief but total vacuum.”



Indeed, bid and ask volumes on Binance’s BTC/USDT market evaporated by more than 95% between 21:13 and 21:22, per Blockworks Research data and as shown on the chart below. The orderbooks were drained almost completely in under 10 minutes and would take the better part of an hour to recover to reasonable levels.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1282" height="718" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-45.png?w=1024&amp;h=1024" alt="" class="wp-image-109104" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-45.png?w=1282 1282w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-45.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-45.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-45.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-45.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-45.png?w=466 466w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-45.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-45.png?w=80 80w" sizes="auto, (max-width: 1282px) 100vw, 1282px" /></figure>



Binance, meanwhile, compensated liquidated users affected by localized depegs that occurred between 21:36 UTC and 22:16 UTC.&nbsp;



Which makes sense: The depegs had started around 21:40 UTC, with the worst of it coming about 10 minutes later. Trump’s announcement of potential additional tariffs on China came 20 minutes after that, at 20:00 UTC, on Truth Social.&nbsp;



Curiously, two Hyperliquid accounts <a href="https://www.wsj.com/finance/currencies/a-historic-crypto-selloff-erased-over-19-billion-but-two-accounts-made-160-million-3144cccd">got ahead of the news</a> by shorting bitcoin and ether minutes before that post, leading to $160 million profits.



Were those traders the same whales who might’ve intentionally crashed prices on Binance after they simultaneously pulled their chips off the table, imploding markets that they themselves turned illiquid? Was that a strategy to profit even more from their shorts, fueled by the tears of liquidations across the exchange ecosystem?



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Reminded by <a href="https://twitter.com/BensonTWN?ref_src=twsrc%5Etfw">@BensonTWN</a> <a href="https://twitter.com/Arthur_0x?ref_src=twsrc%5Etfw">@Arthur_0x</a>, I further explored the data points of <a href="https://twitter.com/ethena_labs?ref_src=twsrc%5Etfw">@ethena_labs</a> price at 9:18 pm UTC and 9:19 pm UTC on 10 Oct across <a href="https://twitter.com/binance?ref_src=twsrc%5Etfw">@binance</a> <a href="https://twitter.com/okx?ref_src=twsrc%5Etfw">@okx</a> <a href="https://twitter.com/Bybit_Official?ref_src=twsrc%5Etfw">@Bybit_Official</a> <a href="https://twitter.com/bitgetglobal?ref_src=twsrc%5Etfw">@bitgetglobal</a> . 0.34 -&gt; 0.27 at 9:18 pm 0.27 -&gt; 0.15 at 9:19 pm It looks like mms withdrew the liquidity… <a href="https://t.co/PhtTWMHAqx">https://t.co/PhtTWMHAqx</a> <a href="https://t.co/Fyvycbethz">pic.twitter.com/Fyvycbethz</a>&mdash; YQ (@yq_acc) <a href="https://twitter.com/yq_acc/status/1978138671531618777?ref_src=twsrc%5Etfw">October 14, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



We’ll never know without Binance publicly releasing details of how their largest traders operated around the time of the crashes (which would never happen).&nbsp;



But remember the part about pattern recognition: In a separate post, another analyst <a href="https://x.com/yq_acc/status/1977433963728867630">catalogued</a> four other instances of attacks on oracles prone to manipulation since late 2020, including bZx, Harvest Finance, Compound and Mango Markets.



So the $19 billion question of whether a single culprit caused the chaos might be a misnomer. It was a situation that could’ve easily been caused by just one person.&nbsp;



Whether or not they intended to trigger the situation is the real kicker. And it doesn’t take a tinfoil hat to suggest that exchange operators (CEX or otherwise) would do well to consider this a coordinated attack in any case.&nbsp;



Fingers crossed, at least.



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Binance

Attack on Binance? Crypto meltdowns are starting to rhyme

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire" target="_blank" rel="noreferrer noopener">subscribe</a>.



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Crypto has grown into a Kafkaesque maze of meta-bets: Bitcoin is the reserve asset of the internet, and if it can do that, then Ethereum must be the World Computer.&nbsp;



But if Ethereum can’t scale to be the World Computer all by itself, then perhaps Solana, Avalanche or some other layer-1 will be the global settlement layer for computation instead.



That settlement layer will need apps. Lots of them. Great for the <a href="https://davidphelps.substack.com/p/the-fat-app-thesis">fat app thesis</a> — the investment logic that suggests “most of the value to be found in crypto today is to be found in apps.”&nbsp;



And if those fat apps have tokens, then hoo boy! — Imagine the value accrual. Especially for those apps that thrive in crypto’s hyperactive attention economy.



What if the apps are so successful that they overload their settlement layers, thereby proving that those blockchains can’t scale, either? Or maybe their devs, validators or other ecosystem participants are not aligned with the apps themselves. What then?



<h2 class="wp-block-heading">Fun with flywheels</h2>



Odds are you’ll then love the <a href="https://www.youtube.com/channel/UC9aOLLMQht_1FKRxbQe60NA">appchain thesis</a>. It has everything good about the fat app thesis, with the added benefit of a very special property: ongoing utility for network participants. Tokens can be dished out as rewards (read: payment) to the people and companies keeping the network online.&nbsp;



And those people need to stake their tokens (and not sell them) to receive more of those rewards — reducing downward pressure on the token’s price and maybe attracting new users (and holders) along the way. The token is an integral part of that flywheel.



Something that Empire host Santiago Roel Santos said on today’s podcast got me thinking about all of this. The topic of <a href="https://blockworks.co/news/polymarket-culture-chasm">Polymarket’s trajectory</a> had come up, and Santi recounted that he had participated in the ICO for the original blockchain-powered prediction market, Augur, which coincidentally occurred 10 years ago this week.&nbsp;



Augur had a brief moment around early 2018 but never enjoyed the same kind of cultural inertia as Polymarket — a fact that hung in the air as the opportunity came for ParaFi to invest.



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/21OwuCgRqMc?si=OGfeGXmdlg3oThzO" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







“It&#8217;s a classic example for anyone that&#8217;s interested in investing in technology. And like, you could have sat there and said, ‘Hey, Augur&#8217;s not successful, so this is definitely not gonna be successful,” Santi told Yano and Dragonfly’s Rob Hadick.



“The reality is, it pays to re-underwrite the thesis under new circumstances. And yeah, you can laugh, sitting there all day long, ‘This time&#8217;s gonna be different.’ But credibly, Augur didn&#8217;t work for a number of reasons that we can talk about here. My main diagnosis is that you didn&#8217;t have a stablecoin. And if you can&#8217;t settle the bet on a stablecoin, it&#8217;s just really noisy.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The Fed cut rates by 25 BPS yesterday. A trader on Polymarket &quot;aBeancounter&quot; who joined last month made $1.4 million on the trade. <a href="https://t.co/vj5gvLS1g4">pic.twitter.com/vj5gvLS1g4</a>&mdash; unusual_whales (@unusual_whales) <a href="https://twitter.com/unusual_whales/status/1968695508282618258?ref_src=twsrc%5Etfw">September 18, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Santi outlined a scenario where someone bets 30 ETH, and the price of ETH suddenly crashes 80% while the bet is still in play. “It hurts to be right and then lose money,” Santi said. Polymarket fixed this by allowing bets to settle natively in USDC.



Sounds like a stablecoin thesis to me. Hadick expanded on Santi’s point. “Stablecoins are the enabler of other types of financial markets and financial ecosystems onchain,” he said. Without stablecoins, it’s much harder to “do financial activity in any real way over any long period of time onchain,” because of the FX risk.&nbsp;



And if free-flowing stablecoins are the crucial infrastructure layer that has so far been missing from the crypto economy, then it’s not just the prediction-market thesis that needs re-underwriting. It’s practically every other vertical in the space: NFTs, gaming, you name it.



Santi said: “[A quote has] just stuck with me forever, which is ‘Anytime you remove friction from a system, it unlocks non-linear consumer behavior.’ The internet, e-commerce, and then stablecoins, [which] I think are primitive from e-commerce to gaming to everything in the middle. It&#8217;s just explosive, and I think we’re just scratching the surface of what is gonna be possible here.”



But if bitcoin is the reserve asset of the internet, and stablecoins are the unit of account of the crypto economy — sprawling with social, finance and gaming platforms, exchanges, prediction markets, launchpads and apps we’re yet to even dreamed of — then what about the tokens issued by all the apps? What do they do? What would Polymarket’s token do, if it launched one tomorrow?



We’re about to get a new wave of tokens that might start with MetaMask and OpenSea, two of the most well-known and well-used apps in crypto history.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Metamask and Opensea airdrops are going to feed families (of down bad 2021 NFT traders)&mdash; Otto Suwen (@OttoSuwenNFT) <a href="https://twitter.com/OttoSuwenNFT/status/1968825178583859236?ref_src=twsrc%5Etfw">September 18, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



In cycles past, those tokens could reasonably double as a payment bridge within the app itself. We used to call these “utility tokens,” but if what Santi and Rob are saying is true, then stablecoins have rendered those well and truly redundant.&nbsp;



Governance has always been the fallback value prop for tokens that don’t really have a reason to exist other than as a conduit for capital (itself a function that has historically rubbed securities regulators the wrong way). The governance token thesis has so far not been overly compelling, and it’s worth unpacking that debate further in another email.



The most obvious function for these tokens will be to reward anyone who has used either app to any meaningful degree. Validators and stakers get paid tokens to secure a layer-1, so why wouldn’t users get paid to drive early adoption on an app?&nbsp;



One problem: Airdrops and token rewards accrue value to the user, not the token. The token becomes the product, and in a crypto economy dominated by stablecoins, such a flywheel quickly runs out of steam.



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Will stablecoins break the token flywheel?

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire" target="_blank" rel="noreferrer noopener">subscribe</a>.



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If you’re waiting for the conversation to shift away from Digital Asset Treasury companies, prepare to wait longer. Same goes for those anticipating a cascade of implosions.



“ You probably end up having an evolution of these DATs, where instead of just putting a one-to-one token in it, DATs basically become this vehicle through which capital ends up getting mobilized in the TradFi world and then deployed onchain at scale,” Yano posited on today’s Empire podcast to Ethena Labs CEO Guy Young.



With that in mind, Yano wondered whether the over-leveraged blowups at the end of 2021 and into 2022 has Young scared of a redux.



In the cases where the carry trade is collateralized one-to-one with the target asset — for example, raising $5 billion to deploy $5 billion — the stablecoin founder doesn’t see cause for concern.



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/NrIfwXyVtWQ?si=-c9z_b39j_eV-uPQ" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







“I think the risk obviously comes if you start to lever up all of the underlying assets and you&#8217;re, you know, 2x long ETH within the vehicle itself, and then these things start getting liquidated. Obviously that becomes a bit more challenging,” Young said.



“I think the one thing that&#8217;s good is that they&#8217;re all much more transparent vehicles, right? Like, we couldn&#8217;t really see into the balance sheets of all of the entities that blew up last cycle, while here, you actually have disclosure requirements to be showing to the market. So anyone who&#8217;s reading those documents will be well aware of how much leverage there actually is.”



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