Byron Gilliam

Nathaniel Whittemore

The Breakdown

On today’s Breakdown, NLW looks at the latest twists in the crypto market structure bill. A group of 12 Senate Democrats is pushing for true bipartisan authorship, raising the stakes as time runs short to move the legislation forward this year. We examine what their demands could mean for stablecoins, DeFi, and the overall momentum of U.S. crypto regulation. Plus, updates on Treasury’s next steps for the Genius Act, Greyscale’s new crypto index fund, and Bito’s IPO filing.
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Senate Democrats Push for Bipartisan Role in Crypto Market Structure Bill

In this week’s Friday Five, NLW digs into why Bitcoin’s September performance is surprising markets, what the Fed’s anticlimactic rate cut means for the economy, and how new SEC approvals are reshaping the ETF landscape. He also breaks down Google and Coinbase’s new agent payment protocol for stablecoins, explores fresh token news from Base and MetaMask, and looks at the latest stablecoin and crypto policy moves in the US and UK.
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The Five Most Important Stories in Crypto This Week

The Federal Reserve delivered its first rate cut since last November, reducing the target range to 4–4.25% as weakening labor data outweighed inflation concerns. Chair Powell framed the move as a “risk management cut” and an adjustment toward neutral, while politics loomed large with Trump-aligned voices pushing for deeper cuts. Markets and analysts were left uncertain about whether this is the start of an easing cycle or simply a preemptive move in a bifurcated economy driven by AI investment on one side and labor market softness on the other.

Fed Cuts Rates Amid Rising Labor Market Risks

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“People will always respond better to a single idea expressed clearly. They tune out when Complexity begins to speak instead.”



— Ken Segall
</blockquote>



When Steve Jobs met with the advertising experts at Chiat/Day to develop an ad for the new iMac, they asked him to pick a single new feature to highlight to consumers.



He couldn’t, insisting instead that a 30-second TV ad was long enough to include the four or five features he thought everyone needed to know about. The agency executives argued that no one can remember four or five things, and urged him to choose a favorite. When Jobs refused, the legendary ad executive Lee Clow decided to make his colleagues’ point in a more tangible way.



As later retold by <a href="https://www.amazon.com/Insanely-Simple-Obsession-Drives-Success-ebook/dp/B0064W5V5C/ref=sr_1_1?crid=36BWLUO4S0P40&amp;dib=eyJ2IjoiMSJ9.3ghxVjvQ3IXQXSmvs21TTRZDGeHjK2jqNQ8G94r7aBXtfRK-_YmC5kav7YX1zSfFRHeqlsvu8A-6169sb--5thf6foQ-sfWKRfUKp7qi0wPopHMlvOMgvFtsmNFgaHAx_NnM3sNzvyQOsJAx-szE4FwKzJ6MUMgZg0Hg9Aa4GogqRe8WXQIMDq6XehPAZ6vuhEqsaWU2D59KkEc62RSykDlqJMymFgA4DT89YFX4l6g.M5BNzMlCQAhl626cONSuJL3KNF3zVj8ahlROhARg1CM&amp;dib_tag=se&amp;keywords=insanely+simple&amp;qid=1758486823&amp;sprefix=insanely+simple%2Caps%2C147&amp;sr=8-1">Ken Segall</a>, Clow tore five sheets of paper from his notepad and crumpled them into paper balls.



Jobs watched until Clow said, “catch,” and tossed a single ball of paper across the table to him. Jobs caught it and tossed it back.&nbsp;



“That’s a good ad,” Clow explained. “Now catch this.” Clow threw all five paper balls at him and he didn’t catch any.



“That’s a bad ad,” Clow told him.



The demonstration appeared to work, because Jobs ended the meeting by giving Chiat/Day the go-ahead for a much simpler ad than the one he asked for at the start of the meeting.



“Minimizing is the key to making a point stick,” Segall explains.&nbsp;



“Give [people] one idea and they nod their heads. Give them five and they simply scratch their heads.”



<h2 class="wp-block-heading">Mixing messages</h2>



Over the years, investors have been given many ideas on why they should invest in Ethereum: the World Computer, digital oil, yield-bearing internet bond, ultra-sound money, the app store of crypto, the stablecoin chain.



None have really stuck, perhaps because they were often made at the same time — Clow’s five paper balls all in the air.



This weekend, Vitalik coined another: “low-risk defi.”



(Like in 1984, I will now go back and change every mention of “DeFi” in my newsletter archive to “defi.”)



Vitalik opens his latest <a href="https://vitalik.eth.limo/general/2025/09/21/low_risk_defi.html">blog post</a> by acknowledging a &#8220;disjointness&#8221; in the Ethereum community caused by the seemingly contradictory goals of creating revenue for token holders and keeping the chain neutral and decentralized.



Low-risk defi, he hopes, is the application that “fills both boxes at the same time.”



If so, it could helpfully synthesize Ethereum’s many competing narratives, as David Hoffman <a href="https://x.com/RyanSAdams/status/1969794415595077997">expects</a> it will: “It’s all coming together now.”



Others are skeptical. Mert Mumtaz, for example, <a href="https://x.com/0xMert_/status/1969531218044579949">argues</a> that Ethereum’s self-imposed technical limitations are incompatible with Vitalik’s emphasis on payments and financial inclusion: “You are not going to serve underserved populations on the L1 because it does not scale!”



From a marketing perspective, though, (and I think this is mostly about marketing), the risk is that the investment pitch for Ethereum might be getting even more disjointed.



“Low-risk defi” seems like a good elevator pitch to me — it differentiates Ethereum from both no-revenue Bitcoin and too-much-revenue Solana; it’s tangible enough to mean something and intangible enough to be open to interpretation; it’s simultaneously high- and low-minded.



But that kind of carefully balanced messaging might get drowned out by the digital asset treasury companies (DATs) that are now shaping the crypto narrative.



Joe Lubin <a href="https://cryptonews.com.au/news/joe-lubin-eth-treasury-strategies-key-to-tell-ethereums-story-to-wall-street-129818/?utm_source=chatgpt.com">says</a> this is the express purpose of SharpLink Gaming, the DAT he chairs: “It’s about telling the Ethereum story.”&nbsp;



Unlike Vitalik, he’s telling that story with traditional investors in mind: “What does Wall Street pay attention to? It pays attention to being able to make money.”



Lubin tosses at least three paper balls in the air by pitching Ethereum as a productive asset, a monetary asset, and a “trust commodity.”



Tom Lee, chair of the other big Ethereum DAT, BitMine, adds stablecoins, RWAs and even AI agents into the messaging mix.



Clow would probably lock them in a room and not let them out until they picked just one of these messages to pitch investors with.



DATs are more of a competition than a communal effort, however, and Tom Lee is currently winning: BitMine holds 2.15 million ETH to SharpLink’s 838,000.



This tells us something about the power of marketing: Joe Lubin, a co-founder of Ethereum, is attracting less attention from investors than Tom Lee, who is mostly known for pitching all kinds of things on CNBC.&nbsp;



The final outcome of this competition could have real consequences.



Lee, for example, <a href="https://www.youtube.com/live/81g2t4uYafw?si=58US91w2iw8X1Ih_&amp;t=9894">thinks</a> BitMine will have outsized influence in the development of Ethereum after it crosses a magical threshold of owning 5% of the supply of ETH.



That’s unlikely from a governance perspective, since no one “owns” the Ethereum network (not even ETH token holders).



But I suspect it will be from a messaging perspective — and messaging matters.



In that sense, a single DAT emerging with 5%+ of the ETH supply might actually help the investment case by simplifying the message that investors hear.



But the DATs themselves are already struggling to stay on message.



Tom Lee’s Ethereum DAT, for example, recently bought into a Worldcoin DAT, and a Solana DAT, DeFi Dev Corp., <a href="https://x.com/mdudas/status/1969182745378107551">bought into</a> a DAT that invests in the 0G token (which doesn’t exist yet).



When even the message makers can’t stay on message, how can investors be expected to keep up?



The obvious counterexample is Bitcoin, which has captured investors’ attention by offering a singular investment pitch: digital gold.



Bitcoin is more than that, of course.&nbsp;



I’d argue that it’s far more interesting as resistance money, for example.&nbsp;



Others think it’s the Lightning network that makes it interesting.



Fortunately, Lee Clow would probably tell you it can be all these things.



With his crumpled up paper balls, Clow wasn’t asking Jobs to eliminate four of the iMac’s five new functions — only to pick one to highlight.



Blockchains and DATs should do the same.



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The Breakdown Newsletter

Ethereum is still workshopping its elevator pitch

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Inflation in the United States is made in Washington and nowhere else.”



— Milton Friedman
</blockquote>



When Fed Chair Paul Volcker raised short-term interest rates to as high as 22%, angry construction workers sent him two-by-fours in the mail in protest.



They had no other use for them, they explained, because his rate hikes were stopping them from building houses for people.



It was a fair point. The recessions Volcker induced with rate hikes are credited with ending inflation in the US — but they probably shouldn’t be because raising interest rates can only slow inflation in the near term.



In the medium term, higher interest rates might even do the opposite: The Fed fights inflation by reducing demand, but that can ultimately be counterproductive.



Putting home builders out of work, for example, reduces the supply of houses and fewer houses means higher house prices.



“Today’s demand is tomorrow’s supply,” John Cochrane writes in explaining why rate hikes can be counterproductive to durably reducing inflation. “The economy needs investment and housing.”



In the long term, higher interest rates are probably no help at all.



Inflation is ultimately a case of too much money chasing too few goods and higher rates don’t change that.



Why then did it work for Volcker? Cochrane argues it’s because “tight money in the early 1980s was quickly followed by tax, spending and regulatory reform.”



Those reforms reassured consumers and investors that the government would not have to resort to printing money to pay off its debts.



Volcker might get credit for that, too, however: It was the threat of repeated Fed-induced recessions that forced the White House and Congress to demonstrate they were committed to lowering the deficit over the long term. In Cochrane’s view, this is the only way to durably lower inflation: “The US has to persuade people that over the long haul of several decades it will return to its tradition of running small primary surpluses that gradually repay debts.” The Fed can’t help with that — but thanks to the legend of Volcker, everyone thinks it can.



Economist and ex-Fed board member Henry Wallich recognized this as long ago as 1975, <a href="https://oll-resources.s3.us-east-2.amazonaws.com/oll3/store/titles/1097/0102.08_LFeBk.pdf?utm_source=chatgpt.com">bemoaning</a> the mistaken belief that &#8220;deficits can do no major damage so long as the central bank does its job right.&#8221;



Volcker then supercharged that belief. He raised rates and inflation went down, so it seems like that’s all there is to it: When inflation happens, it’s the Fed’s job to fix it.



His successors have cemented that impression.



After the last FOMC meeting, for example, Chair Powell <a href="https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20250730.pdf">reassured</a> markets “there should be no doubt that we will do what we need to do to keep inflation under control.”



He has to say that, of course — a big part of how the Fed keeps inflation in check is by using the kind of confident language that keeps inflation expectations in check.



But the confident language also lets Congress and the White House off the hook.



Why do the hard, politically treacherous work of raising taxes, cutting spending and promoting growth if the Fed can simply control inflation with interest rates?



In other words, we have a free rider problem: Congress and the White House don’t feel responsible for inflation, so they do feel free to run giant deficits — always, even when the economy is good.&nbsp;



But what if interest rates were effectively set by the White House?



President Trump has recently been terrifying economists with a campaign to end the Fed’s independence, explicitly calling on the Fed to lower interest rates in order to make the deficit easier to finance.&nbsp;&nbsp;



This is the “fiscal dominance” that economists have long warned would undermine faith in the US dollar and risk runaway inflation.



But this non-economist wonders if it might have an entirely different effect.



Is it too naive to think that if the president politicizes the Fed, politicians will be forced to take responsibility for inflation?&nbsp;



Volcker spooked Congress into fiscal responsibility in the 1980s, and maybe voters, once they realize that inflation is made in Congress, could do so now.



There may not be any other choice, because the Fed is not so scary anymore.



If the Fed were to dramatically raise interest rates, the first-order effect would be higher interest costs on the government’s $37 trillion of debt, which in turn creates inflation by undermining people’s belief that the debt can ever be paid off.



That makes rate hikes unsuitable as a short-term fix for inflation and counterproductive as a longer-term one — and no longer something the Fed can plausibly threaten.



Ideally, recognition of this new reality would focus politicians&#8217; minds on the long-term fixes that only they can implement.



They will be reluctant, of course, because the fixes are politically unpopular and Congress would prefer that the proverbial two-by-fours continue to be mailed to the Fed.



But inflation is wildly unpopular, too, and if voters recognize that politicians are ultimately responsible for it, they might force them into action (or out of office).



To be clear, few economists are rooting for the president to succeed in his campaign to break the Fed, and it&#8217;s not my first choice, either.



But if you break it, you own it — and now is the time for the White House and Congress to own the inflation problem.



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How I stopped worrying and learned to love a politicized Fed

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
&nbsp;&#8220;Nobody goes to the store to buy a Swiss Army knife. It’s something you get for Christmas.”



— Jensen Huang
</blockquote>



Great businesses start as scalpels, not Swiss Army knives.



By choosing one thing to do, companies are more likely to get great at that one thing — and customers are more likely to know that’s the thing they do.



Here, for example, is Yahoo’s homepage, circa 1999: <img loading="lazy" decoding="async" src="blob:https://cms.blockworks.co/0f9c6e90-a5b4-4f0d-aa85-6c8ee5d5aeeb" width="624" height="271">



There’s a lot going on there — search, auctions, news, email, instant messaging — and Yahoo wasn’t particularly good at any of it.



Here’s Google’s homepage, circa 1999:



<img loading="lazy" decoding="async" width="624" height="219" src="blob:https://cms.blockworks.co/2162e9ff-dbf4-4579-8dfb-a35589f0f55c">



It’s easy to see why that proved to be the winner: the single-purpose website made it clear to users what Google does, and that helped Google get very good at doing it.



The fact that lowercase “google” has since become a verb and Yahoo doesn’t do anything more important than host my fantasy baseball league is evidence that being great at one thing generally beats being average at many things.



Will that apply to blockchains, too?



Bitcoin is a single-purpose chain — all it does is send bitcoin — and its simplicity might be the main reason it&#8217;s been such a success.



But Ethereum and Solana are also general-purpose chains and they, too, have had some success.&nbsp;



And neither approach seems to be encroaching on the other: Bitcoin has so far failed at DeFi and Ethereum has so far failed to become money.



So maybe both approaches can peacefully co-exist?



It might be too early to answer, because general-purpose chains will soon have a new, single-minded competitor.



Last week, Stripe and Paradigm formally announced the development of a stablecoin-focused blockchain, <a href="https://blockworks.co/news/tempo-stripe-paradigm-planned-l1">Tempo</a>, that feels like an instant favorite to win the emerging crypto payments business.



Tempo will be purpose-built for stablecoins, offering predictable fees (paid not in a native token, but stables), near-instant finality, “opt-in” privacy and compliance functionality, “lanes” exclusively for payments, and high throughput — all things that general-purpose chains struggle with.



Matt Huang, who leads the development of Tempo, <a href="https://x.com/matthuang/status/1964123449045242041">suggests</a> that being more narrowly focused will allow the chain to develop faster:&nbsp; “We feel urgency to build for the demand that’s coming and want fewer dependencies, including on the rate of Ethereum L1 progress.”



Calling out Ethereum like that might suggest that Tempo will have ambitions beyond payments.



Perhaps tellingly, Huang says that, while Tempo will start with a permissioned validator set, the chain will be “permissionless” from day 1 and will “decentralize further from there.”



A fully decentralized and permissionless blockchain that excels at payments sounds a lot like what you’d want a general-purpose blockchain to be.



Could Tempo pose a threat to Ethereum and Solana not just in payments, but in everything?



The Google example suggests it’s possible: they beat Yahoo at search, then expanded horizontally into email, cloud computing, smartphones, self-driving cars — becoming even more of a Swiss Army knife than Yahoo was in 1999.



There are several such examples: Microsoft was just BASIC, Amazon was just books, Apple was just PCs, Southwest Airlines was just Texas.



But there are counter-examples, too.



To name just one, single-purpose calculators used to be better for doing quick math than general-purpose computers, but who owns one now?



You’re more likely to have a Swiss Army knife in a drawer somewhere than a Texas Instruments calculator.&nbsp;



So, if general-purpose computers could make calculators unnecessary, maybe general-purpose blockchains can eventually make payments blockchains unnecessary, too.



Max Resnick is confident they will: “Decentralized blockchains,” he <a href="https://x.com/MaxResnick1/status/1964072214568784069">predicts</a>,&nbsp; “will be superior to centralized ones in every way” — including speed, scale, reliability, and even regulatory compliance.



If so, Tempo may have fired the starting gun in a race to make general-purpose chains super fast before a super fast, single-purpose chain can be decentralized.



This might be a race with no finish line: it might be impossible to be both decentralized and optimized for payments.



Mert Mumtaz, for example, <a href="https://x.com/tbpn/status/1964079154795860310">thinks</a> Tempo won’t even be a blockchain, let alone a general-purpose one: “How can you possibly have something that’s a payments-only chain?”



For Mumtaz, blockchains are decentralized by definition — and a decentralized blockchain is by definition general-purpose.



Tempo says they will progress toward decentralization.&nbsp;



But Mumtaz thinks that will inevitably flood the chain with frivolous things like Fartcoin, clogging things up and degrading the chain’s performance in payments.



There are only two ways to be a payments chain, he says.



One is to make the chain “not Turing complete,” like Bitcoin, “where you can’t do anything other than send money” — and the other is to “permission the chain.”



If so, Ethereum and Solana can rest easy that they’re not going to become Yahoo to Tempo’s Google.



But what if Tempo gets all the users without decentralizing?



If Tempo really is faster, cheaper, and where all the stablecoins will end up, users might go there not just for payments, but for everything — without regard to whether it meets Mumtaz’s definition of a blockchain.



So this might turn into more of a test than a race. Is decentralization the kind of thing people are willing to pay for?



Or the kind of thing you only get for Christmas?



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Should blockchains be single-purpose?

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
&nbsp;“Without the need to trust a third party middleman, money can be secure and transactions effortless.”



— Satoshi
</blockquote>



Property rights are not sacrosanct in traditional finance.



Even in the US stock market — where shareholder rights are treated with near-religious reverence — a company’s management can sometimes forcibly divest an unwanted shareholder of their shares.



In 2009, for example, the struggling software firm Selectica used a poison pill defense to cut a single shareholder’s stake in half.



When the pill was triggered, all shareholders other than Versata, a hedge fund, received rights that effectively doubled the number of shares they owned.



In effect, this redistributed half of Versata’s share in the company to the company’s other shareholders.



Versata sued, but a Delaware judge sided with the company — proving that, under some circumstances, a board can seize a shareholder’s property much like a government invoking eminent domain.



Unlike eminent domain, however, the company doesn’t have to compensate the dispossessed owner.



It’s not done lightly.&nbsp;



Selectica had to prove in court that its action was a “proportionate” response to a threat posed by a hostile shareholder.



But the fact that it’s possible is part of what inspired crypto and decentralized finance: a new kind of financial system where property rights are enforced by code, not the whims of a Delaware judge.



On Friday, however, World Liberty Financial — a DeFi protocol that’s “governed by a distributed community of WLFI tokenholders” — effectively dispossessed a large token holder of their tokens.&nbsp;



Justin Sun’s substantial holding of WLFI was frozen (perhaps temporarily) when his tokens were added to a blacklist that prevents them from being moved.



In total, World Liberty <a href="https://x.com/worldlibertyfi/status/1964081166367035684">blacklisted 272 accounts</a> this weekend, mostly in an effort to stop phishing attacks — which is laudable, but not exactly in the spirit of not-your-keys-not-your-coins permissionless crypto.



Sun’s tokens, however, were frozen amid reports that he shorted WLFI tokens borrowed from an exchange he controls.



Someone at World Liberty took exception to this and froze Sun’s property in response — something they can do without consulting the “distributed community” of token holders that ostensibly governs the protocol.



TradFi executives don’t appreciate short selling either, of course.



Companies that feel attacked by short sellers will sometimes issue special dividends to complicate short positions, contrive to have large holders recall the shares they’ve lent out, or even lobby the government to ban the practice (as banks successfully did in 2008).



But crypto makes this so much easier: Smart contracts can give protocols the ability to stop their tokens from moving.&nbsp;



Few protocols grant themselves this ability, presumably because it’s counter to the spirit of a decentralized, permissionless financial system.



Blacklists are usually only found in centralized stablecoins, where issuers need the ability to freeze criminals’ funds at the request of law enforcement.&nbsp;



But a blacklist for tokens?



World Liberty might be unique in granting itself the ability to extinguish property rights with just a function call to blacklist(address).



This seems to contradict the spirit of its founding mission.



As World Liberty co-founder and CEO Zach Witkoff tells it, the project was inspired by a conversation he had with the Trump brothers, Eric and Donald Jr., shortly after their accounts were “terminated” by two of the largest US banks.&nbsp;



“So, we started discussing solutions, and the conclusion was that we needed a more democratized system,&#8221; he <a href="https://wublockchain.medium.com/wlfi-ceo-coo-in-conversation-dismantling-banking-hegemony-03546c1579f8">explained</a>. “The origin of World Liberty was to truly return financial control to the users.”



But not, evidently, to users of the World Liberty token.



The project’s <a href="https://static.worldlibertyfinancial.com/docs/intl/gold-paper.pdf">Gold Paper</a> states “WLF believes that the ability to transact privately and without intermediaries is a core American value.”



But World Liberty itself is an intermediary — and an unusually powerful one.



They did warn us.&nbsp;



Further down in the gold paper it cautions that in a “Material Adverse Event or Security Risk,” governance power can be “completely vested in the multisigs.”



This makes dispossessing an unwanted token holder much easier compared to executing a complex poison pill defense that a shareholder can appeal in a Delaware court of law.



Justin Sun, by contrast, can appeal the seizure of his property only to the court of social opinion: “My tokens were unreasonably frozen,” he <a href="https://x.com/justinsuntron/status/1963807543983263802">posted</a> on X after denying accusations of short selling.&nbsp;



That’s not how this alternative financial system was meant to work.



Just the opposite: World Liberty’s multisig appears to give its founders a level of control that TradFi founders can only dream of.



Traditional founders sometimes maintain control of their company with special voting rights, but how much easier is it when that control is baked into a smart contract?



World Liberty’s control appears to be absolute.



Their token, WLFI, is strictly for governance —&nbsp; “the sole utility of holding WLFI is governance of the WLF Protocol” — but World Liberty can ignore the decisions token holders make.



Late last year, WLFI holders <a href="https://snapshot.box/#/s:worldlibertyfinancial.com/proposal/0xce3ff6b195863c2217865ba6f028d2e163d9156a25cb35d923da3a5bc8479483">voted</a> to grant the Aave DAO “approximately 7% of the total supply of $WLFI tokens” (because World Liberty was originally conceived as a fork of Aave).



Eight billion tokens voted in favor of the proposal, vs. just 187,000 against.&nbsp;



Despite that overwhelming consensus, World Liberty appears to be reneging on the deal, <a href="https://x.com/WuBlockchain/status/1959288692159512991">reportedly</a> calling it “fake news.”



This, too, is a TradFi founder&#8217;s dream.



Crypto founders already have the magical ability to raise capital without surrendering a share of their future profits (by issuing governance tokens).&nbsp;



And in this case, the founders didn’t have to surrender any governance rights, either.



Could anything be a better deal than that?



To be fair, selling a token that people think of as equity but is actually more like a collectible is hardly unique to World Liberty — there are many such cases.



If anything, World Liberty deserves credit for being upfront about it: Just the fact that it employs a CEO tells you that, whatever idealistic language used in its gold paper, it’s more of a company than a protocol.&nbsp;



But blacklisting shareholders is a level of centralization that outdoes even TradFi.



“Tokens are sacred and inviolable,”&nbsp; Justin Sun <a href="https://x.com/justinsuntron/status/1963807543983263802">wrote</a> on X, ”this should be the most basic value of any blockchain.”



Sun is not generally known as a champion of decentralization, but he makes the case for it concisely.&nbsp;



“It’s also what makes us stronger and more fair than traditional finance,” he added.



World Liberty’s founders would presumably agree: The first line of their gold paper says World Liberty is “pioneering a new era of Decentralized Finance.”



So far, though, they’re making it look a lot like the old era.



But better.



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World Liberty Financial is perfecting TradFi

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



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
&#8220;I do not fear computers. I fear the lack of them.&#8221;



— Isaac Asimov
</blockquote>



When ATMs became commonplace in the 1990s, people naturally thought most bank tellers would soon be out of a job.



They weren’t.



The number of tellers per branch did in fact go down, from 23 to 13.



But, as Benjamin Todd <a href="https://benjamintodd.substack.com/p/how-not-to-lose-your-job-to-ai">notes</a>, ATMs made bank tellers more productive (because they were freed up to do higher-value work) and bank branches more profitable.



So banks opened more branches — so many more that the total number of bank tellers actually rose.&nbsp;



That happy result held all the way until 2018, when online banking reduced the need for bank branches, which caused the total number of bank tellers to go down.



“While partial automation increased employment,” Todd concludes, “the more dramatic automation made possible by online banking did indeed reduce it.”



Could AI play out the same way?



A <a href="https://digitaleconomy.stanford.edu/wp-content/uploads/2025/08/Canaries_BrynjolfssonChandarChen.pdf">paper</a> published by Stanford University last week seemingly confirmed people’s worst job-pocalypse fears — that we’re skipping straight to the endgame of full automation.



The paper documents falling employment among recent college graduates in the most AI-impacted fields, like software engineering, and suggests that this is a “canary in the coal mine” for the job market — an early sign that AI is coming for all of our jobs.



The same exact data can, however, be used to reach the exact opposite conclusion.



Noah Smith <a href="https://www.noahpinion.blog/p/ai-and-jobs-again?publication_id=35345&amp;utm_campaign=email-post-title&amp;r=6g77v&amp;utm_medium=email">looks</a> at the paper’s findings and wonders why employment losses would only be found among the youngest workers.&nbsp;



If AI is ready to replace humans, wouldn’t companies fire their most expensive humans first?&nbsp;&nbsp;&nbsp;



<a href="https://joshuagans.substack.com/p/if-ai-and-workers-were-strong-complements?utm_source=substack&amp;utm_campaign=post_embed&amp;utm_medium=web">Joshua Gans</a> says the fact that companies have hired even more experienced employees is significant: It suggests that AI is making more experienced workers more valuable.



“If a new technology comes along that augments the productivity of existing workers,” Gans explains, “then any business will want to hire workers with the necessary skills and experience and fewer workers who don’t have those skills.”



From that perspective, Stanford’s paper is good news for human employment, not bad.



Like Tony Stark and his JARVIS assistant, AI is so far proving to augment human workers rather than replace them — and if augmented workers are more productive, the first-order effect of AI should be to make employment go up, not down.



The real problem now, Gans concludes, is businesses that have stopped hiring entry-level workers “are going to run out of workers with experience.”



If so, we might soon stop fearing AIs, and start fearing the lack of them.



Let’s check the charts.



The trend is not our friend:



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="836" height="716" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.46.43.png" alt="" class="wp-image-107315" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.46.43.png?w=836 836w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.46.43.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.46.43.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.46.43.png?w=305 305w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.46.43.png?w=256 256w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.46.43.png?w=80 80w" sizes="auto, (max-width: 836px) 100vw, 836px" /></figure>



This morning’s mobs data showed that employment fell in June — according to the BLS’s model, which is not to be taken literally. Still, the trend is undeniably going in the wrong direction.



The AI effect:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="925" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-52.png?w=1024&amp;h=1024" alt="" class="wp-image-107309" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-52.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-52.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-52.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-52.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-52.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-52.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-52.png?w=451 451w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-52.png?w=379 379w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-52.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



From the aforementioned Stanford paper, its data on developer jobs by age group shows employment has fallen sharply for the youngest employees — but risen for the oldest. We can only hope that the same is true for newsletter writers.



More data:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="935" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-49.png?w=1024&amp;h=1024" alt="" class="wp-image-107306" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-49.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-49.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-49.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-49.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-49.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-49.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-49.png?w=447 447w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-49.png?w=375 375w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-49.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Brian Armstrong <a href="https://x.com/brian_armstrong/status/1963315806248604035">shares</a> that over 40% of the code at Coinbase is now generated by AI. But he also notes that the code “needs to be reviewed and understood” by humans. That would explain the Stanford paper’s finding that experienced developers are in higher demand — and maybe confirm Joshua Gans’ thesis that AI is augmenting workers, not replacing them.



Zooming out:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="883" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-48.png?w=1024&amp;h=1024" alt="" class="wp-image-107305" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-48.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-48.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-48.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-48.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-48.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-48.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-48.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-48.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-48.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



The unemployment rate for college graduates has ticked up, but remains within historic norms.&nbsp;



The ATM experience:&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="1006" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-50.png?w=1024&amp;h=1024" alt="" class="wp-image-107307" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-50.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-50.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-50.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-50.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-50.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-50.png?w=409 409w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-50.png?w=415 415w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-50.png?w=348 348w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-50.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



The best time to be a bank teller was the 18 years after ATMs arrived, because they made tellers more productive and bank branches more profitable. Online banking, however, was a replacement technology.



Look familiar?



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="919" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-51.png?w=1024&amp;h=1024" alt="" class="wp-image-107308" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-51.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-51.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-51.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-51.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-51.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-51.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-51.png?w=454 454w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-51.png?w=381 381w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-51.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



The researchers at Epoch AI predict artificial intelligence will be an augmenting technology in the first instance — causing wages to increase 10x in just over a decade — but then become a replacing technology, causing wages to crash. But Benjamin Todd notes that this assumes AI can do 100% of the jobs. “If instead humans remain necessary for just a small fraction of tasks, say 1%, then the same model shows that wages increase indefinitely.” In other words, we have somewhere between 12 and infinity years of rapidly growing wages to look forward to.



The falling cost of compute:



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="680" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.47.20.png" alt="" class="wp-image-107316" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.47.20.png?w=740 740w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.47.20.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.47.20.png?w=280 280w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.47.20.png?w=284 284w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.47.20.png?w=238 238w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.47.20.png?w=80 80w" sizes="auto, (max-width: 740px) 100vw, 740px" /></figure>



If AI is going to someday do 99% of the jobs, it’s going to demand a lot of power. This chart from a <a href="https://download.ssrn.com/2025/7/9/5136877.pdf?response-content-disposition=inline&amp;X-Amz-Security-Token=IQoJb3JpZ2luX2VjEA8aCXVzLWVhc3QtMSJHMEUCIQDW7Tb35437%2BjGVGkiVvMbgMmqVlZ%2B4MLk%2Fwn%2BYlWGQkAIgKo8tjkr%2FPzF5TXr05Zc%2Bs13tLct9kmaCOyZ7wjeh5w4qvgUIdxAEGgwzMDg0NzUzMDEyNTciDAEV6k5sjY%2FBKrKf8yqbBf7mkSKNo7vj0zjkkbOhG2nnyjHfa29N%2FE%2Fuz%2Bpruqp0%2FmzY920VTFV3V4oaBGsF8SRZvaxQfTp2UNpWcoK3z9jXLeFkXYmwnKQj0CZxtxq1auFTBh5aCMNtjBJ%2Fq5GqKzzKh6GXI1pOKzpQH5v4l4QOZt9wVW%2F57ifBbFxSE%2BWk%2F35nxRgKbh254HWvpA2m2P%2FPC2gpaII73fInwqzOk0aZ%2F0atGqSrIkyP1P4MLIgM9gN6N8BI3ZtIIgxAMQPM8Ut943HljlhHwW2p0tk19PxbBVEF%2BOL3ypkOwVZYOelllqaJpe%2BGREmyCRMTms4Gwdqm1B68D84ndQDClWKZMXHGF7sfJ9ejgGfhnSgWpOSejcq3yX7LU22keUAB8vmJOw%2FqWL0n7njRC8fn3ikGNk0DrNRj8ys8IKLOYwm4MvqaWBfa520Vwjf74%2B34yKSpFbSStsWqiNokmp6wxbBlENh%2BmSQOiY%2BBJjjME%2B0B3xu63MGbSpnLpOTLkCoSj0CvHDvPIM9bRd%2B0yW1p4x%2BEXQQ7XCSceidyf3tgjbI%2Bl8roufqa2Aj2A4FKbocx54dwhRsWaT9Xnj%2BYkd%2BGYs%2FOWa05CCA281VVpx%2FapJxHSp053IBJZ2KAQlqWFUNoq9JmOa9xO6ZYObMZg7pMx%2BTUxupGtIFlJwoY13%2FhOxdELqgq1bVOg9HuIFFdcmMuKsYflq57LyC5CXfx1mjuGA8j45%2F%2F5MGJF%2B4AKb2zPcEkkRFr%2Fa4ExEHYf%2BrFlngthPuSECTDNM3nRSwHyjIk5M0R0yDnrhZwtY%2BO6OB6pTh8S8HoZDwAu0TaYzgx%2BIdmsa6aecj%2BSX7TR6f8gGxUBebq4tiupfIbAYrjQJ1Wjpy9enR7Jz%2F2Tg080Ki4oL4wzuHrxQY6sQE5vTfzWLK9MaiOckljVuAKxx3xBRfZrN%2BxQWofEb0YwJlY8Ad8D9Fp6CufWFFO3gSrr2mqzwLyYp18lz5KZeJ6lDcu5ZQO1VrIYq438p0anm%2BUd6wpxyy995Y8OzfaO7dEiHgU44wto443afEpK%2F6Jw%2Fxec8Smf%2BqqyIgiBvKaEGw5IzZ5QmshEmW4%2FnKj4zuj30YEkG%2FQGXx2zX9oCKwV%2BqcKeKeGshsAqKUnz86Z9Zo%3D&amp;X-Amz-Algorithm=AWS4-HMAC-SHA256&amp;X-Amz-Date=20250905T145014Z&amp;X-Amz-SignedHeaders=host&amp;X-Amz-Expires=300&amp;X-Amz-Credential=ASIAUPUUPRWERD62S6PS%2F20250905%2Fus-east-1%2Fs3%2Faws4_request&amp;X-Amz-Signature=9dda38e55c6190a0b3202500822c33794c2bc5488efb0c8765b259fafb8530e0&amp;abstractId=5136877">paper</a> on the use of Gen AI in the workplace suggests we’ll figure out how to do it cheaply.



Not everything is AI:



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="978" height="634" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.47.36.png" alt="" class="wp-image-107317" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.47.36.png?w=978 978w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.47.36.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.47.36.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.47.36.png?w=396 396w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.47.36.png?w=403 403w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.47.36.png?w=338 338w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-05-at-16.47.36.png?w=80 80w" sizes="auto, (max-width: 978px) 100vw, 978px" /></figure>



Shares of Build-A-Bear are up 1,800% over the past five years — outperforming Nvidia by nearly 600 percentage points.



The long view (2):



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="917" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-47.png?w=1024&amp;h=1024" alt="" class="wp-image-107304" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-47.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-47.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-47.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-47.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-47.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-47.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-47.png?w=455 455w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-47.png?w=382 382w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-47.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



A century of rising US employment through nonstop technological upheaval is reassuring proof that humans always find new things to do.



The example of bank branches and ATMs will still worry people, of course — even if AI is augmenting human workers now, it might replace them later.



But <a href="https://www.economicstrategygroup.org/publication/deming_ong_summers/">research</a> by future-of-work economist David Deming suggests that employment always changes far slower than technology, so it’s unlikely to happen anytime soon.&nbsp;&nbsp;



Or ever.



“While AI helps with certain tasks of professional and managerial workers,” Deming concludes, “the demand for good ideas and cogent analysis of complex counterfactual thought experiments may be nearly unlimited.”



In other words, we might all be bank tellers making change today — and Tony Stark-like augmented humans doing superhero things tomorrow.



Let’s hope so.



Have a great weekend, augmented readers.



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Friday charts: Job-pocalypse now?

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
&#8220;The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence.&#8221;&nbsp;



— Charles Bukowski
</blockquote>



<a href="https://economics.appstate.edu/sites/default/files/cear_wp_2021_01_-_gender_confidence_and_the_mismeasure_of_intelligence_competitiveness_and_literacy_july_2024.pdf">Crypto bros are from Mars…</a>



An academic study <a href="https://marginalrevolution.com/marginalrevolution/2025/09/it-would-take-more-than-one-paper-to-establish-these-claims.html">flagged</a> by Tyler Cowen might inadvertently explain why the cryptosphere is so male dominated.



The researchers report their findings that the advantage men sometimes have in intelligence testing is eliminated (or reversed) when the tests are adjusted for confidence levels.&nbsp;



Men and women, they find, differ primarily in how sure they’re right: Men are more likely to act as though they’re certain, women are more likely to hedge or admit uncertainty.



This maps neatly to investing styles, I think — crypto-investing styles, especially.



Crypto culture often valorizes conviction (“diamond hands,” “HODL”) and punishes hesitation.



Men are overrepresented in crypto not because they’re more willing to take risks, but because the culture and payoff structure reward overconfidence.



Charles Bukowski says overconfidence is the problem with the world, but there’s something to be said for being irrationally sure that you’re right — if startup founders weren’t overconfident in their odds of success, for example, we might not ever have any new companies.



I’d argue that early Bitcoiners were similarly overconfident. But also that they had to be because you’ll never hit a 10,000x investment if you carefully weigh the risk/reward.



Those kinds of returns can only be achieved through belief.&nbsp;



Only a true believer could resist the urge to sell up 10, 100 or a 1,000x.



This, I suspect, is why men are so overrepresented in crypto: They’re better at believing they’re right.&nbsp;



<a href="https://www.galaxy.com/insights/research/tokenized-glxy">There’s now a stock on a blockchain</a>



Bringing stocks onchain has been a crypto talking point for years, but the Galaxy shares on Solana as of this week are the first ones to actually get there.



Most “real-world assets” that claim to be onchain are just IOUs for assets that remain off-chain.



Tokenized Galaxy shares, by contrast, are the real thing — holding Galaxy onchain makes you a shareholder in Galaxy, not a creditor to an intermediary that holds them on your behalf.&nbsp;



You can even take Galaxy shares held in your brokerage account and send them to <a href="https://superstate.com">Superstate</a> to be tokenized on Solana.



There’s not much reason to do that, because you can’t stake, LP or even buy or sell them onchain as of yet.



For now, it’s just a different form of recordkeeping.&nbsp;



But recordkeeping is important.&nbsp;



It means Galaxy could raise capital onchain which is not otherwise possible; or maybe even airdrop shares to incentivize some new behavior.



Superstate’s Robert Leshner says that “moving the recordkeeping from stacks of middlemen to just the token is going to facilitate all these subtle upgrades to the system.”



It’s unclear what that means in practice, but Leshner believes it will bring crypto’s “unbridled innovation” to traditional assets.



Which sounds terrifying.



But fun.



<a href="https://woodcoincrypto.com/coin-verification/">The Wood Wide Web&nbsp;</a>



In addition to the first stock going onchain, we might soon have the first token to go off-chain: “Woodcoin” is pitched as “the first cryptocurrency you can carry in your pocket.”



As the name suggests, these are coins made from wood, which sounds like the least crypto thing imaginable.



But they qualify as crypto because “the images of the coins are secured using cryptographic hash functions and shared via a peer-to-peer network.”



As far as I can tell, no coins have been issued as of yet.



But Woodcoin has big, Bitcoin-like ambitions: “By replacing trust in fiat issuers with trust in physical uniqueness, Woodcoin provides a foundation for trade that is immune to inflationary abuse, resistant to seizure and adaptable to global economic growth.”



The project’s <a href="https://woodcoincrypto.com/whitepaper/">white paper</a> makes a convincing case for why it would make a better global currency than either gold (too heavy) or bitcoin (too deflationary).



It also faults Bitcoin for the “vast electricity consumption” of its proof-of-work mining process.



Woodcoin, by contrast, is secured by a “shared registry and the physical uniqueness of each coin,” which does not involve burning any energy.



We wood have to cut down some trees, though.



<a href="https://www.theinformation.com/articles/nasdaq-steps-scrutiny-companies-loading-crypto">Nasdaq taps the brakes on DATs</a>



Yueqi Yang reports that would-be digital asset treasury companies (DATs) are facing new obstacles: “Nasdaq recently told some publicly listed companies that under certain circumstances, their shareholders would need to approve the plan to raise capital to buy crypto, according to people familiar with the matter.”



That doesn’t seem like a lot to ask — shouldn’t shareholders get to vote on such a major change of direction?



But slowing the process down even a little might scuttle the whole trade.



Announcing a shareholder vote on a proposal to pivot to crypto is unlikely to elicit the same market enthusiasm as announcing the pivot as a fait accompli.



And without that first pop, what’s the point? DATs only work if investors are excited about them.&nbsp;



If nothing else, Yang’s reporting is a reminder that exchanges are also regulators — and a warning that they’re not entirely sold on their listings pivoting to crypto.



They haven’t told anyone to stop. But with the DAT trade already stalling, just tapping the brakes might be enough to bring the trade to a standstill.



<a href="https://davidzmorris.substack.com/p/bullish-and-eos-a-fraud-in-plain?utm_campaign=post&amp;utm_medium=web&amp;triedRedirect=true&amp;_bhlid=c6bacd5903bb15cc96a480860c115dbd78367ab4">The bear case for Bullish</a>



In a Substack post, David Morris contends that the 24,000 BTC held on the balance sheet of the crypto exchange Bullish was effectively stolen.&nbsp;



He traces the history of Bullish back to 2017, when the corporate entity behind the EOS blockchain, Block.One, raised $4.1 billion in an ICO.



Morris cites an EOS community member, Yves La Rose, who says the proceeds were never used to develop EOS, as token holders must have expected.



Instead, they were used to buy the 24,000 bitcoin that can now be found on the Bullish balance sheet.



“A less diplomatic way of putting it,” Morris writes, “would be that EOS is a failure because Block.One stole all the investors’ money.”&nbsp;



“Stole” sounds too strong to me.&nbsp;



Once EOS investors sent their money to Block.One, I’m guessing Block.One was not under any legal obligation to employ it to the benefit of EOS token holders.&nbsp;



Diverting it to the balance sheet of an unrelated entity does seem unethical, though, which is Morris&#8217; main message. He warns the new holders of Bullish equity that they “shouldn’t expect much more ambition or honesty from this team than it has shown at any other moment after a big payout.”



Unlike token holders, however, equity holders have legal rights, so they should be treated more fairly.



But Morris warns they’re already being misled. He cites Dave Wang, who says that Bullish’s preferred accounting metric is deliberately misleading: “The headline 2024 ‘adjusted transaction revenue’ is ~$158 million whereas core transaction revenue is $2 million,” he <a href="https://x.com/DaveWangMIA/status/1957452763287482395">wrote</a> on X.



Wang calls Bullish “a meticulously engineered illusion” that should be valued at “a steep discount to the company&#8217;s net liquid assets” — which is almost the worst possible thing an analyst can say about a company.



Still, I can’t imagine this is news to the institutional investors who bought into the Bullish IPO — they tend to be good at accounting, and presumably did their due diligence before sending Bullish $1.1 billion.



But they were probably all TradFi bros, too, so that might have been overconfident.



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Thursday links: Overconfidence, crypto firsts, DATs and Bullish

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
&nbsp;&#8220;It’s unwise to pay too much, but it’s worse to pay too little.&#8221;



— John Ruskin
</blockquote>



The half-life of a market opportunity is a function of the frictions involved in exploiting it.



A business opportunity like selling GPUs might last forever because GPUs and the proprietary software needed to run them are hard to make.



A financial opportunity like arbitraging a stock across exchanges might last just a fraction of a second because trading on stock exchanges is easy.



Digital asset treasury companies (DATs) are somewhere in between.



There’s currently a mad rush of new DATs seeking to arbitrage the premium that investors are willing to pay for crypto tokens held by an exchange-listed company.



But it takes months for a company to get listed on exchanges, so despite all the new entrants, the window of opportunity has not yet been closed.



Everyone expects it will be soon though, so only those fastest to market are likely to profit.



Getting there via an IPO is out of the question — wrangling all the lawyers and bankers, getting approved by the SEC, and marketing a deal to investors can take a year or more.



A SPAC listing is faster — it might compress the listing process down to six months or so, as several DATs are currently attempting.



They still might not make it in time.



The premium for exchange-listed crypto (as measured by <a href="https://blockworks.co/analytics/treasury-companies/market-data/crypto-treasury-companies-aggregate-mnav-by-asset/">mNAV</a>) is already shrinking — before any of the proposed SPAC deals have even been finalized.&nbsp;



So to get a new company listed on the stock exchange before the DAT opportunity is arbitraged away, the only option may be to acquire a company that’s already on the stock exchange.



This is creating some strange exposures for investors.



Just recently, we’ve had a biotech company become an ETH DAT, a toy maker a TRON DAT, a maker of cleaning products a DOGE DAT, and a wellness company a BONK DAT.



In most cases, the only redeeming feature of this odd assortment of businesses is that they’re already listed on a US stock exchange.



A new Solana DAT, for example, has been created by a de facto takeover of a company that’s developed a new kind of syringe, Sharps Technology.



It’s not a good business.



For the first quarter of this year, Sharps Technology recorded $0 of revenue and an operating loss of $2 million. At the end of last year, the company told the SEC it had “substantial doubt” about its ability to continue as a going concern. In 2023, Sharps’ accounting firm resigned because the company “did not meet [its] internal risk tolerance metrics.”



And yet, the newly crypto-focused company says it will remain in the business of selling syringes.&nbsp;



This commitment to a failing enterprise — wholly unrelated to the company’s new mission to accumulate crypto — seems to defy business logic.&nbsp;



But it does have financial logic.



“If you don’t create an ACTUAL operating business aside from crypto asset accumulation,” <a href="https://www.kbw.com/about-us/our-team/investment-banking/paul-mccaffery/">Paul McCaffery</a> wrote in an email this week, “you’re going to get excluded from Russell indices.”



That may not sound like the worst fate in the world to you, but it could be for a business that’s dependent on its share price trading above NAV.



“Russell inclusion is essential to monetizing the capital markets flywheel,” McCaffery explains. “It forces institutional buying in the order of approximately 17% of the free float of a company…and increases proportionally as companies issue new shares.”



This could prove to be mission-critical: A DAT that’s excluded from indices, McCaffery warns, is almost certain to trade below mNAV.



Trading below mNAV is the DAT equivalent of failing to sell any syringes, so index exclusion is not something they will want to risk.



Those aren’t the only risks in being a pure-play asset company, either.&nbsp;



Without an operating business, a new DAT could fall short of exchange listing requirements and face higher regulatory scrutiny if the SEC deems it an investment company.



As a result, the seed investors that create these new DATs have been taking on some strange business risks.



(And legal risks, too — Andrew Keys <a href="https://youtu.be/KHGEZf0TnzY?si=vPmWiOntMHdlqC9T">warns</a> that reverse-takeover DATs are a “honeypot” for litigation.)



They could, of course, look for higher-quality companies to merge with, but that would be 1) more expensive and 2) slower.



“For now,” McCaffery explains, “these investors have insisted on mNAV (or very close) valuations with the primary focus on speed and the goal of tapping the capital markets flywheel ASAP.”



In other words, they just want the exchange listing and something they can call an operating business — and they don’t want to pay anything for it.



Unfortunately, you do get what you pay for.



And in their rush to catch the DAT opportunity before it’s arbitraged away, what investors are getting is some strange risks.



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Reverse-takeover DATs are a grab bag of risks for investors

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Investigates the macro landscape as the laws of investing are being rewritten, helping investors adapt to a rapidly changing environment.

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Detailing Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
​​“The most valuable commodity I know of is information.” — Gordon Gekko, Wall Street
</blockquote>



Ten months ago, FBI agents raided Shayne Coplan’s Manhattan apartment, ostensibly in search of evidence that the prediction market he founded, Polymarket, had illegally allowed US residents to place bets on the US election.



Two weeks ago, the CFTC gave Polymarket the green light to allow those very same US residents to place bets on whatever they like.



This is quite the turn of events — and it’s not just about elections or politics.



With its US government seal of approval in hand, Polymarket is <a href="https://www.businessinsider.com/polymarket-sees-valuation-skyrocket-in-new-funding-round-2025-9">reportedly</a> raising capital at a valuation of $9 billion — a reflection of the growing belief that prediction markets will be used for much more than betting on elections once every four years.



Instead, proponents say prediction markets can provide a real service to the world by providing it with better information about nearly everything.



I think they might, too — but only if insiders are free to participate.



Yesterday, for example, Polymarket announced new betting markets on company earnings reports, with a promise that it would improve the information that investors have to work with.&nbsp;



Instead of waiting three months to find out how a company is faring, investors could simply watch the odds on Polymarket.&nbsp;



If the probability of an earnings beat is rising, for example, investors would know at a glance that things are going well.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="853" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-128.png?w=1024&amp;h=1024" alt="" class="wp-image-107902" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-128.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-128.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-128.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-128.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-128.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-128.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-128.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-128.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-128.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



But that will only happen if enough of the people betting actually know how things are going.



Relying on the wisdom of crowds to magically discern how a business is doing won’t add much incremental knowledge to the world; everyone’s guesses are unlikely to average out to the truth.



If company insiders were allowed to bet, however, prediction-market odds would offer a real-time barometer of a company’s fortunes.



This would be an excellent replacement for quarterly earnings reports if President Trump decides to <a href="https://apnews.com/article/trump-quarterly-earnings-reports-sec-semiannual-cd5fbed69b72e7525848bc11109d0d35">ban them</a>.



In some ways, it might even be an improvement: Why incur the trouble and expense of updating investors so frequently when investors can get the basic idea from a chart on Polymarket?



Ideally, you’d want people at all levels of the company participating.



Early in a reporting period, warehouse managers might have the best idea of how sales are going, and their bets would share that anecdotal information with the market.



Late in the reporting period, the finance department would start to know what the earnings number will be, and their bets would share that more precise information with the market.



If that sounds like insider trading to you, that’s because it is.



But that’s no reason to disallow it: Insider trading is the kind of victimless crime that’s not worth policing.&nbsp;



In fact, non-insiders should not feel victimized at all. If you’re wrong, you’d rather sell to someone who knows you’re wrong, because they’ll give you a better price for your bet and you’ll lose less money.&nbsp;



“Lose less money” is admittedly not much of a selling point, but prediction markets are a zero-sum game (at best), so someone has to lose.



Losing is the cost of getting better information.



In Wall Street, Gordon Gekko got new information by presenting Bud Fox with a check over lunch.&nbsp;



“Astonish me, pal,” he instructed Fox. “New info. I don&#8217;t care where or how you get it, just get it.”



Fox did get it, and Gekko then shared his new information with the world by betting on it.



You probably agree with both moviegoers and lawmakers that this seems unfair. It’s hard to sympathize with Michael Douglas as a hedge fund manager with slicked-back hair.



But why would anyone do the hard work of digging up new information for free?



At their best, prediction markets are a way of paying people to dig up new information.



In the last presidential election, for example, prediction markets incentivized an anonymous Polymarket bettor to put their own poll in the field and then share that information with the world by betting on Trump to win.



More recently, Blockworks <a href="https://blockworks.co/news/native-markets-leads-usdh-race/?nocache">reported</a> that the Polymarket odds of Ethena winning the USDH ticker on Hyperliquid collapsed “after validators dismissed its chances behind closed doors.”



This is precisely how prediction markets are meant to work: Polymarket incentivized someone to go get better information — otherwise hidden “behind closed doors” — and then share that information with the world by betting on it.



Unfortunately, doing the same with quarterly earnings reports will almost certainly be illegal.



In its <a href="https://polymarket.com/tos">terms of service</a>, Polymarket prohibits several things that are universally disallowed in financial markets: front-running, wash trading, pre-arranged trading and spoofing.&nbsp;



“Insider trading” is conspicuously absent, however, which is hopeful.



But there’s also a catch-all prohibition against engaging in any activity “that violates Applicable Law.”&nbsp;



In the US, the laws applicable to prediction markets will be made by the CFTC, and the CFTC’s <a href="https://www.cftc.gov/sites/default/files/idc/groups/public/@newsroom/documents/file/amaf_factsheet_final.pdf">rulebook</a> seems to prohibit insider trading: “Depending on all of the facts and circumstances, trading on the basis of material non-public information in breach of a pre-existing duty…may violate final Rule 180.1.”&nbsp;



That is more permissive than the SEC’s blanket prohibition on any use of material non-public information, so it might leave scope for the CFTC to allow insiders to participate in prediction markets.



But I’m not hopeful: Every employee of an exchange-listed company has a “pre-existing duty” not to share their inside information with markets.



This is understandable as a rule designed for stock markets, where it’s important to maintain a sense of fairness.



If people think the stock market is rigged, they’ll be less inclined to invest, and companies will have a harder time raising capital.



But what’s the harm in letting insiders share their information with prediction markets?



No one’s betting their 401k money on Polymarket, so there’s no harm in people thinking that the odds are stacked against them.&nbsp;



(Nor will it stop people from participating. Everyone knows the odds are against them in sports betting, but they keep betting on sports.)



If anything, allowing insiders to trade in prediction markets would make stock markets more fair by disseminating information to everyone at the same time.



Without insiders, we’ll learn how uninformed people think a company is doing, which isn’t very helpful.



With insiders, we&#8217;ll learn how informed people know a company is doing, which is.&nbsp;



The purpose of prediction markets is to provide better information to the world, and the best information comes from insiders, so they should be encouraged to participate — even if that means we have to pay them.



“It&#8217;s all about bucks,” Gordon Gekko explained to Bud Fox.&nbsp;



“The rest is conversation.”



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Let insiders trade

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Winning. That’s my idea of fun.”



― Larry Ellison
</blockquote>



Larry Ellison will never be featured in a habits-of-billionaires listicle.



In the 2000s, while running one of the most important companies in the world, he typically strolled into the office at 1:30 in the afternoon.



When he did arrive, he wasn’t always fully engaged. “He had a reputation for being easily bored by the process of running a business,” according to his <a href="https://www.amazon.com/Softwar-Intimate-Portrait-Ellison-Oracle-ebook/dp/B00AK78QVI/ref=sr_1_1?crid=2T4NPSXUYQFW8&amp;dib=eyJ2IjoiMSJ9.3-g-y_80yuEPnN6qJMvJflA5Y4ipn_XRUgjf7BYf8v9yFsbsNYNABwa0EZWb-xyUj1w642CZTrBTp5iEz7bkDYWrYEyKnL8e_LJ_FrnzaBLrdAbJhzA_64no6hQpUp0h.Slr1G6Ds8n0opK70_uWB0dP1LGQtSopsFM6WDG7ITkc&amp;dib_tag=se&amp;keywords=softwar+larry+ellison&amp;qid=1757701157&amp;sprefix=softwar+larry%2Caps%2C153&amp;sr=8-1">biographer</a>.



He was often absent for long stretches, “leaving the shop to senior colleagues.”



On earnings calls, Wall Street analysts asked how much time he’d spend on boats in the coming quarter.



In short, he was the antithesis of the young tech founders profiled in The Wall Street Journal <a href="https://www.wsj.com/business/entrepreneurship/artificial-intelligence-startup-founders-bc730406?mod=hp_lead_pos7">this morning</a> — so devoted to work they barely take time to eat, let alone pursue an outside interest or go on a date.



Ellison, by contrast, devoted years to competitive sailing, learned to pilot airplanes, bought an island, designed Japanese-inspired homes, regularly played tennis with Rafa Nadal and did enough dating to be married five times.



All while running one of the world’s most important companies.



When his first marriage ended in divorce in 1978, Ellison’s ex-wife thought so little of his prospects as a founder that she sold him her claim to the one-year-old Oracle for $500.



(In three subsequent divorces, he again somehow managed to avoid surrendering any part of Oracle.)



And yet, Ellison passed Elon Musk to become the world&#8217;s richest man this week — for the second time.



The first time was in 2000, when he briefly passed Bill Gates near the height of the dotcom bubble.



By then, Oracle’s ubiquitous databases had made the company one of the three main characters in the dotcom boom, alongside Cisco and Sun Microsystems.&nbsp;



Few tech investors survived the subsequent bust: Sun Microsystems was sold for parts in 2009 (to Oracle), and Cisco is an afterthought in tech investing; its shares still below their 2000 peak.



But Oracle’s shares are now eight times above their 2000 peak. Larry Ellison is again vying for the title of world’s richest man, and the company he founded in 1977 is now, suddenly, more relevant than ever — all thanks to Oracle’s eye-popping <a href="https://www.wsj.com/business/openai-oracle-sign-300-billion-computing-deal-among-biggest-in-history-ff27c8fe?gaa_at=eafs&amp;gaa_n=ASWzDAiCtQOIoQWa7Cbn-ZPitRefzCSrIDwvrjrQ5To6hRCXTvwE-9ohD9S_kNwZ3XU%3D&amp;gaa_ts=68c43ae4&amp;gaa_sig=00W5SXFHEXVwc79JeKdJ-3Z359G3yGz6PjqV_slBi-j8sevHu8poP58ydd4Q4pcXobIiQH35WC8KMjDmfbHj3A%3D%3D">$300 billion deal</a> to provide computing power to OpenAI.



Many are skeptical.&nbsp;



OpenAI remains a long way from profitability, so it’s unclear where this $300 billion is supposed to come from — investors presumably won’t foot the bill forever.&nbsp;



Ellison gave back some of his immense paper gains as Oracle shares fell amid concerns over the gigantic investments required to build the data centers and buy the GPUs required to provide $300 billion of computing power.



If demand for artificial intelligence falls short of expectations, or today’s data centers and GPUs become obsolete faster than expected, Oracle risks becoming to the AI bubble what Cisco was to the dotcom one.



But I&#8217;m sure Ellison — who says he’s only happy when everyone thinks he’s wrong — will welcome the doubters.



He proved doubters wrong about relational databases in the 1980s, enterprise software in the 1990s and cloud computing in the 2010s.



Now, by going all in on data centers, Oracle has reinvented itself once again — and become a main character in the unfolding drama of artificial intelligence.



If Ellison’s right, investors will again be winners — not just in Oracle, but in nearly everything.



Let’s check the charts.



Doubling down:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1522" height="918" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-111.png?w=1024&amp;h=1024" alt="" class="wp-image-107724" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-111.png?w=1522 1522w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-111.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-111.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-111.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-111.png?w=426 426w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-111.png?w=433 433w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-111.png?w=363 363w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-111.png?w=80 80w" sizes="auto, (max-width: 1522px) 100vw, 1522px" /></figure>



The US hyperscalers, Oracle included, have doubled capex in just two years. If tech is going to continue to lead markets, they’ll have to prove that earnings will grow faster than their data centers depreciate.



Sustainable?



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="976" height="488" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.04.51.png" alt="" class="wp-image-107728" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.04.51.png?w=976 976w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.04.51.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.04.51.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.04.51.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.04.51.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.04.51.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.04.51.png?w=80 80w" sizes="auto, (max-width: 976px) 100vw, 976px" /></figure>



Corporate profitability has decoupled from its usual tight relationship with GDP growth, but profit margins may be inflated by hyperscalers depreciating their capex over too many years. How long will all the Nvidia chips Oracle is buying be useful to them?



Hyper-outperformance:



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="964" height="574" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.10.32.png" alt="" class="wp-image-107733" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.10.32.png?w=964 964w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.10.32.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.10.32.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.10.32.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.10.32.png?w=438 438w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.10.32.png?w=368 368w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.10.32.png?w=80 80w" sizes="auto, (max-width: 964px) 100vw, 964px" /></figure>



The outperformance of US tech is now well in excess of the dotcom peak. If it turns out to be a bubble again this time, it will likely be because companies like Oracle built too many data centers.



Warning sign?



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1400" height="768" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/1_Rtw8FNlT4F73oPh9dg5AQg.png?w=1024&amp;h=1024" alt="" class="wp-image-107742" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/1_Rtw8FNlT4F73oPh9dg5AQg.png?w=1400 1400w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/1_Rtw8FNlT4F73oPh9dg5AQg.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/1_Rtw8FNlT4F73oPh9dg5AQg.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/1_Rtw8FNlT4F73oPh9dg5AQg.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/1_Rtw8FNlT4F73oPh9dg5AQg.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/1_Rtw8FNlT4F73oPh9dg5AQg.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/1_Rtw8FNlT4F73oPh9dg5AQg.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/1_Rtw8FNlT4F73oPh9dg5AQg.png?w=80 80w" sizes="auto, (max-width: 1400px) 100vw, 1400px" /></figure>



Corporate use of AI might be leveling off. If so, OpenAI might struggle to come up with the $300 billion it’s promised Oracle and Oracle might struggle to keep its data centers busy.&nbsp;



AI is saving global trade:



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="796" height="504" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.12.08.png" alt="" class="wp-image-107736" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.12.08.png?w=796 796w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.12.08.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.12.08.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.12.08.png?w=406 406w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.12.08.png?w=412 412w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.12.08.png?w=346 346w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.12.08.png?w=80 80w" sizes="auto, (max-width: 796px) 100vw, 796px" /></figure>



 Brad Setser <a href="https://www.cfr.org/blog/trump-shock-wasnt-least-not-yet">notes</a> that despite tariffs, US imports will increase this year, with rising imports of tariff-exempt semiconductors offsetting a fall in vehicle imports.



Someone’s paying the import tax:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1430" height="784" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-112.png?w=1024&amp;h=1024" alt="" class="wp-image-107725" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-112.png?w=1430 1430w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-112.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-112.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-112.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-112.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-112.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-112.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-112.png?w=80 80w" sizes="auto, (max-width: 1430px) 100vw, 1430px" /></figure>



The US collected a record $31.4 billion in tariffs in August — but total revenue still fell $345 billion short of spending. The US is <a href="https://x.com/jamiedupree/status/1966210985095463079">on track</a> to run a budget deficit of over $2 trillion this year.



The coffee tax:



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="938" height="516" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.11.15.png" alt="" class="wp-image-107734" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.11.15.png?w=938 938w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.11.15.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.11.15.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.11.15.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.11.15.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.11.15.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-12-at-16.11.15.png?w=80 80w" sizes="auto, (max-width: 938px) 100vw, 938px" /></figure>



 BLS data shows coffee prices up more than 20% on the year, thanks in part to the 50% tariff on goods from Brazil. So, how long does it take to grow a coffee tree (plant? bush?), and do they grow in North Carolina?



It’s never too late to make a few billion:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="885" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-110.png?w=1024&amp;h=1024" alt="" class="wp-image-107723" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-110.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-110.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-110.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-110.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-110.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-110.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-110.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-110.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-110.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Ellison made 95% of his <a href="https://www.bloomberg.com/billionaires/profiles/lawrence-j-ellison/">$363 billion net worth</a> after the age of 72, and 40% after age 80.&nbsp;



The core of Ellison’s business philosophy, according to his biographer, “is that you can’t get rich by doing the same thing as everyone else.” I wouldn’t say betting on AI meets that criteria — but betting bigger than almost anyone else might.



Have a great weekend, world’s-richest readers.



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Friday charts: Ellison is having fun again

This is a segment from The Breakdown newsletter. To read more editions, <a href="https://blockworks.co/brand/the-breakdown">subscribe</a>



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<a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5434457">Strategy as financing franchise</a>



Bond investors are generally considered more sophisticated than stock market investors (there’s more math involved, for one thing) — and no one has ever accused professional bond investors of being less sophisticated retail stock market investors.



But a recent paper that does the math on Strategy’s valuation suggests they might be.



Equity investors, it finds, are paying the right price for Strategy’s equity — but only because bond investors are paying the wrong price for Strategy’s bonds.



This makes Strategy a “financing franchise” that can be valuable enough to justify the premium to NAV it usually trades at: “the ability to sell overpriced bonds to invest in fairly priced securities…creates an intangible asset whose value can make the market value of equity exceed the market value of the firm’s (tangible) assets.”



Why would bond investors continually overpay for Strategy’s bonds?



The authors suggest it’s because Michael Saylor is blinding them with science.&nbsp;



Strategy’s convertible bonds, layered preferred stock, optional conversion features and callable provisions — full of “various embedded optionalities and differing seniority levels” — are deliberately engineered to make “returns more salient while obfuscating risk.”



If so, this should reframe the debate around Strategy: Instead of asking how long it can sell shares above NAV, as investors typically do, we should be asking how long it can sell bonds above fair value.



Not forever, presumably.



“In our model, the pool of ‘dumb capital’ willing to purchase overpriced debt is not bottomless,” the authors caution.



By their calculation, an equity premium of 70-135% over NAV implies that Strategy will be able to sell overpriced bonds for about eight years.



That sounds optimistic to me — which might be why Strategy’s <a href="https://blockworks.co/analytics/treasury-companies/market-data/crypto-treasury-companies-mnav/">premium</a> to NAV has fallen to about 30% now.



This is all a bit academic. Are equity holders really doing the math required to build a “continuous-time structural credit model”?



After looking at all the bewildering equations in the paper, I highly doubt it. Even bond investors will struggle to make sense of the equation they use to value Strategy’s “intangible asset”:&nbsp;



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="660" height="168" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-11-at-17.01.26.png" alt="" class="wp-image-107630" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-11-at-17.01.26.png?w=660 660w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-11-at-17.01.26.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-11-at-17.01.26.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-11-at-17.01.26.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-11-at-17.01.26.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/Screenshot-2025-09-11-at-17.01.26.png?w=80 80w" sizes="auto, (max-width: 660px) 100vw, 660px" /></figure>



Still, it feels directionally correct: Strategy’s premium to NAV is falling because Michael Saylor is pushing up against the limit of how much overly complicated debt he can sell.&nbsp;



With an enterprise value of <a href="https://www.strategy.com">$108 billion</a>, Strategy might simply have outgrown the market for such debt.



But another implication of the paper is that you can’t be too small, either.



All digital asset companies are modelled on Strategy, but few, if any, are big enough to sell complex debt in the first place. If that really is what gives Strategy its value, most DATs shouldn’t trade any higher than 1x NAV.



Even I can do the math on that one.



<a href="https://blockworks.co/news/native-markets-leads-usdh-race">A hyper-crypto stablecoin race</a>



This week’s dog and pony show to select an issuer for a new Hyperliquid stablecoin looks — from a distance at least — like everything crypto is meant to be.



A DAO making a multi-billion-dollar decision: Validators — and the HYPE holders who stake with them — will determine who issues USDH, which is set to siphon as much as $5 billion away from USDC.



Profit margins being competed away: Most of the leading proposals promise to return all of their profits (the yield earned on reserves) to the Hyperliquid ecosystem.



A TradFi CEO <a href="https://x.com/JanvanEck3/status/1965193995182899702">making</a> his pitch on X: Decentralized decisionmaking means the head of a $130 billion asset manager has to do his lobbying on social media, and not, as CEOs are surely more comfortable doing, behind closed doors.



There are sceptics: <a href="https://x.com/hosseeb/status/1965520465172328717">Some</a> suspect the outcome of the vote has been predetermined in favor of Native Markets, a newly formed firm with no track record to support its proposal.



But this, too, might reflect what crypto was always meant to be.



After withdrawing his proposal for USDH, the CEO of Ethena Labs <a href="https://x.com/gdog97_/status/1966137801650614362">lauded</a> the Hyperliquid community’s willingness to consider a new entrant: “No one [cares] how big you are, your background, pedigree or financial resources. It is a level playing field where emergent players can win the hearts of the community and are given a fair shot at succeeding.”



There’s a lot to be sceptical about in crypto (see above and below), but the process around USDH seems like a timely reminder of what can make it worthwhile.



<a href="https://www.theverge.com/c/22947663/justin-sun-tron-cryptocurrency-poloniex">Justin Sun is a character</a>



Christopher Harland-Dunaway&#8217;s feature on Tron founder Justin Sun is full of colorful detail, much of which could get people in trouble: “More than one person believed that talking to me might put their lives at risk,” he writes.



One anonymous source, for example, told Harland-Dunaway that Sun was running an “insider trading team” out of Tron’s Beijing office.&nbsp;



(I’m guessing that refers to the Tron Foundation, since the Tron blockchain presumably doesn’t have an office.)



Another source said his job at TRON was “to make sure the TRX price is at some level Justin wants.” Sun, he claimed, instructed them to buy TRX when he knew that Tron was about to announce good news to the public.



This happened “all the time,” according to another ex-employee.



In this telling, Sun seems to almost go out of his way to invite legal trouble, without fear of the consequences: “Justin’s tolerance for risk is absurdly high,” another ex-employee said. “Like, absurdly high.”&nbsp;



For example, Sun appears to have bought the crypto exchange Poloniex with the express purpose of dismantling its KYC process: “Fake the KYC!” he screamed after being told it was slowing their efforts in China. “Fake it!”&nbsp;



Thereafter, he installed an automated KYC system designed to accept virtually any ID: “Didn’t matter if they submitted a pic of Daffy Duck,” a Poloniex employee said.



There are shades of Sam Bankman-Fried here as well: “I think over time, he started to see all the possibilities of using [Poloniex] as more or less his personal bank,” a source said, with the implication that Sun used customer funds in much the same way SBF did.



When Sun instructed employees to collect tiny amounts of bitcoin that customers had mistakenly sent to a wallet intended only for USDT, for example, “they understood Justin Sun would take the bitcoin personally.”



The tiny amounts added up: In what was known internally as “Operation Couch Cushions,”



230 bitcoin that customers had lost in the deep recesses of Poloniex’s “archaic” exchange was eventually recovered.&nbsp;



But he’s not just about the money.



Sun is quirky enough to have disappeared “for months” without telling anyone at Tron where he was going or when he’d be back.



When an employee finally reached him on the phone and asked where he was, he said “I’m in the forest with this [llama].”&nbsp;



As Harland-Dunaway tells it, Sun’s story reads like a classic rise-and-fall narrative — but without the fall.



Tron’s market capitalization hit an all-time high of over $30 billion in August, making Sun’s 60% stake worth $18 billion (on paper, at least).



The token is even available on US stock exchanges now: Tron Inc., a DAT that holds Tron tokens, was up as much as 17% today.



Crypto really is different.



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