Byron Gilliam

Nathaniel Whittemore

The Breakdown

The latest Fed minutes show a deeply divided committee but a clear signal: no December rate cut is coming. Markets reacted fast, sending Bitcoin tumbling to new lows as leveraged traders piled in and ETF investors pulled out. NLW unpacks what the minutes reveal about the economy, why rate expectations are shifting, and how this is shaping crypto’s end-of-year outlook—including Kraken’s IPO filing and a major Bitcoin bet from Abu Dhabi.
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Fed Minutes Slam the Door on Rate Cuts—Bitcoin Hits New Lows

Bitcoin’s brutal drawdown has traders asking whether the market finally found its bottom, with price testing $90K multiple times, sentiment crushed into extreme fear, ETF flows bleeding out, futures slipping into backwardation, and institutions stepping back; in today’s episode NLW breaks down the case for and against a bottom through technicals, macro shifts, leveraged positioning, while also covering Kraken’s $800M fundraise with Citadel involvement, Tether’s strategic investment in Ledn, new OCC guidance allowing banks to hold crypto for gas fees, and the first slate of Solana ETFs launching into choppy markets.
 
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Bitcoin’s Bottom Watch Begins

A look at why the long-awaited return of ICOs to the US started with a whimper, not a bang. The debut sale on Coinbase’s new platform underperformed expectations, raising questions about demand for new L1s, tokenomics, and whether retail ever really came back this cycle. Plus, microstrategy’s latest massive Bitcoin buy, trouble in its preferred stock, CBOE’s move into regulated perps, and a grim turn for BTC price action.
 
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Why Coinbase’s First ICO Fell Flat

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“There has been a lot of talk about an AI bubble. From our vantage point, we see something very different.”&nbsp;



— Jensen Huang
</blockquote>



Alphabet CEO Sundar Pichai said this week there are “elements of irrationality” in the current boom in AI infrastructure.



But his announcement of a new version of Google’s Gemini LLM gave us reason to think we may not be irrational enough.



Gemini 3 was received as a surprisingly massive improvement over Gemini 2.5, as measured by the arcane metrics that language models are judged on. (As a regular user, I can’t really tell the difference.)



Tomasz Tunguz <a href="https://x.com/ttunguz/status/1991601261662343332?s=20">says</a> this disproves the “scaling wall thesis” that LLMs had hit a plateau where simply adding more compute no longer resulted in better performance.



Google, however, added better compute — smarter algorithms, better training, newer chips — and Gemini 3 got a lot better.



This seems like a green light for everyone to keep investing like mad in everything.&nbsp;



Also this week, Jensen Huang said everyone is still investing like mad in GPUs: “Blackwell sales are off the charts, and cloud GPUs are sold out.”



Better yet, Nvidia CFO Colette Kress <a href="https://stocktwits.com/news-articles/markets/equity/nvidia-a100-gpu-shipped-6-years-ago-full-utilization-michael-burry-depreciation/cLPALD9RE9w">added</a> that “the A100 GPUs we shipped six years ago are still running at full utilization today.”



The comment from Kress appeared to be a direct response to Michael Burry’s <a href="https://x.com/michaeljburry/status/1987918650104283372?s=20">accusation</a> that Nvidia’s customers have been deceptively inflating their reported earnings with unrealistically long depreciation schedules.



But GPUs appear to be benefiting from a “<a href="https://interestingengineering.substack.com/p/why-michael-burry-is-wrong-about">cascading use model</a>”: The newest chips are used for training for a year or so and then run inference tasks for a while longer before eventually being put out to pasture to serve up YouTube videos and things.&nbsp;



That should be excellent news for investors: If the models are still getting better, demand for new chips is increasing and old chips are still useful…we should maybe be wondering whether AI companies are understating their earnings.



And yet, stocks were lower this week.



This might be a sign that the market has stopped worrying about the demand for chips and started worrying about the supply of energy.



Demand seems to be something close to insatiable: A Google Cloud executive recently <a href="https://www.cnbc.com/2025/11/21/google-must-double-ai-serving-capacity-every-6-months-to-meet-demand.html">estimated</a> it would have to double its compute capacity every six months for the next four or five years to meet it.&nbsp;



But where the power will come from to provide it is a mystery.&nbsp;



It takes five to seven years to build the gas turbines that power most data centers and the companies that make them are <a href="https://paulkedrosky.com/stranded-assets-and-the-ai-driven-gas-turbine-renaissance/">fully booked</a> until at least 2030.



If additional power isn’t available, there’s no point in buying a new-generation GPU that draws more of it — an older generation of chip, judiciously drawing less of it, would do just fine (or better).



Nor is there any point in building a new data center if there are no new turbines to pair them with.&nbsp;



All of which is to say, the AI bubble could pop even if the demand for AI is effectively unlimited.&nbsp;



Also this week, Pichai warned that if the AI bubble does pop, “no company is going to be immune, including us.”



He meant no AI company, but “no company” is not far from the truth, either.



Without the boom in data centers, the US economy <a href="https://x.com/jasonfurman/status/1971995367202775284?s=20">would likely</a> be in recession: Amazingly, data centers, which account for 4% of GDP, accounted for 93% of GDP growth in the first half of the year.



So, whatever part of the economy or financial markets you care about, you probably have to care about the scaling wall thesis, data center depreciation schedules and cascading use cases, too.



I’ll keep you posted.



“One chart to rule them all”:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1530" height="837" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-136.png?w=1024&amp;h=1024" alt="" class="wp-image-110092" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-136.png?w=1530 1530w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-136.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-136.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-136.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-136.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-136.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-136.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-136.png?w=80 80w" sizes="auto, (max-width: 1530px) 100vw, 1530px" /></figure>



Michael Burry <a href="https://x.com/michaeljburry/status/1990171815155752976?s=20">thinks</a> this is the only chart you need to see: As measured by capex as a percentage of GDP, the AI boom is already similar in scale to the investing booms that preceded the dotcom, housing and shale bubbles.



Depreciating, yes, but slowly:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="852" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-134.png?w=1024&amp;h=1024" alt="" class="wp-image-110090" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-134.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-134.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-134.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-134.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-134.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-134.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-134.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-134.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-134.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Contra Burry from a16z <a href="https://www.a16z.news/p/charts-of-the-week-fully-scaled-agents">notes</a> that demand for older, less-powerful A100 GPUs has held up surprisingly well.



Going all in:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1247" height="593" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-128.png?w=1024&amp;h=1024" alt="" class="wp-image-110084" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-128.png?w=1247 1247w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-128.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-128.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-128.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-128.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-128.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-128.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-128.png?w=80 80w" sizes="auto, (max-width: 1247px) 100vw, 1247px" /></figure>



At Microsoft, capex has surged to nearly 50% of sales. Benedict Evans says this shows that Microsoft’s business model has changed “from competing on network effects to competing on access to capital.” The latter is much more bubble-prone.



Startups are all in, too:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1432" height="612" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-129.png?w=1024&amp;h=1024" alt="" class="wp-image-110085" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-129.png?w=1432 1432w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-129.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-129.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-129.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-129.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-129.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-129.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-129.png?w=80 80w" sizes="auto, (max-width: 1432px) 100vw, 1432px" /></figure>



Again from Benedict Evans, nearly all Y Combinator startups are now AI-related.



It could get bigger:



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="779" height="578" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-133.png" alt="" class="wp-image-110089" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-133.png?w=779 779w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-133.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-133.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-133.png?w=346 346w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-133.png?w=352 352w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-133.png?w=295 295w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-133.png?w=80 80w" sizes="auto, (max-width: 779px) 100vw, 779px" /></figure>



The starting dates for Emre Akcakmak’s overlaid <a href="https://x.com/akcakmak/status/1990303903775437163?s=20">charting</a> are probably a little arbitrary, but his graphic makes a good point: If AI is a bubble, history would suggest it could get a lot bigger.



The scariest chart in the world?



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="950" height="669" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-135.png" alt="" class="wp-image-110091" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-135.png?w=950 950w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-135.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-135.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-135.png?w=365 365w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-135.png?w=371 371w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-135.png?w=311 311w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-135.png?w=80 80w" sizes="auto, (max-width: 950px) 100vw, 950px" /></figure>



Derek Thompson <a href="https://open.substack.com/pub/derekthompson/p/is-this-the-new-scariest-chart-in?utm_source=share&amp;utm_medium=android&amp;r=3qcul">notes</a> that from the starting point of ChatGPT, the S&amp;P500 has shot higher and the number of job openings in the US has shot lower. I’m not sure how much causality there is here, but it does make for an excellent chart.



The bear case for human employment:



<img loading="lazy" decoding="async" src="blob:https://cms.blockworks.co/ff64d8a5-dbbf-460a-b285-bfb2fbbfa90e" width="624" height="304">Benedict Evans notes that Otis introduced the “Autotronic” elevator in 1950 — the exact peak of employment for elevator attendants. It’s possible that AI will turn out to be Autotronic everything, but we should remember that most elevator attendants found better jobs in the 1960s.



So far, so good:



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1005" height="618" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-130.png" alt="" class="wp-image-110086" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-130.png?w=1005 1005w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-130.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-130.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-130.png?w=418 418w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-130.png?w=424 424w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-130.png?w=356 356w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-130.png?w=80 80w" sizes="auto, (max-width: 1005px) 100vw, 1005px" /></figure>



The delayed jobs data showed the US with a surprise gain of 119,000 jobs in September.&nbsp;



We need some Autotronic housebuilders:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1496" height="797" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-132.png?w=1024&amp;h=1024" alt="" class="wp-image-110088" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-132.png?w=1496 1496w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-132.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-132.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-132.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-132.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-132.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-132.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-132.png?w=80 80w" sizes="auto, (max-width: 1496px) 100vw, 1496px" /></figure>



Torsten Slok notes that the median age of US house buyers is all the way up to 59 — excellent news because it makes me feel ahead of the curve for a change. On the other hand, as a younger-than-average home buyer, I can tell you that homeownership is overrated and renting is underrated.



At least houses aren’t imported:



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="914" height="506" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-131.png" alt="" class="wp-image-110087" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-131.png?w=914 914w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-131.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-131.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-131.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-131.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-131.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-131.png?w=80 80w" sizes="auto, (max-width: 914px) 100vw, 914px" /></figure>



A new <a href="https://www.pricinglab.org/files/TrackingTariffs_Cavallo_Llamas_Vazquez.pdf">study</a> of US prices finds that tariffs have made imported goods 5.44% more expensive than they otherwise would have been.&nbsp;



Other fun inflation facts: The average price of a car in the US is now above $50,000, and in some places, <a href="https://x.com/johnarnold/status/1990216601577103546?s=20">gasoline is cheaper than water</a>.



Have a great weekend, non-depreciating readers.



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Friday charts: Elements of a bubble

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“How did Andean societies exchange resources and administer large numbers of people without currency or writing?”



— Jacob Bongers, digital archeologist
</blockquote>



A mysteriously precise, mile-long band of 5,200 holes dug into Monte Sierpe, Peru, at least 600 years ago has long been a subject of speculation.



Ever since the site was popularized by aerial photography in 1933, professional archeologists have puzzled over its purpose — but hypotheses related to defense, water collection, fog capture, gardening, burial, geoglyph symbology and resource mining have all been discounted for one reason or another.



Having ruled all those out, amateur archeologists settled on the only remaining explanation: “ancient astronauts.”



Last week, however, a team of digital archeologists published an academic <a href="https://www.cambridge.org/core/journals/antiquity/article/indigenous-accounting-and-exchange-at-monte-sierpe-band-of-holes-in-the-pisco-valley-peru/41D83389D230D99CFF18194CF274A9A3">study</a> that finally determined the site’s true purpose: Monte Sierpe, they explain, was “an indigenous system of accounting and exchange.”



“We hypothesise that Monte Sierpe initially served as a barter marketplace before being turned into a large-scale accounting device under the Inca Empire (1400-1532 AD) for collecting tribute from local communities.”



One hundred years before Luca Pacioli popularized the concept of double-entry accounting in Italy, Incas in Peru were keeping their books on a hillside.



The paper’s lead author, Jacob Bongers, frames this in modern terms by <a href="https://theconversation.com/a-centuries-old-grid-of-holes-in-the-andes-may-have-been-a-spreadsheet-for-accounting-and-exchange-269277">saying</a> the hillside “functioned as a large spreadsheet for the Inca Empire.”&nbsp;



Others call it a ledger.



But it looks like a blockchain:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1141" height="613" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-104.png?w=1024&amp;h=1024" alt="" class="wp-image-110014" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-104.png?w=1141 1141w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-104.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-104.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-104.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-104.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-104.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-104.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-104.png?w=80 80w" sizes="auto, (max-width: 1141px) 100vw, 1141px" /></figure>



Imagine a blockchain, and you’ll likely see something like Monte Sierpe: a continuous, physical stream of data stretching a mile into the horizon.



Bongers’ paper comes close to acknowledging the likeness: “The band is not continuous but rather segmented into sections or blocks.”



This is even more evident in the <a href="https://www.youtube.com/watch?v=oRhNJQxx41Y&amp;t=63s">video</a>, where the “blocks of holes” are more visible.



But the resemblance is much more than skin deep — because what could be more proof-of-work than digging thousands of holes?



“Depositing goods in the holes,” the paper explains, “could have been a way of publicly displaying information about the quantity of goods” used for “tribute collection.”



This is useful because you can&#8217;t have a system for tribute or large-scale economic exchange unless you first have clear rules about who owns or controls what.



Blockchains are a public display of information, designed to allow anyone to verify who owns and controls what unit of exchange.



Monte Sierpe was a public display of information that allowed anyone to verify who had paid what tribute to whom.



This public display, the paper proposes, is how a society as large as the Inca Empire was able to administer larger numbers of people without the help of currency or a system of writing.



“The visual prominence of Monte Sierpe…may have increased the probability of locating suitable trading partners, drawing together producer-specialists (e.g. farmers and fisherfolk), mobile traders (e.g. llama caravans and seafaring merchants), lords and administrators for periodic exchange. Large numbers of people depositing goods in the holes would give participants information about the quantity of goods available in an ordered way.”



In other words, they built a public blockchain.&nbsp;



The key insight that led the researchers to this conclusion is that the arrangement of Monte Sierpe’s 5,200 holes into 60 distinct blocks “is structurally reminiscent of at least one locally found khipu, an Inca knotted-string device used for detailed record-keeping.”



In pre-modern Andean societies, khipus — knotted and maintained by specially trained khipukamayuq —&nbsp; “were used to keep track of census information, tribute and inventory,” the paper explains.&nbsp;



By that definition, the portable khipu was the spreadsheets of the time, not Monte Sierpe.&nbsp;



Monte Sierpe — immutable, publicly verifiable, trustless — was the blockchain.



To trust a khipu was to trust the khipukamayuq who tied the knots…much like trusting a bank account is trusting the banker who keeps the accounts.



It’s not a perfect analogy.&nbsp;



The Incas probably were not adding new blocks to their chain of holes for each new bundle of transactions that came in.



Instead, each block is thought to have corresponded to a social group, and each group would fill their assigned holes with goods when it was their turn to pay tribute to the State.



Like a blockchain, the key innovation was that the Band of Holes allowed this to be done publicly, where anyone could verify the payments — up until the goods were removed.



So this analog precursor to the modern blockchain had one limitation: reusing the blocks erased the chain’s history.



It took 600 years to invent a digital version that preserves the full history of a chain by appending new blocks rather than overwriting old ones.



This is Satoshi’s great innovation.



But the principles are unchanged — as is the value proposition.&nbsp;



Digging 5,200 holes in a precise formation on top of a hill is not just a proof-of-work, it was hard work, too.



This monumental investment of labor is evidence that the Incas thought recording transactions in a public, immutable ledger had significant value as a way to organize large groups of people.&nbsp;



Perhaps we are only now catching up.



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History

Did the Inca envision a blockchain system?

Macauley Peterson

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As crypto markets have tumbled, it’s been a reflective week in Ethereum land. On Thursday, Vitalik Buterin and co-authors Yoav Weiss and Marissa Posner dropped <a href="https://trustlessness.eth.limo/general/2025/11/11/the-trustless-manifesto.html">The Trustless Manifesto</a> — a sweeping, almost poetic call to arms for developers to recommit to the network’s founding ethos: Build systems that rely on math and consensus, not on people or platforms.



The document reads like a philosophical companion to Justin Drake’s Lean Ethereum proposal, which turned one year old this week. A newly active X account, <a href="https://x.com/leanEthereum">@leanEthereum</a>, has popped up to mark the milestone — and the overlap in timing doesn’t feel accidental. With <a href="https://devconnect.org/">DevConnect</a> kicking off Monday in Buenos Aires, the pair of ideas together set the tone for a week that’s as much about vision as it is about innovation.



<h2 class="wp-block-heading">‘Trustlessness is the thing itself’</h2>



At its core, the manifesto argues that Ethereum’s success has also made it fragile. As infrastructure and apps scale, the community risks outsourcing too much — RPC endpoints, rollup sequencing, even “self-custody” — to a shrinking circle of trusted intermediaries. Each convenience, it warns, brings the network closer to dependence.



“The only defense is trustless design,” the authors write. “Without it, everything else — efficiency, UX, scalability — is decoration on a fragile core.”



The text lays out three “laws” of trustless design — no critical secrets, no indispensable intermediaries and no unverifiable outcomes — and ends with a pledge: “We refuse to call a system ‘permissionless’ when only the privileged can participate.”



<h2 class="wp-block-heading">The drift toward dependence</h2>



One of the manifesto’s most striking metaphors compares Ethereum’s current trajectory to that of email — once an open, decentralized protocol that anyone could run themselves. Today, spam filters, blocklists and trust-based reputation systems have made it practically impossible for ordinary users to host their own mail servers, the manifesto reads.&nbsp;



“Email became effectively centralized — not because the protocol was closed, but because practical trustlessness was lost,” the authors write.



It’s a cautionary tale for Ethereum’s access layer. If node operation, transaction relaying or cross-chain messaging ends up dependent on a handful of privileged service providers, the network could become as “permissionless” as Gmail: still functional, but fundamentally gatekept. The manifesto’s plea is simple — don’t let that happen.



“Every shortcut that assumes trust eventually costs freedom.”



If that strikes a chord, a smart contract is now live on mainnet for those who want to “sign” the manifesto — literally staking their names to the principle that decentralization is worth the friction.



<h2 class="wp-block-heading">From ‘Lean Ethereum’ to the endgame</h2>



If The Trustless Manifesto is a moral compass, Lean Ethereum is the architectural blueprint it points toward. Drake’s vision, described as Ethereum’s “endgame” or “final form,” imagines a network stripped down to its purest minimal core — fewer dependencies, simpler consensus, and stronger guarantees that anyone can run a node without institutional backing.



The Lean Ethereum account opened with a video teaser of sorts, sketching a picture of where Ethereum might be heading next: lighter, smaller, but more robust.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">zkEra soon™️ <a href="https://t.co/PZSzNr1kPZ">pic.twitter.com/PZSzNr1kPZ</a>&mdash; lean Ethereum (@leanEthereum) <a href="https://twitter.com/leanEthereum/status/1988645664595878183?ref_src=twsrc%5Etfw">November 12, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



A related <a href="https://ethresear.ch/t/eil-trust-minimized-cross-l2-interop/23437">research proposal</a> getting attention this week is the Ethereum Interop Layer (EIL), posted Nov. 13 on Ethereum Research.



EIL aims to make L2s feel like one chain without new trust assumptions: Users sign once via ERC-4337, wallets bundle a Merkle-rooted set of cross-L2 calls, and a CrossChainPaymaster coordinates “XLP” liquidity providers who front gas and funds with an L1-anchored dispute process to slash misbehavior. Instead of relying on intent solvers and opaque relayers, EIL leans on atomic, optimistic swaps and onchain vouchers to keep censorship resistance and verifiability intact — the manifesto’s “no indispensable intermediaries” rendered as working plumbing.



<h2 class="wp-block-heading">A fitting prelude to DevConnect</h2>



For all the talk of rollup scaling and AI agents, the conversation heading into DevConnect feels unusually introspective. Vitalik’s timing suggests a deliberate recalibration, reminding attendees that Ethereum’s biggest challenges are not only technical, but cultural.



Developers (and this newsletter writer) gathering in Buenos Aires may be debating zk cryptography and DeFi security, but beneath it all lies the same question the manifesto asks outright: What does it mean to trust less in 2025?



As the week begins, Ethereum stands ready to prove that growth doesn’t have to mean compromise. Or, as manifesto’s closing line opines:



“The designs will change. The principles will not.”



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blockchain

Ethereum’s ‘Trustless Manifesto’ and the return to first principles

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“A pin lies in wait for every bubble. And when the two eventually meet, a new wave of investors learns some very old lessons.”



— Warren Buffett
</blockquote>



Markets were down this week, possibly because GPUs are starting to go dark.



In Oregon, for example, three of Amazon’s new data centers are sitting idle because the local utility company <a href="https://www.bloomberg.com/news/articles/2025-11-04/amazon-says-berkshire-utility-failing-to-power-data-centers">refuses</a> to connect them to the power grid.&nbsp;



That leaves thousands of cutting-edge GPUs, likely costing hundreds of millions, sitting idle as well — aging in place without making any return on the giant investment they represent.



Microsoft is having the same problem.&nbsp;



Satya Nadella <a href="https://datacentremagazine.com/news/microsofts-power-problem-ai-chips-are-sitting-in-inventory?utm_campaign=Weekly+Briefing&amp;utm_source=hs_email&amp;utm_medium=email&amp;utm_content=2&amp;_hsenc=p2ANqtz-8VdfAdcq-ct7d0ENROqJaeaC3SmOvexqkq9p9qLdMzpbsROUqJBNSpVLOFlqeSXCkYY_uN8gqVimh8DxylgiwnCuImCA&amp;_hsmi=2">says</a> the “biggest issue” that Microsoft is now facing in AI is “a bunch of chips sitting in inventory that I can&#8217;t plug in.”&nbsp;



“It&#8217;s not a supply issue of chips,” he adds. “It&#8217;s actually the fact that I don&#8217;t have warm shells to plug into.”



The “shells” Nadella’s referring to are data centers and they’re not warm because they’re not connected to a source of power.&nbsp;



There are many such cases.



“The infrastructure has now been outpaced by the construction of facilities,” Kristin Hammond of CBRE <a href="https://djcoregon.com/news/2025/09/12/data-center-construction-slows-us-power-grid/">explains</a>. “There’s no use to having the facility if you don’t have the power poles to service it.”



But we’re still constructing the facilities.



Spending on data centers is on pace to <a href="https://news.constructconnect.com/november-data-center-report-spending-surges-92.8-as-southern-states-dominate-construction">double</a> this year vs. last, and the pipeline of <a href="https://www.wsj.com/tech/ai/when-ai-hype-meets-ai-reality-a-reckoning-in-6-charts-bf8043b4?mod=djem10point">proposed projects</a> is growing even faster than that.



This might be starting to sound familiar.&nbsp;



For stock market investors, data centers going unused for want of power should evoke memories of 1999, when an estimated 97% of fiber optic cables that investors were frantically funding remained “dark,” or unused.&nbsp;



The analogy is not exact: It was a demand problem then, and it’s a supply problem now. But the end effect might rhyme to the effect of many billions of dollars of stranded infrastructure.



For credit investors, the current infrastructure frenzy is evoking memories of 2008.



Data centers are increasingly being <a href="https://www.wsj.com/tech/ai/three-ai-megadeals-are-breaking-new-ground-on-wall-street-896e0023?mod=djemfoe">funded with debt</a>, often in special purpose vehicles that keep the debt off-balance sheets, and sometimes by selling asset-backed securities in various risk tranches to investors indifferent to the underlying assets.



Does that sound familiar? Here’s a <a href="https://www.youtube.com/watch?v=1Rhs3PVAP4o">refresher</a> on credit markets from Margot Robbie, if not.



For one veteran investor, the data center boom is evoking 1999 and 2008 — and all the other ones, too.



&#8220;For the first time,” Paul Kedrosky <a href="https://www.bloomberg.com/news/audio/2025-11-14/odd-lots-ai-is-like-every-bubble-all-rolled-into-one-podcast?srnd=phx-oddlots">says</a>, “we&#8217;ve combined all the major ingredients of every historical bubble into a single bubble.&#8221;



Fun!



Kedrosky sees these ingredients as a compelling technology story, a speculative real estate boom, increasingly loose credit and a form of government backstop.



He sees this as a toxic brew for both markets and the economy: “The notion we can land this thing safely is nonsense.”



In short, the risk is that the current power shortage causing GPUs to go dark will cause data centers to build their own power plants — with borrowed money — in the out-of-the-way places where AI data centers are built, but hardly anyone lives.



These new power plants will become “stranded assets,” Kedrosky warns, when efficiency gains in AI training radically reduce the number of chips required: “We&#8217;re completely mis-forecasting arc of demand for compute.&#8221;



It’s the classic pattern: “The system is running at full throttle on forward expectations,” Kedrosky <a href="https://paulkedrosky.com/on-ai-capex-apologists/">writes</a>, “perceived shortage-now/glut-later is exactly how bubbles form.”



On the other hand, there’s no telling how long this process might take.



Kedrosky says it may be “four or five years” until the credit instruments underwriting the data center boom run into trouble.&nbsp;



Five years of booming markets in return for a bust?&nbsp;



I’d take that trade, for sure.



In the meantime, let’s check the charts.



We have big plans:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1064" height="624" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-89.png?w=1024&amp;h=1024" alt="" class="wp-image-109978" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-89.png?w=1064 1064w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-89.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-89.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-89.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-89.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-89.png?w=445 445w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-89.png?w=373 373w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-89.png?w=80 80w" sizes="auto, (max-width: 1064px) 100vw, 1064px" /></figure>



The number of announced plans to build data centers has exploded. But they’re increasingly hard and ever-more expensive to build. Perhaps more worryingly, the number of stalled projects is growing. What this chart will look like next year is probably the key to nearly all asset markets.&nbsp;



The plan for revenue:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1122" height="599" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-90.png?w=1024&amp;h=1024" alt="" class="wp-image-109979" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-90.png?w=1122 1122w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-90.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-90.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-90.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-90.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-90.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-90.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-90.png?w=80 80w" sizes="auto, (max-width: 1122px) 100vw, 1122px" /></figure>



If the data centers do get built, will we use them all? JPMorgan <a href="https://www.wsj.com/tech/ai/when-ai-hype-meets-ai-reality-a-reckoning-in-6-charts-bf8043b4?mod=djem10point">projects</a> that “AI products would have to create an additional $650 billion a year, indefinitely, to give investors a reasonable 10% annual return” on their AI investments. The Raymond James forecasts above suggest we might fall well short of that.



Electricity prices:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1087" height="650" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-94.png?w=1024&amp;h=1024" alt="" class="wp-image-109983" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-94.png?w=1087 1087w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-94.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-94.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-94.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-94.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-94.png?w=436 436w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-94.png?w=366 366w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-94.png?w=80 80w" sizes="auto, (max-width: 1087px) 100vw, 1087px" /></figure>



People worry that data centers will raise the cost of electricity, but, per the above, that has not been the case so far — electricity prices have risen slower than inflation for years. There’s also <a href="https://www.washingtonpost.com/climate-environment/2025/10/25/data-centers-electricity-prices-rise/">evidence</a> that data center demand might even lower electricity prices — likely because higher demand allows fixed costs to be spread over more customers.



It’s mostly a US story, for now:



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="840" height="449" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-93.png" alt="" class="wp-image-109982" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-93.png?w=840 840w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-93.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-93.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-93.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-93.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-93.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-93.png?w=80 80w" sizes="auto, (max-width: 840px) 100vw, 840px" /></figure>



The US continues to lead the world in data centers, with 4,189 vs. just 381 in China. Tellingly, in <a href="https://www.anthropic.com/news/anthropic-invests-50-billion-in-american-ai-infrastructure">announcing</a> its data center plans this week, Anthropic was careful to say it’s investing in “American AI infrastructure.”&nbsp;



Chinese exporters seem to be thriving without the US:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1421" height="752" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-96.png?w=1024&amp;h=1024" alt="" class="wp-image-109985" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-96.png?w=1421 1421w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-96.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-96.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-96.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-96.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-96.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-96.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-96.png?w=80 80w" sizes="auto, (max-width: 1421px) 100vw, 1421px" /></figure>



Torsten Slok notes that while China has exported $75 billion less to the US so far this year, it’s exported $150 billion more to Asia.



Worst US sentiment ever:



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="859" height="539" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-91.png" alt="" class="wp-image-109980" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-91.png?w=859 859w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-91.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-91.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-91.png?w=410 410w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-91.png?w=416 416w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-91.png?w=349 349w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-91.png?w=80 80w" sizes="auto, (max-width: 859px) 100vw, 859px" /></figure>



The University of Michigan’s November survey of consumer sentiment returned its lowest reading on record, going all the way back to 1960. And the bubble hasn’t even popped yet!



Bearish sentiment, bullish returns:



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="789" height="486" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-92.png" alt="" class="wp-image-109981" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-92.png?w=789 789w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-92.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-92.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-92.png?w=417 417w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-92.png?w=424 424w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-92.png?w=356 356w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-92.png?w=80 80w" sizes="auto, (max-width: 789px) 100vw, 789px" /></figure>



The best returns happen when people are most bearish.



You don’t have to be bullish on AI:



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="966" height="615" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-97.png" alt="" class="wp-image-109986" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-97.png?w=966 966w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-97.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-97.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-97.png?w=404 404w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-97.png?w=410 410w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-97.png?w=344 344w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-97.png?w=80 80w" sizes="auto, (max-width: 966px) 100vw, 966px" /></figure>



David Hay <a href="https://haymaker.substack.com/p/haymaker-daily-aa9?img=https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F74361197-9a8b-4d9d-8683-b5db821c2a40_868x554.png&amp;open=false">notes</a> that stocks dropped from the S&amp;P 500 (the black line above) outperformed the index by 5% a year in the 32 years from 1990 to 2022 — a cumulative excess return of 400%.



Do call it a comeback:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="1059" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-95.png?w=1024&amp;h=1024" alt="" class="wp-image-109984" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-95.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-95.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-95.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-95.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-95.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-95.png?w=388 388w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-95.png?w=394 394w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-95.png?w=331 331w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-95.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



CSCO stock — left for dead in 2000 and long forgotten — is now 50% above its dotcom peak in total return (dividends reinvested).



A reminder that, if this bubble is soon over, there will be others to look forward to.



Have a great weekend, everything readers.



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The everything bubble?

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“If you can’t make money, you may want to consider being quiet. Maybe the market knows more than you do.”



— Jeff Yass
</blockquote>



Today, The Breakdown looks at developing stories and links from around the cryptoverse.



<h2 class="wp-block-heading"><a href="https://open.substack.com/pub/moontower/p/spooky-jeff-yass-on-prediction-markets?utm_source=share&amp;utm_medium=android&amp;r=3qcul">Jeff Yass says prediction markets will stop wars</a></h2>



After Jeff Yass brought his math and poker skills onto trading floors in the 1980s, global options markets stopped looking like a casino and started looking like a science.



Yass thinks prediction markets could do the same for the world.



First and foremost, he says, “It will stop wars.”



Yass cites the second Iraq War, which President Bush said would cost the US $20 billion but is now thought to have cost at least $2 trillion, and maybe as much as $6 trillion.



It’s unlikely prediction markets would have settled on such an astronomical number, but Yass believes they might have predicted something like $500 billion, in which case “people might have said, ‘Look, we don’t want this war.’”



That would have saved many, many lives, as well: “If people know how expensive it’s going to be and how disastrous it’s going to be, they’ll try to come up with other solutions.”



Prediction markets, he says, “can really slow down the lies that politicians are constantly telling us.”



He also cites applications in insurance, technology and even dating.



Asked by the 16-year-old podcast host what advice he’d give young people, Yass suggested they could avoid relationship mistakes by creating an anonymous prediction market for their friends to bet on.



“I believe in markets,” he concluded.



<h2 class="wp-block-heading"><a href="https://nodumbideas.com/p/does-momentum-exist-in-prediction">Do prediction markets trend?</a>&nbsp;</h2>



It sounds like a dumb idea: Unlike stocks with their open-ended valuations, prediction markets should converge toward the single fixed probability of a binary outcome.



But the author of No Dumb Ideas crunched the numbers and found that prices in political prediction markets do, in fact, trend: A market that trades up one day is more likely than otherwise to trade up the next day, too.



“Momentum seems to be real, at least for a day or two.”



The author speculatively attributes this to prediction markets making news, the dynamics of political campaigns and/or because momentum trading is fun.



I’d also cite Cliff Asness’s <a href="https://youtu.be/e1Iok2wyoCw?si=EFtXXTKtKE66hgs8">observation</a> that stocks exhibit momentum in part because they tend to underreact to news — so maybe prediction markets do, too.&nbsp;



Whatever the reason, the study by No Dumb Ideas suggests that prediction markets are subject to many of the same behavioral finance drivers as stock markets.



So there should be something in them for everyone: momentum traders, swing traders, quants…most of whom, I suspect, will lose money.



That would be good news, if so, because it will create a stronger profit motive for experts to participate — giving us better information on subjects like how much a war is likely to cost.&nbsp;



<h2 class="wp-block-heading"><a href="https://finance.yahoo.com/news/cohen-co-inc-cohn-q3-110037508.html?guccounter=1&amp;guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&amp;guce_referrer_sig=AQAAAHrSRTmsAd6lSyvfTxRqPzte0umEmVDKNnADyPHwr54NKAQ4WbFoz-zVgj36EUv3GH-Tm6yHRdBnPcglpxzKJrr7HW8A8pV-KJzerF8rJf86v9KznGkfmFGeAvdZxtzyZ4kUIoO00KcT4RQq3Sdzp8YBxgnFNLGVmFEzxr1L1eEm">Cohen cashes in on DATs</a></h2>



The boutique investment bank Cohen &amp; Co. booked $179 million of revenue for its advisory work on a single DAT merger, Nakamoto Kindly MD.&nbsp;&nbsp;



That’s an astonishing haul given that the company currently holds just $594 million of bitcoin, per data from <a href="https://blockworks.com/analytics/treasury-companies">Blockworks Research</a>.



Even worse, Kindly MD now has a market capitalization of $267 million.



Cohen unfortunately took much of its compensation in shares, which have fallen 90% from the merger announcement. As a result, it booked a $146 million non-cash loss for the quarter, reducing its profit on the deal to only $33 million.



That’s still 5.5% of the company’s NAV and 12% of its market cap.



Nice work if you can get it.



<h2 class="wp-block-heading"><a href="https://x.com/haydenzadams/status/1987990314997739625?t=e9VD7PIDjoziGT5ONb8LCA&amp;s=19">Uniswap flips the switch</a></h2>



Uniswap Labs has made a financially underwhelming but symbolically significant proposal for the Uniswap Protocol to collect fees and return them to token holders.



The <a href="https://www.uniswapfoundation.org/blog/unification?utm_source=blockworks-research.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=unification&amp;_bhlid=26d5152c813ec755cdd95b31c94dbd1712ab5600">proposal</a> would retroactively burn 100 million tokens held in its treasury, “representing the protocol fees that could have been burned if fees were turned on at token launch.”



That amounts to a 16% buyback over five years, which is…not a lot?



<a href="https://x.com/0xSharples?s=20">0xSharples</a> of Blockworks Research <a href="https://x.com/0xSharples/status/1988256449806372906?s=20">estimates</a> that, excluding wash trading, Uniswap would have generated about $6 million of fees over the past month, which annualizes to just 1.5% of UNI’s $4.8 billion market capitalization — also not a lot for what looks like an ex-growth business.&nbsp;



More importantly, though, the proposal states that “Labs will stop collecting fees on its interface, wallet, and API to supercharge distribution and adoption of the Uniswap protocol.”



Beyond the fees that will reroute to token holders, this carries <a href="https://x.com/TheiaResearch/status/1988241585834734001?s=20">symbolic weight</a>: It unwinds crypto’s most prominent dual equity-token structure, which has been so fraught with conflicts of interest.



I’d argue this comes at a cost, though.



When the UNI token was launched in 2020 as a pure governance token, it became Exhibit A for why tokens were not stocks and protocols were not companies.&nbsp;



Anecdotally, it felt like most UNI holders did not view themselves as owners of the Uniswap protocol — a protocol, it was thought, could not be owned in the same way a company could.



Token holders were only stewards of the protocol, and the best thing for the protocol was to either keep whatever fees it earned in its treasury or not charge fees at all.&nbsp;



Now, though, once the protocol starts collecting revenue and returning it to token holders, how is it not just a company?&nbsp;



Jake Chervinsky says the proposal will “<a href="https://x.com/jchervinsky/status/1988333836611011037?s=20">minimize governance, maximize ownership</a>” for UNI token holders — which makes Uniswap look a lot more like a company and UNI a lot more like equity.&nbsp;



This is probably for the best: The industry needs investors and investors need a profit motive to invest.&nbsp;



But minimizing governance and maximizing ownership also makes crypto less special.



<h2 class="wp-block-heading"><a href="https://www.sec.gov/newsroom/speeches-statements/atkins-111225-securities-exchange-commissions-approach-digital-assets-inside-project-crypto">Project Crypto</a></h2>



If tokens are less special, do they risk being securities?



SEC Chair and crypto enthusiast Paul Atkins warns that calling something a token does not make it exempt from securities laws “if it in substance represents a claim on the profits of an enterprise and is offered with the sorts of promises based on the essential efforts of others.”



UNI now represents a claim on the profits of the Uniswap enterprise, so, to avoid being security, it will have to argue that it’s not making any promises on the efforts of others.



Chair Atkins promises to tread lightly, but warns that Project Crypto “is not a promise of lax enforcement at the SEC. Fraud is fraud.”



But he’s not asking a lot: “If you raise money by promising to build a network, and then take the proceeds and disappear, you will be hearing from us.”



That’s a pretty low bar for crypto projects to clear, although plenty would not have in recent years.



Nevertheless, Atkins will do everything he can to be sympathetic: “We will not forget that behind every token debate, there are real people.”



Sounds like he’s not on Crypto Twitter much.



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predictions market

Prediction markets, DATs, the fee switch, and Project Crypto

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As recently as a couple of years ago, investing was in a pessimistic place.



Techno-optimist Kevin Kelly <a href="https://youtu.be/5XCjWLJcUG4?si=WPklIiztOoNS8COu">worried</a> that “we’ve stopped making big things.”



Big Tech was pilloried for using immense profits to buy their own shares instead of building new things.&nbsp;



Ben Thompson’s Stratechery sounded more like a legal blog than a tech one, with his daily commentary dominated by the latest in anti-trust news.



Happily, that seems like ancient history now.&nbsp;



Ben Thompson seems to have some new, wildly ambitious tech venture to write about nearly every day: data centers in space, x-ray lithography, thermodynamic computing.



Big Tech has gone from returning cash to shareholders because it didn’t know what to do with it, to borrowing billions to build everything at once: OpenAI, for example, expects to make $100 billion of revenue in 2028 — and post a loss of $74 billion.



We’ve started making big things again: xAI’s million-square-foot data center in Memphis, a TSMC chip-fab occupying 1,100 acres of Arizona desert, a 400-foot-tall SpaceX rocket with 5,000 metric tons of liftoff mass.



People typically put a cynical spin on this: They see big corporations being greedy, or small investors being misled.



Kevin Kelly, however, sees a profound act of optimism.



Optimists, he <a href="https://www.ted.com/talks/kevin_kelly_the_future_will_be_shaped_by_optimists">says</a>, “are willing to sacrifice immediate gains in order to postpone more gains into the future — that’s investment.”



You might be thinking, Yes, I own Nvidia shares now, so I can enjoy “more gains” next week, next month or next year.&nbsp;



But that’s just trading.



Kelly is talking about investing, which postpones the benefits of consumption not just years into the future, but generations.



“Right now,” he points out, “we’re benefiting from the work of previous generations, who have undertaken to create infrastructure — roads, canals, skyscrapers, telephone networks — that we are now enjoying.”



We should try not to take that for granted: People we don’t know took the risk of investing and did the hard work of building, and we get the benefits for free.



“By moving benefits to future generations,” Kelly says, the investors and builders of previous generations “have been acting as good ancestors for us.”



We, too, should aspire to be good ancestors, which we can do by moving some of our benefits into the future.&nbsp;



But that requires us to be optimistic about the future. “The deep history of new ideas,” Kelly explains, “makes it very clear that the optimistic stance of believing something is possible is a requirement to make anything new.”



Kelly is particularly optimistic about the new things that AI investors will make.



“The three chief consequences of AI,” he <a href="https://www.warpnews.org/premium-content/kevin-kelly-the-case-for-optimism/">predicts</a>, “will be the liberation of humans from their unwanted jobs, the explosion of new services and formerly impossible products that are co-created with AIs, and new occupations and desirable tasks for humans.”&nbsp;



Less drudgery, more stuff, better jobs — this is the future being created by today’s most optimistic investors.&nbsp;



Kelly is no utopian; he recognizes the ever-growing scale of the world’s challenges: “We have a planetary economy, we have planetary problems.”



But that just means we have to think bigger: “We have to do planetary solutions.” And he thinks we will: “They’re gonna be big.”



Bigger solutions will require bigger belief: “If we can become more optimistic,” Kelly <a href="https://youtu.be/5XCjWLJcUG4?si=BTR_AwW8elvZ_JaS&amp;t=803">said</a> in 2023, “we can imagine some big things, and then believe they can be made, and that will help make them come true.”



At the time, he worried that “we have an allergy to bigness right now.”



“Lots of people say they’re anti-capitalist,” he added, “but I think they’re anti-big.”



He encouraged people to rethink that: “We should be optimistic not because our problems are smaller than we thought, but because our capacity to solve them is larger than we thought.”



In 2025, it seems clear that AI has the potential to radically expand our capacity to solve even the biggest problems.&nbsp;



If so, it’s the optimistic act of investing in space-based data centers, x-ray lithography and giant chip fabs that will make it happen — eventually.



“In the long run,” Kelly concludes, “optimists shape the future.”



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Financial optimism is winning

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“If this all seems like a wild idea, that means you understand it.” 



— Ted Nelson
</blockquote>



If internet-native money existed in the 1970s, today&#8217;s newsletter would cost $0.001 to read.&nbsp;



Instead, it&#8217;s free.



Ted Nelson thinks that&#8217;s a world-changing disaster.



Nelson is the philosopher, media theorist and tech-visionary who, in 1960, first conceptualized a global “docuverse”: a vast, interconnected library of information made available by networked computers that did not yet exist.



Incredibly, that was nine years before the first computer-to-computer message was sent over the ARPANET.&nbsp;



Nelson prophetically explained that we’d soon access our information via computer screens, which seems intuitive enough — but he was explaining it at a time when hardly anyone had seen one.&nbsp;



He had to make cardboard and celluloid mockups of computer terminals to try to make his “Project Xanadu” comprehensible to people:



<figure class="wp-block-image size-full is-resized"><img loading="lazy" decoding="async" width="466" height="282" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-68.png" alt="" class="wp-image-109925" style="width:575px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-68.png?w=466 466w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-68.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-68.png?w=425 425w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-68.png?w=431 431w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-68.png?w=362 362w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-68.png?w=80 80w" sizes="auto, (max-width: 466px) 100vw, 466px" /></figure>



Nelson imagined those screens displaying “visible connections” between every piece of information: a universal system of permanent, unbreakable, two-way links between all the world’s documents, stored on networked servers that anyone could access.



That was 29 years before Tim Berners-Lee invented the World Wide Web — which Nelson is still unhappy about.



“I don’t want to talk about the Web,” he told an interviewer in 2021. “I hate it.”



Nelson dismisses today’s Web as a dumbed-down version of Xanadu, stripped of its most important parts: visible connection and micro-payments.



“The World Wide Web was my idea in the 1960s,” he later groused. “That other system caught on. The great disappointment of my life.”



Nelson is particularly disgusted by Berners-Lee’s now-ubiquitous hyperlinks, which he derisively calls “jump links” — a blind, one-way leap into an ocean of disconnected digital documents that simply “imitate paper.”&nbsp;



(In Nelson’s honor — and possibly to your confusion — I’ve refrained from including any hyperlinks in today’s article.)



To Nelson, building the Web in imitation of paper was no more imaginative than building cars in the shape of horses.



Project Xanadu promised instead a revolutionary version of the Web with “visible connections between pages,” two-way hyperlinks and “micro paywalls.”



This, he promised, would reflect the “nonlinear” nature of human thought, and thereby advance human creativity and progress — all while fairly compensating the world’s inventors, thinkers and content creators, one micro-payment at a time.



In short, Nelson wanted computers to be organized the way people think, and what we got instead is the opposite: a World Wide Web that makes people think the way computers are organized.



“Calling a hierarchical director a ‘folder,’” he characteristically argued, “doesn&#8217;t change its nature any more than calling a prison guard a ‘counselor.’”



He wasn’t speaking in metaphor: He really does think computers are a prison for the mind.&nbsp;&nbsp;



“I&#8217;m very unhappy about the Web,” he added in 2021, “but now we’re stuck with it.”



But maybe not for too much longer?



One reason you’re not paying $0.001 to read this newsletter on Xanadu is that Nelson’s lofty ideas were conceived decades ahead of the technology needed to realize them.



Even after the internet and the Web were invented, Project Xanadu would have required far more computing power, storage capacity, and networking sophistication than anyone thought possible.



Berners-Lee’s “dumbed down” version of the Web won out for one simple reason: It was possible.



Nelson’s vision of attributing all content to its original source, for example, was unfeasible because of the power and storage it would have required was unavailable.&nbsp;



His vision of compensating every idea with micropayments of royalties and sub-royalties was unfeasible because there was nothing to make micro-payments with.&nbsp;



But in 1989, Berners-Lee at least nodded at Nelson’s vision by including the status code “402: Payment Required” in his world-changing HTTP protocol. &nbsp;



402, as it’s known, would have allowed web servers to demand payment from a visiting browser before granting access to a document, video, song or idea.



Unfortunately, browsers, not being allowed bank accounts, had nothing to pay with — and even if they had, the process would have been too slow and too expensive to be useful.



Things have since changed, of course: Internet-native money was invented in 2009; onchain dollars were invented in 2014; and in 2025, high-throughput blockchains have reduced transaction times to a fraction of a second and transaction fees to a fraction of a cent.&nbsp;



In other words, everything is finally in place to realize Nelson’s “system of commerce that would create viable ways for people to be paid with a sensible and completely fair method.”



It won’t happen quickly.



For one thing, we’ve gotten thoroughly accustomed to internet content being mostly free, so ads are unlikely to be replaced by micropayments anytime soon.



Nor is online shopping likely to change: Credit cards work just fine for occasional purchases (also, we love our air miles).



But Ted Nelson’s original vision anticipated a problem that’s only now become evident, 60 years later: language models scraping the entirety of human knowledge from the internet and reproducing it without attribution.



This is exactly the future that Nelson was trying to prevent: a world where ideas were brutally detached from their creators and copied endlessly without context, credit or compensation.



I’m not sure anyone other than Nelson has even suggested a solution.



Project Xanadu — started in 1960, never a working project and long dismissed — somehow remains a futuristic vision.



To finally realize that vision, the Web might have to be reorganized along Nelson’s principles: with visible connections that allow all the world’s information to be properly attributed, and micro-paywalls so they can be properly compensated.



“I believe the original dream is still possible for everyone,” Nelson said in 2021. “ But not with today&#8217;s systems.”



With today’s systems, however, it might be.







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The Breakdown Newsletter

Project Xanadu: The “original dream” of a freer, fairer internet

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

Empire

For savvy degens who want to think like researchers and analysts, from Blockworks Research

0xResearch

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

Forward Guidance

The essential source for all things Solana — exclusive news, deep analysis, and the latest trends.

Lightspeed

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

Supply Shock

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“What had central bankers shaking in their boots, may end up being what steadies the ground beneath them.”



— David Beckworth on stablecoins
</blockquote>



Writing in The Atlantic, David Frum warns that stablecoins are “by far the most dangerous form of cryptocurrency” and that by legalizing them, the GENIUS Act has “lit a fuse to America’s next financial catastrophe.” Specifically, Frum expects stablecoin assets to surge to $4 trillion (citing an estimate from Citi), and that nearly all $4 trillion of it will go into three-month Treasurys (the riskiest asset issuers are allowed to buy under the GENIUS Act).



Then, he says, there will inevitably come a time when Treasurys crash — as they did in 2022-2023 — which will cause a bank run on stablecoins as holders withdraw their money before issuers are forced to realize their marked-to-market losses on the $4 trillion of Treasurys they hold.



Better yet, Frum thinks stablecoins “bristle with all the dangers of subprime-mortgage securities” and will end up forcing the government to socialize the losses it creates with a 2008-style bailout.&nbsp;



But the 2022-2023 crash in Treasurys played out over 18 months.



So it’s unclear to me why an 18-month decline in an asset that matures every three months would cause people to panic about stablecoin issuers that take no leverage.&nbsp;



But I present Frum’s take here because 1) it’s kind of amusing in its alarmism and 2) it probably represents what a lot of non-finance people are thinking: Stablecoins are dangerous because they will inevitably fail.



<a href="https://www.imf.org/en/publications/fandd/issues/2025/09/stablecoins-tokens-global-dominance-helene-rey">Stablecoins are dangerous because they will inevitably succeed</a>



Writing for the IMF, Hélène<a href="https://www.imf.org/en/settings/globals/publications/fandd/authors/helene-rey"> Rey</a> warns that stablecoins will be such a success that they’ll “threaten government revenues…and destabilize the international financial system.”



In short, she thinks so much of the world’s savings will be redirected to stablecoins that banks will no longer be able to lend, international governments will no longer be able to borrow, and central banks will no longer be able to set monetary policy.



The knock-on effects of such widespread stablecoin adoption will include “financial stability risks, potential hollowing out of the banking system, currency competition and instability, money laundering, fiscal base erosion, privatization of seigniorage and intense lobbying.”



Most alarmingly, Rey worries that this privatization of seigniorage will result in “significant wealth accumulation by…a few companies and individuals,” thereby undermining “the public good dimension of the international monetary system.”



Yikes.



“We must brace ourselves for substantial consequences,” she concludes.



<a href="https://www.federalreserve.gov/newsevents/speech/miran20251107a.htm">Stablecoins are not dangerous</a>



Like Rey, the Federal Reserve’s Steven Miran values our dollar-based international monetary system: “The reserve assets and currency provided by the US are global public goods.”&nbsp;



But that leads him to the opposite conclusion on stablecoins: “Stablecoins might establish an easier means for the financially repressed to enjoy these global public goods and evade draconian restrictions on their finances.”



Crypto people generally think of the Fed’s reserve assets (all the money it prints, basically) as a public bad.



But Miran is right on both substance and tactics: Framing US fiat as a public good is likely the best way to counter the anti-crypto arguments represented by The Atlantic and the IMF.



Unlike Frum and Rey, Miran sees “little prospect of funds broadly fleeing the domestic banking system” — mostly because the GENIUS Act mandates that they do not pay yield and are not FDIC-guaranteed (the flip side of Frum’s argument).



Instead, the “real opportunity in stablecoins is to satiate untapped foreign appetite for dollar assets from savers in jurisdictions where dollar access is limited.”



While Rey views this unsatiated appetite for dollars as a threat to all non-US governments, Miran says it&#8217;s a benefit to non-US people — because it “leapfrogs the challenges of high and unstable inflation or volatile exchange rates.”



It’s a convincing argument; certainly the most convincing of the three presented here.



But only if you can bring yourself to agree that fiat is a public good.



<a href="https://macroeconomicpolicynexus.substack.com/p/the-rise-and-redemption-of-stablecoins?utm_source=post-email-title&amp;publication_id=4309188&amp;post_id=166029841&amp;utm_campaign=email-post-title&amp;isFreemail=true&amp;r=3o9&amp;triedRedirect=true&amp;utm_medium=email">Stablecoins are stabilizing</a>&nbsp;



David Beckworth says that stablecoin alarmism “overlooks an important point: the widespread adoption of dollar-based stablecoins could actually help dampen the global financial cycle.”&nbsp;



Beckworth cites the aforementioned Hélène Rey, who has detailed the destabilizing effects of emerging market borrowers doing so much of their borrowing in US dollars.&nbsp;



Stablecoins, Beckworth says, could fix this by reducing the currency mismatch on private-sector balance sheets: When a strengthening dollar increases the value of dollar-denominated debts, the simultaneous increase in the value of their stablecoins will cushion the shock for emerging markets.



In other words, “stablecoins can act as a decentralized balance sheet stabilizer” for the global economy.



Combined with the likelihood that the Federal Reserve will “act as a backstop” to stablecoins in a future crisis — the very thing David Frum worries about! — the spread of stablecoins “may become one of the very tools that softens the peaks and troughs of the global financial cycle.”



“What had central bankers shaking in their boots,&#8221; Beckworth concludes, “may end up being what steadies the ground beneath them.”



<a href="https://www.justice.gov/usao-ndil/pr/founder-chicago-cryptocurrency-company-indicted-alleged-10-million-money-laundering">Stablecoins can be laundered, too</a>



Firas Isa, founder of an Illinois-based crypto ATM company, has been indicted on charges of money laundering — a reminder that despite the transparent nature of blockchains, many criminals believe the first step in laundering money is to put it onchain.



The (alleged) fact that Isa was able to collect $10 million of fees for converting stolen cash into cryptocurrency demonstrates that crypto crime isn’t just about stealing money that’s already onchain — it’s about laundering funds that were stolen off-chain, too.



Many worry this will get even easier as stablecoins get bigger and more integrated into the traditional banking system.



Hélène Rey, for example, says stablecoins could “help channel money linked to illicit or sanctioned activities and substantially erode the tax base of many countries.”



David Frum says “there is something perverse about a plan to boost demand for Treasury debt by making it easier for crooks to circumvent US laws against terrorist financing and money laundering.”



I don’t have a counterargument to cite against either of those takes, unfortunately.&nbsp;



<a href="https://x.com/KulveerRanger/status/1978912664379085126?s=20">Stablecoins can be boring, too</a>



Stablecoins recently made for perhaps the dullest exchange in UK parliamentary history when Lord Kulveen Ranger asked His Majesty’s government what it thought of them.&nbsp;



Responding on behalf of the King, Lord Livermore predicted that stablecoins will be useful in “reducing costs and enhancing efficiencies” in international payments.&nbsp;



As hot takes go, that is less newsletter-worthy than predictions that stablecoins will cause the next financial crisis, undermine the global financial system, save the global financial system or facilitate crime. But it’s much more likely, too.&nbsp;&nbsp;



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stablecoins

Stablecoins will transform everything — but commentators disagree on how

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Patternicity: Noun. The tendency to find meaningful patterns in meaningless noise.”



— Michael Shermer
</blockquote>



We are hardwired to see patterns in noise — a stick in the grass that looks like a poisonous snake, or a rustle in the bushes that looks like a saber-toothed tiger getting ready to pounce.&nbsp;



With a moment’s reflection, we can usually recognize we’re almost certainly not in danger. But why risk it?



When faced with ambiguity, our brains have been fine-tuned to succumb to Type I errors (false positives) due to the high evolutionary cost of making a Type II error (false negatives).



In other words, it’s better to mistake a stick for a snake than a snake for a stick.



Those prone to the latter — the Type II error of failing to recognize mortal danger — are soon removed from the gene pool.



The Darwinian result is that we’re all descended from people who were quick to make the (occasionally life-saving) Type I error of jumping to false-positive conclusions.&nbsp;



Michael Shermer <a href="https://www.scientificamerican.com/article/patternicity-finding-meaningful-patterns/">calls</a> this “patternicity”: the human tendency to find meaningful patterns in meaningless noise.



“Our brains are belief engines,” he explains — “evolved pattern-recognition machines that connect the dots and create meaning out of the patterns that we think we see in nature.”



Traders and investors are the world champions of patternicity.



Confronted with the cacophonous noise of financial markets, we try to impose order on chaos by drawing lines on charts and searching for reassuringly familiar patterns.&nbsp;



When we perceive a “cup and handle” pattern in the price history of a stock, for example, we’re using the same part of our brain that perceives the shape of a rabbit in a cloud.&nbsp;



But the cup-and-handle is formed by charting prices over time, which seems more quantitatively scientific than a billowy pattern of vapor in the sky.



James Gleick refers to this as “periodicity.”&nbsp;



&#8220;Why do investors insist on the existence of cycles in gold and silver prices?” he asks in <a href="https://www.amazon.com/Chaos-Making-Science-James-Gleick-ebook/dp/B003YL4KOO/ref=tmm_kin_swatch_0?_encoding=UTF8&amp;dib_tag=se&amp;dib=eyJ2IjoiMSJ9.wbgQnuEhLIWY1HpuwBAg68ey4RWvDMHGoydJqSagN4DxsD4TW9khHUiB4S07pkwyAI9PZ7ENDVba-3DmEALTYmFRxnkGKpt3W5vPpmeXRkqNgnlaydfPEjxyz0U8yOIAu9ORS2bGtNkz7lg0WJpWXVD0Fkj3btJCEdSVpvoov9NIk_t-_tbOTc-zPX5j3z9D7AX8h3Fz4GEt2z0aNarG0V8yuxoJPEJrhuZEAmC0b5U.3e_k-V8SS5j8t5RCNcYG3xub3le5GO-LXI9WElflzMU&amp;qid=1763573303&amp;sr=1-1">Chaos</a>. “Because periodicity is the most complicated orderly behavior they can imagine.”&nbsp;



Investors, being the descendants of Type I thinkers, impose neat, repeating cycles on chaotic price data because that’s the most complexity our pattern-hungry brains can process.



“When they see a complicated pattern of prices,” Gleick adds, “they look for some periodicity wrapped in a little random noise.”



Investors and traders may be particularly prone to this evolutionary foible because even the best of them have a hit rate close to 50%.



That makes their performance close enough to random — and randomness tends to beget superstition.



Shermer, for example, notes that baseball players are much more superstitious about their hitting than they are about their fielding because the lower success rate in hitting makes it feel more random.



Traders don’t do anything as obviously superstitious as donning a lucky shirt like they would when they sit down to watch their favorite team play football or baseball.



But that’s because drawing lines on charts and picking patterns out of the noise makes us think we have more agency in making or losing money than we actually do.&nbsp;



Worse than superstition, this is superstition dressed up as science — not just seeing patterns in the stars, but believing the patterns have some meaning.&nbsp;



The “science” of technical analysis is really just astrology for traders.



Shermer calls this “agenticity”: the tendency to infuse patterns with meaning, intention, or agency — or the belief that ghosts, demons, aliens, and government conspiracists haunt our world and control our lives.



Stock market traders, for example, commonly believe it’s the Federal Reserve that controls prices on the way up (and sometimes a cabal of hedge funds that control themes on the way down).



But of all traders, crypto traders are the best of the best at both patternicity and agenticity — because what else is there to go on?



With little or no intrinsic value to ground their decisions, crypto traders are forced to impose imaginary patterns on pure price noise just to have a reason to act.



The original imaginary pattern was the four-year cycle — the idea that bitcoin (and therefore all of crypto) should rally for about 18 months after each of its four-year halvings.



That perceived periodicity is now breaking down, however, with bitcoin falling below $90,000 when the pattern says it should be making new highs above $150,000.&nbsp;



This idea was particularly unscientific, as it’s based on a sample size of just three previous halvings.



Still, there are presumably some tradeable patterns in finance — otherwise Cliff Asness wouldn&#8217;t be a billionaire.&nbsp;



The persistent success of quantitative traders like Asness in finding tradeable price patterns suggests that markets are not perfectly random.



Some might even <a href="https://www.skeptic.org.uk/2024/11/hadd-its-day-theres-no-evidence-for-an-inherited-hyperactive-agency-detection-device/">argue</a> that patternicity is itself a pattern in the noise of human behavior.



In financial markets especially, it might be that human behavior creates the patterns that humans are always looking for.



But even so, the thing to know about markets is this: Any pattern of prices that’s visible to the naked eye will soon stop being a pattern.



In crypto, the four-year cycle lasted longer than most before being exposed as a Type I error of overzealous pattern-matching — which made it a profitably tradeable pattern for a while.&nbsp;



But with bitcoin at $89,000, it’s time to start looking for the next one.



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bitcoin halving

Astrology for traders

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“No problems, no progress.”



— Kevin Kelly
</blockquote>



Large portions of the world wide web, including services like X, ChatGPT, Uber and Spotify, were inaccessible for hours yesterday morning because Cloudflare, a content delivery network, had an “outage” — just weeks after a similarly debilitating outage caused by AWS.



We did not have these problems when every website was hosted on a dedicated server, often in someone’s basement.



Back then, however, the sites were slow to load and quick to crash.&nbsp;



CDNs like Cloudflare were designed to fix this. Instead of every website fighting for itself, we now route traffic through a kind of virtual switchboard that caches content globally (solving latency) and absorbs threats like DDoS attacks (solving security and availability).



It worked.&nbsp;



The web has become incredibly fast, secure and reliable, and services like ChatGPT and Uber can scale without burning scarce capital on redundant infrastructure.



Last morning’s events suggest it might have worked too well. 



Most of the modern web now runs on three cloud providers and a few dominant content delivery networks, which have created single points of failure in what was once a decentralized system.



As a result, we have massive, internet-wide blackouts instead of sporadic, isolated crashes.&nbsp;



This is the typical way that technology develops.&nbsp;



As Kevin Kelly <a href="https://www.ted.com/talks/kevin_kelly_the_future_will_be_shaped_by_optimists">explains</a>, “Most of the problems we have today are created by the solutions we had in the past.”



The problem of widespread hunger, for example, was solved by industrialized farming — but now food is so cheap and industrialized we have an epidemic of obesity.



The problem of routine infections becoming deadly was solved by antibiotics, but now we have antibiotic-resistant superbugs.



The problem of near-universal poverty was solved by fossil fuels, but now we have the problem of climate change.



If it seems like there are ever more of these technology-induced problems, that’s because there probably are.



In the same way that one scientific answer gives rise to several new questions, one technology solution gives rise to several new problems.



“There will be more problems because new solutions create many more problems,” Kelly explains.



But this is good news, not bad.



“Problems don’t impede progress,” Kelly says; just the opposite: “Problems are the conduit of progress.”&nbsp;



Progress, he adds, is not the process of eliminating problems, but of upgrading them.&nbsp;



Obesity is an upgrade relative to starvation, for example, and climate change is an upgrade relative to near-universal poverty.



Therefore, the increasing complexity of our problems is not a cause for despair, but a measure of the progress we’re making.



Even when these upgraded problems seem too complex, Kelly assures us they won’t be for long: “We can trust the fact that future generations will be able to solve problems that we cannot ourselves.”



In other words, the problems born from solving the last generation’s problems will be solved by the next, because each succeeding generation is more capable than the last.



Now, let’s do crypto.



<h2 class="wp-block-heading">Mo solutions mo problems</h2>



Whereas: Problems are the engine of technological progress. Resolved: Technologies with the most problems will do the most good.



If problems are good, then crypto — by the transitive property of equality — must be great.



Crypto has lots of problems! And all of its own creation.



But it’s worth remembering that, as with any technology, these new problems arose as solutions to previous problems:&nbsp;



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1400" height="1004" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-115.png?w=1024&amp;h=1024" alt="" class="wp-image-110035" style="width:781px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-115.png?w=1400 1400w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-115.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-115.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-115.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-115.png?w=358 358w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-115.png?w=364 364w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-115.png?w=305 305w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-115.png?w=80 80w" sizes="auto, (max-width: 1400px) 100vw, 1400px" /></figure>



Kevin Kelly’s dictum that there’s “no progress without problems” is unfortunately not a law of physics, so there’s no guarantee that crypto will find solutions for all these new problems it’s created.



But there are reasons to share Kelly’s techno-optimism and belief that this is all for the best.



In the case of the world wide web, for example, we solved the frequent, small inconveniences of decentralized Web1 with a solution that created the rare but large-scale outages of centralized Web2.



And the solution to that problem might be to re-decentralize the internet…with crypto!



At its best, Web3 might be seen as solving the problems that Web2 created in solving the problems of Web1.



That, too, would cause all new problems, I’m sure.&nbsp;



We should welcome them.



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