Byron Gilliam

Nathaniel Whittemore

The Breakdown

On this Halloween Friday Five, NLW and Scott Melker break down a wild week in macro and crypto. The Fed’s latest meeting left markets confused about future rate cuts, while Wall Street and legacy payment giants doubled down on digital assets. ICE partners with Polymarket to explore tokenized collateral, Mastercard eyes a $2B crypto acquisition, and even Western Union is launching its own stablecoin. Plus, Solana ETFs crush expectations, and what this cycle’s institutional dominance means for the future of crypto markets.
 
 
Enjoying this content?
<ul>
 <li>SUBSCRIBE to the Podcast: https://pod.link/1438693620</li>
 <li>Watch on YouTube: https://www.youtube.com/@TheBreakdownBW</li>
 <li>Subscribe to the newsletter: <a href="https://blockworks.co/newsletter/thebreakdown">⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://blockworks.co/newsletter/thebreakdown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠</a>
</li>
 <li>Join the discussion: https://discord.gg/VrKRrfKCz8</li>
 <li>Follow on Twitter:</li>
 <li>NLW: https://twitter.com/nlw</li>
 <li>Breakdown: https://twitter.com/BreakdownBW</li>
</ul>

Wall Street’s Crypto Push, Western Union’s Stablecoin, and the Fed’s Halloween Confusion

Markets got the rate cut they expected — but not the clarity they wanted. Fed Chair Jerome Powell stunned investors by signaling that December’s cut is “far from a foregone conclusion,” while also announcing an end to quantitative tightening. With two dissents on the committee and growing confusion over data gaps from the government shutdown, Powell’s cautious tone left markets guessing. Stocks whipsawed, Bitcoin fell, and questions mounted about liquidity risk and the so-called “AI bubble.” Today on The Breakdown, NLW unpacks a Fed day that left everyone wondering what comes next.
 
Enjoying this content?
<ul>
 <li>SUBSCRIBE to the Podcast: https://pod.link/1438693620</li>
 <li>Watch on YouTube: https://www.youtube.com/@TheBreakdownBW</li>
 <li>Subscribe to the newsletter: <a href="https://blockworks.co/newsletter/thebreakdown">⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://blockworks.co/newsletter/thebreakdown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠</a>
</li>
 <li>Join the discussion: https://discord.gg/VrKRrfKCz8</li>
 <li>Follow on Twitter:</li>
 <li>NLW: https://twitter.com/nlw</li>
 <li>Breakdown: https://twitter.com/BreakdownBW</li>
</ul>

Fed Cuts as Expected, But Powell Keeps Markets Guessing

Polymarket is preparing to relaunch in the U.S. after years in regulatory exile, now armed with a CFTC-compliant license and a $9B valuation. The move signals a new era for prediction markets—blurring the line between crypto, sports betting, and social platforms. Plus: Visa’s stablecoin expansion, Western Union’s on-chain pivot, and BlackRock’s Larry Fink calls Bitcoin an “asset of fear.”
Enjoying this content?
<ul>
 <li>SUBSCRIBE to the Podcast: https://pod.link/1438693620</li>
 <li>Watch on YouTube: https://www.youtube.com/@TheBreakdownBW</li>
 <li>Subscribe to the newsletter: <a href="https://blockworks.co/newsletter/thebreakdown">⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://blockworks.co/newsletter/thebreakdown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠</a>
</li>
 <li>Join the discussion: https://discord.gg/VrKRrfKCz8</li>
 <li>Follow on Twitter:</li>
 <li>NLW: https://twitter.com/nlw</li>
 <li>Breakdown: https://twitter.com/BreakdownBW</li>
</ul>

Polymarket’s $9B Comeback: Prediction Markets Return to the U.S.

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



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



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“The illusion that one has understood the past feeds the further illusion that one can predict and control the future.”&nbsp;



— Daniel Kahneman
</blockquote>



<a href="https://dune.com/alexmccullough/polymarket-brier-score">Prediction markets are spookily accurate</a>&nbsp;



Professional sports bettors judge themselves not by the outcome of their bets, but by the final betting line: If they placed their bet at better odds than those available immediately before the event, it was a good bet, even if it loses.&nbsp;



But how do you judge the accuracy of the betting market itself?



<a href="https://x.com/alexmccullaaa">Alex McCullough</a> uses “Brier scores” — a statistical method of judging the accuracy of probabilistic predictions.



Applying that methodology to Polymarket, he finds that the bettors there have been spookily good at predicting events.&nbsp;



The Brier score for any given prediction market is the squared difference between the forecasted probability of an event and the event’s actual outcome.



Squaring the difference is instructive because it penalizes overconfidence: Assigning a 90% probability to something that doesn’t happen gives you a high Brier score (0.9^2 = 0.81).&nbsp;



Assigning a 10% probability to something that doesn’t happen gives you a low one (0.1^2 = 0.01).



McCullough finds that Polymarket’s probabilities have a shockingly low Brier score of 0.0581.



To put that into perspective, a market where every probability was 50% would score 0.25, and a market where every probability was always 0% or 100% and always correct would score 0.



So, at 0.0581, Polymarket’s Brier score suggests that its prediction markets are roughly 77% more accurate than a coin flip, and not so far removed from perfect.



McCullough says that puts Polymarket “on par with the best prediction models in existence.”



Might they be too accurate then? Betting markets have to be at least a little inefficient, or else there won’t be any incentive for the superforecasters and insiders that make markets efficient to participate (confusingly circular, I know, but true). 



But McCullough calculates Polymarket’s Brier score using its prices one day before event resolution — the equivalent of using the final betting line for a sporting event.



So, one takeaway from his data is that you might still make money in prediction markets, but only if you can beat the final line.



Sports bettors will tell you that’s not easy to do.



<a href="https://www.amazon.com/Thinking-Bets-Making-Smarter-Decisions-ebook/dp/B074DG9LQF/ref=tmm_kin_swatch_0?_encoding=UTF8&amp;dib_tag=se&amp;dib=eyJ2IjoiMSJ9.j2ZTyyUCeR_xKKs3IWfctmEoCz9gvF4FDWJgKjwID07QdCOgbxMN4zWjvR8QRxVbvfYIQSvM5xPLkzQ_rG4h2BETKvJ8tQwvyed2skOrlxKM8vmnbBdqpbxtzukbfQxoNnLz9-HCe7jeFEfwVEXbTvLi2U75GKCCw3n_PMOWUoQcmR_EdE1pHz3B4Y0HsDHO2xPT7MJtExSGU_L39Uph16H_B4cwSq_g7KtrLINdLCo.uJ9k76mOnP6LIY_Dc2ccRBRWl1WQZRNQpTMv92YEm_A&amp;qid=1761843266&amp;sr=8-2&amp;asin=B074DG9LQF&amp;revisionId=eee2c2a8&amp;format=3&amp;depth=1">Life is poker, not chess</a>



Daniel Kahneman warned of the “pernicious effects” of outcome bias: “It leads observers to assess the quality of a decision not by whether the process was sound, but by whether its outcome was good or bad.”



Poker players like Annie Duke call this “resulting”: changing strategy just because a few hands of Texas hold ‘em went against you.



That is not the way to do it, in poker or in life: “No sober person thinks getting home safely after driving drunk reflects a good decision,” Duke notes.



And yet, in nearly everything other than poker, nearly everyone does this: Ask someone why they think they made a mistake and there’s a near 100% probability they’d point to the outcome.&nbsp;



But life, Duke adds, is poker (probabilities), not chess (outcomes).



So here’s some investing/life advice: Don&#8217;t judge your decisions by their results.



<a href="https://tokenterminal.com/explorer/markets/prediction-markets">Prediction markets are popular</a>



Incredibly, prediction markets are now busier than they were at the peak of the 2024 presidential election when seemingly everyone was at least watching them.&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="722" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-165.png?w=1024&amp;h=1024" alt="" class="wp-image-109681" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-165.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-165.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-165.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-165.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-165.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-165.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-165.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-165.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-165.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



This probably means that prediction markets have evolved from being a once-every-four-years novelty to a constant source of information. Possibly on everything.&nbsp;



Case in point: People bet $1.4 million on a <a href="https://kalshi.com/markets/kxfedmention/fed-mention/kxfedmention-25oct">Kalshi market</a> predicting what Jerome Powell would say in his press conference yesterday.



FOMC press conferences are pretty staid affairs — if people will bet on that, they’ll probably bet on anything.



I suppose that’s a good thing, because even the most obscure bets can be informative.&nbsp;



Alex McCullough found that “the least liquid markets, with under $1K of total trading volume, achieve a good [Brier] score .1226 at time of writing.”



I have no idea how that could possibly be — but I guess it means there really is a <a href="https://polymarket.com/event/major-meteor-strike-10kt-in-2025?tid=1761841257600">7% chance</a> a large meteor will hit earth in the next two months.



(Down from 18% in June, mercifully.)



<a href="https://www.reuters.com/investigations/how-reuters-tallied-trump-organizations-crypto-income-2025-10-28/">Trump family crypto riches</a>



Over 90% of the Trump Organization&#8217;s earnings in the first half of the year came from crypto, Reuters reports.



Counting only realized gains, they conservatively estimate the president’s sprawling corporation earned $802 million from crypto projects in just the first half of the year.



Earnings from everything not related to crypto added up to just $62 million.



Most of it came from just two projects: $463 million from sales of World Liberty Financial tokens, and $336 million from sales (and maybe trading fees?) of the Trump memecoin.



Neither of those tokens has any claim on earnings or assets — WLFI is effectively a non-dilutive equity and TRUMP is a collectible.



So the $802 million was earned without having to give anything up.



Magic internet money, indeed.&nbsp;



<a href="https://open.spotify.com/episode/3zRPB384lRtPxWEtDZsUgh?si=f7bd78bcc4a1472f">Gemini Space Station S-1</a>



After doing a deep dive into Gemini’s S-1, Lee Reiners and Jimmy Lenz question why its stock trades above zero.



“I just don’t see a path to profitability here,” Reiners concludes, “which begs the question why the stock is worth anything at all.”



Lenz agreed: “I cannot figure it out.”&nbsp;



Ouch.



I did my own analysis of the S-1 and discovered that the crypto exchange is incorporated as “Gemini Space Station, Inc.”



So maybe the investors currently assigning it a $2 billion valuation are mixing it up with SpaceX?



Stranger things have happened.



(In crypto, every day.)



<a href="https://www.barrons.com/articles/24-hour-trading-buy-sell-stocks-276ccb3f?mod=djemMoneyBeat_us">The end of closing bells</a>



Barron’s reports that US equities are likely to be trading 24/7 as soon as the second quarter of next year.



If so, I think it’s a terrible idea because nothing good happens after hours.&nbsp;



For many years, trading volumes on US exchanges have gravitated to the first and last five minutes of the trading day, for the simple reason that liquidity seeks liquidity.&nbsp;



Nearly all orders are executed by machines now, and machines, knowing they have no short-term alpha, mostly try to minimize their price impact.&nbsp;



They do that by trading whenever there’s likely to be the most liquidity.&nbsp;&nbsp;



If you don’t have short-term alpha (and you almost certainly don’t), you, too, should trade whenever everyone else is.



That will not be nights and weekends.



Crypto has conditioned people to think trading should happen on nights and weekends because important things sometimes happen on nights and weekends.&nbsp;



But one thing I learned from many years of trading stocks (often before and after market hours), is that you will almost always get a better price by waiting for the market to open.



There are some good reasons for why stocks should be tokenized, but trading them 24/7 is not one of them.



Thinking otherwise is a behavioral-finance illusion.



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



Get the news in your inbox. Explore Blockworks newsletters:



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



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



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forward-guidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/supply-shock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

Polymarket

Predicting, resulting, zeros, and when not to trade

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



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



<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.



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



Get the news in your inbox. Explore Blockworks newsletters:



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



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



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forward-guidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/supply-shock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

The Breakdown Newsletter

Ethereum is still workshopping its elevator pitch

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



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



<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.”



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



Get the news in your inbox. Explore Blockworks newsletters:



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



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



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forward-guidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/supply-shock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

Let insiders trade

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



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



<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.



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



Get the news in your inbox. Explore Blockworks newsletters:



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



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



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forward-guidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/supply-shock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

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>



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



<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.



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



Get the news in your inbox. Explore Blockworks newsletters:



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



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



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forward-guidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/supply-shock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

Thursday links: Overpriced debt, community-approved stables and Justin Sun

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



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



<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.



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



Get the news in your inbox. Explore Blockworks newsletters:



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



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



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forward-guidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/supply-shock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

How I stopped worrying and learned to love a politicized Fed

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



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



<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?



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



Get the news in your inbox. Explore Blockworks newsletters:



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



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



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forward-guidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/supply-shock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

Should blockchains be single-purpose?

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

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



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



Fiat money was invented in colonial America, and to convince people it had value, the colonies that issued it periodically lit their tax revenue on fire.



Paper money dates to 11th-century China, but historian Dror Goldberg <a href="https://www.amazon.com/Easy-Money-American-Invention-Governments/dp/0226825108">argues</a> that fiat — money valued primarily because the state demands it for taxes — was invented by the colony of Massachusetts in 1690.



Colonial Americans didn’t call it money at the time; to them, “real money” was metallic coins like Spanish pieces of eight, and the most-common form of paper their local governments printed was referred to as “bills of credit.”



But (as discussed <a href="https://mail.blockworks.com/p/hard-money-is-bad-money">yesterday</a>) very little “real” money was available in the colonies, so bills of credit circulated as money instead.&nbsp;&nbsp;



Counterintuitively, when the bills circulated back to the government as taxes, they were burned.



This goes against our modern expectation of governments collecting taxes to use for current or future spending.



But at that early stage of monetary history, money-issuing governments knew they had to give people reason to believe the paper they printed in arbitrary amounts had value.



To make the public “cherish” its money, the government had to prove it could make that money scarce.



“Whereas it is of the greatest importance to preserve the credit of the paper currency of this colony,” the Virginia legislature <a href="https://www.nber.org/system/files/working_papers/w21881/w21881.pdf">resolved</a> in 1760, “nothing can contribute more to that end than a due care to satisfy the publick that the paper bills of credit, or treasury-notes, are properly sunk.”



To that end, the legislature appointed a committee to ensure that, “at least twice a year,” all the bills of credit that had been collected in taxes were “burnt and destroyed.”



This bonfire of the taxes was often conducted in public, to make a memorable show of the government’s fiscal responsibility.&nbsp;



“The burning was an event,” Andrew David Edwards <a href="https://press.princeton.edu/books/hardcover/9780691200262/money-and-the-making-of-the-american-revolution?srsltid=AfmBOopW-7e7jNaW2kNTFYRixgbi2l_UOCIedTewKaJUpUYU8N9y3PMs">writes</a>, “advertised in public newspapers and marked in legislative records.”



By making a public display of making money more scarce, the government hoped to maintain its value.



300 years later, that’s still sort of how it works.



Over the past three and half years, the Federal Reserve has “burned” about 2.4 trillion of the bills of credit (aka, dollars) it printed after the pandemic (in the form of bank reserves).



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1596" height="982" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-160.png?w=1024&amp;h=1024" alt="" class="wp-image-109658" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-160.png?w=1596 1596w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-160.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-160.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-160.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-160.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-160.png?w=418 418w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-160.png?w=424 424w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-160.png?w=356 356w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-160.png?w=80 80w" sizes="auto, (max-width: 1596px) 100vw, 1596px" /></figure>



Technically, the Fed makes money more scarce by reducing the amount of debt it holds: US dollars are created when the Fed buys bonds from banks (which adds to banks’ reserves), and destroyed when the Fed lets those bonds mature (reducing bank reserves).&nbsp;



As a demonstration of responsible monetary policy, that’s not quite as dramatic as lighting bills of credit on fire.



Nor is the money destroyed very publicly: The Fed’s role in creating and destroying money did not get a mention in today’s FOMC’s <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20251029a.htm">statement</a>, which announced only its decision on interest rates (a quarter-point cut).



In his press conference, however, Chair Powell additionally announced that the FOMC had decided to “cease run-off” of the debt it holds.



This is a modern way of saying it will not burn any more money.



In fact, it might soon be printing it again.



Reserves “have to be ample,” Powell said in the Q&amp;A, adding that “at a certain point, you want reserves to start gradually growing.”



The Fed grows reserves by buying bonds.



In other words, the Fed will soon be printing money again (by buying bonds), because $6.6 trillion of bank reserves is no longer “ample” in today’s monetary regime.



There are a lot of monetary plumbing reasons for that, most of which are beyond my newsletter-writer understanding.



But the announced change of direction highlights perhaps the biggest difference between burning bills of credit in 1760 and reducing bank reserves today: It was fiscal policy back then and monetary policy now.



“Colonial Americans burned their money because each bill represented a tax debt that had been repaid,” Andrew David Edwards explained.



Of course, that’s not what’s happening now.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1596" height="992" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-161.png?w=1024&amp;h=1024" alt="" class="wp-image-109659" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-161.png?w=1596 1596w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-161.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-161.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-161.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-161.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-161.png?w=413 413w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-161.png?w=420 420w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-161.png?w=352 352w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-161.png?w=80 80w" sizes="auto, (max-width: 1596px) 100vw, 1596px" /></figure>



In the time the Federal Reserve responsibly burned $2.4 trillion of reserves, the federal government somewhat irresponsibly added $6 trillion of debt.



George Washington, who used his farewell address to advise that governments’ “vigorous exertions in time of peace to discharge the debts,” would not approve.



Despite a strong economy, the US has made no effort at all to reduce its debt, and that has gotten people worried about fiat money again.



There’s not much the Fed can do about that, because burning bank reserves will never be as convincing as burning tax receipts.



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



Get the news in your inbox. Explore Blockworks newsletters:



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



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



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forward-guidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/supply-shock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

Federal Reserve

The dollar needs a new bonfire of the bills

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



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



María Corina Machado received the news that she’d been awarded the Nobel Peace Prize while confined to an undisclosed location.



The “Iron Lady of Venezuela” and “Latin American Joan of Arc” has been in hiding since Nicolás Maduro threatened her with &#8220;maximum justice” in the wake of the 2024 election that made clear she’s the rightful president of Venezuela.



Machado reports that she’s survived assassination attempts and a kidnapping since then, but has refused to leave the country.



She sent her three children into safety abroad, but chose to remain herself — “a choice that has inspired millions of people,” <a href="https://www.nobelprize.org/prizes/peace/2025/press-release/">according</a> to the Nobel committee. It’s an example that should resonate far beyond Venezuela: “María Corina Machado has shown that the tools of democracy are also the tools of peace,” the committee added.



One of those tools, Machado says, is bitcoin.



The Maduro regime has “weaponized financial systems against its people,” she <a href="https://hrf.org/latest/hrf-interviews-venezuelan-opposition-leader-maria-corina-machado-on-financial-repression-and-freedom/?utm_source=chatgpt.com">told</a> the Human Rights Foundation (HRF), citing a deliberate bout of hyperinflation that hit a high of 10 million percent in 2018.



Since 2008, the Venezuelan government has expropriated its citizens’ savings by removing 14 zeros from the national currency — 100 trillion of today’s bolívars buy what a single bolívar did in 2008.



“Holding a bag of candy was worth way more than having a bag of your national currency,” one expropriated Venezuelan <a href="https://mission.org/hidden-in-plain-sight/bitcoin-a-lifeline-in-venezuela/?utm_source=chatgpt.com">said</a>, “because the candy could hold its value.”&nbsp;



Machado advocates for bitcoin as a better, less sugary store-of-value: “Some Venezuelans found a lifeline in bitcoin, using it to protect their wealth and finance their escape.”



Machado herself, however, uses it not to escape.



“Our campaign operates without banking access,” Machado says. But they can still take donations: “Unlike bank wires, which the regime usually blocks, bitcoin donations cannot be seized.”



In that sense, bitcoin has helped Machado lead the struggle against Maduro from within Venezuela.



It’s enabled many other Venezuelans to both survive and resist Maduro.



“Bitcoin bypasses government-imposed exchange rates and helps many of our people,” Machado adds. “It has evolved from a humanitarian tool to a vital means of resistance.”



Another protesting Venezuelan, Jorge Jraissati of the Economic Inclusion Group, says this makes bitcoin part of a “tech-based strategy” to combat authoritarianism.



“The key to defeating autocratic regimes lies in citizens’ having universal access to freedom technologies like Bitcoin, Signal, and Nostr,” he <a href="https://hrf.org/latest/the-role-of-freedom-tech-in-venezuela/">writes</a>.&nbsp;



Bitcoin in particular has empowered his countrymen “to overcome Maduro’s financial surveillance and repression.”



Much of the world lives in similarly repressive circumstances.&nbsp;



Alex Gladstein of the Human Rights Foundation <a href="https://hrf.org/latest/why-bitcoin-is-freedom-money-hrf-in-the-journal-of-democracy/">estimates</a> that “87% of humanity was born into either an authoritarian regime or a collapsing fiat currency.”&nbsp;



In that large part of the world, “the legacy banking system simply does not work well enough anymore to fund democracy work,” he explains.



Bitcoin, however, is “keeping resistance alive” in places where government-issued currency “cannot be used for essential human-rights activities.”



Gladstein says bitcoin is increasingly the currency for those activities, and is on its way to becoming “a standard currency for human-rights activism and beyond by 2030.”



We’re accustomed to seeing giant 2030 price targets for bitcoin, but could it hit an even bigger activist target?



If it does, the Nobel committee may get credit for helping it on its way.



Gladstein notes that “the overwhelming majority of bitcoin critics live in the United States or Europe and are blinded by enormous financial privilege.”&nbsp;



By awarding their Peace Prize to an enthusiastic user, the Nobel committee might help remove the blinders and improve bitcoin’s image in the 13% of the world that doesn’t need it as anything other than an investment.



For Machado, the primary benefit of the Nobel Peace Prize is that it makes her safer by making her more famous.



“This raises her visibility and increases the cost of attempts to suppress and destroy her,” Gideon Rose of the Council on Foreign Relations <a href="https://pca.st/episode/71800157-576f-4b22-8e41-a546ac12f437?t=1645">explains</a>. “By putting the sanction of benevolent international opinion on her efforts, [the Nobel] may protect her life.”



For bitcoin then, the significance of the award is that Machado has similarly put her benevolent opinion on the oft-maligned cryptocurrency, which may protect it from its critics.



Because only a Maduro-like authoritarian can be opposed to freedom tech.



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



Get the news in your inbox. Explore Blockworks newsletters:



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



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



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forward-guidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/supply-shock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

Bitcoin

Bitcoin is the currency of resistance, says Nobel Laureate

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



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



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
&#8220;We never made the error that so many others have: mistaking their product for the device that delivers it.”&nbsp;&nbsp;



— Michael Bloomberg
</blockquote>



I’m old enough to remember when a Bloomberg Terminal was a stand-alone box wedged onto a cluttered trading desk between a dual-receiver phone and a clacking machine for time-stamping order tickets.



The chunky keyboard had colorful buttons for the most-used functions, a squawk-box speaker, and a fun roller ball that made navigating the Terminal feel like playing Missile Command (an arcade game found in 1980s bowling alleys and pizza parlors that I was extremely good at).



Soon, though, the Bloomberg “terminal” was just software, displayed on the same screen as your trading system, using the same keyboard you used for everything else.



That made it seem less special to me, which I thought would make it less valuable, too — if all the financial news and market prices could be displayed directly on my regular computer screens, surely anyone could provide it?



Michael Bloomberg knew otherwise.&nbsp;



Bloomberg never confused the product he was selling (information) with the device that delivered it (a chunky, colorful box) — so when a better delivery mechanism came along, he was quick to embrace it.



As a result, Bloomberg Terminals soon became as ubiquitous on trading desks as empty coffee cups and Patagonia vests.



There are many counterexamples.



Kodak thought its product was rolls of film, so it ignored the digital camera (despite inventing it, even). Its actual product, it turned out, was preserving memories, and digital cameras (and now phones) are better devices to deliver it.



Newspaper publishers thought their product was a physical paper delivered to your door, but that was just the delivery mechanism. The real product was news and ads, which the internet was much better at delivering.



Record labels thought their product was CDs, but that was just a delivery mechanism. The real product was music, and MP3s (and then streaming) delivered it better.



In each case, once-dominant companies mistook the means of delivery for the thing being delivered — like Amtrak confusing a desire to get somewhere with a desire to ride over railroad tracks.



Could the crypto industry be making the same mistake?



The risk of confusion seems unusually high in crypto, because it’s unusually difficult to know what the product is.



Michael Saylor, Larry Fink, and every ETF investor will tell you the product that Bitcoin sells is a store of value — bitcoin — the sole purpose of which is to go up.



Others think Bitcoin’s product is decentralization and censorship resistance, and that the token merely enables those things.



ETH investors seem equally of two (or more) minds: is Ethereum selling blockspace? A store-of-value token? A secure network to host real-world assets?



Or maybe we don’t have to choose — maybe Ethereum can be all of those things.



But that risks a lack of focus: the drive to make ETH a store of value, for example, can be at odds with selling as much blockspace as possible.



“You must keep the main thing the main thing,” Bill Gates once advised.



Solana seems better at that: its community is unified around a mission to get the chain as fast as possible while staying decentralized enough to remain permissionless.



But is that a product or a delivery device?



Delivery devices are important, too: Blockbuster and Netflix both delivered movies, but Blockbuster delivered them from stores and Netflix delivers them straight into your home.



But people go to Netflix because that&#8217;s where the movies are now, not because movies are more enjoyable if they’re delivered over the internet.



Similarly, people might continue to go to Solana because that&#8217;s where the tokens are now.



Matt Hougan <a href="https://x.com/Matt_Hougan/status/1974471208751276072">says</a> “Solana is the new Wall Street,” citing its technical merits: speed, throughput, finality.&nbsp;



But what makes Wall Street, Wall Street isn’t how fast NYSE and Nasdaq are — it’s because that’s where the best stocks are.



The technology those exchanges run on isn’t particularly valuable, and the blockchain that Solana and other ecosystems run on might not be either.



“If you don’t have a native digital asset on the chain,” Figure co-founder <a href="https://pca.st/tjhdvr3y?t=33m50s">Mike Cagney</a> says, “it’s basically worthless technology.”



Most chains have tokens, of course, but why would they have value if the chain itself is “basically worthless”?



Presumably because they’re the best way to deliver some kind of product.



Michael Bloomberg would likely remind us that blockchains are just delivery devices.



The product is what they deliver: ownership, coordination, and permissionless access.



If so, those are the things the industry should keep as the main thing.



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



Get the news in your inbox. Explore Blockworks newsletters:



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



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



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forward-guidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/supply-shock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>