0x0.ai: AI Smart Contract

Casey Wagner

On Tuesday, Coinbase moved to advance its case against the US Securities and Exchange Commission over alleged violations to the Freedom of Information Act.&nbsp;



Per the latest filing, Coinbase and History Associates (the consulting firm Coinbase retained) are now requesting a pre-trial conference to discuss a proposed motion for a partial summary judgment in the case.&nbsp;



Coinbase hired History Associates in 2023 to assist in retrieving records from the SEC and FDIC. Both requests were denied, and History Associates sued both agencies in June 2024 in an effort to force them to hand over the documents. In both suits, History Associates is the plaintiff, and Coinbase is named as a related party.&nbsp;



Read more: <a href="https://blockworks.co/news/coinbase-lawsuit-sec-fdic-foia-dispute">Coinbase announces lawsuits against SEC, FDIC in Freedom of Information Act dispute</a>



<a href="https://blockworks.co/tag/coinbase">Coinbase</a> specifically sought documents from the SEC related to three investigations: <a href="https://blockworks.co/news/sec-drops-ethereum-consensys-investigation">Ethereum</a>, Zachary Coburn — the EtherDelta founder <a href="https://www.sec.gov/newsroom/press-releases/2018-258">charged</a> in 2018 for allegedly operating an unregistered exchange — and Enigma MPC. These documents, Coinbase hopes, will reveal details about how the SEC classifies cryptocurrencies.&nbsp;



The <a href="https://blockworks.co/tag/sec">SEC</a>’s investigations into Coburn and Enigma MPC, History Associates wrote in its initial complaint, are “long-closed,” so there should be “no potential interference with law enforcement activities” should the agency hand over the documents.&nbsp;



In its response to the complaint, the SEC denied allegations that it lacks authority to oversee the crypto industry. The agency also asserts that it “did not improperly withhold any documents under FOIA.”&nbsp;



Read more from our opinion section: <a href="https://blockworks.co/news/sec-wrong-about-crypto-asset-securities">The SEC has been wrong about ‘crypto asset securities’ all along</a>



Most recently, the SEC has said it will conduct a repeat review process of the documents in question to determine whether or not they can be released. The initial exemption they cited in 2023, FOIA Exemption 7(A), “may” no longer apply. This process, they say, could take three years to begin unless History Associates agrees to narrow its request, which it has not.&nbsp;



In its proposed motion for summary judgment, which has not been filed, History Associates says it will ask the court not to grant the SEC any additional time extensions.&nbsp;&nbsp;



Paul Grewal, Coinbase’s chief legal officer, on Tuesday <a href="https://x.com/iampaulgrewal/status/1846196901835927580">said</a> the SEC’s “constantly changing story” raises a question of what they are “hiding, and why?”&nbsp;



The SEC did not immediately return Blockworks’ request for comment.



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Coinbase continues with SEC lawsuit over denied FOIA request 

Ben Strack

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<h2 class="wp-block-heading">Harris punts on crypto talking points, again&nbsp;</h2>



Hours after pledging to support Black men’s rights to safely invest in crypto, Vice President Kamala Harris’s Monday night speech fell short on delivering details.&nbsp;



Harris’s “<a href="https://www.theguardian.com/us-news/2024/oct/14/harris-black-men-economic-opportunities-plan-weed-crypto">Opportunity Agenda for Black Men</a>” debuted Monday morning. The policy proposal emphasizes how the administration will elevate the Black male community by giving them tools to “build wealth, support their families and lead their communities.”&nbsp;



One of these wealth-building tools? Give Black men the opportunity to “benefit from financial innovation” — namely, crypto.&nbsp;



Specifically, the agenda states Harris is committed to “supporting a regulatory framework for cryptocurrency and other digital assets so Black men who invest in and own these assets are protected.”



The proposal was published ahead of Harris’s planned rally in Erie, PA last night. More on that soon. First, let’s talk about the response.&nbsp;



<a href="https://x.com/ShevrinJones/status/1845806476062806375">Many</a> praised the initiative as a welcome effort to elevate a marginalized community. <a href="https://www.theblock.co/post/320930/vice-president-kamala-harris-vows-to-support-a-crypto-regulatory-framework-in-plan-to-support-black-men">Others</a> criticized the language in the agenda, saying it’s frustrating that Harris’s administration sees Black men in crypto solely as investors (as opposed to leaders and builders).&nbsp;



The agenda itself mentions crypto twice. The first time was quoted above.&nbsp;



Here’s the second: “More than 20% of Black Americans own or have owned cryptocurrency assets. Vice President Harris appreciates the ways in which new technologies can broaden access to banking and financial services.”&nbsp;



It’s similar to the limited statements we’ve heard from Harris on crypto in the past — decidedly not negative, but perhaps too vague to be truly positive. Last month the presidential hopeful mentioned blockchain/digital assets twice; once at a fundraising event in New York where she said she’d “<a href="https://blockworks.co/news/empire-newsletter-silvergate-collapse">encourage</a>” new technologies like crypto, and a second time during a speech in Pennsylvania, where she said the US will “remain dominant” in blockchain technology.&nbsp;



But last night’s appearance in PA left those hoping for more crypto-focused comments disappointed. She mentioned blockchain a total of zero times.&nbsp;



Still, maybe beggars can’t be choosers? Are limited, unclear remarks better than nothing? Galaxy Research’s Alex Thorn <a href="https://x.com/intangiblecoins/status/1845845163588907486">argues</a> that Harris’s (relative) clarity is at least better than the current administration’s. In Galaxy’s “policy scorecard” released Monday, analysts say Harris is, on several issues, “somewhat supportive” and “slightly better than Biden.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">TRIGGER ALERT 🚨 i’m releasing our policy scorecard on the positions of biden, harris, and trump on major bitcoin &amp; crypto issues bottom line: while trump is undoubtedly more favorable for the industry, we’re optimistic that harris could be more supportive than biden has been <a href="https://t.co/qNKeLtppcS">pic.twitter.com/qNKeLtppcS</a>&mdash; Alex Thorn (@intangiblecoins) <a href="https://twitter.com/intangiblecoins/status/1845845163588907486?ref_src=twsrc%5Etfw">October 14, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



These issues include the industry’s relationship with the SEC, Harris’s approach to bitcoin mining regulations and her stance on banking laws.&nbsp;



Specifically, Thorn said, Harris has hinted that she’s interested in easing the so-called “<a href="https://blockworks.co/news/operation-choke-point-2-0">Operation Chokepoint 2.0</a>” policy that has sought to isolate crypto players from the banking system. But these ratings are based on a very limited sample pool; we just don’t have a lot to go off of when trying to evaluate Harris.&nbsp;



Trump, compared to Harris, has given the public more definitive stances on crypto. He wants to fire Gary Gensler. He wants to make the US a bitcoin mining <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-bitcoin-mining-meeting">hub</a>. He wants to stop the US government from <a href="https://blockworks.co/news/donald-trump-speaks-bitcoin-2024">selling seized bitcoin</a>.&nbsp;



When it comes down to it, though, we don’t have a comprehensive policy proposal on digital assets from either candidate. All we can do is analyze what they have said and look to the members of their respective teams to try and glean an opinion. But time is running out.&nbsp;



— Casey Wagner&nbsp;



<h3 class="wp-block-heading">~2,900&nbsp;</h3>



The number of people that purchased a combined 344 million World Liberty Financial tokens after the <a href="https://blockworks.co/news/0xresearch-newsletter-trump-world-liberty-financial-aave">Trump-backed</a> project went live this morning, onchain <a href="https://etherscan.io/token/0xda5e1988097297dcdc1f90d4dfe7909e847cbef6#balances">data</a> shows.&nbsp;



The project has allocated 20 billion of its 100 billion total tokens for public sale. The sale was open to accredited investors in the US. <a href="https://blockworks.co/news/world-liberty-financial-kyc-starts">KYC efforts</a> for WIFL began two weeks ago.&nbsp;



<h2 class="wp-block-heading">DTCC again swoops into tokenization segment at ‘inflection point’</h2>



It was almost a year ago exactly that the Depository Trust &amp; Clearing Corporation (DTCC) <a href="https://blockworks.co/news/defi-acquisition-dtcc-securrency">revealed its buy</a> of blockchain-based financial and regulatory tech developer Securrency.



Now, the financial market infrastructure giant has introduced a so-called sandbox to “clear the path to scalable adoption of digital assets.”



For those who don’t know, the DTCC (per its website), processes trillions of dollars in securities transactions daily.



Dubbed DTCC Digital Launchpad, the new offering seeks to connect tech providers and others to collaborate on “pilots that have a clear path to production.”



The Japan Securities Clearing Corporation (JSCC) led a <a href="https://www.dtcc.com/-/media/WhitePapers/Transforming-Collateral-Management-With-Digital-Assets-JSCC.pdf">proof-of-concept</a> on the platform to explore how central counterparties could use tokenization within the collateral management process for clearing members and their buy-side firms. It paid special attention to how margin calls could be automated — boosting efficiency and transparency using digital assets and smart contracts.



Ultimately, JSCC used DTCC’s blockchain-based infrastructure to issue digital assets such as cash, stocks and bonds, JSCC CEO Konuma Yasuyuki noted in a statement.



Last year’s Securrency deal was meant to allow DTCC to quicken the development of a platform designed to “unlock the power of institutional DeFi,” the <a href="https://blockworks.co/news/dtcc-acquisition-tradfi-crypto">company said</a> at the time.



Elliot Chun, a partner at advisory firm Architect Partners, wrote in a research note last year that tokenization had not yet lived up to its promise.



“The fundamental way to move the industry forward is by having a critically important market participant make a significant investment in technology,” Chun said in that October 2023 post. “You can’t get more critical than DTCC.”



DTCC’s release points to the <a href="https://www.gfma.org/policies-resources/gfma-publishes-report-on-impact-of-dlt-in-global-capital-markets/#:~:text=The%20report%20finds%20that%20DLT,at%20scale%20(e.g.%2C%20approximately%20%2416">projection</a> that $16 trillion worth of tokenized securities could live on digital rails by 2030. Standard Chartered expects the tokenized real-world asset market to hit $30 trillion by 2034.



We’ve seen plenty of tokenization efforts take place in recent months — from TradFi players’ test of a <a href="https://blockworks.co/news/tradfi-blockchain-trials-mass-adoption">Regulated Settlement Network</a> to Visa’s tokenized asset platform <a href="https://blockworks.co/news/visa-to-help-banks-test-tokenized-assets-smart-contracts">sandbox launch</a>.



And yet adoption of this technology has seemed to stall, argues DTCC digital assets head Nadine Chakar. The industry is indeed at “an <a href="https://blockworks.co/news/on-the-margin-newsletter-tokenization-trend">inflection point</a>,” the executive told Blockworks Tuesday.&nbsp;



“Innovation is an evolving process; if we continue developing in silos, we risk repeating the mistakes of the past and creating more fragmentation in markets,” Chakar noted. “We believe DTCC can play a critical role in developing this ecosystem, building a common infrastructure by encouraging industry collaboration around standards, data, liquidity and infrastructure.”



It may take a little while to know the impact of this new DTCC offering (with pilots and participants expected to be publicized in Q1 2025), but it’ll be worth paying attention to.&nbsp;&nbsp;



— Ben Strack&nbsp;



<h2 class="wp-block-heading">Coinbase exec weighs the presidential hopefuls</h2>



You just read Casey’s breakdown of the VP’s latest comments, and we are officially three weeks away from Election Day.&nbsp;&nbsp;



The results on Nov. 5 will matter a lot, Coinbase Chief Policy Officer Faryar Shirzad told me at <a href="https://blockworks.co/tag/permissionless">Permissionless</a> last week. But he also urged the industry to not lose sight of the progress made so far.&nbsp;



“It’s hard for me not to conclude that we’ve already had an extraordinarily successful election year, and whatever happens on Election Day will be just additive to the success we’ve already had by putting ourselves on the main political stage,” Shirzad noted.



Donald Trump “deserves enormous credit for what he’s said on the crypto issues and how comprehensive his vision has been,” the executive added.&nbsp;



In particular, Shirzad lauded Trump’s vows to support crypto businesses being built in the US and to push against regulators abusing their powers against an industry.&nbsp;&nbsp;



But more than that, what caught the Coinbase exec’s ear was Trump’s words about <a href="https://blockworks.co/news/0xresearch-newsletter-self-custody-developments">defending the right</a> to self-custody crypto.&nbsp;



“My interpretation of what he means is that he’s protecting the DeFi ecosystem and the ability of individuals…to control [their wallet] and have all the Fourth Amendment protections and privileges that one should be entitled to,” Shirzad said. “I think that was a huge, huge policy victory, and I think it is the kind of thing we hope the Democrats will embrace at some point as well,” he said.



Harris deserves some credit too for the efforts she’s made to converse with the crypto community and her seeming intention to be more constructive on the issue, Shirzad noted.



Outreach sessions with members of Harris’s campaign have had a “positive” tone, Shirzad said — adding that her advisers are “eager to hear what we think the issues are and understand it better.”



“There’s reason to feel optimism on both sides,” Shirzad explained. “But at the end of the day, more substance and more detail are critical, and we’re hoping to get more from the vice president between now and Election Day.”



It seems that for some, Harris’s comments last night fell a bit short on the details. Whether she or Trump speak more about crypto over the next 21 days (and how into the weeds they choose to go) is anyone’s guess.&nbsp;



— Ben Strack



<h2 class="wp-block-heading">Bulletin Board&nbsp;</h2>



<ul class="wp-block-list">
<li>Canary Capital on Tuesday filed an <a href="https://www.sec.gov/Archives/edgar/data/2039461/000199937124013330/litecoin-s1_101524.htm">S-1</a> with the SEC <a href="https://blockworks.co/news/canary-capital-litecoin-etf">for a litecoin ETF</a>. The filing comes after the firm last week took a page from <a href="https://blockworks.co/news/xrp-etf-contingent-on-election-and-sec-appeal">Bitwise’s book</a> and threw its hat in the XRP ETF ring. These products need SEC approval before being allowed to launch.  </li>



<li>CFTC-regulated Bitnomial revealed plans to launch a US perpetual futures trading <a href="https://botanical.finance/">platform</a>. The product announcement follows Bitnomial’s $25 million Series C raise, which closed over the summer. </li>



<li>Coinbase on Tuesday filed a <a href="https://assets.ctfassets.net/sygt3q11s4a9/6ege1NgjUEFUVKHLbiOJoc/1c2cae114ae49f156b21b1f4262b6111/HAI_v._SEC_-_Pre-Motion_Notice__as-filed_.pdf">motion</a> in its joint case (with consultancy firm History Associates Incorporated) against the SEC. The case, which Coinbase <a href="https://blockworks.co/news/coinbase-lawsuit-sec-fdic-foia-dispute">brought in June</a>, deals with the SEC’s alleged violations of the Freedom of Information Act. Coinbase is now asking the court to schedule a hearing to discuss the exchange&#8217;s request for a partial summary judgment.</li>



<li>US spot bitcoin ETFs notched $556 million of <a href="https://farside.co.uk/bitcoin-etf-flow-all-data/">net inflows</a> on Monday, <a href="https://blockworks.co/news/btc-uptober-price-gains">as BTC rallied</a>. It was the segment’s highest inflow total in a single day since June 4.  </li>
</ul>



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VP Harris’s latest crypto comments fall short on details

Katherine Ross

VanEck is diversifying with the launch of a new venture fund.&nbsp;



The $30 million fund is focused on early-stage startups specifically with the goal of investing in fintech projects at the intersection of crypto and AI.&nbsp;



“Those two components are very much like horizontal technologies. And I say that because crypto is like the value layer and AI is where you can now take financial services that are typically performed by people, represent them in code and start to automate things,” general partner Wyatt Lonergan told Blockworks.&nbsp;



Read more: <a href="https://blockworks.co/news/forward-guidance-newsletter-vaneck-vc-fund">From crypto ETFs to VC: VanEck unveils $30M fund</a>



The fund’s made a couple of investments so far, but VanEck isn’t quite ready to divulge any details just yet. What we do know is that it plans to make up to 35 investments, and the checks can range from $500,000 to $1 million. 



The goal is to focus on early-stage (pre-seed and seed), but Lonergan’s not looking to completely shut the door on participating in a Series A if the right project comes around.&nbsp;



Read more: <a href="https://blockworks.co/news/empire-newsletter-ai-crypto-use-case">The case for AI finding a killer app for crypto</a>



“We need to be opportunistic. If we see something that we missed because we weren&#8217;t around a year ago, they&#8217;re raising enough ground and it&#8217;s attractive — we&#8217;ll look at it. But we are always price-sensitive. When you have a small fund, you have a concentrated fund structure, the idea is that any one investment could return the fund multiple times. That&#8217;s very important,” he said.



Both Lonergan and his partner Juan Lopez came from Circle Ventures. He helped launch Circle Ventures back in 2021 before leaving for <a href="https://blockworks.co/tag/vaneck">VanEck</a>.&nbsp;



The fund will have an interest in <a href="https://blockworks.co/tag/stablecoins">stablecoins</a>, which shouldn’t be a huge surprise given Lonergan’s past and VanEck’s own interest. While the firm itself doesn’t have a stablecoin, it <a href="https://blockworks.co/news/new-stablecoin-entrants-payments-focus">invested in the stablecoin firm Agora</a>, which is helmed by Nick van Eck, the son of VanEck CEO Jan van Eck.



But it’s not just personal interests that pique both Lonergan and the 69-year-old investment management firm.



At the “core,” Lonergan said, “are stablecoins and…within that, we kind of believe the underlying blockchains are more or less being commoditized to a point that there&#8217;s enough great technology out there. That&#8217;s best exemplified by [the fact that] you can go onto any crypto wallet or Coinbase today and upload dollars for free, send it across the world.”



Read more: <a href="https://blockworks.co/news/empire-newsletter-stablecoins-rally-indicators">Are stablecoins a leading indicator for major rallies?</a>



Given Lonergan’s belief that stablecoins, in particular, could see regulatory clarity over the next two years, he explained now is the right time to start laying the framework for startups that could succeed in a positive regulatory environment.&nbsp;



Lonergan reasoned that the door opening for fintechs to use stablecoins won’t be a very obvious crypto use case. It may be that crypto connections won’t be really obvious to those adopting stablecoins.



“It won&#8217;t be this crypto thing. If you&#8217;re not investing in this category, [and] it could be a weird tagline, but I think it could be that kind of ChatGPT moment for crypto, because [stablecoins] are the one technology that businesses will consume at scale, right? AI was not apparent until you had Chat,” Lonergan said.



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Is crypto’s ‘ChatGPT’ moment nearly here?

Canary Capital has revealed plans to launch a litecoin-focused product just one week after filing for an ETF that would directly hold Ripple’s XRP token.



The asset manager’s proposed Canary Litecoin ETF would “hold LTC and establish its net asset value on each business day by reference to the CoinDesk Litecoin Price Index,” the Tuesday <a href="https://www.sec.gov/Archives/edgar/data/2039461/000199937124013330/litecoin-s1_101524.htm">filing</a> notes.&nbsp;



<a href="https://blockworks.co/tag/litecoin">Litecoin</a> turned 13 years old on Sunday. LTC’s market capitalization stands at nearly $5.3 billion — the 27th-highest among crypto tokens, according to CoinGecko data.&nbsp;



“As one of the longest-running blockchains with 100% uptime since its inception, litecoin has demonstrated a proven track record of security and reliability with significant enterprise-grade use cases,” a Canary spokesperson said in an email. “With its strong foundation, litecoin continues to play a leading role in the broader cryptocurrency ecosystem, which Canary believes could make it attractive to a wider range of institutional investors.”



The latest litecoin ETF proposal follows Canary’s filing to launch a ripple (XRP) offering. Fellow fund firm Bitwise <a href="https://blockworks.co/news/bitwise-files-for-spot-xrp-etf">revealed plans for a similar XRP product</a> just days earlier.&nbsp;



Read more: <a href="https://blockworks.co/news/xrp-etf-contingent-on-election-and-sec-appeal">Election outcome and SEC appeal to decide XRP ETF future</a>



Those XRP filings come after filings from VanEck and 21Shares to <a href="https://blockworks.co/news/lightspeed-newsletter-spot-solana-etf-filing">launch ETFs that would hold solana</a> (SOL) directly.



The Securities and Exchange Commission would have to approve these proposals before the ETF could launch — a process that typically takes months.&nbsp;



Though the US regulator approved spot bitcoin and ether ETFs in January and July, respectively, industry watchers have said planned products focused on crypto assets outside of BTC and ETH could face hurdles in the near-term.&nbsp;



Read more: <a href="https://blockworks.co/news/forward-guidance-newsletter-xrp-etf-filing">The XRP ETF filing: A sign of regulatory progress or wishful thinking?</a>



The <a href="https://blockworks.co/tag/sec">SEC</a>, for example, has historically wanted to first see a <a href="https://blockworks.co/news/us-spot-crypto-etf-approvals-outlook">regulated futures market</a> for a spot crypto ETF’s underlying asset — like those for bitcoin and ether. None exist for LTC, XRP or SOL.



Still, a Canary Capital spokesperson told Blockworks earlier this month that there are “encouraging signs of a more flexible regulatory environment.”



“This year’s approval of the spot Ethereum ETFs, following the earlier spot bitcoin ETF approvals, signals positive momentum, especially considering how long it took for ETH futures products to be approved,” the representative added. “We’re optimistic about the next phase of developments in the space.”



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Canary Capital plots litecoin ETF just days after XRP proposal 

Jack Kubinec

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During my first evening at Blockworks’ Permissionless conference, I engaged in a new kind of small talk fodder among crypto folk: Polymarket odds.



Infinex founder Kain Warwick had around a 70% chance to win his Karate Combat bout with David Hoffman, the Bankless podcast host roughly ten years his junior. We scoffed at the market’s confidence in a fighter on the wrong side of 40.&nbsp;



Prediction markets are the crypto world’s recent fascination, and although <a href="https://blockworks.co/news/lightspeed-newsletter-prediction-markets-post-election">I had written</a> (skeptically) about them, I hadn’t watched one resolve in real time. That would all change by Friday night, as two crypto figures made their amateur boxing debuts, and crypto fans responded in the way they know best.&nbsp;



The looming boxing match’s odds were a subject of conversation during the three-day event, and whispers of Warwick’s training regimen and size seemed to keep him in the lead. At the match itself though, someone next to me lamented loudly that they didn’t have a VPN on their phone. Polymarket isn’t technically available in the US, though it’s safe to assume there were a fair number of Hoffman-Warwick bettors who skirted that particular regulation.



Prediction markets currently operate in a legal gray area in the US. Although the non-crypto prediction market Kalshi <a href="https://www.theblock.co/post/319206/federal-court-clears-kalshi-to-list-election-betting-contracts-denies-cftcs-motion">won</a> a legal victory against the CFTC earlier this month, the case is now <a href="https://www.cnbc.com/2024/10/14/election-bets-appeals-court-fast-tracks-cftc-vs-kalshi-case.html">headed</a> to appeals.&nbsp;



Following a <a href="https://blockworks.co/news/unpacking-potential-polymarket-ban">2022 CFTC spat of its own</a>, Polymarket, which is the largest crypto prediction market by far, does not allow bets to come from inside the United States. Solana-based Drift also restricts US users on its BET product.



Some smaller prediction markets take the social media age verification approach to geofencing, by which I mean they ask users to self-verify that they are not in the US.



On the evening of Hoffman and Warwick’s fight, I craned my neck to see the two crypto guys exchange awkward jabs and kicks. After Hoffman landed some blows in the first round, I heard someone behind me remark that his Polymarket odds had shot up.



“I wish they would display the Polymarket odds on the screen,” the onlooker added.



When Hoffman won in a majority decision, someone near me was aghast at seeing his $250 bet on Warwick slip away.&nbsp;



Walking away from the fight, I don’t feel differently about some of prediction markets’ fundamental flaws: They haven’t proven their stickiness outside of election betting, and there are better ways to trade most news events.



But I think there’s still a reasonable business case for something like Polymarket. Crypto rails can make betting markets run more smoothly, and Polymarket has a better UX than its competitors. Plus, an inclination toward decentralization could help address some of the issues in other betting markets, such as limiting successful bettors’ accounts.



And as the $65,000 bet on two non-boxers trading clumsy blows proves, the crypto world really likes to speculate. Bet against that fact at your own peril.



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Amateur boxing is a whole new experience with prediction markets

Donovan Choy

Today, enjoy the 0xResearch newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/research">Subscribe to the 0xResearch newsletter</a>. 



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<h2 class="wp-block-heading">Using “Trusted Execution Environments” for MEV</h2>



If you lose your iPhone today, you may be worried that a hacker would access your sensitive facial and fingerprint biometric information for their gain.



But that is not possible, largely thanks to what is commonly known as a <a href="https://support.apple.com/en-sg/guide/security/sec59b0b31ff/web">secure enclave</a>. It’s a kind of chip where applications process sensitive information separately from the phone’s main processor and operating system, such that it would afford data protection from a potential attacker (or even Apple itself).



It turns out that crypto developers and researchers are looking to utilize this hardware-based technology for groundbreaking use cases in the blockchain world.



Secure enclaves, or “trusted execution environments” (TEEs) as is more commonly referred to in crypto, can be used for instance to thwart the so-called MEV trilemma.&nbsp;



The Ethereum public mempool is fast and decentralized, but not private, which opens a profitable opportunity for MEV extractors.



Centralized block builders are fast and solve the “privacy” aspect, but they’re not decentralized. That has emerged in an oligopolistic status quo where the dominant block builders like <a href="https://mevboost.pics/">Beaverbuild or Titan</a> strike up exclusive deals with popular applications/wallets with lots of incoming transaction orderflow, then divvy up the MEV profits between themselves.



You can have two properties, but not all three. In either scenario, users get the short end of the stick.



In theory, TEEs could solve this by creating a decentralized MEV auction. As Flashbots’ Shea Ketsdever <a href="https://x.com/BanklessHQ/status/1831687078276366552">explains</a>, users could privately send their transactions to a block builder running within a TEE and have a guarantee that their order flow data won&#8217;t be leaked, thereby protecting it from MEV attackers.



The block builder would remain decentralized because it’s in a secure enclave, and is now computationally fast thanks to <a href="https://www.intel.com/content/www/us/en/developer/tools/trust-domain-extensions/overview.html">Intel’s TDX</a>, the tech firm’s latest in TEE technology.



That’s the bet that Uniswap is making on its recently announced L2 rollup Unichain.



To mitigate MEV leakage, Unichain will <a href="https://docs.unichain.org/whitepaper.pdf">execute</a> its block-building operations within a TEE, specifically Intel’s TDX hardware “which offers both private data access and verifiable execution through its computational integrity property” while enabling “execution attestations [to] be posted publicly” so anyone can verify that blocks were indeed built inside the TEE.



But when things seem too good to be true, they usually are. TEEs are, of course, subject to a whole bunch of <a href="https://x.com/EdFelten/status/1844414561941848312">criticism</a>, namely that it won’t be fast enough or the hardware secure enough, and a reliance on a piece of hardware built by Big Tech.



Enough security vulnerabilities have merited an entire website “sgx.fail” that compiles the failures of Intel’s “Software Guard Extension” (SGX).



In regards to Unichain, Daniel Shapiro puts it succinctly in a recent <a href="https://app.blockworksresearch.com/flashnotes/unichain-liquidity-potentially-begets-liquidity">Blockworks Research report</a>:&nbsp;



A final risk to note is that much of the architectural design of the (Unichain) rollup is reliant on TEEs used in Flashbots verifiable block builder (rollup-boost). Specifically, the initial TEE builder will run on Intel TDX’s hardware. There are long-standing, unsolved problems with TEEs with respect to security vulnerabilities. Although Flashbot has addressed these challenges, it remains unclear how scalable this strategy is. As the chain grows, the incentive to attack will grow in unison. New security exploits could arise that could put user funds at risk. In addition, criticism has been directed towards the TEE design with respect to transaction inclusion and priority inclusion.



— Donovan Choy



<h2 class="wp-block-heading">Is Off the Grid good for Avalanche L1?</h2>



We asked for more apps in crypto and they delivered.&nbsp;



With a unique combination of tactical gameplay, cyberpunk aesthetics and a blockchain-based economy, Off The Grid (OTG) by Gunzilla has proven that consumer-focused applications can successfully integrate blockchain without alienating users. By implementing elements like NFT-based in-game assets while giving players the option to avoid direct interaction with blockchain mechanics, Gunzilla has created an inclusive and free-to-play platform that appeals to both crypto enthusiasts and traditional gamers.



OTG has hit several major milestones including 6.1 million active addresses, 58 million transactions, 1+ million hours streamed on Twitch and partnerships with many top gaming streamers such as Shroud and Ninja. If Off The Grid maintains its momentum, it could inspire other developers to create blockchain-powered games and potentially establish Avalanche as a hub for Web3 gaming and consumer applications.



Built on Avalanche&#8217;s L1 framework, OTG not only demonstrates Avalanche’s scalability and flexibility for game development, but also highlights the platform&#8217;s potential to attract new games and applications. Avalanche&#8217;s L1 infrastructure is positioned to draw developers who want to tap into the benefits of blockchain without compromising the gameplay experience. Upcoming and existing features of Avalanche, such as ACP-77 and HyperSDK, not only make it more affordable for developers to launch their own L1 blockchain but provide a performant, cheap and abstracted experience to the end user.



While the best form of financial exposure to OTG&#8217;s early success is unclear, the game can still serve as a key driver for the Avalanche ecosystem (Avalanche’s Blizzard fund also co-led Gunzilla’s last <a href="https://gunzillagames.com/en/news/55-Gunzilla-Games-Announces----M-in-Funding-Co-Led-by-CoinFund-and-Avalanche">funding round</a>). Gunzilla has not yet introduced a native token or NFT model for public investment, though its future native token on the Gunz Avalanche L1 will play a role in the game&#8217;s economy (e.g. by paying for gas on its network). Additionally, Avalanche&#8217;s L1 economics are still evolving, with options like the pay-as-you-go (PAYG) model providing flexible opportunities for validators and ecosystem participants, or staking 2,000 AVAX per validator up front in order to take advantage of interoperability between other Avalanche L1s.



<a href="https://app.blockworksresearch.com/research/the-avalanche-ecosystem-an-analysis-of-subnet-adoption">Blockworks Research</a> has covered the evolving Avalanche L1 (previously known as subnets) economics, for those interested in learning more. Additionally, there are also Web3 Gaming Guilds that have both invested in and are running validators in OTG, offering another potential way for exposure.



Overall, OTG&#8217;s success signals that blockchain can enhance game development in meaningful ways by drawing in non-crypto users and providing a viable blueprint for future blockchain-powered consumer applications. As more games and applications potentially adopt Avalanche&#8217;s blockchain framework, it could lead to increased network usage, validator participation and overall ecosystem growth.



— Nikhil Chaturvedi 



<h2 class="wp-block-heading">Chart of the Day</h2>



Total stablecoin supply increasing:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcJo3vdqvqRqDyV7Qq2QZi2XJ4JAEGf3Jy9NDjQ90HBQGgP0BksjCPOUYtjq3nOmmZlDeiX326xQzNT3Z87blQbyFVcYQdc1gpsDmzUkXWlslnYt0cdUELEgnojhv80sp8teIWc4oFT0GV5UmLSsZFiIxI?key=76Ovo7XoZXkuObyYsvw-XA" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.artemisanalytics.com/stablecoins">Artemis</a></figcaption></figure>



The total supply of onchain stablecoins today is $163.2 billion, creeping ever closer to its March 2022 all-time high of $166.4 billion. Total stablecoin market cap has increased by about $1 billion over the past month, with about $1 billion apiece coming from USDT and USDC.



— Donovan Choy



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Can the MEV trilemma be solved with trusted execution environments?

Ran Yi

DeFi&#8217;s infrastructure needs to evolve significantly if it intends to compete with traditional financial systems and drive mass adoption. Despite the promise of decentralized finance, current platforms fall short in areas like liquidity, speed and cross-chain compatibility. Without addressing these critical shortcomings, DeFi will struggle to gain the trust and adoption needed to rival TradFi. To truly bring DeFi into the mainstream, we must develop frameworks that are as secure, scalable and efficient as their TradFi counterparts.



Global financial infrastructures like Swift and other core systems were the backbone of the digital finance boom in TradFi. They enabled seamless cross-border transactions, improved trust in financial institutions and ultimately aided global adoption. Just as the pillars of TradFi required strong, innovative frameworks to thrive, DeFi must evolve beyond its current limitations. The exponential growth of Web3, onchain trading and decentralized finance demands infrastructure that can not only keep pace but also drive further adoption.&nbsp;



Read more: <a href="https://blockworks.co/news/banks-swift-crypto-transaction-trials">Banks to use Swift network for crypto transaction trials</a>



Centralized exchanges have arguably come closest to emulating the foundational pillars of TradFi, as evidenced by their broad user bases and large trading volumes which comfortably outstrip those of DeFi platforms. However, the downfall of FTX in 2022 served as a harsh reminder of the risks inherent in using custodial services, while underscoring the value of decentralized, non-custodial solutions. This is where DeFi has the opportunity to truly differentiate itself — but only if the underlying infrastructure is up to the task.



Read more: <a href="https://blockworks.co/news/non-custodial-stablecoin-native-exchange">Post-FTX world needs ‘next-generation’ exchange, ex-Coinbase exec says</a>



So, which infrastructure options do developers have to build orderbook-based platforms in the DeFi space?



While some devs may opt for crypto exchange clone scripts — white-label solutions that replicate existing CEXs or DEXs — these often fall short in crucial areas. Although they can reduce development time, they lack the foundational elements necessary for long-term survival and success. Furthermore, while there are a number of CEX clone scripts available to build orderbook-based platforms, there aren’t that many options for orderbook-based DEXs.



In my view, any infrastructure designed to support successful DeFi platforms must excel in four key areas. First, deep liquidity is essential — it’s the lifeblood of any trading system. Without sufficient liquidity, platforms will struggle to offer competitive spreads, leading to a poor user experience and ultimately, failure.



Read more from our opinion section: <a href="https://blockworks.co/news/bitcoin-powerful-defi-potential">Bitcoin’s evolution into DeFi is inevitable — and it’s about time</a>



Next, omnichain functionality — the capacity of assets to move freely and securely across multiple blockchains — is crucial for enhancing liquidity and creating new trading opportunities. This process can be simplified further by chain abstraction, which reduces the complexities involved in cross-chain transactions and makes the entire ecosystem more seamless.



Modularity is another important factor. Developers need the flexibility to customize infrastructure to meet the specific needs of their platform. A modular approach allows them to choose the components that best serve them, driving innovation and adaptability.



Finally, there’s speed. In trading, speed is everything. High latency kills market opportunities, and slow platforms will inevitably drive users away. For any DeFi platform to be taken seriously, high-speed infrastructure is non-negotiable.



By integrating features like deep liquidity, omnichain compatibility, modularity and speed, developers can unlock significant advantages across various DeFi platforms. For example, in the case of spot or perpetual DEXs, shared orderbooks can offer users better price discovery, reduced slippage and institutional-grade trading experiences — benefits typically associated with CEXs.



Read more from our opinion section: <a href="https://blockworks.co/news/defi-future-nirvana-hack-risk">DeFi is the future (and a hack can’t convince me otherwise)</a>



Similarly, DeFi aggregators can leverage a unified liquidity pool, minimizing the fragmentation of liquidity across different networks. This allows seamless access to deep liquidity, without the need for separate integrations, thus creating a more efficient trading environment.



When it comes to institutional trading platforms, robust infrastructure ensures they can meet the high standards required by professional and algorithmic traders. With the right setup, it becomes much easier to implement advanced features like algorithmic trading, diverse order types and risk management tools, all supported by reliable onchain data and liquidity.



Even CEXs stand to benefit from this type of infrastructure. By developing decentralized counterparts to their platforms, CEXs can cater to users who prioritize the autonomy and transparency of DeFi, while still offering the speed and trading experience expected from centralized platforms. Hybrid models, such as WOOFi Pro and BTSE DEX, are already leading the charge in this area.



Similarly, derivatives and options platforms can take advantage of real-time price feeds, transparent order matching and efficient settlement processes, all directly onchain. This reduces the need to rely on centralized entities, offering a more decentralized and transparent trading ecosystem for complex financial products.



However, none of these advantages matter without active traders. Liquidity is the lifeblood of any market and without it, the crypto market as we know it would cease to function. When deep liquidity and fast execution are present, traders benefit from tighter spreads, reduced slippage and a superior overall trading experience.



To drive mass adoption, the focus must shift from grand promises to tangible advancements. Imagine a world where decentralized exchanges and platforms offer the same reliability and efficiency as traditional finance, where traders can move assets across chains without friction, and where high-frequency trading happens at the speed of thought. Building this future is necessary if DeFi is ever to move beyond the fringes and take its place as a serious contender in the global financial ecosystem.



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DeFi’s slow infrastructure is holding back mass adoption

David Canellis

Today, enjoy the Empire newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



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<h2 class="wp-block-heading">Old dogs, new tricks</h2>



Step aside, boys, there’s a new venture fund in town.&nbsp;



VanEck Ventures was officially announced last week. It’s a $30 million early-stage fund, which is meant to be a “fintech vehicle very much at the center of crypto and AI,” general partner Wyatt Lonergan told me.&nbsp;



“Those two components are very much like horizontal technologies. And I say that because crypto is like the value layer and AI is where you can now take financial services that are typically performed by people, represent them in code and start to automate things,” he said.&nbsp;



Lonergan teased that the fund’s made a couple of investments so far, but VanEck isn’t quite ready to divulge any deets just yet. Sad. What we do know is that they plan to make up to 35 investments, and the checks can range from $500,000 to $1 million.&nbsp;



The goal is to focus on early-stage (pre-seed and seed), but Lonergan’s not looking to completely shut the door on participating in a Series A if the right project comes around.&nbsp;



“We need to be opportunistic. If we see something that we missed because we weren&#8217;t around a year ago, they&#8217;re raising enough ground and it&#8217;s attractive — we&#8217;ll look at it. But we are always price-sensitive. When you have a small fund, you have a concentrated fund structure, the idea is that any one investment could return the fund multiple times. That&#8217;s very important,” he said.



Both Lonergan and his partner Juan Lopez came from Circle Ventures. Lonergan helped launch Circle Ventures back in 2021 before he left for VanEck.&nbsp;



The fund will still have a keen interest in stablecoins, which shouldn’t be a huge surprise given Lonergan’s past and VanEck’s own interest. While the firm itself doesn’t have a stablecoin, it invested in the stablecoin firm Agora, which is helmed by Nick Van Eck, the son of VanEck CEO Jan Van Eck.



But it’s not just personal interests that pique both Lonergan and the 69-year-old investment management firm.



At the “core,” Lonergan said, “are stablecoins and … within that, we kind of believe the underlying blockchains are more or less being commoditized to a point that there&#8217;s enough great technology out there. That&#8217;s best exemplified by [the fact that] you can go onto any crypto wallet or Coinbase today and upload dollars for free, send it across the world.”



Lonergan’s tone came off as bullish, given his belief that stablecoins, in particular, could see regulatory clarity in the next two years. Building upon the regulation that could be coming “very soon,” the thought is that legal stablecoins could draw in fintech firms.



As always, there’s a bit of a catch. Lonergan reasoned that the door opening for fintechs to use stablecoins won’t be a very obvious crypto use case. Basically, it wouldn’t be surprising if the crypto connections weren’t wildly obvious to those adopting stablecoins.



“It won&#8217;t be this crypto thing. If you&#8217;re not investing in this category, [and] it could be a weird tagline, but I think it could be that kind of ChatGPT moment for crypto, because [stablecoins] are the one technology that businesses will consume at scale, right? AI was not apparent until you had chat,” Lonergan said.



If we’re looking at the most popular use cases for crypto at this moment, he may very well be on to something. Polymarket, when mentioned in non-crypto media, isn’t flaunted as “crypto,” though we know it is.



For now, perhaps flying a little under the radar might be the best thing for potential killer apps.



— Katherine Ross



<h2 class="wp-block-heading">Data Center</h2>



<ul class="wp-block-list">
<li>BTC and ETH are taking it easy after yesterday’s push, now up 1% and 2% apiece in the past day. (BTC: $65,500; ETH: 2,600.)</li>



<li>HNT has given up most of its gains made in the past two months, having fallen nearly 30% from its six-month peak in September.</li>



<li>Sui leads Base and Solana for weekly DEX volume <a href="https://defillama.com/dexs/chains">growth</a>, up 41.6% to $227.9 million.</li>



<li>Base and Solana have otherwise grown 20% and 14.6% week-on-week, processing $1.1 billion and $1.76 billion, respectively.</li>



<li>Avalanche has gained about $100 million in <a href="https://defillama.com/stablecoins/chains">stablecoins</a> in the past seven days, rising 4.5% — the most of any chain with $350 million supplies or more.</li>
</ul>



<h2 class="wp-block-heading">A stable indicator</h2>



Rising stablecoin supplies are sometimes viewed as bullish indicators for individual coins.



More stablecoins on a network imply increased onchain activity, leading to more value accrual for the native token, and, eventually, converting to higher prices.



But how true is it?



After mapping stablecoin supplies against token performance for most of the top blockchains, I’m not entirely sold.



Ten out of the top 16 blockchains by stablecoin supplies — which includes any network with $250 million or more native <a href="https://defillama.com/stablecoins/chains">supplies</a> right now — indeed showed a fairly clear correlation between the amount of stablecoins minted onchain and token prices.



In almost every case, though, it was token prices that shot first, often weeks or months in advance, before stablecoin supplies started really taking off.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXczjzB2ruexQa9NRW0ge_fIBDiOeAqnpfjr0kNi7RjNRA1rx9LWT5OWAJQiZcIxFZiIp1dXd_Kv1apAAky8yUGHljzp9uJTsEHXlM5zgBVAw6unNVzYx-NYLlFEiszTEekVVaJj5nIZSYKl2zcLej9jQBcb?key=wCv5NmLSPh_S0kPauR7BbA" alt=""/><figcaption class="wp-element-caption">Price has led stablecoin growth in most cases</figcaption></figure>



SOL, for instance, began rallying hard at the end of last September, as bitcoin was heating up for an ETF-hype-fueled bull run.&nbsp;



Solana’s stablecoin supplies, as shown by the purple-shaded area in the background above, had been stagnant for six months, at around $1.5 billion, leading up to that rally.&nbsp;



It wasn’t until December that Solana’s stablecoin supplies rose in any meaningful way, during which time SOL had rallied over 300%. NEAR showed an almost identical lag.



Similar patterns can be seen in aptos, toncoin, near, avalanche and, to a lesser degree, ether, although prices and stablecoin supplies decoupled during recent consolidation for the former two.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcft7Dv8LiXmszPZOsQ564OKFRm1dr6n_sWyNyHe4hi4Nl1uhU3sMoVEiqiRjA5e9mhwrl6oDsuZFCHflymG5DFw7L1jbcjBRRg1r8i9L4iGiaZ26eNOoB4rHaNJ3FSwx_vGLYK05pNDxVlNLeY60STdnwN?key=wCv5NmLSPh_S0kPauR7BbA" alt=""/><figcaption class="wp-element-caption">SUI has showed tight correlation while APT has lagged behind Aptos’ stablecoin supplies</figcaption></figure>



Stablecoin supplies on Ethereum layer-2s also rose massively well after their own price rallies, but that correlation has also died off for now.&nbsp;



The extent to which L2 activity accrues to their base assets — let alone ETH — is however an <a href="https://blockworks.co/podcast/bellcurve/eeab0b9a-8521-11ef-b118-8f1e8c202670">ongoing debate</a>, so it’s probably better to focus only on layer-1s.



In any case, there were exceptions: BNB, MATIC, FTM and CELO didn’t really show a clear correlation either way. Token prices stayed flat while stablecoins increased, or prices went up despite stablecoin supplies hardly budging or even shrinking.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXekA0TS3ZGQv-q6yNRObXUT1LdgXjPmgarv4kMrB3b1nlvjRhEbixjhSAcF-F3Gv-1ToGKm9JhTKpVDLo7Udqe3J5Wp5ocBjxFt2t8gwb3DAXAJfdIwaGPH5GQjei26yZCMvh_o0KrYafq4-DV9b7fp0THA?key=wCv5NmLSPh_S0kPauR7BbA" alt=""/><figcaption class="wp-element-caption">The price of bitcoin jumped in Q4 2023 — bringing stablecoin supplies along with it</figcaption></figure>



And besides, bitcoin itself front-ran the current rally in global stablecoin supplies. But the amount of stablecoins in the crypto ecosystem has gone up during bitcoin’s sideways action, which has now persisted since March.



The real question is then: Are stablecoins front-running the next bitcoin rally? Who knows, but that would certainly align with calls for bulls to take control for the next eight-to-10 months.&nbsp;



— David Canellis



<h2 class="wp-block-heading">The Works</h2>



<ul class="wp-block-list">
<li>As part of its multibillion-dollar settlement, TD Bank failed to <a href="https://blockworks.co/news/fincen-td-bank-suspicious-crypto-transactions">disclose</a> ‘suspicious’ transactions related to crypto. </li>



<li>The man who accidentally dumped a hard drive with 8,000 bitcoin (worth $522 million) is now <a href="https://www.walesonline.co.uk/news/wales-news/im-suing-council-495m-because-30106009">suing</a> his local city council to let him search for the missing BTC.</li>



<li>Coinbase’s Base has <a href="https://www.dlnews.com/articles/defi/coinbase-chain-base-beats-arbitrum-as-top-ethereum-layer-2/">stolen</a> Arbitrum’s title of the largest rollup by total value locked. </li>



<li>TD Cowen <a href="https://www.theblock.co/post/320969/sen-hagertys-draft-stablecoin-bill-could-shape-legislation-in-2025-td-cowen-says?utm_source=rss&amp;utm_medium=rss">thinks</a> that the draft stablecoin legislation from Sen. Bill Hagerty could shape the regulatory framework for stablecoins.</li>



<li>Tether’s considering potentially lending billions to commodities traders, Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-10-14/tether-talking-to-commodity-traders-about-lending-its-crypto-billions-usdt">reported</a>.</li>
</ul>



<h2 class="wp-block-heading">The Riff</h2>



Q: Will crypto ever move on from Tether?



Pockets of the space will probably adopt alternatives.&nbsp;



Yield-bearing stablecoins could become the default asset for some DeFi apps, or even wallets, leading to increased usage.



I’d be on the lookout for these kinds of partnerships moving forward, especially for newer layer-1 networks still building out their LEGO infrastructure.



Failing a doomsday scenario involving police intervention or other such drastic regulatory action against Tether and its executives, it would take a catastrophic failure of the firm’s own doing to unravel at this point.&nbsp;



Realistically, the only thing that has ever mattered to the market is whether Tether can <a href="https://blockworks.co/news/the-historic-significance-of-tether-16b-bank-run">redeem their tokens</a> for real dollars. And despite all the oddities in Tether’s history, there’s been no publicly disclosed instance of failing to process those requests.



Whether crypto is prepared for that possibility, say by ensuring there’s infrastructure in place to support sudden mass exodus from USDT into alternatives, is another story altogether.&nbsp;



From a risk management perspective, it could be wise. More likely, though, is that crypto would be reactive to such a situation than proactive.



— David Canellis



Crypto in general? Probably not. It’s too baked in.&nbsp;



But will we see a bit of a shift in power dynamics due to the regulatory environment? I’m leaning toward yes at this stage.&nbsp;



Look, if Tether isn’t able to operate in the EU and if the US were to ever follow in similar tracks, then that does make USDC the go-to when it comes to major players in those two environments.&nbsp;



But outside of the US and EU, I think Tether will maintain its dominance. It’s solving one of the biggest issues that crypto wanted to take care of: allowing access to something like a dollar digitally (that’s the easiest, most crass way to put it though we could argue that it’s not entirely true).&nbsp;



It’s not really a sexy use case, but it’s a damn good one.&nbsp;



If we were to turn all of this on its head and say that Tether is suddenly MiCA compliant and fully accepted by the US government, then I think the crown is practically soldered on its head, and Tether will reign over the other offerings.&nbsp;



As usual, I’m left with a desire to grab some popcorn and watch this play out.



— Katherine Ross



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Are stablecoins a leading indicator for major rallies?

Bitcoin has historically experienced strong gains in October, and this trend seems to be holding, with BTC surpassing $66,000 and ETH reaching a two-week high.



After eclipsing that level, bitcoin’s price had settled around $65,850 by 4 pm ET — up 4.8% from 24 hours prior. Ether was trading at about $2,620 at that time, a 6% gain from a day ago.&nbsp;



Seasonal trend analysis continues to point to the so-called “Uptober” narrative and strong fourth quarter performance despite the month’s “patchy” first couple of weeks, according to LMAX Group market strategist Joel Kruger.



Read more: <a href="https://blockworks.co/news/btc-uptober-market-odds">As BTC rallies after jobs report, what are the ‘Uptober’ odds?</a>



“Bitcoin and crypto assets overall have actually held up quite well of late when considering a wave of broad-based demand for the US dollar in recent weeks on the back of a repricing of Fed expectations,” Kruger told Blockworks.



Bitcoin has pushed back toward its recent resistance level at roughly $66,550, he said, adding: “A break back above this level should open the door for <a href="https://blockworks.co/news/0xresearch-newsletter-btc-bullish-reversal">a more direct retest</a> of the record high from earlier this year.”



Despite bitcoin <a href="https://blockworks.co/news/bitcoin-all-time-high">breaking its 2021 high</a> earlier this year (above $73,000), ETH has yet to surpass the nearly $4,900 mark it hit three years ago.



There is “important resistance” in ETH’s price around $2,820, Kruger noted — a break above which would suggest crypto assets are set for a more significant run.&nbsp;



“This has already been a breakthrough year for the asset class given the friendlier <a href="https://blockworks.co/news/political-candidates-cannot-ignore-crypto-voters">regulatory climate</a>, wider adoption and introduction of the bitcoin and ETH ETFs in the US,” he explained. “All of this suggests the market should be wanting to push for a big breakout in the weeks ahead and we will be keeping an eye on those <a href="https://blockworks.co/news/btc-levels-to-watch-after-selloff">already mentioned key levels</a> in bitcoin and ETH for confirmation.&#8221;



<h2 class="wp-block-heading">The factors at play</h2>



China Finance Minister Lan Foan said Saturday that the government <a href="https://www.reuters.com/world/china/china-says-will-significantly-increase-debt-revive-economic-growth-2024-10-12/">plans</a> to ramp up debt issuance to revive economic activity — a potential positive for risk assets like BTC.&nbsp;



“Whilst no details were provided on the exact size, strong commitments to ‘significantly increase’ debt to support the economy boosted local equity markets,” Wintermute OTC trader Jake Ostrovskis said in an email.&nbsp;



That came after the chief executive of the world’s largest asset manager — BlackRock’s Larry Fink — said Friday that “the utilization of digital assets [is] going to become <a href="https://blockworks.co/news/on-the-margin-newsletter-inevitable-institutional-digital-assets-involvement">more and more of a reality worldwide</a>.”



<a href="https://blockworks.co/tag/blackrock">BlackRock</a>, with more than $11 trillion assets under management, has waded into the crypto segment via its launch of spot bitcoin and ether ETFs this year.&nbsp;



“If we can create more acceptability, more transparency, more analytics related to these assets, then it will be expanded,” Fink said of the crypto asset class during an earnings call last week.



The CEO also questioned how the US could look to digitize the dollar, noting “all of that is going to be under discussion.”



<a href="https://blockworks.co/tag/larry-fink">Fink</a> added: “We believe the technology of these blockchains are going to become very additive, and then it will overlay AI and [have] better data analytics. The applicability and the broadening of these markets will occur.”



US spot bitcoin ETFs tallied $349 million of net inflows from Oct. 7 to Oct. 11, Farside Investors <a href="https://farside.co.uk/bitcoin-etf-flow-all-data/">data</a> shows.



Investor decisions are likely being driven more by the upcoming US elections than by monetary policy forecasts, according to CoinShares research head James Butterfill in a recent blog post.



“This trend is evident in the fact that <a href="https://blockworks.co/news/forward-guidance-newsletter-crypto-etfs-permissionless">stronger-than-expected</a> economic data had little impact on stemming outflows, whereas the recent US vice presidential debate and a subsequent shift in polling towards the Republicans, perceived as more supportive of digital assets, led to an immediate boost in inflows and prices,” he added.



Further, the <a href="https://blockworks.co/news/election-impact-bitcoin-bull-market">current lack of clarity</a> around the US election outcome and global liquidity conditions are “preventing the market from establishing a clearer directional trend,” notes FalconX’s David Lawant.&nbsp;



“As uncertainty surrounding these factors diminishes, ETF flows may re-emerge as a more significant driver of price action,” Lawant explained in a research note.



A portion of expected selling pressure looks to be off the table for now given the one-year deadline <a href="https://www.mtgox.com/img/pdf/20241010_1b5ee10e-cf5b-420e-9e41-43ccd9e515e5_announcement_en.pdf">extension</a> for Mt. Gox repayments — from Oct. 31, 2024 to Oct. 31, 2025.&nbsp;



Read more: <a href="https://blockworks.co/news/mt-gox-bitcoin-final-boss">Bitcoin bulls meet their third final boss after US and Germany: Mt. Gox</a>



A belief in recent months has been that Mt. Gox creditors, who have long awaited the return of their funds, could opt to sell their crypto and drive prices down.



<h2 class="wp-block-heading">Price predictions</h2>



Dan Tapiero, founder of 1RoundTable Partners and 10T Holdings, said during a panel discussion last week that he expects BTC to hit between $150,000 and $180,000 in two years or so.&nbsp;



The upper end of that would be a 3x gain from the $60,000 level bitcoin has hovered around for a while now, he said, noting BTC’s similar rise in early 2021.



Fellow panelist Pantera Capital CEO Dan Morehead gave a more exact price and timeline, projecting BTC could hit $117,000 by August 2025. This, he said, is based on previous post-halving price patterns.&nbsp;



While there was plenty of talk at Permissionless about how much the election (now nearly three weeks away) will impact crypto’s trajectory one way or another, Tapiero seems to prefer looking at the grander picture.



The 10T founder said: “This move toward putting all value on a blockchain is bigger than one election.”&nbsp;



A modified version of this article first appeared in the daily Forward Guidance newsletter. Subscribe <a href="https://blockworks.co/newsletter/forwardguidance">here</a> so you don’t miss tomorrow’s edition.



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As BTC passes $66K, is ‘Uptober’ finally upon us?

Today, enjoy the Forward Guidance newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/forwardguidance">Subscribe to the Forward Guidance newsletter</a>.



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<h2 class="wp-block-heading">On the up and up?</h2>



Bitcoin breached $66,000 on Monday, while ETH recently hit a two-week high. It seems Blockworks’ Permissionless conference in Salt Lake City last week <a href="https://blockworks.co/news/permissionless-3-day-one-vibes">got</a> <a href="https://blockworks.co/news/forward-guidance-newsletter-vaneck-vc-fund?utm_source=forward-guidance.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=where-we-stand-after-66-grand&amp;_bhlid=5b1fe95af156df4a89fb363dc5a7ebfa7a66e2fc">everyone</a> <a href="https://blockworks.co/news/empire-newsletter-permissionless-crypto-regulation">excited</a>.&nbsp;



Jokes aside, there are a few potential catalysts at play — and updates to catch up on, as the Forward Guidance team was a bit busier than usual last week.&nbsp;



You probably know by now (especially if you’re a regular Forward Guidance/Blockworks reader) that bitcoin typically sees above-average gains in October.&nbsp;



Seasonal trend analysis continues to point to this so-called <a href="https://blockworks.co/news/btc-uptober-market-odds">“Uptober” narrative</a> and strong Q4 performance despite the month’s “patchy” first couple of weeks, according to LMAX Group market strategist Joel Kruger.



After eclipsing $66k, BTC had settled around $65,580 by 2 pm ET — up 4.4% from 24 hours prior.



“Bitcoin and crypto assets overall have actually held up quite well of late when considering a wave of broad-based demand for the US dollar in recent weeks on the back of a repricing of Fed expectations,” Kruger told Blockworks.



Bitcoin has pushed back toward its recent resistance level at roughly $66,550, he said, adding: “A break back above this level should open the door for a more <a href="https://blockworks.co/news/0xresearch-newsletter-btc-bullish-reversal">direct retest</a> of the <a href="https://blockworks.co/news/bitcoin-all-time-high">record high</a> from earlier this year.”



<h2 class="wp-block-heading">The factors at play</h2>



First, it’s worth noting China’s latest fiscal announcement: Finance Minister Lan Foan said Saturday that the government <a href="https://www.reuters.com/world/china/china-says-will-significantly-increase-debt-revive-economic-growth-2024-10-12/">plans</a> to ramp up debt issuance to revive economic activity.&nbsp;



“Whilst no details were provided on the exact size, strong commitments to ‘significantly increase’ debt to support the economy boosted local equity markets,” Wintermute OTC trader Jake Ostrovskis said in an email.&nbsp;



<a href="https://blockworks.co/news/on-the-margin-newsletter-china-stimulus-stagnation">Stimulus</a> is typically good for risk assets like BTC, though we’ll have to keep an eye on this.&nbsp;&nbsp;&nbsp;



There was also the biggest asset manager’s chief executive — BlackRock’s Larry Fink — saying Friday that “the utilization of digital assets [is] going to become <a href="https://blockworks.co/news/on-the-margin-newsletter-inevitable-institutional-digital-assets-involvement">more and more</a> of a reality worldwide.”



We know about BlackRock’s belief in the crypto segment given its launch of spot bitcoin and ether ETFs this year. But Fink commenting on crypto assets is always bullish because, well, he runs a financial giant with more than $11 trillion assets under management.&nbsp;



“If we can create more acceptability, more transparency, more analytics related to these assets, then it will be expanded,” he said of the crypto asset class during an earnings call last week.



Fink also questioned how the US could look to digitize the dollar, noting “all of that is going to be under discussion.”



The CEO added: “We believe the technology of these blockchains are going to become very additive, and then it will overlay AI and [have] better data analytics. The applicability and the broadening of these markets will occur.”



Because we mentioned BlackRock, ETF flows are worth noting as well. US spot bitcoin ETFs tallied $349 million of net inflows from Oct. 7 to Oct. 11, Farside Investors <a href="https://farside.co.uk/bitcoin-etf-flow-all-data/">data</a> shows.



Investor decisions have likely been more influenced by the upcoming US elections than by monetary policy outlooks, CoinShares research head James Butterfill said in a blog post.&nbsp;&nbsp;



“This trend is evident in the fact that stronger-than-expected economic data had little impact on stemming outflows, whereas the recent US vice presidential debate and a subsequent shift in polling towards the Republicans, perceived as more supportive of digital assets, led to an immediate boost in inflows and prices,” he added.



Further, the current <a href="https://blockworks.co/news/election-impact-bitcoin-bull-market">lack of clarity</a> around the US election outcome and global liquidity conditions are “preventing the market from establishing a clearer directional trend,” notes FalconX’s David Lawant.&nbsp;



“As uncertainty surrounding these factors diminishes, ETF flows may re-emerge as a more significant driver of price action,” he explained in a research note.



One other thing is that a portion of expected selling pressure looks to be off the table for now given the one-year deadline <a href="https://www.mtgox.com/img/pdf/20241010_1b5ee10e-cf5b-420e-9e41-43ccd9e515e5_announcement_en.pdf">extension</a> for Mt. Gox repayments — from Oct. 31, 2024 to Oct. 31, 2025.&nbsp;



A belief in recent months has been that Mt. Gox creditors who have long awaited the return of their funds could opt to sell their crypto and <a href="https://blockworks.co/news/mt-gox-bitcoin-final-boss">drive prices down</a>. So such potential negative impacts of these repayments are abated in the short term.&nbsp;



<h2 class="wp-block-heading">Price predictions</h2>



Given the latest crypto price rise, let’s conclude with some predictions from two Dans with a long track record in this space.&nbsp;



Dan Tapiero, founder of 1RoundTable Partners and 10T Holdings, said during a panel discussion last week that he expects BTC to hit between $150,000 and $180,000 in two years or so.&nbsp;



The upper end of that would be a 3x gain from the $60,000 level bitcoin has hovered around for a while now, he said, noting BTC’s similar rise in early 2021.



Fellow panelist Pantera Capital CEO Dan Morehead gave a more exact price and timeline, projecting BTC could hit $117,000 by August 2025. This, he said, is based on previous post-halving price patterns.&nbsp;



While there was <a href="https://blockworks.co/news/permissionless-day-two-vibes">plenty of talk</a> at Permissionless about how much the election (now nearly three weeks away) will impact crypto’s trajectory one way or another, Tapiero seems to prefer looking at the grander picture.



The 10T founder said: “This move toward putting all value on a blockchain is bigger than one election.”&nbsp;



— Ben Strack



<h3 class="wp-block-heading">565%</h3>



The growth in <a href="https://blockworks.co/news/empire-newsletter-polymarket-d8x-offerings">prediction markets</a> during the third quarter, according to a CoinGecko <a href="https://www.coingecko.com/research/publications/2024-q3-crypto-report">report </a>published Monday.&nbsp;



Volume on the top three prediction markets rose from roughly $466 million to $3.1 billion quarter over quarter — with Polymarket accounting for 99% of market share in September.



“Some $1.7 billion of bets have been placed on the ‘US Presidential Election Winner’ since the start of 2024, accounting for [about] 46% of Polymarket’s yearly volume,” the report added.&nbsp;



<h2 class="wp-block-heading">EU DLT pilot regime gets the green light</h2>



Nineteen months after the European Union launched its DLT Pilot Regime, the first platform has received authorization and is set to debut next month.&nbsp;



The Central Securities Depository Prague, the Czech Republic’s post-trade services provider, is expected to launch its DLT settlement system on Nov. 18. Prague’s CSD is unique in that it services institutions as well as individuals, and officials said both will have access to the DLT program.



Businesses in Prague can use the service to manage their cap tables (including employee stock ownership plans) and fundraise, Ondřej Dusílek, CEO of CDCP, said in a <a href="https://www.cdcp.cz/csd-prague-receives-first-european-dlt-register-approval/?lang=en">statement</a>.&nbsp;



The approval of the first DLT Pilot Regime applicant comes after months of frustration surrounding the program. In April, the European Securities and Market Authority (ESMA) <a href="https://www.esma.europa.eu/sites/default/files/2024-04/ESMA75-117376770-460_DLT_Pilot_Regime_-_Letter_to_EU_Institutions.pdf">wrote</a> to the European Commission, Parliament and Council to explain challenges they’ve encountered when trying to get the pilot off the ground.&nbsp;



Most notably, the lack of CBDCs makes cash settlements difficult, ESMA said. Plus, the newly effective <a href="https://blockworks.co/news/micar-foreign-stablecoins-advantage-in-europe">MiCA regulations</a> come with implications for custodians and “self-hosted wallets” that are not immediately clear. Regulators need to issue <a href="https://blockworks.co/news/mica-clarity-stablecoin-restrictions-revisited">more guidance</a> on how custody providers can operate within DLT infrastructure, ESMA said.&nbsp;



The commission’s <a href="https://www.esma.europa.eu/sites/default/files/2024-05/3056562_030524_Reply_Verena_Ross_on_DLT_Pilot_Regime_Implementation.pdf">response</a> was brief in detail but enthusiastic in support. They said the pilot regime was an important effort that should continue, noting that applicants should not be deterred from the lengthy process as the program has “no expiration date.”&nbsp;



So that brings us here, to the Central Securities Depository Prague’s approval. The first green light being given to a TradFi institution is not surprising, and I’d say it’s even encouraging that an incumbent is interested in exploring this technology.&nbsp;



We’ll have to wait and see how Prague’s program plays out, and if they encounter the challenges ESMA feared (mostly if they find they need CBDCs to meet cash settlement demands), but I’d label myself as cautiously optimistic, for now.&nbsp;



— Casey Wagner



<h2 class="wp-block-heading">On Our Radar</h2>



Welcome back to another Monday edition of the Forward Guidance newsletter! With the major <a href="https://blockworks.co/news/forward-guidance-newsletter-jobs-report">jobs</a> and inflation reports now behind us, we have a relatively quiet week ahead in terms of economic data. Here’s what we will be watching:&nbsp;



<ul class="wp-block-list">
<li>Initial jobless claims on Thursday are slated to show a slight decrease after last week’s unexpected jump. Claims for the week ended <a href="https://www.dol.gov/ui/data.pdf">Oct. 5</a> came in at 258,000 — a 33,000 increase from the week prior. Analysts attributed the surge to Hurricane Helene, but the impact of the storm is likely to be felt for several weeks. For the week ended Oct. 12, economists expect 245,000 initial claims. Another factor impacting employment numbers is the ongoing Boeing strike. While striking workers are not eligible for unemployment benefits, those furloughed and facing temporary layoffs are. </li>



<li>Also on Thursday, the US Retail Sales report will be released. As Sevens Report Research founder Tom Essaye said Monday, investors being confident in a soft landing is the single most important support for the current market, so these consumer-spending metrics will be telling. Economists are calling for a 0.3% monthly increase in September, up from the 0.1% increase notched between July and August. After relatively flat retail sales data throughout 2024, a boost would be a welcome sign that growth is not too stagnant. </li>



<li>Lastly, the <a href="https://www.newyorkfed.org/survey/empire/empiresurvey_overview#tabs-4">Empire State</a> and <a href="https://www.philadelphiafed.org/surveys-and-data/regional-economic-analysis/manufacturing-business-outlook-survey">Philadelphia Fed</a> manufacturing surveys, to be released on Tuesday and Thursday, respectively, will give us the first look into economic activity for October. Both reports indicated that growth was on the rise last month, so continued momentum here will also support the soft-landing narrative. The Philly index, which turned positive last month, is expected to come in at 2.9, up from 1.7 in September. New York’s figure last month showed an increase in the state’s manufacturing activity for the month of September — the first such instance since November 2023. </li>
</ul>



— Casey Wagner



<h2 class="wp-block-heading">Bulletin Board&nbsp;</h2>



<ul class="wp-block-list">
<li>We talked about bitcoin, but ETH’s price rose above $2,600 for the first time since Oct. 1. It was at $2,625 at 2 pm ET — a more than 6% gain in the past 24 hours. </li>



<li>As part of an “opportunity agenda” for Black men, Vice President Kamala Harris is set to support on Monday “a regulatory framework for cryptocurrency and other digital assets so Black men who invest in and own these assets are protected,” according to a campaign <a href="https://mailchi.mp/kamalaharris.com/vice-president-harris-releases-opportunity-agenda-for-black-men-as-part-of-harris-walz-comprehensive-push-to-continue-engaging-black-voters-6744030">release</a>.</li>



<li>US ETFs that hold ether directly saw <a href="https://farside.co.uk/ethereum-etf-flow-all-data/">relatively flat</a> net flows last week, even as the country’s spot bitcoin ETFs posted $349 million of inflows over the five-day span. Bloomberg Intelligence’s James Seyffart <a href="https://blockworks.co/news/forward-guidance-newsletter-crypto-etfs-permissionless">acknowledged at Permissionless</a> last week that his flow projection for these ETH products appears to have been “way too bullish.” The funds have so far been hurt by launching during the summer “doldrums,” ETH’s <a href="https://blockworks.co/news/tough-ethereum-vibes">price trajectory</a> around that time and the need for <a href="https://blockworks.co/news/education-required-to-spur-eth-etf-outflows">more education</a> around the asset, industry watchers have said.     </li>
</ul>



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The factors that led BTC above $66K…and what’s next?

Today, enjoy the Lightspeed newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to the Lightspeed newsletter</a>. 



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Happy birthday, Solana bull run.



A year ago today, SOL was trading at around $22. By the end of October 2023, the price had nearly doubled. By Christmas day, it crossed $120 — a price appreciation of over 400% in less than three months. The chart pierced $200 a couple times in March, but SOL has oscillated above and below $150 for much of the past six months.&nbsp;



The asset was trading at around $155 at press time, a 606% increase from a year ago, according to CoinGecko.



Solana’s downtrend ended with its chief perpetrator — former FTX CEO Sam Bankman-Fried — on trial for fraud. As the market realized that FTX estate sales of SOL wouldn’t be as catastrophic as some feared, the price began to tick upward. Still, common knowledge held that Solana would struggle to shake off its FTX ties quite so quickly.



“Solana Is Down 15% Since Hitting a 14-Month High. Is the Rally Over?,” read one headline as SOL’s price sat around $40.



As the Bankman-Fried circus slowly receded from public view, token airdrops took over Solana’s mindshare. Multiple Solana-based DeFi protocols — most notably <a href="https://blockworks.co/news/jupiter-airdrop-draws-criticism">Jupiter</a> and <a href="https://blockworks.co/news/jito-airdrop-value">Jito</a> — distributed new native tokens to their users. Airdrop farming, or moving assets around in hopes of increasing one’s allocation, partly juiced the assets in Solana DeFi protocols to over $4 billion in March for the first time since early 2022. Today, Solana DeFi holds over $6 billion in assets, according to DeFiLlama.



For the bull run’s third act — one we’re very much still in the middle of — SOL rode a wave of excitement surrounding memecoins. What started with <a href="https://blockworks.co/news/slerf-investor-lose-money-crypto">missing pre-sale funds</a> and <a href="https://blockworks.co/news/memecoin-dogwifhat-shibainu-lasvegas-sphere">DogWifHat on the Las Vegas Sphere</a> gave way to pump.fun, a novel launchpad that let anyone launch a memecoin for a couple of dollars-worth in SOL. The platform, which is younger than Solana’s bull run, has <a href="https://dune.com/adam_tehc/pumpfun">generated</a> nearly $130 million in revenue.&nbsp;



As with many things in crypto, Solana’s bull run has involved a heavy dose of unseriousness — “free money” and speculative pet pictures abounded. And obviously, price trends like Solana’s can’t last forever, and we could very well be reflecting on Solana’s 500% drop a year from today. But for those who timed the bull run correctly, there was life-changing money to be made.



<a href="https://blockworks.co/news/permissionless-iii-day-three-solana">Last week at Permissionless III</a>, I met Klaus Wenzel, a Lightspeed reader who paid his way to attending the conference with profits he had taken from a SOL investment last October. Wenzel pays his bills with staking rewards from his SOL, he told me in a direct message.



“Now I can scroll Twitter, listen to Blockworks podcasts and research crypto full time. Life has never been better,” Wenzel said.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



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Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



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Solana’s bull run is 1 year old today

Macauley Peterson

Today, enjoy the 0xResearch newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/research">Subscribe to the 0xResearch newsletter</a>. 



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<h2 class="wp-block-heading">Why bitcoin ETF flows matter</h2>



As we approach the mid-point of October, net inflows for the US bitcoin ETFs have flipped into positive territory for the first time this month.



Bitcoin ETFs notched $253.6 million in net inflows on Friday, breaking a three-day negative streak. They ended the week with a solid net of $348.5 million.



ETF flows provide insights into bitcoin price movements, acting as a potential indicator of directional trends, according to David Lawant, head of research at FalconX.



In addition to a correlation between BTC price and ETF flows overall, “a positive shock to ETF flows leads to a persistent positive effect on bitcoin prices, peaking around days 3-4 with approximately a 1.2% price increase before gradually diminishing,” Lawant wrote in a research note Friday.



BTC is up about 5% today, threatening to break above the daily high set on Sept. 28 at nearly $66,000. The brief dip below $60,000 last week has turned into a spring, setting up a <a href="https://x.com/BigCheds/status/1845821835574759861">bullish double-bottom</a> chart pattern.



Ritesh Dutta, Deputy CEO at AMINA Bank, finds solace in the relative outperformance of venture capital-backed cryptos. “The recent surge in VC-backed cryptocurrencies, particularly SUI and Aptos, is a strong signal of market confidence in <a href="https://blockworks.co/news/on-the-margin-newsletter-inevitable-institutional-digital-assets-involvement">institutional adoption</a> of innovative blockchain technologies,” Dutta told Blockworks. He also likes the “resilience in DeFi,” which has maintained its total value locked (TVL) in the third quarter, alongside a 14% rise in the total stablecoin market cap to $172 billion.



For most crypto assets, the <a href="https://blockworks.co/news/btc-uptober-market-odds">anticipated “Uptober”</a> has been more like a continuation of “<a href="https://blockworks-research.beehiiv.com/p/closing-september-on-a-pullback">Choptember</a>.” But the present attempt to reverse a longer-term downtrend looks promising.



— Macauley Peterson 



<h2 class="wp-block-heading">Chart of the Day</h2>



Slow and steady progress with Ethereum solo stakers:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdRifiwliPYTJVYY_Fy7hfk2fs8ViYZZ4mOYNqCpY4bXtFh_m9Fy2NunrQPZYF-CDxf6Xl27b8kmommTR4Q2MaiKX5c3vkDOO9LUPyuCsPv9fxSIFrvuFBhF1dnIkGIXyzev3FMZ_6zQajj1CZnzHp-uPA?key=cpT_n3yTt4E3sWur4lvNGQ" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://ethresear.ch/t/on-solo-staking-local-block-building-and-blobs/20540">Ethresearch</a></figcaption></figure>



How well has Ethereum been preserving decentralization? According to research from Toni Wahrstätter, the reorg rate for solo stakers (dark purple line) has decreased about 0.25% since the <a href="https://blockworks.co/news/ethereum-dencun-upgrade-mainnet">Dencun hard fork</a> in March 2024.&nbsp;



Solo stakers may not necessarily be local block builders, however, as a certain subset are using third-party relays and <a href="https://blockworks.co/news/mev-the-relays-problem">MEV-Boost</a> to outsource block building. The bad news: Based on the last 12 months, local block builders — considered the holy grail of decentralization — are still about 5x more likely to be reorged than MEV-Boost block builders.



— Donovan Choy 



<h2 class="wp-block-heading">Governance</h2>



Ethena proposal to onboard SOL as USDe backing asset:



In August, Ethena made the <a href="https://x.com/ethena_labs/status/1821185511563956569">strategic decision</a> to expand its yield-bearing synthetic stablecoin USDe <a href="https://blockworks.co/news/lightspeed-newsletter-ethena-solana-integration">to Solana</a> with the use of LayerZero’s OFT (Omnichain Fungible Token) standard. Ethena looks to further expand its presence in Solana with a governance proposal <a href="https://gov.ethenafoundation.com/t/proposal-onboard-sol-as-a-usde-backing-asset/232">posted</a> last Thursday looking to onboard SOL as a backing asset to USDe.



Unlike centralized stablecoins such as USDT and USDC, USDe is collateralized by a “cash-and-carry” trade. Short positions on perpetuals futures are taken by Ethena against user-deposited BTC, ETH and possibly SOL (the long position) to exploit a difference in funding rates for profit, with a <a href="https://app.ethena.fi/dashboards/solvency">reserve fund</a> ($46.6 million) to mitigate short-term volatility.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXddKWJYtjSSqfUk4MbpsCss8cFtc_evkinQiVsOZbu6IR9hbvGnKMVjnIjHX6q3jkb4WWwwuMn0zRsMVAiWB-j5lRgPsbfNEg3-ypnankxvZ-ngbOlToMJWPJaUCkB4GuSgGHdDpRqmAX-h3ns7gK_flDVo?key=cpT_n3yTt4E3sWur4lvNGQ" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.ethena.fi/dashboards/positions">Ethena</a></figcaption></figure>



Posted by Ethena Labs Research, the economic rationale for the proposal is the relatively favorable funding rates of SOL perpetual futures in 2024 to BTC and ETH over the last several months.&nbsp;



If approved, the plan is to target an initial allocation range of $100 to $200 million SOL for USDe. That is about 5-10% of SOL open interest, compared to Ethena’s present stake in 3% of BTC open interest and 9% of ETH open interest.



— Donovan Choy



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Bitcoin is poised for a bullish reversal

As part of a larger investigation into TD Bank’s transactions and adherence to anti-money laundering laws, a FinCEN investigation found that the traditional finance bank failed to disclose “suspicious activity” regarding crypto.



A consent order alleges that the bank processed transactions for “Customer Group C,” which is an unknown entity, “including the facilitation of over $420 million to a financial institution offering cryptocurrency services in the high-risk jurisdiction of Colombia.”



There was a pattern, FinCEN <a href="https://www.fincen.gov/sites/default/files/enforcement_action/2024-10-10/FinCEN-TD-Bank-Consent-Order-508FINAL.pdf">said</a>, of Customer Group C doing over $100 million in wire transfers a month, “most of which facilitated apparent third-party cryptocurrency trading and involved high-risk industries and jurisdictions, including Colombia, China and countries in the Middle East.”



Read more: <a href="https://blockworks.co/news/fincen-hearing-crypto-illegal-financing">House hearing on FinCEN oversight turns into crypto debate&nbsp;</a>



Customer Group C saw transactions top $1 billion in a period of time from July 2023 to April 2024, the order found. Ninety percent of that came from an unnamed crypto exchange, though this one was UK-based. Sixty percent of the outgoing transactions went to a Colombian financial institution — again unnamed.&nbsp;



The group was also tied to an “international cryptocurrency exchange platform,” the order states, and received over $650 million from it. However, it’s not clear which platform <a href="https://blockworks.co/tag/fincen">FinCEN</a> is referring to.&nbsp;



“TD Bank processed these transactions on behalf of Customer Group C, due in part to a lack of clear controls applicable to customers dealing in cryptocurrency: the limited high level written policies the Bank had in place relating to virtual assets alluded to the requirements for certain additional controls and monitoring,” the order claims.



Read more from our opinion section: <a href="https://blockworks.co/news/crypto-innovation-suffering-inside-closed-networks">Crypto is becoming the same broken system it promised to fix</a>



“However, there is no evidence any enhanced controls were ever applied to Customer Group C’s extensive transactions with virtual asset service providers.”



The bank failed to report the activity until it received “multiple law enforcement inquiries” about the unnamed entity.



Last week, TD Bank pleaded guilty to <a href="https://blockworks.co/tag/aml">AML</a> violations, paying a hefty fine of $3 billion in penalties. Of that sum, $1.3 billion went to FinCEN according to the order filed with the government office.



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TD Bank failed to disclose ‘suspicious’ crypto transactions tied to unnamed customer group 

Today, enjoy the Empire newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



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



<h2 class="wp-block-heading">The comeback kid</h2>



I think we can all agree that NFTs won’t undergo the same explosion we saw last cycle.&nbsp;



That’s not, of course, to say that NFTs can’t make a comeback of any sort. But it looks like we won’t see CryptoPunk #5822 fetch another $23 million (8,000 ETH at the time) like it did a few years ago.&nbsp;



(For reference, in the past 24 hours, CryptoPunk #8135 sold for a cool 29 ETH, or $71,000, per CryptoSlam.)



OpenSea CEO Devin Finzer <a href="https://blockworks.co/event/permissionless-iii/recordings">told me at Permissionless</a> that this time will be a little different. And part of that, he said, is the utility behind NFTs.&nbsp;



“The technology has just been getting better and better,” since the last boom, he said on a panel.&nbsp;



The previous cycle caused some <a href="https://www.theatlantic.com/ideas/archive/2021/04/nfts-werent-supposed-end-like/618488/">issues</a>, even with the demand. Gas fees, among other things, were pain points for consumers who wanted to simply purchase an NFT. Finzer said that they’ve “solved” a lot of those problems since 2021.&nbsp;



“Now you can build all of the cool stuff that we’ve always dreamed of building because…scaling is here on Ethereum, for example,” he explained. Though OpenSea continues to work on onboarding and user experience, he said.



Admittedly, it seems already that any sort of NFT comeback is going to appear vastly removed from what we saw in 2021. Not just anyone is going to be able to create and successfully sell off an NFT.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfvJU1H4_fHYwDH1OvB2FYoSWZYQHn_GE_oFl4asiEhSqo4Q1oUiTDSqtMuK4yAwlq9hXX5B5EVwLMsh8hhZYq6vLD8Fcoicrl2Zpqgo4hHVVQ6A9qFL-DbD9eMQGZ3ebOTGIskrPRKcbSA4tNhRveAXgtc?key=lBKbl17C1g4q2pGnkOLNZQ" alt=""/><figcaption class="wp-element-caption">Source: CryptoSlam!</figcaption></figure>



Finzer said that he’s looking at transaction and user counts to monitor momentum, putting transaction volume to the side. Overall, Finzer said the space is showing a lot of “momentum.”



For example, three <a href="https://blockworks.co/news/7-nft-use-cases">use cases</a> are becoming abundantly clear this time around: gaming, physical collectibles tied to a digital collectible, and tokenizing real-life objects (like Galaxy <a href="https://investor.galaxy.com/news/news-details/2024/Galaxy-Announces-Tokenization-of-the-1708-Stradivarius-Violin-Empress-Caterina/default.aspx">tokenizing</a> a famous violin).



“Gaming’s probably the [use case] I’m most bullish on,” Finzer told the crowd at Permissionless. In a close follow-up, Finzer said he’s keeping an eye on physical assets, which encompasses both tokenized real-life items and digitizing certain things such as tickets.



Ubisoft’s announcement of a crypto game — Champions Tactics — that’ll launch later this month shows that perhaps gaming, a segment that didn’t flourish when Bored Apes were selling for millions, shows how demand has shifted. The <a href="https://championstactics.ubisoft.com/">page</a> for the game notes that 75,000 playable characters, or Champions, have been minted.



Not to mention that Off the Grid, another crypto game, which climbed to the top of the charts in the Epic Games store.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">10 months later &#8211; most popular free game on the Epic Games Store &#8211; #1 trending game on Epic &#8211; 150k Twitch streamers on Friday was more than League of Legends &#8211; partnership with Ninja &#8211; has an Avalanche L1 for token, marketplace, and NFTs Onchain gaming has arrived. <a href="https://t.co/A3uPMVTKxH">https://t.co/A3uPMVTKxH</a>&mdash; Yano 🟪 (@JasonYanowitz) <a href="https://twitter.com/JasonYanowitz/status/1845621334237155785?ref_src=twsrc%5Etfw">October 14, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



But there’s one other storm cloud over NFTs right now, and that’s the Securities and Exchange Commission, which <a href="https://blockworks.co/news/sec-issues-wells-notice-opensea-nfts">sent OpenSea a Wells notice</a> a few months ago, though <a href="https://blockworks.co/news/what-an-sec-lawsuit-against-opeansea-could-look-like">no lawsuit’s been filed yet</a>.



Finzer hopes that the momentum isn’t stymied by any potential regulatory action, given that OpenSea, among others, is “ready to go and fight if push comes to shove.”



“No news on that,” Finzer told me when I asked if they’d heard from the regulator since the notice.



As for where we end up over the mid-term, Finzer said that he expects a “wild” few years. “In five years, I think we’ll all be living in the metaverse potentially,” he said.&nbsp;



If that’s the case, I just hope my mortgage is cheaper.



— Katherine Ross



<h2 class="wp-block-heading">Data Center</h2>



<ul class="wp-block-list">
<li>BTC and ETH have broken upwards this morning, climbing over 3% to monthly highs of $64,800 and $2,530 apiece.</li>



<li>SUI set a new price record of $2.35 on Sunday evening, having gained 15% in the past week. It has since retraced slightly to $2.24 (mcap: $6.19 billion).</li>



<li>Base transaction counts have also hit a new peak, per <a href="https://app.blockworksresearch.com/analytics/base?dashboard=base-onchain-activity&amp;interval=weekly">Blockworks Research</a> data: 40.82 million in the past week, up over 17% from the previous period. Trading bots including Banana Gun are leading gas consumption on the network, alongside AMM Aerodrome.</li>



<li>Base’s TVL has hit a new <a href="https://defillama.com/chains">record</a> of $2.455 billion, up 54% in the past month.</li>



<li>Bitcoin is the second-most popular <a href="https://www.cryptoslam.io/blockchains">venue</a> for NFT trading in the past month after Ethereum: $67.2 million volume vs. $107.8 million.</li>
</ul>



<h2 class="wp-block-heading">Off the Grid, on the chain</h2>



Off the Grid — one of the first true AAA games infused with crypto — is a ballsy experiment worthy of your attention.



I spent the weekend (and some of this morning) blasting through as many rounds as I could, earning what appears to be a stand-in tester cryptocurrency for every kill.&nbsp;



And yes, it’s actually fun.



The third-person shooter, from Ukrainian-German studio Gunzilla Games, throws the player into a battle royale set in a world ripped straight from dystopian action thrillers Elysium, Chappie and District 9.&nbsp;



Which is to be expected: Director Neill Blomkamp co-founded the studio and serves as its creative chief.



It’s a cool twist on the genre made big by PUBG, Fortnite and Warzone. The lore goes that players have their limbs surgically removed to compete on the hyper-violent <a href="https://gameoffthegrid.com/">Teardrop Island</a> — to be replaced by mechanized arms and legs fitted with all sorts of weaponry, from swords and shields to drones and poison gas.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeofdex5GrzuWd8WxVysCMPKXoI2gxHda_jeZp1HZIBpdQ7vsv3XOdzeOU0vBm3YkcOL8efkk0A3lCoB5giShB5pNzw_r5yr7i0Rg5a5wIR1INCM9xaiCjBlVBBWLZYaIbBc376VsUMbo6pFSB461BwTLs?key=lBKbl17C1g4q2pGnkOLNZQ" alt=""/><figcaption class="wp-element-caption">Always dressed for crypto summer</figcaption></figure>



Freedom of movement is where Off the Grid really shines. Jetpacks are standard — so lots of zooming between buildings, cranes and other climbables — while legs can come loaded with ultra-speed or mega-jump capabilities.&nbsp;



It’s super fast-paced and smooth, although the PS5 beta does suffer from some optimization issues in the current version.



As for the crypto stuff: It’s not totally live just yet.



Weapons and other items like skins and clothing can be optionally minted NFTs and traded on the in-game marketplace for a native token, GUN. Just like a crypto version of the Steam marketplace.



Those mechanics run on an Avalanche subnet (through which transactions don’t eventually settle via the main Avalanche chain, as is the case with Ethereum rollups and mainnet).



Avalanche’s Blizzard Fund <a href="https://gunzillagames.com/en/news/55-Gunzilla-Games-Announces----M-in-Funding-Co-Led-by-CoinFund-and-Avalanche">co-led</a> a $30 million funding round in March for Gunzilla Games, alongside CoinFund.



And you can indeed earn GUN for killing enemies, ranking highly in matches and extracting what’s known as HEX cubes — loot boxes that you can then sell for more GUN. Above average items go for around 80 to 100 GUN at the moment.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc5mzZzLaLB162oxJUbxEVQBX8qTWhoVF9m2afCOnT8BaohpjLXVncich_wGzTW-1CL9d097DENqKAvhQur6aASgC98kLN0JPiNQT7CP1M6P0DCuXbJOBKSx6fy-FI5fiiPRQ7Xk_0bb_YPZ_42ieGKHnEP?key=lBKbl17C1g4q2pGnkOLNZQ" alt=""/><figcaption class="wp-element-caption">Three kills earned me 0.3 GUN, with an additional 1.2 GUN coming from the monthly battle pass subscription </figcaption></figure>



For now, the GUN token payouts and NFT minting appear to still be occurring on a testnet version of Gunzilla Games’ subnet, GUNZ, although all early access progress is set to carry over to the full release. I reached out to the team to confirm and I’ll drop a note in a future edition with their answer.&nbsp;



Either way, the <a href="https://scan.gunztoken.io/">testnet</a> has seen over three million transactions per day for the past three days running with 5.5 million wallet addresses — positively humming along. And in the future, items will be <a href="https://gunzillagames.com/en/news/56-Gunzilla-Games-Announces-Integration-of-its-GUNZ-Blockchain-Into-OpenSea-Marketplace">tradable</a> as NFTs on OpenSea, denominated in the GUN token, which the team previously <a href="https://decrypt.co/207849/district-9-director-avalanche-shooter-off-grid-launches-mobile-game-subnet-rollout">said</a> it plans to list on centralized crypto exchanges.



Aside from maintaining Twitch <a href="https://twitchtracker.com/games/983841243">attention</a>, the real keys to success will be whether Off the Grid can stave off cheaters while maintaining balance in its crypto-economy as it ramps up.



In the meantime, who can argue with pwning noobs to earn crypto.



— David Canellis



<h2 class="wp-block-heading">The Works</h2>



<ul class="wp-block-list">
<li>Avalanche Foundation struck a <a href="https://www.theblock.co/post/320833/avalanche-foundation-to-repurchase-tokens-sold-to-terras-lfg-in-2022-deal-pending-court-approval?utm_source=rss&amp;utm_medium=rss">deal</a> to repurchase nearly two million tokens sold to Terra’s Luna Foundation Guard, pending court approval.</li>



<li>Arkham Intelligence is <a href="https://www.bloomberg.com/news/articles/2024-10-11/crypto-firm-arkham-backed-by-openai-s-altman-to-launch-derivatives-exchange?utm_source=telegram&amp;utm_content=crypto&amp;utm_medium=social">reportedly</a> plotting to launch a derivatives exchange.</li>



<li>Samara Asset Holdings is <a href="https://www.coindesk.com/markets/2024/10/14/samara-asset-group-plans-up-to-328m-bond-to-expand-bitcoin-holdings/?utm_medium=referral&amp;utm_source=rss&amp;utm_campaign=headlines">planning</a> to issue a $30 million bond to buy up some bitcoin. </li>



<li>Copper <a href="https://www.coindesk.com/business/2024/10/14/crypto-custodian-copper-appoints-former-sec-advisor-amar-kuchinad-as-new-global-ceo/?utm_medium=referral&amp;utm_source=rss&amp;utm_campaign=headlines">tapped</a> former Goldman Sachs and SEC employee Amar Kuchinad as its new CEO.</li>



<li>Horst Jicha, a German national <a href="https://www.cnbc.com/2024/10/11/horst-jicha-skips-bail-new-york-cryptocurrency-fraud-fugitive.html">accused</a> of running a $150 million crypto scam, went poof from his New York City home while on a $5 million bond.</li>
</ul>



<h2 class="wp-block-heading">The Riff</h2>



Q: Are gamers coming around to crypto?



Off the Grid will be the best test of that to date.



To be clear, the game is very much still in beta. But there are already a slew of <a href="https://www.reddit.com/r/OffTheGridGame/comments/1g2hn64/anyone_else_having_trouble_with_purchases_fml/">posts</a> <a href="https://www.reddit.com/r/OffTheGridGame/comments/1g31wnh/failed_transactions/">complaining</a> about failed transactions for in-game stuff, and blockchain is, apparently, still very easy to blame.



One Redditor wrote:



“Why the hell does it take 15 tries of 15 different items before I can purchase anything on marketplace. Right now I can even buy anything on there like I been locked out by moderators for interfering on their stupid cryptocurrency scam they got going. Like what do u get by holding onto all the rarest items and preventing others from buying them. Only a handful of market gate holders have a majority of the valuable items and what does that get then at the end of the day a couple thousand dollars worth of savings in a video game they likely don&#8217;t even play. Fricken vultures man why don&#8217;t they just not use our market place to make crypto pennies and leave the gaming to gamers …”



Make of that what you will.



— David Canellis



It’s too early to tell.&nbsp;



I don’t think gamers necessarily have anything really against crypto (though, understandably, I think a lot of game developers have a bad taste in their mouth from previous iterations, but that’s a whole other can of worms).



The over-monetization of games can easily burn folks out. Remember back in 2017-2018 when loot boxes became more widely used, and therefore, controversial? I think folks just want to avoid that.&nbsp;



I’ll be honest with you, I’m an avid Sims player so I’m well aware of how much it sucks to continually sink money into a game. And I think it’s a fair concern for games with NFT functionality. But I hope that we’ve finally struck a fair balance.&nbsp;



No one’s gonna care if it’s a crypto game as long as it’s good, and doesn’t require you to drain your bank account to have a fun time.&nbsp;



Let’s be real, at the end of the day, the gameplay is what really matters.



— Katherine Ross



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A wave of new games could prove NFTs aren’t dead after all

Karate Combat announced the launch of its upcoming layer-2 blockchain, UP, built on the Hedera layer-1 network.



The first professional striking league governed by its own KARATE token, the project allows over 100,000 users to earn tokens by accurately predicting fight outcomes using its Up Only Gaming software.



Through the use of the Up Only Gaming software stack, more than 100,000 users on the platform can earn KARATE tokens by correctly predicting fight outcomes.



The UP layer-2 is set to be launched in Q1 2025. Its own $UP token is planned to be launched within the same year, with up to 30% of the token going to KARATE stakers.



Read more: <a href="https://blockworks.co/news/permissionless-day-two-vibes">Politics and memecoins drive the conversation on day 2 of Permissionless</a>



“Karate Combat is already massively incentivized to spread its Up Only Gaming technology to other sports, esports, fantasy sports, crypto projects and more,” onlylarping, Karate Combat’s pseudonymous co-founder, said. “UP is the enabling technology to not only allow us to provide all the tech for free, but to give grants and our user base to early partners.”



Karate Combat’s latest combat sporting event <a href="https://www.universe.com/events/karate-combat-50-permissionless-tickets-NP6T1Z">KC 50</a> is being held at <a href="https://blockworks.co/event/permissionless-iii">Permissionless III</a> in Salt Lake City, UT. It will feature a fight between David Hoffman, co-founder of Bankless, and Kain Warwick, co-founder of Infinex.



Read more: <a href="https://blockworks.co/news/permissionless-iii-day-three-defi">Permissionless III: DeFi phoenix looms as OG builders forecast next phase</a>



<h2 class="wp-block-heading">Polemos partners with Buff</h2>



On Wednesday, the blockchain <a href="https://blockworks.co/tag/gaming">gaming</a> asset management platform Polemos announced a partnership with Buff.game — a gaming company that runs a loyalty program for over 15 million players across games like Dota 2, Fortnite, League of Legends, Valorant and more.



The partnership is leveraging Polemos&#8217; asset management wallet and non-collateralized lending solution to let gamers trade, lend, borrow and access in-game items without the need for players to make an upfront investment.



Carl Wilgenbus, CEO of Polemos, said of the partnership: &#8220;This collaboration with Buff.game represents a pivotal moment in the evolution of gaming. By combining our Web3 expertise with Buff&#8217;s massive player base, we&#8217;re set to catalyze widespread adoption of blockchain gaming technologies.&#8221;



<h2 class="wp-block-heading">One interesting stat:</h2>



<ul class="wp-block-list">
<li>Pudgy Penguin <a href="https://x.com/pudgypenguins/status/1841878248101196078">GIFs</a> on Giphy have seen more than 30 billion views. </li>
</ul>



<h2 class="wp-block-heading">Also of note:</h2>



<ul class="wp-block-list">
<li>ENS domain names are now <a href="https://x.com/nalin/status/1843750140332650851">searchable</a> on Google.</li>



<li>The CryptoKitties NFT project is <a href="https://x.com/CryptoKitties/status/1841206455153934824?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1841206455153934824%7Ctwgr%5Ef0beffe8b1d8a196bee0ddfc0667d6d00ce86b14%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fopensea.io%2Fblog%2Farticles%2Fopensea-digest-october-10-2024">launching</a> “All the Zen,” a new monster breeding game on the Telegram messaging platform.</li>



<li>The Avalanche-based battle royale shooter Off the Grid from Gunzilla Games went <a href="https://x.com/playoffthegrid/status/1843685237546725748?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1843685237546725748%7Ctwgr%5Ef0beffe8b1d8a196bee0ddfc0667d6d00ce86b14%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fopensea.io%2Fblog%2Farticles%2Fopensea-digest-october-10-2024">live</a> on PlayStation 5, Xbox and PC, making it the first ever blockchain game on PlayStation 5.</li>
</ul>



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



<h2 class="wp-block-heading">The state of crypto ETFs: Permissionless edition</h2>



We’ve already noted there has been plenty of <a href="https://blockworks.co/news/empire-newsletter-permissionless-crypto-regulation">regulatory talk</a> at Permissionless.&nbsp;



ETFs were also a major point of discussion following the milestone launches of US spot <a href="https://blockworks.co/news/sec-approves-bitcoin-etf">bitcoin</a> and <a href="https://blockworks.co/news/ether-etfs-approved-for-us-exchange-july-23">ether</a> funds in January and July, respectively.&nbsp;



The bitcoin ETF chatter focused, in part, on the buyers driving the so-far $18.6 billion of net flows into the segment.



“The industry had an expectation that was summed up by: ‘Here come the boomers,’” Bianco Research’s Jim Bianco said during a panel discussion. “I don’t think it’s really been that at all.”



Rather, he and fellow panelist Bloomberg Intelligence analyst James Seyffart, noted that a large <a href="https://x.com/biancoresearch/status/1802764031415271586">chunk</a> of that money has come from existing digital wallets.



Indeed, Samara Cohen, BlackRock’s CIO of ETF and index investments, noted that 75% of buyers of the iShares Bitcoin Trust (IBIT) had never bought an iShares product before — signaling many IBIT holders are more crypto native investors.&nbsp;



While a number of wealth managers have <a href="https://blockworks.co/news/advisers-bitcoin-etfs-client-portfolios">jumped into</a> these products, many more remain on the sidelines. Morgan Stanley has <a href="https://blockworks.co/news/on-the-margin-newsletter-morgan-stanley-bitcoin-adoption">allowed</a> its financial advisers to offer the BlackRock and/or Fidelity bitcoin ETFs to certain clients, but other wirehouses have not yet followed suit.



“Really what they want to look at is who are the right investors, what’s the right level of liquidity needs, risk tolerance…and what’s the role bitcoin might play in a portfolio so they can recommend an appropriate allocation,” Cohen said. “That’s not a trivial exercise with relatively limited trading data and a pretty interesting market backdrop over the last few years.”&nbsp;&nbsp;&nbsp;&nbsp;



Seemingly more involved than wealth managers in bitcoin ETFs right now are hedge funds that are executing basis trades, Permissionless speakers have noted. That means they are taking positions in both the BTC spot and futures markets in a bid to profit from price differences.



As for the spot ether ETFs, Seyffart acknowledged his flow estimate for those funds (at between 15% and 25% those of the BTC funds, in the first year) appears to have been “way too bullish.”



Those US ETH products have so far seen net outflows amounting to $548 million.



A few reasons for this include the product launches occurring during the summer “doldrums,” ETH’s <a href="https://blockworks.co/news/tough-ethereum-vibes">price trajectory</a> around the launch and the need for <a href="https://blockworks.co/news/education-required-to-spur-eth-etf-outflows">more education</a> around the asset.&nbsp;



And, of course, the ETFs can not yet <a href="https://blockworks.co/news/proposed-ether-etfs-not-staking-eth">stake</a> the ETH that they hold.&nbsp;



“People who understand this and are staking their ETH would never go to an Ethereum ETF because you’re giving up that 3% or 4% yield,” Seyffart said. “You lose more utility by taking Ethereum and putting it in an ETF wrapper than you do taking bitcoin and putting it into an ETF wrapper.”



— Ben Strack



<h3 class="wp-block-heading">13.75%</h3>



The amount MicroStrategy shares were up on Friday, as of 2:15 pm ET. The business intelligence firm’s stock price is now at a 52-week high.



The run-up comes as MicroStrategy founder Michael Saylor announced plans to launch a bitcoin bank during a recent interview with research firm Bernstein. MicroStrategy currently holds 252,220 BTC.



<h2 class="wp-block-heading">Did You Notice</h2>



Happy Friday! Inflation data this week came in above expectations, painting an uncertain picture as investors and analysts continue to <a href="https://blockworks.co/news/btc-uptober-market-odds">speculate</a> about what we might see from the Fed in November. Here are the highlights:&nbsp;



<ul class="wp-block-list">
<li>Thursday’s CPI report came in hotter than expected. As Felix said <a href="https://blockworks.co/news/forward-guidance-newsletter-hot-inflation-data">yesterday</a>, the report wasn’t smoking hot, but left much to be desired. We’ll call it warm. Core CPI rose 0.3% month over month, vs. the 0.2% that analysts expected. Annually, core CPI came in at 3.3%, just above the forecasted 3.2%. Same with headline CPI, which was up 0.2% from the prior month and 2.4% year over year, compared with 0.1% and 2.3% expected, respectively. </li>



<li>Friday’s PPI report showed core PPI inflation rose to 2.8% annually. Analysts had called for 2.7%. The monthly increase for the core index showed a 0.2% increase in line with forecasts. Neither the PPI nor the CPI are the Fed’s top inflationary gauge, but they are still important data points to note. </li>



<li>The University of Michigan published its Survey of Consumers on Friday, showing sentiment dropped 1.7% from September to October. At the same time, near-term inflation expectations increased to 2.9%. It’s the highest inflation expectation we’ve seen since the summer. </li>
</ul>



— Casey Wagner



<h2 class="wp-block-heading">Bulletin Board&nbsp;</h2>



<ul class="wp-block-list">
<li>Coinbase Chief Policy Officer Faryar Shirzad said during a Permissionless panel that Donald Trump is “very committed to the crypto issue” and that the Harris campaign “has done a really good job in beginning to talk to us.” We asked the executive about some other things; check <a href="http://blockworks.co">Blockworks.co</a> next week for our full interview with Shirzad.</li>



<li>Bitcoin’s price surged above $62,900 by 2 pm ET — up more than 4% from 24 hours prior.  </li>



<li>After notching $245 million of net inflows on Monday, the US-listed spot BTC funds endured three straight days of outflows this week (amounting to a combined $140 million), Farside Investors <a href="https://farside.co.uk/bitcoin-etf-flow-all-data/">data</a> shows. <a href="https://farside.co.uk/ethereum-etf-flow-all-data/">Flows</a> into the US ETH products have been roughly flat since Monday. </li>



<li>Permissionless is wrapping up today, but Blockworks’ DAS is coming back to NYC from March 18-20, 2025! Early bird tickets are <a href="https://blockworks.co/event/digital-asset-summit-2025-new-york">available now</a>.</li>
</ul>



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

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