EarnBet

Katherine Ross

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



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If we’re trying to celebrate Christmas, then we need to bring out some green to even out the red this morning.&nbsp;



Kraken’s Thomas Perfumo already <a href="https://blockworks.co/news/crypto-market-holiday-pullbacks">warned us last week</a> that we could see some pullbacks ahead of the holidays, and that seems to be ringing true right now. Whether or not we see the selling countered is another story.&nbsp;



But I’m not actually here to talk about markets. Or, I should say, I’m not talking about what the markets are doing today.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd6dwvu5R48RdU6YZzbtei5ghv_4Kfq37E3l6c83bOW-18vweS7Y3W5W7Ec3m3bpNEkWi9mqT1-hXaye1iBk4G3_VKO0-LS0VZ1DIGE9wT1iPW8zbGIlrIyOeGYB-b7R7rsowq40A?key=t1FBQ15ZXSF89ih_1dIaFidS" alt=""/><figcaption class="wp-element-caption">Keep this chart in mind if you’re obsessively watching bitcoin’s price right now. Source: Coinbase Institutional</figcaption></figure>



Earlier this week, Coinbase Institutional released its market outlook for next year.&nbsp;



David Duong, head of research, pointed out in the note that the 2024 uptrend has shown some “stark” differences to previous cycles, but the overall landscape looks “promising” still.



VanEck, in its predictions, otherwise said it believes that the bull market’s going to carry on next year, peaking at around $180,000. After that, they expect a 30% retracement from bitcoin and altcoins could see double that.&nbsp;



“A recovery is likely in the fall, with major tokens regaining momentum and reclaiming previous all-time highs by the end of the year,” VanEck wrote.&nbsp;



But even if we see a decline, Coinbase Institutional came off pretty bullish in their note.&nbsp;



“As the regulatory and technological landscapes evolve, we expect to see substantial growth in the crypto ecosystem as wider adoption drives the industry closer to achieving its full potential. This will be a pivotal year. The breakthroughs and advancements of 2025 may very well help shape the long-term trajectory of the crypto industry for decades to come,” Duong wrote.&nbsp;



Let’s zoom in on a question I’ve asked a number of people now: Can <a href="https://blockworks.co/news/when-will-eth-break-all-time-high">ETH make a comeback next year</a>? 



ETH’s just been lagging behind, watching from the sidelines as both bitcoin and solana carve out new all-time highs.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXelOEjo8tLgBB6SzB2TyqaLUOhyqPVdOtfrVQNKQ7vela_9QHpwnBdM7liCmZFwyLvnbrtQA4lutkU5fHRRXQY3hpMXMdZDRtmOpjbmkRx1tBsALAH6jYoSJ4GSz1bokyhJ5WQI_w?key=t1FBQ15ZXSF89ih_1dIaFidS" alt=""/></figure>



In the long-term, Duong and his team think that the growth of the Ethereum L2 ecosystem is a “boon,” but it’s not clear right now if that’s going to be enough to aid ETH in the short to medium term.



21Shares, in their predictions report, thinks that Solana is going to continue to eat Ethereum’s lunch.



“While we don’t anticipate a full ‘flippening,’ Solana is primed to outperform and capture more market share from Ethereum through improved UX and infrastructure,” 21Shares analysts wrote.&nbsp;



They also think that Ethereum is primed for a “revenue renaissance” beginning next year.&nbsp;



“Web2 firms like Robinhood and PayPal, along with traditional finance entities like Visa, are likely to launch their own L2s, leveraging cost-efficiency and scalability to unlock new revenue streams and serve a growing demand for decentralized applications,” they said.&nbsp;



So maybe things aren’t looking so bad after all.



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What analysts say about the market next year

Jack Kubinec

This is a segment from the Lightspeed newsletter. To read full editions, <a href="https://blockworks.co/newsletter/lightspeed">subscribe</a>.



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A group of 12 plaintiffs filed a lawsuit against two of the creators of HAWK, a memecoin promoted by the so-called Hawk Tuah girl Haliey Welch, in the Eastern District Court of New York this morning.&nbsp;



Welch is notably not party to the suit, which lists only her business partners, a launchpad and a Cayman Islands foundation as defendants. Welch became the latest celebrity to launch a Solana memecoin this year — and far from the first to have it blow up on her.&nbsp;



Haliey Welch became the face of the “Hawk Tuah” meme after appearing in a man on the street social media post in Nashville this summer. Improbably, Welch turned her brief clip into a promising influencer career: her Talk Tuah podcast <a href="https://x.com/ComplexPop/status/1838315768569532419">rose</a> to #4 on the charts.



Welch also made some crypto ties, <a href="https://x.com/HalieyWelchX/status/1816934298890432814/video/1">attending</a> Bitcoin Nashville and appearing <a href="https://x.com/MostCrucified/status/1831450281261007034">virtually</a> at Korea Blockchain Week. Her X profile picture is a reference to the Mog memecoin.



In late November, a little-known company called overHere announced it had partnered with Welch to launch HAWK, a memecoin that would “redefine the crypto space.” The HAWK token is the <a href="https://overhere.gg/">only</a> product listed on overHere’s website. It was founded by Clinton So, a Hong Kong resident who is one of the lawsuit’s defendants.



“We have been extremely transparent about the limited scope and extent of our involvement in the Hawk Tuah token project. We are confident that we have done nothing wrong. As for any litigation, we will let the process play out in court,” said So’s PR firm, which is called Rekt Partners, when reached for comment.



The crypto twitter personality Alex Larson Schultz, a Los Angeles resident known online as Doc Hollywood, also helped promote the launch. Some of the HAWK tokens were pre-sold and used to fund the project, the lawsuit says.



The token debuted Dec. 4 and saw its market capitalization shoot up before falling 90% all within a few hours, the suit adds. Welch, So, and Schultz initially defended the failed launch in an X space before largely disappearing from social media for the past two weeks. Welch has not posted or uploaded anywhere online since the incident.



So has already thrown Schultz under the bus for the incident: the overHere X account posted that Schultz/Doc Hollywood had full control of the token and “<a href="https://x.com/overHere_gg/status/1868799748305756667">vanished</a> when things got hard.” OverHere cast Welch and her team as wanting to tap “Web3’s potential” but not having the experience to do so in a savvy way.



Celebrities being taken for a ride by business partners urging them to debut hopeless projects is a time-honored tradition in crypto — just <a href="https://x.com/Caitlyn_Jenner/status/1795269306693075404?lang=en">ask</a> Caitlin Jenner. Reading between the lines, that seems to be the case here as well. Welch not being a defendant in the suit is telling in that regard. That story becomes sadder when the celebrity involved is a 22 year-old girl who just became famous overnight.



Max Burwick, whose Burwick Law firm filed the suit alongside Wolf Popper, told me the firm is “engaged in discussions” with Welch’s counsel.&nbsp;



He added that the case “underscores a troubling pattern in the crypto space: the targeted exploitation of celebrity and public figures’ names to generate profit, often at the expense of everyday people.”



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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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HAWK memecoin draws lawsuit, but ‘Hawk Tuah’ girl not sued

Ben Strack

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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Bitcoin keeps hitting new highs. Good for bitcoin, ether says (if the asset could talk).&nbsp;



ETH’s price of $3,470 (as of 1:30 pm ET Thursday) is about 30% off of its nearly $4,900 all-time high (set in November 2021).



LMAX Group market strategist Joel Kruger said a weekly close above $4,000 could help accelerate the rally toward a retest of its price peak. That “could easily play out between now and year end,” he told me earlier this week.



<a href="https://www.reuters.com/markets/us/futures-inch-higher-markets-await-fed-decision-2024-12-18/">Stocks</a>, BTC and ETH then dipped following Wednesday’s FOMC meeting. Still, Kruger said he doesn’t expect the latest crypto asset selling to materially impact longer-term price outlooks.



CoinShares research associate Luke Nolan told me he’s eyeing February or March for ETH to hit a new high — that is, if market momentum continues and ether ETF flows remain strong.



He sees several factors working in ETH’s favor: a multi-year low in the ETH/BTC ratio; a flip in retail and institutional sentiment; and being an attractive relative value trade (given ETH is one of the few notable coins <a href="https://blockworks.co/news/eth-sol-playing-catch-up-btc">yet to hit</a> an ATH this cycle).



On the investor sentiment piece, US <a href="https://farside.co.uk/ethereum-etf-flow-all-data/#google_vignette">spot ETH products</a> have brought in $3 billion of net inflows since Nov. 6 (<a href="https://blockworks.co/news/revisiting-trumps-crypto-promises-after-his-election-win">after the election</a>). That number is $13.5 billion for <a href="https://farside.co.uk/bitcoin-etf-flow-all-data/">spot BTC funds</a> over that span.



BTC remains an “easier sell” for many investors given its digital gold narrative, Nolan argued. More difficult to grasp is an analogy of Ethereum as a kind of global <a href="https://blockworks.co/news/empire-newsletter-ethereum-blockchain-innovation">decentralized AWS</a>.



“It&#8217;s a slower process to get people to understand [ETH’s] value proposition,” he added. “But it seems to be happening more so now than it was when the products initially launched.”



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An ATH for ETH?

Felix Jauvin

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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So the Fed cut rates by 25bps yesterday and markets threw a fit. Hell, we even ran <a href="https://blockworks.co/news/rate-decision-fuels-santa-rally-odds">a headline</a> talking about a Santa rally that was about to ensue. Whoops. It happens.&nbsp;



But what gives? What actually happened? Let’s break it down.



Going into an FOMC meeting, a constellation of factors come together to create the tension that leads to the price outcome of the event. This combination of the market’s expectations is based on the FOMC’s forward guidance (the name of this newsletter!) and the positioning of market players going into the event with respect to those expectations. Let’s break the two down.&nbsp;



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



Going into the meeting, the SOFR curve, which can be considered the market implied forecast of the fed funds rate path toward its terminal rate, had departed significantly from the Fed’s previous summary of economic projections forecast from September.



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1144" height="1018" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-2-1.png?w=1024&amp;h=1024" alt="" class="wp-image-95554" style="width:691px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-2-1.png?w=1144 1144w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-2-1.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-2-1.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-2-1.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-2-1.png?w=289 289w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-2-1.png?w=293 293w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-2-1.png?w=246 246w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-2-1.png?w=80 80w" sizes="(max-width: 1144px) 100vw, 1144px" /></figure>



This largely reflected a major phase shift upward in economic strength and resilience of the labor market, requiring less rate cuts than what everyone expected in September.&nbsp;



In 2025, the market was only anticipating three-ish rate cuts. Therefore, to surprise the market to the hawkish side of things, the hurdle was very high to achieve this.&nbsp;



To my surprise, the FOMC managed to do it while also cutting rates yesterday. A hawkish cut? What a time to be alive.&nbsp;



By moving up the expected fed funds rate to 3.9% (from 3.4%), the FOMC forecasted only two cuts in 2025 vs. the already hawkishly positioned market that expected three.



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf-h-2pih4yt0aCmS3d1qxbBgHcixd0fah1XMPRvmkZPRuSSL7Nq28nuXK9_8zI8W2lyj1VVezl8zTcUktM5VFGu1EYzO7nSHtYLOm4o2Pyz6oSYE0kFfX5Jx5B29uVpUBuTt1d?key=lY_46wJq03kW9UoYsGQARtzY" alt="" style="width:726px;height:auto"/></figure>



This decrease in the amount of cuts was largely driven by increased uncertainty on the path of inflation in the next 12 months, as seen here:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="598" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-1-1.png?w=1024&amp;h=1024" alt="" class="wp-image-95553" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-1-1.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-1-1.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-1-1.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-1-1.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-1-1.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-1-1.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-1-1.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-1-1.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-1-1.png?w=80 80w" sizes="(max-width: 1600px) 100vw, 1600px" /></figure>



All of that information got distilled into this simple move — the second dot here moving above the market’s expectation in 2025: 



<figure class="wp-block-image size-full is-resized"><img loading="lazy" decoding="async" width="1006" height="968" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-2.png" alt="" class="wp-image-95552" style="width:687px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-2.png?w=1006 1006w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-2.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-2.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-2.png?w=267 267w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-2.png?w=271 271w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-2.png?w=228 228w, https://blockworks-co.imgix.net/wp-content/uploads/2024/12/unnamed-2.png?w=80 80w" sizes="(max-width: 1006px) 100vw, 1006px" /></figure>



Now what made this move so brutal yesterday? The second part: positioning.&nbsp;



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



There’s a trifecta of positioning dynamics that came together to lead to the perfect kindling, sparking the fire that was yesterday. As Tyler Neville (co-host of the roundup) discusses here, with the VIX being so low into the event, the systematic crowd was aggressively long: <img loading="lazy" decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfM8xlPBc3OErRsLaVb8fSyH0rPlOiC_PkPzh1GF-So2IJMb9cRLA68oxj9GTxvZUkH7IdAw7EAkeQiWFKghh7X7vYawEiLBcAOPB-zjI0l0u36ARh5lxCqpjrzjpd-QoDHUGNd?key=lY_46wJq03kW9UoYsGQARtzY" width="466" height="585">



Further, there were widespread expectations of seasonality dynamics in markets (i.e. the Santa rally we alluded to yesterday) to take us to the promised land. This led to everyone piling in on the same trade of longing high beta risk assets under an assumption of continued dovishness from Powell.



Finally, we have the largest options expiry in history happening this week. With such large open interest, dealers who have to hedge their delta exposure end up chasing gamma in a reflexive manner that amplifies moves in markets. This further led to yesterday’s acceleration.



As always, there’s no single cause for market moves on any day. More so, it’s the constellation of a variety of factors that come together to cause the outcome. And some days those end up being quite aggressive moves, like we saw yesterday.



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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>.



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Unpacking the Santa rally that never was

Donovan Choy

Bull markets are the time of exciting mainnet launches, airdrops and announcements.



After the world’s shortest testnet, Kraken brought forward yesterday the <a href="https://blockworks.co/news/kraken-ethereum-layer-2-superchain">mainnet launch</a> of its Ink L2 rollup — months ahead of schedule. Then, Sophon, a consumer-focused validium L2 on the Avail data availability layer, also <a href="https://x.com/sophon/status/1869427009278914935">launched</a> its mainnet.



But the announcement that&#8217;s getting ETH bulls excited today? Banking giant Deutsche Bank is planning an L2 deployment on ZKsync’s Elastic Chain stack, <a href="https://www.bloomberg.com/news/articles/2024-12-18/deutsche-bank-tries-to-tackle-compliance-hurdles-for-public-blockchains?utm_source=telegram&amp;utm_content=crypto&amp;utm_medium=social">Bloomberg</a> reported.



&#8220;Institutions looking to build onchain are coming to ZKsync for the ability to build in Web3 without compromise. ZKsync offers institutions with a customizable architecture to build tailored solutions that enable privacy, scalability and interoperability with other private and public blockchains,” Alex Gluchowski, co-inventor of ZKsync, told Blockworks.



Codenamed <a href="https://www.axelar.network/blog/deutsche-bank-dama-2-announcement">Project DAMA 2</a>, Deutsche Bank’s initiative was first announced in early November as part of the Singapore central bank’s <a href="https://blockworks.co/news/singapore-central-bank-ready-to-try-defi-after-crypto-giants-leave-for-dubai">Project Guardian</a>. Project Guardian is a global consortium of 27 financial institutions and eight key policymaker groups, focused on nudging financial institutions towards experimentation with <a href="https://blockworks.co/news/jpmorgan-tokenized-blockchain-portfolio-avalanche">asset tokenization</a> and <a href="https://blockworks.co/news/ubs-switzerland-tokenized-fund-ethereum">blockchain ledgers</a>.



Deutsche’s L2 is a TradFi development, so all the trappings of a TradFi L2 is to be expected.



That is to say, it’s a permissioned L2 network that needs to prioritize regulatory compliance over the kinds of financial degeneracy replete elsewhere on public blockchains.



Regulators are increasingly coming around to recognizing the merits of blockchain technology, but even the most forward-thinking policymakers aren’t giving up their power in a pinch.



Put simply, financial regulators are saying: Go forth and innovate with blockchains, but not to the point where it undermines our political bottom lines, please.



As AdrianoFeria.eth <a href="https://x.com/AdrianoFeria/status/1869455036880658650">put it</a>: “The only pragmatic choices for institutions that require stringent oversight and interoperability are to either run their own private, permissioned layer-1 chains, or to harness Ethereum’s L2 ecosystems.”



So Deutsche, like other centralized institutions that have launched L2s, has turned to the premier destination for that customizable solution: Ethereum.



Ethereum’s pivot from sharding to a rollup-centric roadmap in 2020 was largely pitched as a technological bet on <a href="https://blockworks.co/news/ethereum-blobs-balancing-act">horizontal scaling</a> rather than the vertical scaling route that Solana has taken. I.e., the global state can’t fit on one blockchain, we need to split it up.



That modular freedom to launch a chain however you want is also what motivates many TradFi institutions to choose Ethereum.



This strategy is, of course, not exclusive to Ethereum. Avalanche too, has pursued this aggressively with its <a href="https://blockworks.co/news/block-explorer-ava-labs-etherscan">subnet model</a>.



Avalanche’s traction, however, has been subpar relative to Ethereum rollup adoption, for the reason that it has been one step behind Ethereum in technology.



“Firstly, Ethereum rollups came out before Avalanche’s subnets. And when subnets were ready, it carried a far higher upfront cost compared to launching an OP Stack rollup. All the while, costs of rollups were trending down with EIP-4844 and new data availability solutions <a href="https://blockworks.co/news/data-availability-transaction-costs-blockchain">like Celestia</a>,” Blockworks Research analyst Nikhil Chaturvedi explained.



But that too is changing for Avalanche.&nbsp;



Avalanche&#8217;s <a href="https://x.com/BlockworksAdv/status/1868710879694635129">Etna</a> upgrade this week is drastically cutting the costs of launching an Avalanche subnet (now rebranded to Avalanche L1s). Previously, P-Chain validators had to stake 2000 AVAX, whereas costs today would be more than 10x smaller.



“The costs are now reduced to be cheaper or comparable to the cost of a rollup on Celestia,” Chaturvedi 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>.



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>.



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Deutsche Bank puts ZKsync in the zeitgeist

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



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Let’s look ahead and forget about bitcoin (briefly) sliding under $100k, shall we?



For Amberdata’s Greg Magadini, any altcoin szn is currently set to give retail a potentially profitable run. Though, clearly, this is crypto, and everyone should maintain caution.&nbsp;



Anyway, he pointed out that altcoins offer regular investors a “more even playing field” than the stock market does.&nbsp;



“If you think about a company that goes public, typically there are VCs that are early stage investors, there&#8217;s a Series A, B, C, so on, so forth. Then there&#8217;s an IPO, and then retail buys at the very, very tail end. In crypto, it&#8217;s actually the opposite. Its retail is in Discords — small teams essentially talk to their Discord communities to launch a token, and often retail is the first one to be in the market, so they essentially have an information advantage,” Magadini explained.&nbsp;



“And so that&#8217;s what makes this market very interesting: as a small player, you can invest and be at the forefront of value creation. But obviously the volatility can be crazy, and there&#8217;s a lot more scams. There&#8217;s no regulation along the way. Basically, you are kind of on your own.”



Magadini said that bitcoin — though volatile — is the lowest volatility asset for crypto right now, and also has the benefit of being the biggest market in which most people, and institutions, with crypto exposure are in.&nbsp;



This opens the door for a potential altcoin rotation to have a “higher beta performance,” where bitcoin can go 2x, and altcoins go 10x, Magadini said.&nbsp;



The good news for retail this cycle is that, despite seeing institutional action in bitcoin and ether, Magadini said he thinks institutions are still “locked out” until we see an altcoin become a major pair.



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Institutions are ‘locked out’ until an altcoin become a major pair: Analyst

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A couple months after rumors started <a href="https://x.com/0xMert_/status/1849414495170388302">trickling</a> out, the Solana developer shop Anza — which was spun out of Solana Labs earlier this year — put out a pair of proposals to consider implementing slashing in the network.



Solana has notably never enabled slashing, which is a popular method to keep validators honest in proof-of-stake blockchains. By putting slashing live, Solana would have a way to punish validators who slow down the network — but it would also introduce a vector of risk for SOL stakers.



Solana validators run software and propose and vote on blocks containing Solana transactions. Every 400 millisecond slot, a validator becomes the leader who proposes a block for all the other validators to vote on and verify. If the block looks good, it’s confirmed. If there are problems, a slot can be skipped and revisited later so that Solana can still run fast. Currently, there is no way to punish leaders who mess up proposing blocks, or validators who vote late or incorrectly, slowing down Solana’s consensus.



For now, the proposed slashing program would only slash validators for so-called duplicate blocks, where the same block is created twice. Anza is yet to decide what the slashing economics would look like at a granular level, but the SIMD author recommended burning, or functionally destroying, the slashed stake. Anza’s Ashwin Sekar also proposed a parabolic slashing curve where if 5% of a validator’s stake commits a violation, 1% of their stake is burned, while if 33% of the stake commits a violation, 100% is slashed. Ethereum’s slashing curve is linear, Sekar <a href="https://www.youtube.com/watch?v=7Hmkaj-5QUU">explained</a> on a validator discussion call.



Sekar also said the slashing proposal is still in its early stages, and such an update would be rolled out in late summer 2025 at the earliest.



Anza’s proposal seemed to be met with general early approval from Solana’s technical community.



“I can think of many scenarios in Solana where slashing is critical,” Temporal researcher Ben Coverston said on X. “Slashing is necessary to make malicious behavior -EV.”



We don’t know how slashing might look on Solana, but on Ethereum, slashing incidents tend to be quite rare. Less than 0.04% of active Ethereum validators have ever been slashed, according to Ethereum research shop Consensys. Simply put, most validators tend to do what they’re supposed to do nearly all of the time in blockchain settings with slashing enabled.



Still, turning slashing on would add a risk vector for Solana stakers, who would see their rewards suddenly dip if their delegated validator had their stake suddenly burned. This risk extends to restaking protocols as well, as some have warned of <a href="https://blockworks.co/news/eigenlayer-at-risk-of-centralization">“slashing cascade” risks</a> for Ethereum restaking outfit EigenLayer. 



“[I] hope [you&#8217;re] staking with validators you actually trust,” Mert Mumtaz, CEO of Solana’s largest validator Helius, <a href="https://x.com/0xMert_/status/1849414495170388302">said</a> on X.



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Solana staking may become riskier as Anza proposes slashing

David Canellis

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It’s probably safe to say that Donald Trump isn’t really signing transactions on Polygon and Ethereum himself.



Still, those handling the crypto projects he’s linked to are doing their best to have Trump live up to his moniker: The First Onchain President.



I’ve spent the morning compiling onchain data for Trump-linked crypto projects — his NFT collections (trading cards) and upcoming DeFi platform World Liberty Financial.



The goal: Calculate the cumulative value of Trump’s onchain footprint.



It was a quick analysis, but the data shows that Trump has so far raked in almost $84 million in crypto revenue in two years.



Trump’s four NFT collections on Polygon have generated $7.7 million in crypto (WETH and POL fka MATIC).&nbsp;



That revenue was derived from a mixture of primary sales and royalties on secondary sales. The first set of Trump NFTs went on sale two years ago almost to the day, in December 2022.



(Note: The NFT collections have also brought in additional offchain revenue, as the project accepts fiat via credit card payments. Credit cards aren’t exactly onchain yet, so those sales have been left out of the totals above, although they could range in the millions.)



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd85aC9XFmXAuaI2H4kZnUTA_fkmvD7UL4ewmnPOmYUfh9xSiTJx5a7ia8u7_V8UPmlG85bWzNDEPh9wH5FMWlzbqSlWUHh2wlv_yMYovXKjmnDyzOQq6QwUCRbUMrR4Swjj7s8tA?key=vNgpFz4MyG6xQJH_AVoO4mU3" alt=""/><figcaption class="wp-element-caption">NFT revenue and memecoin taxes are valued at current prices</figcaption></figure>



There’s also a suite of unofficial Trump memecoins that regularly pay a transfer tax to Trump wallets.



Ultra small cap coins with names like “DT Inu” and “Take America Back” have gifted about $240,500 to Trump to date.&nbsp;



The coins’ token contracts automatically forward small sums of USDC or ETH to Trump’s wallets every time they’re transferred, including when they’re traded on DEXs.&nbsp;



This has resulted in sudden, short-lived bursts of additional crypto revenue for Trump’s onchain footprint.&nbsp;



As for how much has been cashed out — whoever is handling Trump’s crypto has so far seemingly liquidated $3 million ETH on Coinbase.



Trump’s address deposited 1,325.16 ETH to the exchange across November and December 2023, a sum that would’ve been worth $4.9 million if held until today.



And then there’s the World Liberty Financial token sale. Which, until Tron founder Justin Sun <a href="https://x.com/justinsuntron/status/1861121947372773545">aped</a> in $30 million, appeared to run out of steam at just over $20 million.



As of this morning, the WLFI offering has brought in over $75 million for the platform, with 80% ($61 million) of it coming in after Trump’s win in November, even if Sun was responsible for about half of that.



It goes deeper: World Liberty’s wallet has also accumulated amounts of DeFi tokens AAVE, LINK, ENA and ONDO in the past week or so, altogether worth $5.2 million at current prices.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf1oCp2bFIj1qIHId6UdyylKX3KieWGSADxQ8r8ySeDXYdWd93Ipz9Q8VqctRVbz10vP9If3nkvE4Je7ekJruTrMxcqgyp6Hsxxd-JzqzDKGB7T2Lh6dMSkVU6beDFuYm-bNQ47Qw?key=vNgpFz4MyG6xQJH_AVoO4mU3" alt=""/></figure>



The working theory is that World Liberty Financial is holding them as it is set to integrate with those protocols moving forward, especially in light of Ethena Labs’ <a href="https://x.com/worldlibertyfi/status/1869454093015760977">newly-announced</a> strategic partnership, as well as World Liberty’s Aave <a href="https://governance.aave.com/t/temp-check-world-liberty-financial-aave-v3-instance-on-ethereum-mainnet-proposal/19383?utm_source=empire-31ed59.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=onchain-president&amp;_bhlid=f144740336e68d5e5776403bb3de2a611d9fc061">temp check</a> for teaming up, made in October.



Between all this and Trump’s spiritual <a href="https://x.com/AltcoinDailyio/status/1854346051764834588">purchase</a> of a burger with bitcoin in the leadup to the election, it’s obvious that the President-elect is indeed deeper in crypto than any other Commander-in-Chief, and perhaps even any US politician.



Still, it’s not without intrigue: World Liberty Financial just offloaded around $11 million in Coinbase’s wrapped bitcoin token cbBTC, while simultaneously picking up an equivalent amount of wBTC, as shown on the chart above by the purple and red shaded areas.



Coinbase was <a href="https://blockworks.co/news/coinbase-bit-global-lawsuit">recently locked</a> in a brief legal battle with wBTC’s custodian, BiT Global, after the firm sued over the delisting of WBTC in light of Justin Sun’s reported affiliation. On Wednesday, a federal judge ruled that Coinbase could delist WBTC without worry.



Whatever World Liberty Financial’s reason for switching wrapped bitcoin tokens, it all tracks. After all, what would the first onchain President be without the traditional crypto drama?



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Tracking Trump’s crypto footprint

Casey Wagner

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In a real 11-hour move, Congressional leaders have unveiled a stopgap bill to fund the government for three more months.&nbsp;



Should it pass, lawmakers will narrowly avoid a government shutdown. However, the new deadline to agree on a budget would come during President-elect Trump’s crucial first 100 days in office.&nbsp;



Lawmakers now have until Friday to pass the highly-anticipated <a href="https://docs.house.gov/billsthisweek/20241216/CR.pdf">continuing resolution</a>, all 1,500 pages of it. The House Rules Committee will have to approve a violation of the 72-hour rule, whereby bill text is released three days ahead of a vote. Over in the Senate, unanimous approval is needed to break procedure for passage before the deadline.



As we’ve <a href="https://blockworks.co/news/congress-in-final-weeks-of-session">written about before</a>, Republicans and Democrats largely agree that a CR is the best way (and at this point, the only way) to avert a shutdown.



Some highlights from the bill:



<ul class="wp-block-list">
<li>$110.4 billion in total disaster aid, most of which would go to southern US states in the wake of hurricanes Milton and Helene. </li>



<li>There’s a provision that would give DC control over Robert F. Kennedy Memorial Stadium, an agreement that would help the District bring the Commanders back to the city. </li>



<li>A 3.8% “cost of living” increase on Congressional salaries, which currently stand at $174,000.</li>
</ul>



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Congress kicks the can

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Industry insiders have predicted <a href="https://blockworks.co/news/crypto-ipos-bringing-back-retail">more crypto IPOs</a> in 2025. In a possible preview, today we saw a segment player uplisted to a major exchange.



Shares of crypto wallet provider Exodus became available on the NYSE American stock exchange Wednesday. It was a <a href="https://blockworks.co/news/exodus-wallet-post-election-check-in">“finally” moment</a> for the company, which had prepared for this in May before an unexpected <a href="https://www.globenewswire.com/news-release/2024/05/09/2878404/0/en/Listing-of-Exodus-Class-A-Common-Stock-Delayed-by-NYSE-American.html">delay</a>.



Exodus considers itself “a pure-play crypto company” at a time when more investors seek exposure.



CFO James Gertneztke said access to capital markets could be helpful for product and marketing initiatives, or for buying other companies.&nbsp;



The focus in 2025 is to launch and (extend the reach of) products that bridge the TradFi-crypto gap (i.e. passkeys and XO Swap), he noted.



“We have a large warchest already so this is not necessarily an immediate impact,” Gertneztke said of the capital markets access. Part of that warchest he’s referring to is a treasury comprising 1900 BTC and 2,660 ETH.&nbsp;



Exodus has held bitcoin since its 2015 founding. The company receives most of its revenue in BTC and USDC; revenues linked to its exchange aggregator processing record volume in Q4 helped Exodus recently add <a href="https://blockworks.co/news/company-treasuries-btc-reserve-asset">100 BTC to its treasury</a>.



“We have no debt, so our holdings are not ‘levered,’” the CFO added. 



The company’s BTC holdings might seem small relative to <a href="https://blockworks.co/news/microstrategy-bitcoin-bet">MicroStrategy’s</a> (439,000 BTC). But 1,900 BTC (currently worth ~$200 million) is nothing to sneeze at, and corporate <a href="https://blockworks.co/news/marathon-buying-btc-momentum">BTC buying sprees</a> seem poised to continue.



Gertneztke, indeed, made it clear to me: “We don’t plan on stopping in the new year.”



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A long-awaited NYSE American listing

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The FOMC today, as expected, lowered interest rates by 25 basis points. Committee members cited a commitment to achieving “maximum employment” and getting inflation closer to its 2% target as reasons for the decision. It’s the central bank’s third consecutive rate cut, but projections show committee members expect to slow their pace of decreases in 2025.&nbsp;



Odds of another 25bps cut in January are now at 82%, according to <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">data</a> from CME Group.&nbsp;



Committee member projections published Wednesday show the median interest rate target by the end of 2025 falling in the 3.75% — 4% range. This is 50bps higher than previous projections showed.&nbsp;



The FOMC’s forward guidance (see what we did there) from this week’s meeting was mostly unchanged but a key phrase was added: “extent and timing.”



“In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the committee will carefully assess incoming data, the evolving outlook and the balance of risks,” Wednesday’s <a href="https://www.federalreserve.gov/monetarypolicy/files/monetary20241218a1.pdf">statement</a> read.&nbsp;



It’s the decision we saw coming, so markets shouldn’t be surprised. Still, the “Trump trade,” i.e., the rally we’ve seen across the board since the election, appears to have <a href="https://blockworks.co/news/us-equities-recover-after-trump-fueled-rally">stalled</a>. Stocks, with the exception of Big Tech, have largely traded sideways for most of the month.&nbsp;



The S&amp;P 500 is up just 0.2% since Dec. 2. The Nasdaq Composite, meanwhile, has gained around 3.7%. Not too shabby of a return, but still down from November, when the index gained almost 6%.&nbsp;



What gives? Politics. And I’m not just saying that because I’m writing this newsletter from Reagan International.&nbsp;



“Since Trump announced several unorthodox <a href="https://blockworks.co/news/donald-trump-cabinet-selection">cabinet nominations</a>, there has basically been an inverse correlation between cyclical stocks and the likelihood these cabinet nominations get confirmed,” Tom Essaye, founder of Sevens Report Research, said. “Prior to Trump’s announcement of Matt Gaetz as AG, Pete Hegseth as Defense, RFK Jr. as HHS Secretary and Tulsi Gabbard as National Intelligence Director, the market was marching steadily higher.”



The slowing Trump rally has markets poised for a <a href="https://blockworks.co/news/bullish-december-rally-possibility">Santa rally</a>, some analysts say. We’re still a few days out from the true “Santa rally window” (the last five trading days of the year plus the first two days of the new year), and with the Fed’s decision coming in as-expected, a breakout in equities and crypto could be imminent.&nbsp;



The Dow Jones Industrial Average is currently on its longest losing streak since 1978 (nine days), but historically slumps preempt runs, at least the vast majority of the time. As a reminder, this is not trading advice!



The S&amp;P 500 was down 0.6% over today’s session in the moments after the Fed’s decision, the tech-heavy Nasdaq Composite had also lost 0.6% just after 2 pm ET.



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Fed delivers expected 25bps cut as investors speculate a Santa rally 

Macauley Peterson

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Focusing on EVM chains, the Flipside’s Onchain Users Report tracked both record growth and emerging challenges in maintaining engagement quality. Here are a few trends to watch in 2025.



<h2 class="wp-block-heading">Record user growth</h2>



Newly acquired users reached a record 19.4 million in October, with Base contributing 13.7m — “almost 8x the runner-up, Polygon,”​ the report notes. This explosive growth was attributed to Coinbase’s <a href="https://blockworks.co/news/coinbase-safeguarding-crypto">vast user base</a> and Base’s focus on “trending sectors like <a href="https://blockworks.co/tag/meme-coins">memecoin</a> trading and <a href="https://blockworks.co/tag/artificial-intelligence">onchain AI</a> via new initiatives like Based Agents.”​



An “acquired user” is defined as a user who has conducted at least two transactions in 2024​.



Ethereum also saw consistent user growth, averaging 1.56m new users monthly. <a href="https://blockworks.co/tag/arbitrum">Arbitrum</a> peaked in May with 3.3m acquired users, fueled by GameFi and SocialFi​.



Bitcoin usership, however, remained relatively flat despite BTC reaching its historic <a href="https://blockworks.co/news/btc-new-all-time-high-100k">$100k milestone</a>. This reflects speculative activity rather than meaningful onboarding.



<h2 class="wp-block-heading">Superusers: Base and Polygon dominate</h2>



Flipside terms “superuser” as those who executed 100 or more transactions on a chain, at any point.



<a href="https://blockworks.co/tag/base">Base</a> led the way here with 15.1m wallets executing 100+ transactions, 38% more than Ethereum’s 10.7m superusers. Meanwhile, <a href="https://blockworks.co/tag/polygon">Polygon</a> recorded 1.5m new superusers in 2024, underscoring its strength outside of DeFi. According to the report, “Polygon’s superuser activity also surpassed that of every other observed chain, with 867.7m monthly super-user transactions.”​



Ethereum retained its position as the DeFi hub with 10.9m DeFi-related superusers, more than Arbitrum and <a href="https://blockworks.co/tag/optimism">Optimism</a> combined.



<h2 class="wp-block-heading">Blast’s surge and sharp decline</h2>



Among newly launched chains, <a href="https://blockworks.co/tag/blast">Blast</a> made headlines with a record single-month peak of 134.9k acquired users in June. This was driven by its ability to incentivize “a wide range of gamified onchain activities.”



However, the chain experienced a significant user drop-off in Q4. Despite the evident exodus of points farmers from the chain, the report highlights Blast’s upside potential: “The remaining users are still active on multiple fronts, suggesting that the chain has the potential to outlive, and exceed, its initial hype.”



<h2 class="wp-block-heading">Uniswap’s DeFi dominance</h2>



<a href="https://blockworks.co/tag/uniswap">Uniswap</a> solidified its dominance, capturing 91.3% of DEX activity on Base and increasing its share on Ethereum by 27.72% compared to 2023. This points to a broader trend, “a ‘winner-takes-most’ DeFi market [that] disproportionately favors larger incumbent players with deeper liquidity and brand familiarity,” the authors said.



Meanwhile, LFJ (née Trader Joe) retained its lead on <a href="https://blockworks.co/tag/avalanche">Avalanche</a>, growing its market share by just over 6% from 2023, thanks to innovations like Auto-Pools.



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



While 2024 saw record user acquisition, Flipside emphasizes the need for quality engagement. As the report notes: “Behind the headlines of record user growth lies a deeper challenge: building ecosystems that create meaningful, lasting engagement, not just fleeting speculation.”



For instance, despite Base attracting massive numbers of users, the report underscores the “narrow range of onchain actions its new user base is currently engaged in,” such as simply gambling on a memecoin or two. It’s not clear whether apps can execute on the opportunity to redirect users toward deeper activities like DeFi.



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Base leads explosive growth: Flipside

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MicroStrategy is sucking most of the air out of the room right now. But there are even bigger forces at play.



As debate rages over whether Saylor is a once-in-a-lifetime financial genius or just another overleveraged trader, stablecoins are bringing even more liquidity to crypto.



At least, that’s in terms of raw dollar value being pumped into the space right now.&nbsp;



MSTR has now spent $17.5 billion on bitcoin in the past two months alone, as shown by the orange areas on the chart below. Most of that cash has come from buyers of its infamous zero-percent convertible bonds.



MicroStrategy’s purchases can then be viewed simply as accepting dollars with one hand and plowing them into bitcoin with the other. Fast and cheap liquidity in return for exposure.



In the same period, bitcoin ETFs in the US have gained an additional $16.5 billion in net inflows. ETH ETFs have otherwise net added $3 billion, and together those flows are in blue on the chart.



ETFs follow much the same process as MicroStrategy but without the bonds. They take investor cash to buy an equivalent amount of bitcoin or ether, passing on exposure to shareholders minus a fee.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcJPlSGdszNXxp79rxY9T0mI7qszP2QnJSmS1AphMLhSVzNi5f8UZfExCVfAuO7hgZh9e1uLfSFkDHTP7Ah3h74KE96N8wNOIaXlZnrQaxRj86c89FerbJp6Q6B4IPz9ln2EOfQ?key=LkPy9etj0hhgnPeOxAZhbQCx" alt=""/><figcaption class="wp-element-caption">Stablecoins, MicroStrategy’s bitcoin buys and ETF inflows converged in November</figcaption></figure>



And then there’s stablecoins. Since mid-October, stablecoins issuers have collectively minted an additional $30.8 billion tokens. Over 92% of those inflows have gone to USDT and USDC.&nbsp;



Outside of Sky’s USDS and the more exotic alternatives that have emerged, such as Ethena’s USDe and <a href="https://empire-31ed59.beehiiv.com/p/weekday-month-day-6e60b2af555c25f5?utm_source=empire-31ed59.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=public-good-public-stock&amp;_bhlid=2b21ca86ef6b71e210d195fa6ed6c7f1d096d6a0">Usual’s USD0</a>, stablecoin managers generally take US dollars, buy short-dated Treasurys and other cash equivalents and then issue the same amount of fresh token supply to whomever wired them cash.&nbsp;



Obviously, stablecoins flows aren’t really the same thing as ETF inflows or MSTR’s cash pipeline.&nbsp;



But they do represent something similar: a widespread urge to enter crypto markets across a multitude of avenues.



That’s now to the tune of almost $68 billion in the past nine weeks — easily the biggest liquidity wave on record, at least by my count.



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MicroStrategy spent $17.5B on bitcoin in the last 2 months

Sonic Labs has officially launched its Sonic mainnet, a next-generation EVM-compatible layer-1 blockchain built to empower developers with robust features and compelling incentives.



With the capability to handle up to 10,000 transactions per second and near-instant finality, Sonic sets a new benchmark for performance. It also features a native decentralized bridge that seamlessly connects to Ethereum, making it a powerful platform for building innovative, high-impact applications.



Spearheaded by the team behind Fantom, Sonic is rooted in proven technology. The introduction of the S token propels Sonic far beyond Fantom and FTM, reshaping the landscape of DeFi. It’s engineered to provide developers with cutting-edge tools while offering users rapid access to abundant liquidity.



For FTM holders, the transition to Sonic couldn’t be easier—thanks to a simple 1:1 token upgrade to S.



<h2 class="wp-block-heading">Empowering Developers: Sonic’s Innovative Fee-Share Model</h2>



Sonic Labs is revolutionizing how blockchain developers are rewarded. Unlike traditional platforms that prioritize extracting value, Sonic takes a radically different approach: channeling a substantial portion of network fees back to the developers themselves. This strategy reflects a strong commitment to fostering an ecosystem rooted in innovation, growth, and long-term sustainability.



The <a href="https://docs.soniclabs.com/funding/fee-monetization">Fee Monetization</a> (FeeM) program is a game-changer. Developers can earn up to 90% of the fees generated by their applications—similar to revenue-sharing models seen in Web2 platforms like YouTube, but implemented within a decentralized environment. The model incentivizes app success, meaning developers earn more as their applications attract greater engagement and usage.



By blending proven digital monetization strategies with cutting-edge blockchain technology, Sonic empowers developers to build, scale, and profit from their applications efficiently and sustainably.



<h2 class="wp-block-heading">Introducing Sonic Gateway: The Decentralized Bridge</h2>



As blockchain ecosystems grow, the demand for secure and efficient cross-chain solutions is at an all-time high. Unfortunately, many existing bridges rely on centralized structures, making them prime targets for hacks and failures.



Sonic Gateway by Sonic Labs changes the game. This decentralized bridge seamlessly connects Ethereum and Sonic, offering a secure and user-friendly experience. Here’s what sets it apart:



<ul class="wp-block-list">
<li>Uncompromising Security: Sonic Gateway prioritizes your asset safety. If the bridge becomes inactive for two weeks, a built-in fail-safe allows you to recover your funds directly on Ethereum. This permanent safety net ensures peace of mind and reliable protection. </li>



<li>Blazing-Fast Transfers: Transfers occur in predictable intervals—every 10 minutes from Ethereum to Sonic, and hourly in reverse. Need faster access? Opt for the Fast Lane feature to bridge instantly by paying a minimal fee. </li>



<li>Fully Decentralized Operation: Unlike centralized bridges, Sonic Gateway is managed by Sonic’s validator network across both chains. This removes single points of failure and ensures the bridge maintains the same level of decentralization as the Sonic network.</li>
</ul>



How to Bridge Your Assets:



<ol class="wp-block-list">
<li>Visit the <a href="https://gateway.soniclabs.com/">Sonic Gateway platform</a>.</li>



<li>Connect your Web3 wallet.</li>



<li>Choose the asset you want to transfer.</li>



<li>Review the expected amount on Sonic.</li>



<li>Approve the transaction.</li>
</ol>



Sonic Labs has big plans to expand the reach of Sonic Gateway, adding support for more blockchains and enabling frictionless access to native assets across ecosystems. By maintaining decentralized custody, Sonic Gateway eliminates the vulnerabilities of centralized and third-party bridge solutions, ensuring your assets remain secure and accessible at all times.



<h2 class="wp-block-heading">Switching from FTM to S: Your Step-by-Step Guide</h2>



As Fantom transitions into Sonic, it’s time for FTM holders to upgrade to the new S token. To make this process hassle-free, Sonic Labs has introduced an easy-to-navigate upgrade portal on MySonic. Converting your FTM to S tokens is simple and maintains a 1:1 exchange rate.



Here’s how to upgrade:



<ol class="wp-block-list">
<li>Head to the <a href="https://my.soniclabs.com/upgrade">FTM-to-S upgrade portal</a>.</li>



<li>Connect your Web3-compatible wallet.</li>



<li>Enter the amount of FTM you wish to convert.</li>



<li>Confirm the amount of S tokens you’ll receive (it’s a direct 1:1 swap).</li>



<li>Approve and submit the transaction.</li>
</ol>



The process is quick and seamless. Your new S tokens will show up in your wallet on Sonic within moments after completing the swap.



For the first 90 days after launch, the portal offers full flexibility, allowing you to swap back and forth between FTM and S. Once this period ends, the portal will only support FTM-to-S conversions.



<h2 class="wp-block-heading">Unlocking Growth: 190.5 Million S Airdrop</h2>



Sonic Labs is rolling out a major airdrop, distributing <a href="https://docs.soniclabs.com/funding/airdrop">190.5 million S tokens</a> to developers and users to accelerate growth on the Sonic network. The initiative is divided into two reward systems: Sonic Points and Sonic Gems.



<ul class="wp-block-list">
<li>Sonic Points are designed for users, rewarding activities like early adoption, asset holding, app usage, and overall engagement within the Sonic ecosystem. This encourages active participation and long-term loyalty. </li>



<li>Sonic Gems focus on developers, incentivizing applications that drive user interaction and innovation. Developers can convert their earned Gems into S tokens, which can be used to reward their app users, boosting growth and sustained activity.</li>
</ul>



The distribution of Sonic Points and Gems will happen across multiple seasons, ensuring a steady and adaptable rewards program. The first season is scheduled to wrap up by June 2025.



With its groundbreaking technology, developer-first incentives, and seamless user experience, Sonic Labs is poised to redefine the blockchain landscape, empowering a new era of innovation, scalability, and decentralized success.



This content is sponsored and does not serve as an endorsement by Blockworks. The veracity of this content has not been verified and should not serve as financial advice. We encourage readers to conduct their own research before making financial decisions. 



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Sonic Labs unveils Sonic mainnet: The future of fast, EVM-compatible blockchains

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



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ICYMI: Crypto custodian BiT Global took action against Coinbase last week for delisting wBTC.&nbsp;



Coinbase first announced its decision to delist wBTC back in late November, just a few months after it launched cbBTC, its own wrapped bitcoin.&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">We regret and are surprised by Coinbase’s decision to delist WBTC. As the core team behind Wrapped BTC, we have always been committed to providing the community with the most compliant, transparent, and decentralized BTC tokenization product. Over the years, WBTC has established…&mdash; WBTC (@WrappedBTC) <a href="https://twitter.com/WrappedBTC/status/1858932022569587023?ref_src=twsrc%5Etfw">November 19, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Growing up with a parent who was a lawyer, I was always told there are three sides to every story: Each party’s own side and then the truth.&nbsp;



Last night, Coinbase <a href="https://assets.ctfassets.net/c5bd0wqjc7v0/59OyVZocZqtlU9B2lTEHDr/fc3854730ce855db79d5111b029122c8/as-filed_Coinbase_opp.pdf">responded</a> to BiT Global’s suit, and both parties have made some, well, interesting arguments.&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">We&#39;ve filed our response to BiT Global’s effort to stop our delisting of wBTC before any discovery or even formal response to their bogus claims. We lay out why this lawsuit lacks any semblance of merit and why their request for a TRO should be denied. You can read it all for…&mdash; paulgrewal.eth (@iampaulgrewal) <a href="https://twitter.com/iampaulgrewal/status/1869114052179542381?ref_src=twsrc%5Etfw">December 17, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Coinbase’s filing centers around Justin Sun, who’s been <a href="https://blockworks.co/news/bitgo-wbtc-custodial-changes">linked to wBTC</a> since August. Basically, the firm said that wBTC failed its listing standards because of the “unacceptable risk” Sun poses due to his “material involve[ment].”&nbsp;



“Consistent with that process, Coinbase conducted careful diligence, including asking BiT questions about who ultimately owned and controlled BiT. BiT refused to answer, presumably to conceal Mr. Sun’s role, much as it has done here. At the conclusion of its diligence, Coinbase concluded that Mr. Sun’s affiliation with—and potential control over—wBTC presented an unacceptable risk to its customers and the integrity of its exchange,” it said in its filing Tuesday.



BiT, on the other hand, argued that Coinbase had ulterior motives to delist wBTC, which is to throw around its weight as one of the top exchanges — forcing users to only have access to its own wrapped bitcoin offering, rather than enabling a choice between the two.



<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">Coinbase’s decision to delist WBTC, without any concrete reason beyond a vague “recent review” goes against everything the DeFi and crypto industry stand for. It’s clear that Coinbase’s decision is an attempt to gain a competitive advantage, pushing forward their own wrapped…&mdash; BiT Global (@BiTGlobalTrust) <a href="https://twitter.com/BiTGlobalTrust/status/1859265686012596275?ref_src=twsrc%5Etfw">November 20, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“Having achieved the network effects that were its goal, it has now embarked on an effort to use that power to replace cryptocurrencies created by others with its own knock-off versions—with Coinbase taking short term-losses to keep profits for itself longterm as its knock-off gains market share. And wBTC is Coinbase’s first target,” BiT argued last week.



BiT claims that this is “a tale as old as Silicon Valley,” and mentions that Google, Microsoft and Facebook have all tried to take out the competition.&nbsp;



“A centralized platform gains more and more users from a first mover advantage. It creates a moat for itself using network effects which lock those users into its platform. And then it starts changing the rules that got it there. After the bait-and-switch, smaller entrepreneurs find themselves the victims of a corporate goliath that sees their innovations merely as a resource to be grabbed by any means possible and absorbed into itself,” it said.



Coinbase, however, argued that the exchange makes up for a “de minimis (less than 1%) portion” of wBTC traded. Per Coinbase, there’s not enough evidence to justify a court executing a temporary restraining order to force the exchange to keep hosting wBTC.&nbsp;



A hearing in California is set for later today, so we’ll soon see how both arguments play out.



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Coinbase and BiT Global prepare for their day in court

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Crypto asset manager Bitwise has launched a solana staking ETP in Europe with the ticker BSOL, Lightspeed has learned exclusively. Solana staking firm Marinade will be Bitwise’s staking provider.



The move comes less than a month after Bitwise <a href="https://blockworks.co/news/bitwise-ceo-solana-ncredible-emerging-asset">signaled its plans</a> to list a solana ETF in the US by registering a statutory trust in Delaware. Bitwise’s decision to build out its SOL staking infrastructure could also give it the capacity to offer staking rewards for its US spot SOL ETF. Current US applications all have staking rewards stripped out due to securities law concerns, but some are speculating that might change under a Paul Atkins-led SEC.&nbsp;



Another US-based crypto asset manager made a similar move in recent months when VanEck <a href="https://blockworks.co/news/vaneck-begins-sol-staking">began a SOL staking partnership</a> with Kiln.



Bitwise first offered a European solana ETP when it <a href="https://blockworks.co/news/bitwise-europe-acquisition-crypto-etps">acquired London-based ETC Group</a> and its ESOL product, which currently holds $24 million in assets under management, down from $27 million a month ago. Investors’ problem with ESOL is likely its lack of staking rewards, which have been quite lucrative for solana investors in recent months. BSOL has staking rewards baked in.



Solana staking rewards come from SOL issuance, priority fees and MEV tips that users and the network pay out to validators who run the blockchain’s software. Validators pass these rewards onto stakers to compete for staked SOL. For stakers, the reward rate is around 8% annually, according to Solana Compass. This is more than double the <a href="https://ethereum.org/en/staking/">average</a> staking APY on Ethereum.



To be clear, solana ETP issuers don’t pay this full amount. 21Shares’ solana staking ETP, the fifth-largest crypto ETP in Europe, pays 5.49%. Bitwise will pay 6.48%, according to a document shared with Blockworks, and it is using Marinade as its staking provider, Bitwise CEO Hunter Horsley said. 21Shares also charges a 2.5% management fee, while BSOL will cost investors 0.85% per year.



Again, none of the US solana ETFs would include staking rewards as currently constructed. But that order of things may not last. Bitwise’s staking provider Marinade <a href="https://www.theblock.co/post/315725/marinade-hires-fidelity-digital-asset-services-founding-president-as-chief-commercial-officer">hired</a> New York-based banking executive Hadley Stern to be its chief commercial officer in September, perhaps to prepare for a rush of US institutions looking to access solana staking yield.



It’s impossible to know exactly how the future might play out, but with VanEck and now Bitwise adding solana staking ETPs to their portfolios, something like this is plausible: Atkins comes to power, SOL staking rewards are deemed not to be securities, spot ETF issuers re-file with staking rewards attached, and firms use their European staking ETP infrastructure to offer the same products in the US.



But I wouldn’t bank on that happening very soon. Bloomberg ETF analyst Eric Balchunas <a href="https://www.theblock.co/post/315725/marinade-hires-fidelity-digital-asset-services-founding-president-as-chief-commercial-officer">said</a> today he expects SOL ETFs to be approved in the US only after BTC and ETH combo, Litecoin, and HBAR products all have gotten the go-ahead.



Updated Dec. 18, 2024 at 3:40 pm ET: Clarified that Solana’s staking rewards come from priority fees and MEV tips in addition to SOL issuance.



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