Boson Protocol

Macauley Peterson

Delta, a new layer-1 platform challenging the status quo for building high-throughput decentralized applications, has raised $11 million in funding.&nbsp;



The platform positions itself as a &#8220;network of networks&#8221; that seeks to break the traditional trade-off between blockchain sovereignty and interoperability, a nagging problem that many developers face today.



Delta’s pre-seed funding round was led by Figment Capital and Maven 11, with Variant and DBA leading the seed. (Blockworks co-founder Michael Ippolito is also an angel investor.)



The functional goals of Delta’s architecture are similar to those of the major rollup “clusters” — OP Superchain, the AggLayer or ZKsync Elastic Chain frameworks — all of which face interoperability challenges born from Ethereum’s rollup-centric roadmap.&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-rollups-closer-than-expected">Bitcoin rollups may be closer than we think</a>



Dapp developers often have to choose between two approaches: building within the confines of a single framework or creating an independent appchain that must retrofit interoperability solutions.



The new approach aims to combine the best of both worlds by offering developers local control over their environment while still maintaining global connectivity through the base layer, according to Ole Spjeldnaes, CEO of Repyh Labs, which is building Delta.



“Originally we thought that this is what Ethereum was going to be like — you wouldn&#8217;t need to have these local clusters,” Spjeldnaes told Blockworks.



Delta&#8217;s architecture separates execution and transaction ordering from data availability and settlement, offering theoretical advantages over both appchains and <a href="https://blockworks.co/tag/rollups">rollups</a>, which typically require complex bridging solutions. In Delta, execution occurs within individual &#8220;domains,&#8221; which are akin to app-specific rollups or execution shards.



The key difference from, say, a <a href="https://blockworks.co/news/zk-sync-elastic-chain-rebrand-seeks-to-carve-out-scaling-niche">ZKsync Elastic Chain</a>, is that these domains retain complete power over their blockspace and can use any existing virtual machine or develop custom programs. However, Delta eschews Ethereum, and all its domains settle on a new decentralized base layer, which ensures shared global state and interoperability.



Read more: <a href="https://blockworks.co/news/funding-zero-knowledge-in-spotlight">Funding Wrap: Zero-knowledge is back in the spotlight</a>



“Delta is a more bottoms up approach to achieving, first of all, stronger properties than what something like the ZK Elastic Chain can provide because it&#8217;s a single state machine,” Spjeldnaes said. “If Ethereum did not have to think about being backwards compatible and had had the foresight, this might have been what it would have ultimately looked like.”



Unlike Ethereum rollups, all assets within Delta’s network stay on the base layer, notes Myles O’Neil, Repyh’s chief product officer.



“There&#8217;s no real equivalent for this in rollup terminology,” O’Neil told Blockworks.



That has consequences for asset issuance and liquidity — for instance, a stablecoin gets issued once on the base layer and is automatically available for use in all domains.



Another standout feature of Delta is its use of zero-knowledge proof-based settlement integrated directly into the base layer, allowing domains to interoperate without any external coordination or intermediary bridges.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf79gO1U8CAmrX9e6V40fCA8UYxTjbEavfzo6IYkjwjZjtVlZGYjxpYRokSix1HjbpniDJ45uA3JUOmepVy2ySks0b5F3N4DycQ44zABLvmsSLg_16TW1WK0gUflW89-xDeneAxAthpqo32OPJVmD1BOp7Q?key=mk3rPL2w0isHLHhpmNvX0w" alt=""/><figcaption class="wp-element-caption">Source: Repyh Labs</figcaption></figure>



“There are a minimal number of things that need to be proven by all domains,” Spjeldnaes explained, but so long as they are following this set of what are called Delta’s “global laws,” they retain the flexibility to use whatever execution, sequencing or permissions model they want.



Domains generate a State Diff List (SDL), a compressed standardized format for state changes based on their own transaction ordering, and submit it to the base layer, along with proofs that the SDL doesn’t violate any global laws (or the domains own “local laws”). The state model prevents conflicts between each domain&#8217;s subset of state.



“We let the domains be opinionated about how much else they want to prove,” O’Neil said. “So if they want to be completely trustless, just like a zk rollup, they can choose to prove their entire execution path.”



All domains will need to use a shared prover, which should be “the most efficient one for all” Spjeldnaes said. “The goal is really to maximize strong interop without infringing on the sovereignty of each domain,” he added.



Delta’s proof-of-stake validator set uses a leaderless and orderless consensus mechanism, known as Byzantine Reliable Broadcast (BRB), which Spjeldnaes compares to Sui’s <a href="https://blog.sui.io/mysticeti-consensus-reduce-latency/">Narwhal-Bullshark</a> consensus algorithm.



“I think Sui is very elegant,” Spjeldnaes said. “They are able to just do ordering for those transactions that need ordering [but] that adds a ton of overhead — which you can tell by their benchmarks — you have Narwhal and then you have to add consensus on top of Narwhal, and that is really the bottleneck.”



BRB avoids this overhead, and Spjeldnaes noted the computation requirements for validators will be very low, because their main task is verifying proofs. By foregoing the need for global transaction ordering, the network scales linearly as more machines are added, Spjeldnaes said.



“We see this as being also a protocol which would scale quite well in terms of the number of validators, but we haven&#8217;t tested this yet, so we cannot really make a strong claim about it.”



Delta’s biggest problem will be how to bootstrap usage and bring in assets to yet another new layer-1 network. With the mainnet launch still over a year away, O’Neil said they’ll be going after both crypto natives and non-crypto developers from the fintech and Web2 world.&nbsp;



By taking on the shortcomings of current leading ecosystems like Ethereum and Solana, the team hopes to demonstrate the merits of a new paradigm.&nbsp;



“What a system would look like if you were to rebuild things from scratch,” O’Neil said.



Updated to clarify which firms led the pre-seed and seed rounds.



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



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Starting from scratch: A new architecture looks to challenge incumbents

David Canellis

Katherine Ross

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



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<a href="https://blockworks.co/event/permissionless-iii">Permissionless III</a> kicks off in Salt Lake City today! 



Whether you’re on or off the ground, follow <a href="https://x.com/Permissionless">@Permissionless</a> for all the latest updates. And be sure to check the <a href="https://x.com/search?q=%23permissionless&amp;src=typed_query">hashtag</a> for more cool stuff.



<h2 class="wp-block-heading">Grasping at straws</h2>



Despite slick marketing leading up to the release of HBO documentary Money Electric, we’re no closer to finding out the identity of Satoshi Nakamoto.



What filmmaker Cullen Hoback, whose most recent work chronicled QAnon and 8chan with Q: Into The Storm, has given us is more of a creative retelling of Bitcoin lore.&nbsp;



The early efforts of the Cypherpunks, the formation of Blockstream and its victory in the Blocksize War, into the corporatization/industrialization of bitcoin mining and El Salvador adopting it as legal tender.



All that’s squeezed into 90 minutes, including cutaways to incessant negging from Nouriel Roubini and the mainstream media — solid comedic relief.



That side of the film makes for a solid primer on the discourse. It even features a decent, albeit small, roster of legitimate insiders, including, among others: Blockstream co-founder Adam Back, veteran hacktivist Amir Taaki, a prominent early Bitcoiner now working on anonymous protocol DarkFi, as well as cryptography consultant and former Bitcoin core dev Peter Todd.&nbsp;



Hoback later suggests Todd could be Nakamoto, hiding in plain sight all these years.



The bulk of Electric Money’s baseline reality, however, is woven with clips of Hoback following Back around the streets of Malta, to see if he’s Satoshi.&nbsp;



If Back was the progenitor, then the surrealness of Bitcoin Miami and nation state adoption were expressions of his genealogy.&nbsp;



It would also technically make Back a trillionaire, if bitcoin were to hit $1 million per coin, a factoid the film repeats over and over. That’s based on prior analysis that found Nakamoto had mined over 1 million BTC, although there is some <a href="https://blog.bitmex.com/satoshis-1-million-bitcoin/">dispute</a> about the real number.



Other scenes shadow former Blockstream marketing chief Samson Mow — who advised El Salvador president Nayib Bukele on his bitcoin adoption plan — on a world trip as a self-styled Bitcoin ambassador. The film also tags along with Todd on urban exploration trips in Latvia, before he’s presented as a real candidate.



Back, who has repeatedly denied that he created Bitcoin, is the only person cited by name in the body of the white paper for his work on Hashcash. It was an early proof-of-work system built in 1997 for curbing denial of service attacks and email, which Nakamoto tweaked for bitcoin mining.



Hoback looked for holes in Back’s story, the biggest of which was a letdown: Back was actually interested in bitcoin years earlier than he previously claimed, and he’d even edited a Wikipedia entry to include potential identities for Nakamoto that weren’t him, including Nick Szabo, Wei Dei and Hal Finney. Not exactly proof.



It’s only at the 80th minute that Hoback lays his cards on the table: a bluff based on a loose interpretation of BitcoinTalk forum posts.



Todd was supposedly Nakamoto at the age of 15 because he’d:



<ul class="wp-block-list">
<li>Spoken online about building a digital currency based on Hashcash before 2009.</li>



<li>Never officially held a position at Blockstream despite working closely on Bitcoin Core, for decentralization purposes.</li>



<li>Minorly corrected Nakamoto about how a fee market would work in a BitcoinTalk thread, by “finishing his sentence” with a followup post over an hour later.</li>



<li>Perhaps created a sockpuppet, roleplaying as a US intelligence agent who would later publicly assign Todd the task of coding that fee market.</li>



<li>Stopped posting on BitcoinTalk around the same time as Nakamoto.</li>



<li>Cryptically once suggested in an IRC channel that he had physically destroyed the keys to his bitcoin.</li>
</ul>



<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">“The level of reaching here rivals QAnon stuff (which is pretty ironic if you know what Cullen&#39;s previous documentary was about)” Exactly. The truth is pretty simple: there&#39;s hundreds, even thousands of people who could have created Bitcoin. We&#39;re not going to find Satoshi. <a href="https://t.co/TZMtqJhxgU">https://t.co/TZMtqJhxgU</a>&mdash; Peter Todd (@peterktodd) <a href="https://twitter.com/peterktodd/status/1843957196830441766?ref_src=twsrc%5Etfw">October 9, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



It makes for a fun theory, and for a final showdown, Hoback presents it to Todd and Back in an abandoned railway, a have-fun-staying-poor man’s Point Break. They both — rightfully — laugh it off, which has continued on X following the film’s release.



Whether we should or shouldn’t know who Nakamoto is or was is a tired conversation at this point.&nbsp;



Still, it’s obvious that for many normal folk, the question indeed presents a Rubicon that they can’t cross. That itself would hinder adoption, I guess, but as far as shedding light on the way through that mess goes, Money Electric ain’t it.



— David Canellis



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



<ul class="wp-block-list">
<li>Canary Capital is joining the <a href="https://www.theblock.co/post/320158/canary-capital-files-for-a-spot-xrp-exchange-traded-fund-with-the-sec?utm_source=rss&amp;utm_medium=rss">race</a> for an XRP ETF, filing its registration statement with the SEC on Tuesday.</li>



<li>BTC and ETH are where they were yesterday: bouncing off $62,000 and $2,400 apiece.</li>



<li>Solana is “richly valued” against the rest of the market, Standard Chartered <a href="https://www.coindesk.com/markets/2024/10/08/solana-is-richly-valued-versus-ether-but-could-still-outperform-if-trump-gets-elected-standard-chartered/?_gl=1*qyu0a7*_up*MQ..*_ga*MTE2NzM2OTIwMC4xNzI4NDQ5MjM2*_ga_VM3STRYVN8*MTcyODQ0OTIzNi4xLjAuMTcyODQ0OTIzNi4wLjAuMTE5NzAxNDY2NQ..">said</a>.</li>



<li>Ex-Alameda Research CEO Caroline Ellison <a href="https://www.theblock.co/post/320198/former-alameda-ceo-caroline-ellison-agrees-to-hand-over-bulk-of-her-assets-to-settle-ftx-lawsuit?utm_source=rss&amp;utm_medium=rss">agreed</a> to turn over assets to FTX debtors to settle a lawsuit, per The Block. </li>



<li>$168.4 million has flowed into Ethereum mainnet bridges in the past <a href="https://defillama.com/bridges/chains">week</a>, while $215.8 million has flowed out of Arbitrum’s.</li>
</ul>



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



Q: What are Crypto.com’s chances against the SEC?



To put it simply: Crypto.com faces an uphill battle.&nbsp;



The firm filed a lawsuit against the Securities and Exchange Commission after it received a Wells notice from the agency.



The case, in some ways, mirrors what we saw from Consensys earlier this year. The firm receives the notice from the SEC — which threatens, but doesn’t promise legal action on the SEC’s behalf — and then responds by filing a lawsuit.&nbsp;



Earlier this year, Consensys filed suit against the SEC — also disclosing a Wells notice — as the firm took the fight to the regulator. The two cases are clearly a bit different despite some similarities, such as the fact that they both were filed in Texas courts.&nbsp;



While Consensys was really focused on ETH, the SEC seems to be taking a different approach with Crypto.com.



“The SEC has refused to provide Crypto.com a complete list of network tokens sold on the platform that it plans to allege are crypto asset securities. Instead, it has referred Crypto.com to other enforcement actions in which the SEC has asserted claims based on secondary-market sales of various network tokens, including the Targeted Network Tokens,” the complaint said.



Those targeted network tokens include BNB, SOL, ADA, FIL, ATOM and ALGO.&nbsp;



A Texas court recently dismissed the claims from Consensys. Now we’ll just have to see how Crypto.com fares.&nbsp;



— Katherine Ross



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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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We’re no closer to finding Satoshi Nakamoto

Despite slick marketing leading up to the release of HBO documentary Money Electric, we’re no closer to finding out the identity of Satoshi Nakamoto.



What filmmaker Cullen Hoback, whose most recent work chronicled QAnon and 8chan with “Q: Into The Storm,” has given us is more of a creative retelling of Bitcoin lore.&nbsp;



The early efforts of the Cypherpunks, the formation of Blockstream and its victory in the <a href="https://blog.bitmex.com/the-blocksize-war-chapter-1-first-strike/">Blocksize War</a>, into the corporatization/industrialization of bitcoin mining and El Salvador adopting it as legal tender.



All that’s squeezed into 90 minutes, including cutaways to incessant negging from <a href="https://blockworks.co/news/nouriel-roubini-crypto-bitcoin-atlast">Nouriel Roubini</a> and the mainstream media — solid comedic relief.



That side of the film makes for a solid primer on the discourse. It even features a decent, albeit small, roster of legitimate insiders, including (among others): Adam Back, co-founder of Blockstream, veteran hacktivist Amir Taaki, a prominent early Bitcoiner now working on anonymous protocol DarkFi, as well as cryptography consultant and former Bitcoin core dev Peter Todd.&nbsp;



Hoback later suggests Todd could be Nakamoto, hiding in plain sight all these years.



Read more: <a href="https://blockworks.co/news/craig-wright-is-not-satoshi-nakamoto">Craig Wright is not Bitcoin creator Satoshi Nakamoto, UK judge says</a>



The bulk of Electric Money’s baseline reality, however, is woven with clips of Hoback following Back around the streets of Malta, to see if he’s Satoshi.&nbsp;



If Back was the progenitor, then the surrealness of <a href="https://www.coindesk.com/markets/2017/04/18/miami-2014-the-last-days-of-bitcoins-wild-west/">Bitcoin Miami</a> and nation state adoption were expressions of his genealogy.&nbsp;



It would also technically make Back a trillionaire, if bitcoin were to hit $1 million per coin, a factoid the film repeats over and over. That’s based on prior analysis that found Nakamoto had mined over 1 million BTC, although there is some <a href="https://blog.bitmex.com/satoshis-1-million-bitcoin/">dispute</a> about the real number.



Other scenes shadow former Blockstream marketing chief Samson Mow — who advised El Salvador president Nayib Bukele on his <a href="https://blockworks.co/news/el-salvador-timed-bitcoin-bottom-empire-newsletter">bitcoin adoption plan</a> — on a world trip as a self-styled Bitcoin ambassador. The film also tags along with Todd on urban exploration trips in Latvia, before he’s presented as a real candidate.



Read more from our opinion section: <a href="https://blockworks.co/news/philosophers-bitcoin-resistance-money">Why we need philosophers to explain bitcoin: A review of ‘Resistance Money’</a>



Back, who has repeatedly denied that he created <a href="https://blockworks.co/tag/bitcoin">Bitcoin</a>, is the only person cited by name in the body of the white paper for his work on Hashcash. It was an early proof-of-work system built in 1997 for curbing denial-of-service attacks and email, which <a href="https://blockworks.co/tag/satoshi-nakamoto">Nakamoto</a> tweaked for bitcoin mining.



Hoback looked for holes in Back’s story, the biggest of which was a letdown: Back was actually interested in Bitcoin years earlier than he previously claimed, and he’d even edited a Wikipedia entry to include potential identities for Nakamoto that weren’t him, including Nick Szabo, Wei Dei and the late Hal Finney. Not exactly proof.



Read more: <a href="https://blockworks.co/news/hal-finney-bitcoin-satoshi-nakamoto-zk-proofs">25-year old video shows Bitcoin pioneer Hal Finney talking zero-knowledge proofs</a>



It’s only at the 80th minute that Hoback lays his cards on the table: a bluff based on a loose interpretation of BitcoinTalk forum posts.



Todd was supposedly Nakamoto at the age of 15 because he’d:



<ul class="wp-block-list">
<li>Spoken online about building a digital currency based on Hashcash before 2009.</li>



<li>Never officially held a position at Blockstream despite working closely on Bitcoin Core, for decentralization purposes.</li>



<li>Minorly corrected Nakamoto about how a fee market would work in a BitcoinTalk thread, by “finishing his sentence” with a followup post over an hour later.</li>



<li>Perhaps created a sockpuppet, roleplaying as a US intelligence agent who would later publicly assign Todd the task of coding that fee market.</li>



<li>Stopped posting on BitcoinTalk around the same time as Nakamoto.</li>



<li>Cryptically once suggested in an IRC channel that he had physically destroyed the keys to his bitcoin.</li>
</ul>



<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">“The level of reaching here rivals QAnon stuff (which is pretty ironic if you know what Cullen&#39;s previous documentary was about)” Exactly. The truth is pretty simple: there&#39;s hundreds, even thousands of people who could have created Bitcoin. We&#39;re not going to find Satoshi. <a href="https://t.co/TZMtqJhxgU">https://t.co/TZMtqJhxgU</a>&mdash; Peter Todd (@peterktodd) <a href="https://twitter.com/peterktodd/status/1843957196830441766?ref_src=twsrc%5Etfw">October 9, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



It makes for a fun theory. For a final showdown, Hoback presents it to Todd and Back in an abandoned railway, a have-fun-staying-poor man’s Point Break. They both — rightfully — laugh it off, which has continued on X following the film’s release.



Whether we should or shouldn’t know who Nakamoto is or was is a tired conversation at this point.&nbsp;



Still, it’s obvious that for many normal folk, the question indeed presents a Rubicon that they can’t cross. That itself would hinder adoption, I guess, but as far as shedding light on the way through that mess goes, Money Electric ain’t it.



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



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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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We are all Satoshi Nakamoto — except Peter Todd

Casey Wagner

Ben Strack

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>.



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



<h2 class="wp-block-heading">SEC strikes again</h2>



In an exciting start to the SEC’s 2024-2025 fiscal year, Singapore-based Crypto.com has been served a <a href="https://blockworks.co/news/crypto-dot-com-sec-wells">Wells notice</a>, and, in response, filed a suit against the securities regulator.&nbsp;



In its complaint, the exchange says the SEC is “unlawfully expanding its jurisdiction to cover secondary-market sales” of certain cryptocurrencies. These certain tokens are, according to Crypto.com: SOL, ADA, BNB, FIL, FLOW, ICP, ATOM, ALGO, NEAR and DASH.&nbsp;



There are some familiar names here. In its lawsuit <a href="https://blockworks.co/news/coinbase-sec-rulemaking-appeals-court">against Coinbase</a>, the SEC also named SOL, ADA, FLOW, NEAR, DASH and ICP as securities. When the agency sued Binance, SOL, ADA, FIL, ATOM and ALGO made the SEC’s list. So there’s clearly a trend.&nbsp;



Wells notices, which precede formal enforcement actions, have been a dime a dozen lately. <a href="https://blockworks.co/news/consensys-files-lawsuit-against-sec">Consensys</a> sued the agency in June after receiving a Wells. <a href="https://blockworks.co/news/uniswap-responds-to-sec-wells-notice">Uniswap</a> got its notice in May. <a href="https://blockworks.co/news/sec-issues-wells-notice-opensea-nfts">OpenSea</a> was served in August. You get the picture.&nbsp;



These “counter-suits,” if you will — when a company preemptively takes a legal action before the SEC does the same — don’t tend to go very well for the filer. Consensys’s suit against the SEC was <a href="https://blockworks.co/news/consensys-lawsuit-against-sec-dismissed">dismissed</a> last month, although the ruling was fairly procedural (the SEC <a href="https://blockworks.co/news/sec-drops-ethereum-consensys-investigation">stopped</a> its investigation into Ethereum, so the court said Consensys’s complaint was now moot).&nbsp;



We’ll be watching how the Crypto.com suit plays out. The SEC has declined to comment, on both this matter and the Wells notice, but we will be keeping an eye out for an enforcement action as well.&nbsp;



— Casey Wagner



<h3 class="wp-block-heading">+52%&nbsp;</h3>



This is the 10-year average for bitcoin’s fourth quarter returns, as noted by Galaxy Research in a new report. Bitcoin gained 3% in the third quarter of this year after losing almost 13% during the second quarter.&nbsp; If history repeats itself, these final months of the year could be lucrative. But as always, this is not investment advice.



<h2 class="wp-block-heading">An FTX reminder before the election&nbsp;&nbsp;</h2>



Those infamous three letters have hit the news cycle again, and the timing could prove impactful. Then again, maybe not.&nbsp;



You know the FTX story by now. Its founder is <a href="https://blockworks.co/news/sam-bankman-fried-sentenced">in jail</a> because of it. But there was a bit of closure yesterday when a bankruptcy judge <a href="https://blockworks.co/news/ftx-bankruptcy-plan-approved">greenlit a plan</a> to pay back investors.&nbsp;



The plan, as laid out in previous filings, called for 98% of non-government creditors to <a href="https://blockworks.co/news/empire-newsletter-ftx-bankruptcy-finish-line">get “at least”</a> 118% of the value in their accounts (at the time of the exchange&#8217;s <a href="https://blockworks.co/news/ftx-meltdown-timeline">implosion</a> in November 2022) within two months of the plan’s approval.



It will be paid in cash, meaning investors are <a href="https://blockworks.co/news/ftx-former-customers-oppose-bankruptcy-plan">not getting back</a> any tokens they held on FTX. That isn’t exactly ideal for them, given most assets have <a href="https://blockworks.co/news/sam-bankman-fried-crypto-portfolio">increased substantially</a>. Bitcoin’s price back then was about one-quarter of what it is today.&nbsp;&nbsp;



Still, a portion of this story is being put to rest. Where are we still needing closure? Crypto regulation in the US (and other jurisdictions).



And oh, by the way, the US presidential election is 28 days away.&nbsp;



Mark Cuban, who has thrown vocal support behind VP Kamala Harris, recently reiterated what plenty have said over the last two years: The FTX pain could have been avoided. And <a href="https://decrypt.co/284737/mark-cuban-harris-ftx-sec-gary-gensler">he apparently told</a> one of Harris’s advisors as much over lunch.&nbsp;



The billionaire <a href="https://www.youtube.com/watch?v=tMvufQQbGJo">criticized</a> the SEC’s regulation-by-litigation approach and lack of clear guidelines (instead lauding efforts by Japan, for example). He put at least some of the blame on SEC Chair Gary Gensler — a man that Donald Trump in July said he would <a href="https://blockworks.co/news/donald-trump-speaks-bitcoin-2024">fire</a>, if elected.



An SEC spokesperson did not immediately return a request for comment.&nbsp;



While Trump has been <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-crypto-promises">vocal</a> about being a pro-crypto president, Harris now too has made it known she wants to <a href="https://blockworks.co/news/on-the-margin-newsletter-china-stimulus-stagnation">support</a> the industry. Specifics have been elusive.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;



We know politicians read the news, and maybe some even scroll through Crypto Twitter (or X, whatever). The FTX repayment plan making headlines again so close to Nov. 5 might help highlight the need for comprehensive regulation strides.&nbsp;&nbsp;



Alex Saleh, head of partnerships at Coincover, said in a Tuesday email that more jurisdictions need to begin “moving the dial” on regulatory frameworks.&nbsp;&nbsp;



“It’s clear that regulation will play a central role in preventing future crises like FTX,” Saleh added. “The EU’s MiCA legislation, for example, introduces specific rules around fraud protection and capital reserve requirements which will help foster a safer and more secure ecosystem.”&nbsp;



— Ben Strack



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



<ul class="wp-block-list">
<li>Economists are now <a href="https://www.reuters.com/sustainability/sustainable-finance-reporting/ecb-cut-rates-by-25bps-both-oct-dec-euro-zone-economy-wobbles-2024-10-08/?utm_source=Sailthru&amp;utm_medium=Newsletter&amp;utm_campaign=Reuters-Business&amp;utm_term=100824&amp;user_email=fa79e40e809c025fd4827946d76a7c6be663b35e69ebda4628a3ff9f08f02c28&amp;lctg=6217b5e4e61dc90bfd6de99d">calling</a> for two 25 basis point interest rate cuts from the European Central Bank in October and December. The updated forecasts come after September data showed that eurozone inflation is now below 2%.</li>



<li>Officials from China’s National Development and Reform Commission on Tuesday failed to promise more robust stimulus plans, disappointing investors. The CSI 300 index — a cap-weighted index tracking the top 300 stocks on the Shanghai Stock Exchange and the Shenzhen Stock Exchange — closed 5.9% higher after initially surging 11%.</li>



<li>Tomorrow is the day! <a href="https://blockworks.co/event/permissionless-iii">Permissionless III</a> kicks off in Salt Lake City. Casey, Ben and Felix will all be taking the stage to talk about the biggest trends in macro and crypto. You don’t want to miss it.</li>
</ul>



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SOL, ADA listed in Crypto.com Wells notice

Jack Kubinec

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Trendy new apps don’t tend to last long in crypto — except, apparently, for pump.fun.



After a tame September, memecoins have returned to prominence in recent days, with the Solana-based launchpad seemingly leading the way.



The app, which seemed past its heyday just weeks ago, has recorded 12 straight days of at least $900,000 in revenue, according to a Dune <a href="https://dune.com/adam_tehc/pumpfun">dashboard</a>. The last time it pulled that off was *checks notes* never. MOODENG, a pump.fun token based on a viral baby hippo from a zoo in Thailand, seemingly kicked off the recent memecoin rally, in which traders seem to be skipping out on traditional memes to trade pump.fun coins.



Kaito AI, which uses AI to analyze online sentiment, <a href="https://x.com/_kaitoai/status/1843195759434531250">said</a> Monday that memecoin mindshare is now at a yearly high. 



A majority of the 10 largest memecoins are down on the week, according to CoinGecko, while pump.fun had its most consistent week and a half of revenue yet — indicating that traders are passing up the likes of dogecoin and pepe in favor of pump.fun’s cute animal pictures du jour.



Crypto’s online hype machine has already kicked in. Murad Mahmudov, a longtime crypto public figure who’s shifted from bitcoin maximalism to memecoins, went <a href="https://x.com/MustStopMurad/status/1843014105273389405">viral</a> for a podcast segment explaining why memecoins will “Outperform Everything” in 2025. Su Zhu, most famously the co-founder of collapsed crypto hedge fund Three Arrows Capital, <a href="https://x.com/zhusu/status/1842551529997504665">weighed</a> in that “[i]nstitutional allocation to memecoins is likely to be the story of q4 2024.” Ethereum co-founder Vitalik Buterin <a href="https://x.com/VitalikButerin/status/1843260976206082216">said</a> he sold his MOODENG allocation and donated the proceeds to support anti-airborne disease technology.



And — stop me if you’ve heard this before — a rapper who’s a few years past her last top hit released a pump.fun memecoin.&nbsp;



Not everyone was feeling quite so upbeat.&nbsp;



“If you are finally joining the influencers that missed out and are just now joining memes in Q4, congrats, you are exit liquidity for everyone who was early,” wrote based16z, a popular crypto poster.



For anyone who’s been following over the past six months, it feels like crypto is stuck in something of a pump.fun Groundhog Day. The meme market pumps, similar players play similar roles in the online drama, and some industry watchers — myself being one of them — fall into believing that the pump.fun top is finally in.



But enough time has passed for crypto to wise up. Bet against pump.fun, which has already booked over $120 million in revenue roughly 10 months after launching, at your own peril.



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Pump.fun tops $900K revenue for 12 straight days

Donovan Choy

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Memecoins are entering a so-called “supercycle phase” — a fitting choice of words when you need to scream into the ears of unsuspecting investors that something of epic proportions is coming.



That’s the thesis of a somewhat viral <a href="https://youtu.be/6nqzwdGxTGc">Token2049</a> talk by Murad Mahmudov titled “The Memecoin Supercycle,” to which a growing contingent of Crypto Twitter seems to be subscribing.



Embrace memecoins, argues Mahmudov, because memecoins give you hope, fun, identity, a sense of belonging, emotional connection, a way to reduce loneliness and a way to engage in collective artistic expression and an imagined reality.



Let’s back up for a second here.



Based on <a href="https://www.coingecko.com/en/categories/meme-token">CoinGecko</a>, the entire memecoin market is $53 billion, about 2.3% of the entire $2.3 trillion crypto market cap. <a href="https://blockworks.co/news/lightspeed-newsletter-pump-dot-fun-memecoin">Pump.fun launched</a> in January 2024, and about <a href="https://dune.com/hashed_official/pumpdotfun">2.3</a> million memecoins have been created since then.



How many of these memecoins have been “successful” for investors?



Not many, is the answer. Based on August data by <a href="https://x.com/Adam_Tehc/status/1824994679265349802">@Adam_Tehc</a>, 64.7% of pump.fun traders on Solana lose money or breakeven at best. Only 3% make more than a thousand dollar profit, and a rare few of 0.0028% wallets are hitting the $1 million moonshot on memecoins.



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcQsSuXzpMETIbsynFe0NTEsuMEbiGiZdkCfchgztgK8rJM-Jtj_oNpqJMPhdGLVSuN0hfBuI553uhmlmV0ri6xMSmisy4EiBbwqztU1rn-bgNXqUyvO8LTke-stE1KC3w5yJbgB1-lQTe2ux8SdYv5NK_d?key=mfn73cL5xdusnrfBtAxlGg" alt="" style="width:551px;height:auto"/><figcaption class="wp-element-caption">Source: <a href="https://x.com/crypto__kermit/status/1825109763966787894/photo/1">@crypto__kermit via Twitter</a></figcaption></figure>



Part of the argument for “why memecoins” is because the VC-backed altcoin alternatives are terrible.&nbsp;



There’s admittedly a grain of truth there. Most VC-backed tokens have seen a down-only chart from their CEX listings, they’re rid with <a href="https://blockworks.co/news/0xresearch-newsletter-eigen-tokens-transparency">fishy insider investor tokenomics</a> and many of their products haven’t panned out (about 18% of crypto companies that <a href="https://blockworks.co/news/lightspeed-newsletter-solana-venture-capital">raised in 2022</a> have shut down, according to <a href="https://x.com/reganbozman/status/1841218868787978255">Lattice Fund</a>).



But the solution, I think, is to get these things right rather than dive headfirst into memecoins and throw the baby out with the bath water.



Recall that the history of the internet for instance, is littered with dead companies that collectively raised billions of dollars. In her <a href="https://www.amazon.sg/Bull-History-Boom-Bust-1982-2004/dp/0060564148">recollection</a> of the dot-com bubble, journalist Maggie Mahar estimated that by February 2002 — two years after the peak of the bubble — about 100 million investors lost ~$5 trillion in the stock market.&nbsp;



Today, the internet is indispensable. Suffice to say, we did not arrive there by doubling down on speculative use cases.



Memecoins do not pretend to try to create a socially innovative product, and that has been wrapped up in a marketing spin to be portrayed as a kind of investor advantage.



But failed crypto projects at the very least net socially important lessons and knowledge that is being taken and applied forward in the industry.&nbsp;



We know that algorithmic stablecoins are probably not a good idea, given the <a href="https://blockworks.co/news/one-year-since-terra">spectacular collapse of Terra</a>.



We know from the meager improvements in costs from decentralized storage solutions like Filecoin (relative to centralized competitors like AWS) that data is not likely to be the breakout use case for DePIN.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf5c3ldVjEXVZsXdevlFQ7S2h2m-XsBHthqJYVBqfYz9-bl5RwlD1FCdyoX0ltr_i6sB8LfkygdG4CoLjO9MinHk3IhHhjPhUWcXhWuYbix8xUPHv0Wn50g8gRWKh_x1homGvC9Tl5q31nj_yHE0xce_EfQ?key=mfn73cL5xdusnrfBtAxlGg" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://x.com/dunleavy89/status/1833167137633866157">MV Global</a></figcaption></figure>



We know that from the downfall of Axie Infinity, the next wave of blockchain-based games are not likely to be based on play-to-earn mechanics.



The point here, really, is that we don’t know the exact recipes for what will and won’t work until entrepreneurs (and, unfortunately, many hoaxsters along the way) give it a go. That is — after all — the whole point of a permissionless market: to allow an archipelago of experiments to flourish simultaneously.



If memecoins do indeed see a “supercycle,” it does beg the giant question of: So what? What has the blockchain industry proved to themselves, as well as outsiders and regulators, aside from the perennial need that people gamble?



Crypto wasn’t designed to make you rich. If that happens along the way, congratulations! But crypto was here to set you free.



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Who cares about a memecoin supercycle?

Here’s my confession: I was a decentralization maxi for the first half-decade of my time in crypto.&nbsp;



The market has however shifted to a slightly different bent, taking me along with it. Permissionless maximalism is now the prevailing alignment.&nbsp;



Decentralization does tend to feed into permissionless-ness. The latter implies there is no central authority granting or denying permission to join the network — thereby making it decentralized — but permissionless systems can be centralized in nature.&nbsp;



Image boards like 4chan, for instance, don’t ask users to create accounts to post or view content. Setting aside the extensive moderation, there’s effectively no initial permission beyond accepting basic terms and conditions. The underlying site still runs on Cloudflare and could technically be seized at any moment.&nbsp;



Read more from our opinion section: <a href="https://blockworks.co/news/decentralization-for-data-security">Without decentralization, our data will never be safe</a>



Within the blockchain context, think of smaller protocols that allow anyone to validate transactions, but due to a lack of interest, the team itself ends up running almost all of the full nodes. Permissionless, but centralized.



I identified with the hardline Bitcoiner. The tangibility of metal machines running proof-of-work is what uniquely ties blockchains to the North Star of censorship-resistance.&nbsp;



As long as mining rigs hum along in a data center in some remote corner of the world, the blockchain is alive, resistant to police raids, war and other types of physical interference.



Monero was okay, too. At least it was mineable. Same with Ethereum — until it <a href="https://blockworks.co/news/staking-eth-no-security">switched to proof-of-stake</a>.&nbsp;



If the seizure of bitcoin mining farms was a concern, then the potential for one machine to act as thousands — or even tens of thousands — of validators at the same time must centralize that risk.



Throughput, by that logic, is secondary. Yes, Bitcoin and Ethereum can only handle single-to-low-double-digit transactions per second. Too slow for mass appeal that comes with use cases broader than sending BTC or USDT back and forth, like <a href="https://consensys.io/blog/the-inside-story-of-the-cryptokitties-congestion-crisis">breeding</a> digital cats.



That’s just the cost of <a href="https://blockworks.co/tag/decentralization">decentralization</a>, I would say.



Besides, it’s not clear whether NFTs and memecoins really need to be onchain and forever cryptographically-verified at the expense of people managing the servers.&nbsp;



We could simply inspire all that less-important compute to move to more centralized networks. (And therein lies Vitalik’s <a href="https://x.com/VitalikButerin/status/1435413681588736007">pitch</a> for Ethereum’s scaling roadmap.)



Doing so would free up the actual censorship-resistant blockspace for folks with unquestionable claims to it — those living under authoritarian regimes and hyperinflationary economies.



Read more: <a href="https://blockworks.co/news/stablecoin-empire-emerging-economies-user-interface">Stablecoins are ‘a better product’ than local currencies in emerging economies, Carrica says</a>



As Frictionless co-founder Logan Jastremski alluded to on the latest <a href="https://blockworks.co/podcast/empire">Empire</a> episode, goals like these are noble. The world wide web has such immense societal impact only because it is open source, permissionless and decentralized.&nbsp;



More censored internets in places like mainland China and North Korea are, by contrast, methods of control — not tools for freedom.



Bitcoin currently makes up more than 58% of the crypto market, up from 41% at the start of last year, its highest level in over three years. Although, it’s obvious that the blockchain space has moved on from decentralization maximalism.



For most of the world, there is one internet. In crypto, we now have dozens (or even hundreds) of tech companies and startups building competing “finternets” — all with varying degrees of decentralization, speed and security.&nbsp;



Read more: <a href="https://blockworks.co/news/lightspeed-newsletter-solana-finternet">Indian tech magnate teases Solana-built ‘finternet’ for an economy onchain</a>



Practically none of them are even close to their final form.&nbsp;



The trillion-dollar question is then: Does all that make Web3 a winner-take-all situation, with the blockchain that finally cracks the perfect balance of the <a href="https://vitalik.eth.limo/general/2021/05/23/scaling.html">scalability trilemma</a> taking the lion’s share?



It could be that we end up with two major blockchains: one “money” blockchain and one “general purpose,” with a smattering of boutique networks in their orbit, some of which could be more decentralized and censorship-resistant. They would cater to the hobbyists and those that desperately require those properties.



And, behind the scenes, the continued development of the finternet might look more like the Web2 app layer. Like how Meta runs the backbone for WhatsApp, Facebook and Instagram, and whichever outfit that wins the Web3 race maintains the tech stack for all the killer crypto apps.&nbsp;



Perhaps a chain with far fewer than 100 full nodes, so that it’s fast enough to support whatever mainstream app will bring the next wave of non-native users onchain. For scale, Solana, Ethereum and Bitcoin each have thousands.



Read more: <a href="https://blockworks.co/news/ton-outage-permanent-uptime-web3">The Offline Network: Maybe permanent uptime isn’t a Web3 thing after all</a>



In that scenario, decentralization is not the be-all-and-end-all. It’s instead replaced by strict adherence to permissionlessness: becoming an active participant in the network, say by running a high-performance full node in a server farm somewhere, may be prohibitively expensive for most, but it’s still technically possible for anyone.&nbsp;



In the spirit of pragmatism over dogmatism — and until Moore’s law unlocks more possibilities for blockchain builders — maybe that’s enough.



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



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Decentralization maximalism is dead. Long live permissionless maxis.

Crypto.com said it filed a suit against the Securities and Exchange Commission after it received a Wells notice earlier this year.&nbsp;



The crypto firm <a href="https://crypto.com/company-news/complaint">said</a> it’s trying to “protect the future of the crypto industry in the US, joining a series of our peers who are actively defending themselves and taking action against a misguided federal agency acting beyond its authorization under the law.”



A slew of other crypto firms have also received similar notices, including Uniswap, Consensys and Robinhood.&nbsp;



Read more: <a href="https://blockworks.co/news/robinhood-wells-notice-sec">Robinhood discloses Wells notice over its crypto business</a>



“Our lawsuit contends that the SEC has unilaterally expanded its jurisdiction beyond statutory limits and separately that the <a href="https://blockworks.co/tag/sec">SEC</a> has established an unlawful rule that trades in nearly all crypto assets are securities transactions no matter how they are sold, whereas identical transactions in bitcoin (BTC) and ether (ETH) are somehow not,” a press release announcing the suit said.



The suit — similar to the one Consensys <a href="https://blockworks.co/news/sec-lawsuit-against-consensys-securities">filed earlier this year</a> — was <a href="https://blockworks.co/news/consensys-files-lawsuit-against-sec">filed in a Texas court</a>. It names SEC Chair Gary Gensler and Commissioners Caroline Crenshaw, Jamie Lizarraga, Hester Peirce and Mark Uyeda, as well as the agency itself.&nbsp;



Per the <a href="https://crypto.com/document/complaint.pdf">suit</a>, the SEC’s Wells notice is focused on <a href="https://blockworks.co/tag/cryptocom">Crypto.com</a> allegedly acting as an “unregistered broker-dealer and securities clearing agency under the federal securities laws.”



A Wells notice warns firms of potential enforcement actions, though it doesn’t always mean that the SEC will file its own suit against the firm. Crypto.com said it received the notice on Aug. 22.&nbsp;



“The SEC has refused to provide Crypto.com a complete list of network tokens sold on the platform that it plans to allege are crypto asset securities. Instead, it has referred Crypto.com to other enforcement actions in which the SEC has asserted claims based on secondary-market sales of various network tokens, including the Targeted Network Tokens,” the suit claims.



“The SEC does not comment on the existence or nonexistence of a possible investigation,” a spokesperson told Blockworks.



Updated October 8, 2024 at 1:24 pm ET: Added statement from the SEC. Updated October 8, 2024 at 10:11 am ET: Modified language for clarity.



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Crypto.com files suit against SEC, discloses Wells notice

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



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This week, Blockworks is taking over Salt Lake City with Permissionless III — a three-day conference specially for users, founders, investors, devs and policymakers.



Our editorial team will be there in force, which means we’re scaling back the Empire newsletter format during the event.&nbsp;



Enjoy the slightly abbreviated read, and if you haven’t secured your tickets yet, <a href="https://blockworks.co/event/permissionless-iii">grab them here</a>.



— David Canellis



<h2 class="wp-block-heading">RIP FTX</h2>



We’re one step closer to wrapping up the <a href="https://blockworks.co/news/ftx-meltdown-timeline">FTX saga</a> for good. Really.



The bankruptcy of the FTX estate — which was once one of the biggest crypto exchanges in the world — will now proceed to its final stages, after Judge John Dorsey approved the estate’s repayment plan yesterday.



Not to mention, three of the five executives charged in the downfall of FTX have been sentenced (Sam Bankman-Fried is <a href="https://blockworks.co/news/sam-bankman-fried-sentenced">serving 25 years</a>, Caroline Ellison <a href="https://blockworks.co/news/caroline-ellison-sentenced-to-24-months">will serve two</a> and <a href="https://blockworks.co/news/former-ftx-exec-ryan-salame-sentenced">Ryan Salame is facing 7.5</a>). The last two, Nishad Singh and Gary Wang, are set to be sentenced next month.&nbsp;



With its two-year anniversary quickly approaching, putting to bed one of crypto’s darkest moments might even come in time for the next bull run.&nbsp;



But who knows.&nbsp;



The repayment confirmation hearing, which started early Monday morning, lasted almost the entire day as the bankruptcy court heard objections and cross-examined witnesses.&nbsp;



Alvarez &amp; Marsal’s Steven Coverick took the stand and faced a cross-examination that touched on a, well, understandably touchy subject for a lot of FTX creditors: the matter of in-kind versus cash distributions.&nbsp;



Here’s the deal. A lot of creditors pushed the debtor&#8217;s estate to return their crypto as it was when FTX went bust. However, the plan that was approved yesterday returns the amount of crypto that was in wallets of former customers in cash — not their original tokens.



The caveat that lawyers representing the estate had pushed is that creditors are getting interest on top of that sum, which supposedly makes them more than whole — if we’re basing this all on November 2022 prices, which had been severely deflated by the ordeal.&nbsp;



Bitcoin, for instance, currently changes hands for nearly four times what it was as FTX suspended withdrawals.



Coverick helped to shed some light on why the estate didn’t budge on its plans to distribute cash. FTX, he said, “never had the crypto.”&nbsp;



The entire issue came down to the way that the estate had to scrape together the funds. “The debtors simply don’t have the crypto to make in-kind distributions” so they would then have to purchase the crypto to make in-kind distributions. It would be expensive, lower the amount returned to customers,” he explained in court to attorney David Adler, who was representing a set of objectors.



This revelation isn’t a huge surprise. We’ve known for a while that user funds were misappropriated. The FTX estate under John J. Ray managed however to find between $14.5 billion and $16.3 billion. It needed $11 billion to fully pay back customers.&nbsp;



Now you might be wondering — especially if you were in Adler’s shoes — perhaps the estate could buy the crypto it owes customers to execute full and fair in-kind distributions. According to both FTX’s lawyers and Coverick, that could have ramifications for the broader market.&nbsp;



Judge Dorsey agreed with them, overruling Adler, when he greenlit the plan. Adler tried to push for a <a href="https://blockworks.co/news/blockfi-ftx-bankruptcy-comparison">distribution plan similar to BlockFi’s</a>, but Coverick said that FTX was a “very different” case. Again, the judge seemed to agree with that reading.&nbsp;



There’s “nothing in the code to require in-kind versus cash distributions and so far I’ve only heard that the suggestions for in kind could do more harm than good,” Dorsey told the court.&nbsp;



What does this mean for creditors? Per the May court filing, 98% of non-government creditors will <a href="https://blockworks.co/news/empire-newsletter-ftx-bankruptcy-finish-line">receive “at least” 118% of claims</a> in cash within two months of the plan’s approval.&nbsp;



If everything goes to plan, we could officially put FTX to rest in early 2025.&nbsp;



— Katherine Ross



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



<ul class="wp-block-list">
<li>BTC and ETH are mostly flat, with the former bouncing above $62,200 multiple times this morning and the latter at $2,400.</li>



<li>Solana memecoin POPCAT has retraced 12% from its $1.47 all-time high set on Sunday evening. Its market cap is currently $1.2 billion, slightly <a href="https://www.coingecko.com/en/categories/meme-token">trailing</a> FLOKI.</li>



<li>Ether spent most of the past day <a href="https://ultrasound.money/">deflationary</a> amid a jump in native DEX <a href="https://defillama.com/dexs/chains">volumes</a>: 23% week-on-week.</li>



<li>Global NFT sales <a href="https://www.cryptoslam.io/nftglobal?headerPeriod=7d">volumes</a> are also up 21% in the past week to $91.3 million, per CryptoSlam.</li>



<li>Donald Trump has taken the lead on <a href="https://polymarket.com/event/presidential-election-winner-2024/will-donald-trump-win-the-2024-us-presidential-election">Polymarket</a>: 52.8% to Kamala Harris’ 46.6%.</li>
</ul>



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



Q: The topic of the Ethereum camp’s dogmatic approach to retaining solo stakers came up on <a href="https://blockworks.co/podcast/empire/e81d92fc-84f4-11ef-aa3b-37f12def5ce8">today’s Empire podcast</a>. So, is it worth sacrificing decentralization and ideology for more throughput?



Here’s my confession: I was a decentralization maxi for the first half-decade of my time in crypto.&nbsp;



I identified with the hardline Bitcoiner. The tangibility of actual machines running proof-of-work is what uniquely ties blockchains to the North Star of censorship-resistance.&nbsp;



As long as mining rigs hum along in a data center in some remote corner of the world, the blockchain is alive, resistant to police raids, war and other types of physical interference.



Monero was okay, too. At least it was mineable. Same with Ethereum — until it switched to proof-of-stake.&nbsp;



If the seizure of bitcoin mining farms was a concern, then the potential for one machine to act as thousands, or even tens of thousands, of validators at the same time must centralize that risk.



Throughput, by that logic, is secondary. Yes, Bitcoin and Ethereum can only handle single-to-low-double-digit transactions per second. That’s just the cost of decentralization, I would say.



Besides, it’s not clear whether NFTs and memecoins really need to be onchain, forever cryptographically verified at the expense of the people managing the servers.&nbsp;



We could simply inspire all that less-important compute to move to more centralized networks. (And therein lies Vitalik’s <a href="https://x.com/VitalikButerin/status/1435413681588736007">pitch</a> for Ethereum’s scaling roadmap.)



Doing so would free up the actually censorship-resistant blockspace for folks who need it — those living under authoritarian regimes and hyperinflationary economies.



As Frictionless co-founder Logan Jastremski alluded to on <a href="https://blockworks.co/podcast/empire">Empire</a>, goals like these are noble. The World Wide Web has such immense societal impact only because it is open source, permissionless and decentralized.&nbsp;



More censored internets in places like mainnland China and North Korea are, by contrast, methods of control — not tools for freedom.



Bitcoin currently makes up over 58% of the crypto market, up from 41% at the start of last year, its highest level in over three years. But it’s obvious that the blockchain space has moved on from decentralization maximalism.



For most of the world, there is one internet. In crypto, we now have dozens (or even hundreds) of tech companies and startups building competing “finternets” — all with varying degrees of decentralization, speed and security.&nbsp;



Practically none of them are even close to their final form.&nbsp;



The trillion-dollar question is then: Does all that make Web3 a winner-take-all situation, with the blockchain that finally cracks the perfect balance taking the lion’s share?



It could be that we end up with two major blockchains: one “money” blockchain and one “general purpose,” with a smattering of boutique networks in their orbit, some of which could be more decentralized and censorship-resistant. They would cater to the hobbyists and those that desperately require those properties.



And, behind the scenes, the continued development of the finternet might look more like the Web2 app layer. Like how Meta runs the backbone for WhatsApp, Facebook and Instagram, and whichever outfit that wins the Web3 race maintains the tech stack for all the killer crypto apps.



In that scenario, decentralization is not the be-all-and-end-all. It’s instead replaced by strict adherence to permissionlessness: becoming an active participant in the network, say by running a high-performance full node in a server farm somewhere — may be prohibitively expensive for most, but it’s still technically possible for anyone.&nbsp;



In the spirit of pragmatism over dogmatism — and until Moore’s law unlocks more possibilities for blockchain builders — maybe that’s enough.



— David Canellis



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The FTX saga is finally coming to an end

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<h2 class="wp-block-heading">SEC appeal is having a ripple effect&nbsp;</h2>



The SEC’s appeal of the court’s decision in its case against Ripple appears to be having, well, a ripple effect.&nbsp;



As a refresher: A federal judge <a href="https://blockworks.co/news/judge-rules-ripple-xrp-not-security?utm_source=on-the-margin.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=new-day-sahm-rule&amp;_bhlid=e486fbf0e817113df4c1fb8a41cfff47c7497df6">ruled last year</a> that while Ripple’s institutional sales of XRP counted as an unregistered securities offering, programmatic sales did not. The court then, in August, <a href="https://blockworks.co/news/ripple-fined-civil-penalty-sec-lawsuit">ordered Ripple to pay</a> a $125 million penalty — <a href="https://blockworks.co/news/empire-newsletter-ripple-sec-legal-battle">far below the $2 billion</a> the SEC had sought.



The US securities regulator <a href="https://blockworks.co/news/sec-files-ripple-appeal-precedent">appealed that decision last week</a>.



Now, crypto exchange Coinbase has referenced the SEC’s appeal in a letter to Judge Katherine Polk Failla (overseeing the SEC v. Coinbase suit) — urging the court to grant <a href="https://blockworks.co/news/sec-coinbase-motion-interlocutory-appeal">its own motion for interlocutory appeal</a> from earlier this year.



By doing so, the court “would help ensure that the Second Circuit has before it a full account of the legal and practical implications of the SEC’s litigating position — a position that the SEC acknowledged just weeks ago has sown ‘confusion,’” wrote lawyer William Savitt, who is representing Coinbase.&nbsp;



A Coinbase spokesperson told me in an email on Monday that the company “remains confident that we are right on the facts and the law.”



Indeed, the company has the legal bills to prove its belief that this is a fight worth fighting.



Blockchain Association policy counsel Laura Sanders told Blockworks that the SEC’s appeal underscores that it’s essential for the court to weigh in on various foundational questions. “Namely: Is an obligation past the point of sale required for a secondary-market transaction to involve an investment contract?” she explained.



You probably know by now that the so-called <a href="https://www.investopedia.com/terms/h/howey-test.asp">Howey test</a> is used to determine whether something is an investment contract and should thus be regulated as a security.&nbsp;



Well, the word “Howey” appeared four times in Savitt’s letter. The lawyer notes the SEC’s appeal reconfirms that “the issues presented by Howey’s application to secondary-market digital asset transactions are of ‘industry-wide significance.’”



Arie Heijkoop, a partner at law firm Haynes and Boone, said the appeals court should take into account the facts of each case as it considers both. A ruling on each appeal — which in this case would be made by the same court — would go a long way to determine how digital assets should be treated under current US securities laws.&nbsp;&nbsp;



“And given that the SEC has not shown a willingness to provide official regulation or guidance on these matters, having it settled through litigation seems to be the way to get any clarification with this SEC administration,” he said.&nbsp;&nbsp;



The court&#8217;s decision to grant the appeal motion or not will ultimately depend on how much appetite it has for this clash, Heijkoop added.&nbsp;&nbsp;



“The judges will have to decide whether there is enough in all the pleadings and filings before it to make a big decision that could ultimately steer the industry,” he said. “Or whether they want to see the battle develop and play out further.”  



— Ben Strack



<h3 class="wp-block-heading">$159 million&nbsp;</h3>



The amount of money that left bitcoin investment vehicles last week, according to CoinShares data. In a sign investors may be moving more toward a risk-off strategy, digital asset investment products on the whole recorded $147 million of net outflows. 



CoinShares analysts attribute the moves to Friday’s better-than-expected <a href="https://blockworks.co/news/btc-uptober-market-odds">jobs report</a>, which has markets anticipating a lower interest rate cut from the Federal Reserve next month.



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



Happy Monday! With the September jobs report in the rearview mirror, the focus this week is back on inflation. Here’s what we’ll be watching:&nbsp;



<ul class="wp-block-list">
<li>The minutes from the FOMC meeting last month — when central bankers opted for a large cut of 50 basis points — will drop on Wednesday. As a reminder: The dot plot showed that most committee members see us ending 2024 with a federal funds rate between 4.25% and 4.75%. The minutes will give us a better understanding of how they came to this decision, though. After Friday’s positive jobs report, markets on Monday were calling for a 25bps cut in November, with fed funds futures prices showing an 84% likelihood, according to <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">CME Group</a>. </li>



<li>We’ll get the weekly initial jobless claims data on Thursday. Analysts are expecting a slight uptick in first-time filers for the week ended Oct. 5 — calling for 230,000, vs. 225,000 the week prior. On the heels of September’s jobs report, a mild increase shouldn’t be enough to spook markets, but any sign of unemployment edging lower is going to be appreciated. </li>



<li>Also on Thursday, we will get September’s CPI report, followed by the PPI on Friday. Analysts expect core CPI to show a 0.2% monthly increase, down from the 0.3% rise recorded in August. PPI is similarly projected to show prices are inching lower, as analysts forecast a 0.1% monthly increase vs. 0.2% in August. </li>



<li>Last but not least, we will get the University of Michigan’s consumer sentiment survey, which is expected to come in a bit higher than last month (70.3, compared to 70.1). It’s a good litmus test for how optimistic Americans are feeling about their finances and the economy at large. </li>
</ul>



— Casey Wagner



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



<ul class="wp-block-list">
<li>Bitcoin’s price surged to roughly $64,300 today before settling above $63,500 just after 2 pm ET — up roughly 1% from 24 hours ago.</li>



<li>As alluded to earlier, US spot bitcoin ETFs notched about $275 million of net outflows last week, according to Farside Investors <a href="https://farside.co.uk/bitcoin-etf-flow-all-data/">data</a>. Flows into their ETH counterparts over the same span (Sept. 30 to Oct. 4) were also negative, at about $25 million. The latter ETF category has seen $548 million of net outflows since the July 23 launches.   </li>



<li>Crypto-focused asset manager 21.co has linked up with Crypto.com, the company revealed Monday. As an initial step in the “long-term, strategic partnership,” 21.co Wrapped Bitcoin (21BTC) will source bitcoin liquidity from Crypto.com. </li>



<li>It’s officially <a href="https://blockworks.co/event/permissionless-iii">Permissionless</a> week. We hope to see some of you in Salt Lake City!</li>
</ul>



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Coinbase cites SEC’s Ripple appeal to advance its own legal battle

The FTX estate appeared in front of a court Monday for a hearing centered on its bankruptcy&nbsp;



plan, which was proposed back in May of this year.&nbsp;



After a hearing that spanned most of Monday, bankruptcy court Judge John Dorsey signed off on the plan, allowing FTX to move one step closer to fully winding down.&nbsp;



The judge praised the plan, calling it a “model case” for a “complicated” bankruptcy.&nbsp;



<a href="https://blockworks.co/tag/ftx">FTX</a>’s plan, which received “overwhelming” support from creditors, was presented to the Delaware Bankruptcy Court for confirmation. However, there’s been plenty of controversy around the plan, which would — upon winding down — distribute funds to creditors based on the asset prices of crypto back in November 2022.&nbsp;



Read more: <a href="https://blockworks.co/news/ftx-comparison-crypto-bankruptcies">Why FTX is different from other crypto bankruptcies</a>



Former FTX customers had previously fought for distributions <a href="https://blockworks.co/news/blockfi-ftx-bankruptcy-comparison">to be made in-kind</a>, meaning that customers would receive crypto instead of payments in cash.



However, during a cross-examination during Monday’s hearing, Alvarez &amp; Marsal’s Steven Coverick told the court that the debtors didn’t have the crypto in order to make in-kind distributions. Coverick and his firm worked with the debtors on the plan.&nbsp;



FTX, he added, “never had the crypto.”



The estate, per the May filing, owes creditors roughly $11 billion, and has managed to find somewhere between $14.5 billion and $16.3 billion in cash.&nbsp;



The hearing Monday confirmed that the estate researched ways to return crypto back to former customers, but it would have been expensive and would have lowered the amount returned, Coverick added.&nbsp;



Due to the way in which the estate would have to go about purchasing the crypto, the purchases would potentially “result in a run-up in the market,” he told attorney David Adler.



The plan, however, doesn’t rule out distributions made in stablecoins.



Per a May court filing, 98% of non-government creditors will <a href="https://blockworks.co/news/empire-newsletter-ftx-bankruptcy-finish-line">receive “at least” 118% of claims</a> in cash within two months of the plan being approved.&nbsp;



The hearing marks another milestone in the saga of FTX, which is coming up on the <a href="https://blockworks.co/news/ftx-meltdown-timeline">two-year anniversary of its collapse</a>. Since the November 2022 crash, former CEO Sam Bankman-Fried has both been tried in court and found guilty. He is serving a <a href="https://blockworks.co/news/sam-bankman-fried-sentenced">sentence of 25 years</a>. Former Alameda CEO Caroline Ellison has also been sentenced, she faces <a href="https://blockworks.co/news/caroline-ellison-sentenced-to-24-months">two years in jail</a>. FTX executive Ryan Salame faces a sentence of <a href="https://blockworks.co/news/former-ftx-exec-ryan-salame-sentenced">seven and a half years</a> in jail.



Nishad Singh and Gary Wang, both executives who testified at Bankman-Fried’s trial last year, are set to be sentenced next month.



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Judge approves FTX bankruptcy plan

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Never ask a man his salary, a woman her age, or a crypto VC about their 2022 Solana investments.



A pair of research notes published a year apart by the crypto venture shop Lattice gives insight into how the year SOL cratered to $9 specifically affected Solana-based startups. Lattice published a 2021 seed round retrospective in 2023, and a 2022 retrospective recently in 2024.&nbsp;



26%, or more than a quarter, of 2022 Solana seed startups have already failed, and only 61% have managed to ship a product, <a href="https://www.lattice.fund/writing-and-press/2022-seed-stage-retrospective">according</a> to Lattice. Among crypto ecosystems, only Binance saw a lower percentage of projects shipping products. Binance, Avalanche and NEAR 2022 startups all topped Solana’s fail rate, too.&nbsp;



Still, it was a marked step down from 2021’s cohort of Solana startups. In Lattice’s retrospective on that year, <a href="https://www.lattice.fund/writing-and-press/2021-seed-stage-retrospective">published</a> in 2023, it found that 75% of 2021 Solana startups had already shipped a product, and only 11% had failed. Both figures are markedly better compared to 2022.



Meta, the pseudonymous co-founder of Solana-focused Lucid Ventures, said they don’t think Solana is “abnormal” in the VC world, where it’s “standard” for many projects to fail.&nbsp;



In Solana’s early days, a lot of projects garnered visibility from hackathons organized by the network — the sizable <a href="https://blockworks.co/news/lightspeed-newsletter-stake-auction-marketplace">liquid staking protocol</a> Marinade was started as a Solana hackathon <a href="https://x.com/MarinadeFinance/status/1799129421607256142">project</a>, for instance. This can gin up developer excitement, and other alternative blockchains are trying to recapture some of the same magic, it seems: Monad just <a href="https://x.com/monad_xyz/status/1842310910553326018">held</a> a pitch competition for the yet-unlaunched chain. But early, hackathon-era projects may not have a very high success rate.



SOL Big Brain, another pseudonymous VC, <a href="https://x.com/SOLBigBrain/status/1820861386991251726">posted</a> a list of projects they had been told to keep an eye on in 2021. Very few still garner any name recognition.



“Lessons in there for investors investing in new ecosystems,” they wrote.&nbsp;



Of the Solana startups that did survive 2022, however, some are now in the process of raising follow-on funding, and these bigger rounds are starting to touch down. Notably, Drift and Helius both announced rounds in excess of $20 million last month. By my count, this represented the largest Solana rounds in this market cycle for startups that aren’t aiming to build their own blockchains.



These rounds contributed to the $173 million in venture funding the Solana ecosystem hauled in in Q3 of this year, its highest quarterly total since Q2 of 2022, <a href="https://cdn.builder.io/o/assets%2Fce0c7323a97a4d91bd0baa7490ec9139%2Fe090cfa13cfc4e4e95a330c82b9d03a6?alt=media&amp;token=3b6792e5-fe9b-4551-88b0-91e4cf3fbc4b&amp;apiKey=ce0c7323a97a4d91bd0baa7490ec9139">according</a> to the Solana Foundation.



But while Solana may be once again putting up 2022 venture numbers, it will hope to avoid 2022 venture outcomes.



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1 in 4 Solana VC startups from 2022 have already failed 

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<h2 class="wp-block-heading">A new EIP to make Ethereum faster</h2>



Everyone wants the Ethereum network to be faster. This can be achieved in one of three ways:



<ol class="wp-block-list">
<li>Reduce slot times (i.e. the time intervals between newly proposed blocks).</li>



<li>Make blocks bigger by increasing gas limits.</li>



<li>Improve blob (Binary Large OBject) transactions capacity, a temporary form of data structure introduced in EIP-4844 that allowed L2s to settle to Ethereum more cheaply.</li>
</ol>



This weekend saw the emergence of the newly proposed <a href="https://github.com/ethereum/EIPs/pull/8931">EIP-7781</a> aimed at the first.



Proposed by <a href="https://x.com/ben_a_adams">Ben Adams</a>, co-founder of Illyriad Games and Nethermind contributor, EIP-7781 wants to shorten slot times on the Ethereum L1 from from 12 seconds to eight seconds.



The proposal cites EIP-7781’s impact as an improvement in overall throughput by 33% and reduced latency for based L2 rollups, which roughly translates to a hypothetical gas limit increase from 30 million to 40 million or a blob count increase from six to eight.



Since block sizes remain unchanged, aggregate peak bandwidth demands will not rise either.



In other words, Ethereum would be faster, without increasing the bandwidth requirements on individual nodes (though the impact on hardware is up for debate).



The new proposal has received the approval of Ethereum Foundation researcher <a href="https://github.com/ethereum/EIPs/pull/8931#issuecomment-2395026393">Justin Drake</a>, who agrees EIP-7781 would roughly increase throughput by 50%, make DEXs like Uniswap roughly 1.22x more efficient and reduce confirmation times of L1 contracts by one-third.&nbsp;



If passed, EIP-7781 would have significant positive impacts on based rollups like Taiko, whose architecture leverages the sequencer of the L1 (and thereby is constrained by L1 block times), as opposed to traditional rollups like Optimism and Arbitrum, who run their own centralized sequencers.



It’s a welcome change but one wonders if it’s just another EIP on an Ethereum roadmap already chock-full of EIPs waiting to be implemented.&nbsp;



Recall that the upcoming <a href="https://blockworks.co/news/testing-bottleneck-next-ethereum-upgrade">Pectra hard fork</a> (with already 20+ EIPs) that was scheduled in early 2025 was <a href="https://blockworks.co/newsletter/research/issue/post_a2d3d0b2-7573-4379-a2d8-db9d7c7dc488">split</a> in two during the last Ethereum All Core Developers (ACD) call.&nbsp;



ETH Core Dev Alex Stokes, who moderated the last ACD, <a href="https://hackmd.io/@ralexstokes/rJVuKtlpR">cited</a> Pectra as “one of the biggest hard forks we have had in Ethereum history.”



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



Polymarket hits all-time highs in daily trading volumes:&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdyTH-VvCX_CqNObVhkC9sV1_qTVGXpQi6x4ChVNpdXKjicjoF8Oi1qSfQByqGw7CM-1_cMMHX6RZfi_toKMWcqMUXAGeVV1JILvqZ7G5vrUF3wIXyCLpYoP26sqf619fh8_EAFnGUlI61LNIk1OB050Z0?key=26-qyIB22NbzOhdKnKWiqQ" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.blockworksresearch.com/analytics/polymarket">Blockworks Research</a> (h/t <a href="https://x.com/smyyguy/status/1843278051142242528">Dan Smith</a>)</figcaption></figure>



Polymarket is racking up all-time highs in daily trading volumes. On Sunday, 82% ($79.3 million) of volumes came from the “elections” category. The biggest market by far is still the “<a href="https://polymarket.com/event/presidential-election-winner-2024?tid=1728309704050">Presidential Election Winner 2024</a>” prediction market, with about $1.38 billion worth of bets riding on it. It’s right now giving Trump a 51% lead compared to Harris’s 47.9%.



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New EIP-7781 to make Ethereum faster by 33%

Bitcoin has now been in a bull market for 686 days, ever since it bottomed out below $15,500 in November 2022 amid <a href="https://blockworks.co/tag/ftx">the FTX fiasco</a>.



The past three bull markets lasted between 1,047 and 1,278 days. That’s counting from when the price of bitcoin hits its local floor, past its cycle peak and finishes alongside its ultimate correction.



So, bitcoin is now firmly in the second half of its current bull market — if the cycles since 2011 are anything to go by.



We already know that bitcoin returns have diminished every cycle. As to be expected: Bitcoin went from a market cap of a few million to over $12 billion in its first major bull cycle starting in 2011, or up to 620x returns.



Read more: <a href="https://blockworks.co/news/bitcoin-halving-cycle-returns">Bitcoin halvings may be bullish — but returns have shrunk every cycle</a>



Then, it went from a few billion in 2015 to almost $300 billion in 2018 (103x returns) and then to $1.2 trillion by the 2021 peak (21x), which is more or less the market valuation it has today.



If bitcoin this time around were to undergo the same degree of growth as it did between 2018 and 2022, then it would need to rally from a $300 billion market cap to a $6.3 trillion one — which would make it almost twice as valuable as Apple stock.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeV26Q0CuGMlXXXDFHeYi8BvbjyMEsXCZm5gT4Os3Ddil-CZhdKwfRfv1AnaNViwRMZwmiSgjFC_3mfdG5Ef6BI6FHk_VArgFNYO3bAUJZtex7dQvtFx6uHDlLux33dHP-cNpkPbR4mzM__6ZhTg7Q4p_HB?key=eKh0n_CrFzmeX-nhdbM8CQ" alt=""/><figcaption class="wp-element-caption">Loyal <a href="https://blockworks.co/category/empire-newsletter">Empire newsletter</a> readers would recognize this chart. It plots bull markets against each other, as if they all started at once, to gauge just how high bitcoin goes, and for how long.</figcaption></figure>



If bitcoin were truly bigger than Apple right now, the price of BTC would be $1.32 million (current price: $63,000). For scale, Fundstrat managing partner and perennial bull-poster Tom Lee has previously <a href="https://www.dlnews.com/articles/markets/fundstrat-tom-lee-on-why-bitcoin-to-hit-500k-usd-in-5-years/">said</a> that BTC could hit $150,000 by the end of the year, and $500,000 in the next five years.



With this in mind, bitcoin has done remarkably well this cycle.&nbsp;



Notice that the purple line above — the current bull market — started off more or less in line with the three previous cycles, thanks to a monster opening in 2023.&nbsp;



But a brief reversal to below $20,000 saw bitcoin start to lag behind at around day 100, before catching up quickly after day 300. Hype around a potential BlackRock bitcoin ETF hype <a href="https://blockworks.co/news/crypto-media-slow-thoughtful-facts">really percolated</a> around then.



After that point, bitcoin was outpacing the 2018 to 2022 market cycle. It even briefly eclipsed the returns seen in the ripper price action between 2015 and 2018, culminating in a March all-time high which <a href="https://blockworks.co/news/history-of-bitcoin-halvings">atypically occurred before</a> the Bitcoin halving.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdmtuAuNnoK7V2K9lB5y7vvyniSLTNWzJCgfCCzMlIKR8-_fXPHEXnPHq9tqWAZT8_NZE64rwQBDFc2sTPWdDvBnctJBna6vr7bZAcAzBvn9A54y7PuLXjO3T7xOQ8FxCgs6KMen3232EgrFRbZLfKIjAAQ?key=eKh0n_CrFzmeX-nhdbM8CQ" alt=""/><figcaption class="wp-element-caption">Here’s a similar chart but for the cap growth for the rest of the crypto market. The current altcoin cycle is well below the previous two.</figcaption></figure>



But bitcoin has been trending sideways for long enough now that it is no longer outpacing any of the previous bull markets.&nbsp;



And it was about this time that each run really accelerated: Bitcoin has reached its cycle top somewhere between day 750 and day 1,060 into each bull market, and prices usually spent hundreds of days ramping up to reach those peaks.



It could be that bitcoin made most of its gains in the first 500 days of this bull market. That would certainly align with the trend of diminishing returns.



Or, bitcoin is simply late to the real bull run, due to crescendo over the next eight months or so — a period that would interestingly end about five months into the next US president’s first term, in June 2025.



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



If there was a case to be made for the election outcome being pivotal for the state of crypto markets, this might just do it.&nbsp;



Still, at least going by how the previous bitcoin bull markets have played out, it could be that whatever immediate impact the election has marks the beginning of the end of the cycle.



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



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Why the US election could put a timer on this bitcoin bull market

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



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



Good morning.&nbsp;



This week’s editions are going to look a smidge different, with so many of our folks on the ground at Permissionless in Salt Lake City.&nbsp;



For those with FOMO, we’ll keep you updated on what’s happening at the event, while also keeping an eye on crypto.&nbsp;



And if you haven’t secured your tickets yet, <a href="https://blockworks.co/event/permissionless-iii">grab them here</a>.&nbsp;



Hopefully, I’ll see you there. If not, we’ll catch you around your inbox.&nbsp;



— Katherine Ross&nbsp;&nbsp;



<h2 class="wp-block-heading">Unforgive-a-bull</h2>



The bitcoin bull run is officially late —&nbsp;or maybe it was really early.



Bitcoin has now been in a bull market for 686 days, ever since it bottomed out below $15,500 in November 2022 amid <a href="https://blockworks.co/tag/ftx">the FTX fiasco</a>.



The past three bull markets lasted between 1,047 and 1,278 days. That’s if you start counting when the price of bitcoin hits its local floor, past its cycle peak and finishing alongside its ultimate correction.



Going by those figures, we can probably say that bitcoin is now firmly in the second half of its current bull market — if the cycles since 2011 are anything to go by.



We already know that bitcoin returns have <a href="https://blockworks.co/news/bitcoin-halving-cycle-returns">diminished every cycle</a>. As to be expected: bitcoin went from a market cap of a few million to over $12 billion in its first major bull cycle starting in 2011, or up to 620x returns.



Then, it went from a few billion in 2015 to almost $300 billion in 2018 (103x returns) and then to $1.2 trillion by the 2021 peak (21x), which is more or less the market valuation it has today.



If bitcoin this time around were to undergo the same degree of growth as between 2018 and 2022, then it would need to rally from a $300-billion market cap to $6.3 trillion — which would make it almost twice as valuable as Apple stock.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXczAqSZWwekV1IolkLGj8JLdi-_DMhTxTCZzOhM4eqoBu3ZJBzMZAqEJ1U-fhogMZBBpSFCJ95PRae4ULBEDk3NL58ByXS7qxzw2o2aVVNTiOxQ7zCG5Om7t9sgejdulzCWRuseyBjd6ywzXBFnWFaVe92g?key=pHyXYR-eEVKNE47snoO54w" alt=""/><figcaption class="wp-element-caption">Returning Empire readers would recognize this chart. It plots bull markets against each other, as if they all started at once, to gauge just how high bitcoin goes, and for how long.</figcaption></figure>



If bitcoin were truly bigger than Apple right now, the price of BTC would be $1.32 million (current price: $63,000). For scale, Fundstrat managing partner and perennial bull-poster Tom Lee has <a href="https://www.dlnews.com/articles/markets/fundstrat-tom-lee-on-why-bitcoin-to-hit-500k-usd-in-5-years/">previously said</a> that BTC could hit $150,000 by the end of the year, and $500,000 in the next five years.



With this in mind, bitcoin has done remarkably well this cycle.&nbsp;



Notice that the purple line above — the current bull market — started off more-or-less in line with the three previous cycles, thanks to a monster opening in 2023.&nbsp;



But a brief reversal to below $20,000 saw bitcoin start to lag behind at about day 100, before catching up quickly after day 300. Hype for a potential BlackRock bitcoin ETF hype <a href="https://blockworks.co/news/crypto-media-slow-thoughtful-facts">really percolated</a> around then.



After that point, bitcoin was outpacing the 2018 to 2022 market cycle. It even briefly eclipsed the returns seen in the ripper market action between 2015 and 2018, culminating in a March all-time high which <a href="https://blockworks.co/news/history-of-bitcoin-halvings">atypically occurred before</a> the bitcoin halving.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf-bLCWoju0H5XWkeDkhf3uF1sSYp8H9bIkCuVJ0l597ShDOqLZB5gnsSeysB81QNY8LELYdETVZyaycVuphIBgsLaGb8lr9VWaLnxXzXp2_v-ctuyVo8fcyv05Ed-6qg73aZbKpgoOVCndlInnlwlqlTOQ?key=pHyXYR-eEVKNE47snoO54w" alt=""/><figcaption class="wp-element-caption">Here’s a similar chart but for the cap growth for the rest of the crypto market. The current altcoin cycle is well below the previous two.</figcaption></figure>



But bitcoin has now trended sideways long enough that it’s no longer outpacing any of the previous bull markets.&nbsp;



And it was about this time that each run really accelerated: bitcoin has reached its cycle top somewhere between day 750 and day 1,060 into each bull market, and prices usually spent hundreds of days ramping up to reach those peaks.



It could be that bitcoin made most of its gains in the first 500 days of this bull market. That would certainly align with the trend of diminishing returns.



Or, bitcoin is simply late to the real bull run, due to crescendo over the next eight months or so.&nbsp;



If you needed a little extra hopium in your morning Monday coffee, that might do the trick.



— David Canellis



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



<ul class="wp-block-list">
<li>Did a new <a href="https://www.politico.eu/article/mystery-creator-bitcoin-identified-new-hbo-documentary-satoshi-nakamoto-crypto-currency/">HBO documentary</a> find the real Satoshi Nakamoto? The doc, which is set for a Tuesday premiere, may claim that Len Sassaman is the real Satoshi. Or, at least, that’s the <a href="https://www.coindesk.com/markets/2024/10/07/len-sassaman-gets-the-memecoin-treatment-ahead-of-hbo-bitcoin-creator-documentary/?utm_medium=referral&amp;utm_source=rss&amp;utm_campaign=headlines">outcome</a> that Polymarket bettors and memecoin makers are hoping for.</li>



<li>The inflow streak for crypto ETF products is over, thanks to the $147 million in outflows last week, CoinShares <a href="https://coinshares.com/us/resources/market-activity/fund-flows-07-10-24/">noted</a>.</li>



<li>EigenLayer “erroneously transferred” 1.6 million EIGEN ($5.7 million) to a “malicious attacker” after an investor’s transfer was <a href="https://x.com/eigenlayer/status/1842317191045157099">compromised</a>.&nbsp;</li>



<li>Leah Wald’s Sol Strategies (formerly Cypherpunk Holdings) is likely to reinvest a windfall from the bankrupt FTX estate back into SOL, she told <a href="https://coinshares.com/us/resources/market-activity/fund-flows-07-10-24/">The Block</a>.</li>



<li>Crypto M&amp;A activity may be on the rise, with FalconX shopping around for potential acquisitions, Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-10-07/crypto-firm-falconx-hunts-for-acquisitions-after-record-quarter">reported</a>.</li>
</ul>



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



Q: How’s crypto VC funding holding up?



We’re in the “keep on keeping on” stage of VC activity.&nbsp;



Crypto companies raised <a href="https://blockworks.co/news/humanode-ecosystem-funding-program-dapps">$823 million last month</a>, roughly $158 million lower than August’s total of $981 million.&nbsp;



So there’s not a huge discrepancy — which can be seen as a good thing — but we’re also not seeing a big boom. Something that PitchBook’s Robert Le has cautioned could be on the back burner until next year, at the very least.&nbsp;



With the election next month, it’ll be interesting to compare October’s figures to August and September.



DeFi has remained the top category for funding raises throughout the last two months, with over 63 companies raising.



While a lot of folks are hoping that we break out of this ‘will they, won’t they’ cycle when it comes to regulatory clarity (arguably one of the biggest holdups for the industry right now), Le isn’t too certain we’re on the quick path to anything concrete after the election.



“Currently there is not a strong imperative in Congress to push through crypto legislation, and we do not expect the legislative environment for crypto to change significantly after the election,” he wrote in a <a href="https://pitchbook.com/news/reports/q4-2024-pitchbook-analyst-note-us-presidential-election-guide?utm_term=&amp;utm_campaign=analyst_note&amp;utm_medium=newsletter&amp;utm_source=daily_pitch&amp;utm_content=q4_2024_pitchbook_analyst_note_us_presidential_election_guide">note</a> last week.



Let’s just hope something gives, because we need a catalyst stat.



— Katherine Ross



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Kicking the tires on this bitcoin bull market

$823 million.&nbsp;



That’s the amount raised by crypto companies in September alone. The sum is broken up across 200 different companies that raised last month, with Celestia’s ecosystem fundraise of $100 million topping that list.&nbsp;



Infinex was a close second, raising $65 million through public token sales.&nbsp;



Strategic funding, like Celestia, topped the amount of funding done last month, in part helped by TON Foundation’s raises for its ecosystem funds. But seed rounds are topping the charts, per TIE data. 41 companies raised seed rounds last month.&nbsp;



Read more: <a href="https://blockworks.co/news/celestia-raises-155m-a16z-decentralized-science">Funding Roundup: Celestia’s raised $155M</a>



Last month, DeFi companies raked in the funding money, with 33 companies announcing raises.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf0Q4CJcoGzqEAVTevMLV4mszgb50b2pcBceExmdcZfpTDhkl6XPCNZLSU0P0HOH6lQGe1E42u_4tkaQ35s1Crr7vq4hHc4ZFBStNeqi2St3oZI4uTUwMNNdA0MJkyclHW9KEdAFiKolKW3JeWquuLsFnJN?key=h7RFuDSkBC_2jtmxWOL6Pg" alt=""/><figcaption class="wp-element-caption">Source: The TIE Terminal</figcaption></figure>



But that group didn’t raise the most money. Instead, it was Protocol Development, which raised a total of $192 million, per the data.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXffgrNb3lbR_c400G3r-ZDhJHH8p0yIIL1YZ95IBT_FeBqLdFnpROVoN8RF9_wTRV-RUg3Aoh5k6u5Ahh3ywrt68fkMFJ2RzUJdX4IJRLIEww3FHj7YKGq-tyASf6IfMiY2bhJPI3Q7zDHNaPhCZr8yM5DV?key=h7RFuDSkBC_2jtmxWOL6Pg" alt=""/><figcaption class="wp-element-caption">Source: The TIE Terminal</figcaption></figure>



So far, October is looking quiet — aside from some token unlocks coming later this month. A reaction to the spooky season or are we just taking a collective breath? It’s too soon to tell.



Now onto a funding announcement&#8230;



Humanode exclusively told Blockworks that it was launching an Ecosystem Funding Program. The $10 million program aims to “support and nurture the next generation of Sybil-resistant projects on its chain.”



Read more: <a href="https://blockworks.co/news/grass-data-verification-depin-funding">Funding Roundup: HackVC leads funding round for DePIN Grass&nbsp;</a>



It’s unclear who participated in the raise, however, with the team noting that it was supported by “funds and angels.”



The program will initially focus on “consumer dapps with the potential to reach one million users. To many, that goal may seem small, however, the key here is that this will be on the Humanode EVM, utilizing crypto biometrics for Sybil resistance.”&nbsp;



Humanode plans to collaborate with the projects selected for the program, offering not only funding but also technical, media and community-building support. Both the founders and other members of the Humanode Core Team will assist these projects throughout the process.



Read more: <a href="https://blockworks.co/news/ethcc-2024-attendees-want-web3-apps">Web3 Watch: EthCC attendees ask: “Where are the apps?”</a>



They clarified in this case, &#8220;users&#8221; refers to unique individuals, not accounts.



“I know it sounds cliche, but we are investing in people and projects that have the drive and potential to hoist their flag, mark their place in the industry and understand the value of Sybil-resistance in their dapps,” Dato Kavazi, the co-founder of Humanode, said.



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