The Dogeson

Byron Gilliam

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“By 2026, Google’s main product will not be search but AI.”



— Kevin Kelly, 2016
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When Kevin Kelly met Larry Page at a party in 2002, he asked why anyone would invest in a company that offers its product for free: “I still don’t get it. There are so many search companies. Web search, for free? Where does that get you?”



Page’s response was both memorable and prophetic: “Oh, we’re really making an AI.”



That was two years before Facebook, three years before YouTube, five years before the iPhone and 20 years before ChatGPT.



For Kelly, it was an &#8220;aha&#8221; moment.



“Rather than use AI to make its search better,” he <a href="https://www.amazon.com/Inevitable-Understanding-Technological-Forces-Future-ebook/dp/B016JPTOUG/ref=tmm_kin_swatch_0?_encoding=UTF8&amp;dib_tag=se&amp;dib=eyJ2IjoiMSJ9.X73Zxh6EG6ZxXXRXYGrGPVI7xazRLJ2ncHB4DdyMBAW0kI4awqHgRbbhUZhFJ7Ug_j1nZHXCVsWRsiAH1AMOIEwWv7KB5egRyTON_kFeshv5fnK6C7weu8Epwm_I9D6Sm0SyI3TVepKzzuiogfjqiZgios3xxICdh4XthN3B9XBt2UHw4H9-f78GYORxLf0rqqvvtBWWxZ1wZgG_VsQLruPw7i9u18tSGmV5RJWBufk.SHrSP8fM-i9UEORTlGCtt34CVamxjGXTVyx792s2-uE&amp;qid=1765547592&amp;sr=8-1">wrote</a> in 2016, “Google is using search to make its AI better. Every time you type a query, click on a search-generated link, or create a link on the web, you are training the Google AI.”&nbsp;



Kelly was right about search engines — training AI would prove far more consequential than serving ads.&nbsp;



But from the perspective of 2025, we can make an even bigger claim: The true purpose of the entire internet was to train AI.



That, at least, is the view of Alex Tabarrok, who recently told Tyler Cowen that history will remember the internet primarily as the “agar culture for the growth of the AI” — i.e., the nutrient-rich petri dish whence it sprang.



“That’s why the internet’s important,” Cowen agreed. “We’re just beginning to realize this, right?”



“When we look back,” Tabarrok added, “we’ll think about… &#8216;What was the internet?&#8217; Putting everything online was for the AI. It wasn’t for us. I don’t think anyone thought about that.”



Except Larry Page!



And maybe Page’s dad, a pioneer in AI research.



And also Page’s co-founder, Sergey Brin, the machine-learning expert so well-versed in AI that he’s contributed code to Google’s large language model, Gemini.



None of those three made the cover of <a href="https://time.com/7339685/person-of-the-year-2025-ai-architects/">Time Magazine</a> as an &#8220;architect of AI” this week.



But they probably should have, because Google’s search engine did exactly what they intended it to.



“The ultimate search engine would understand everything on the web,” Page <a href="https://youtu.be/tldZ3lhsXEE?si=bLHftU0Um1UCXnqA&amp;t=224">explained</a> way back in 2000. “It would understand exactly what you wanted and give you the right thing and that’s obviously artificial intelligence; to be able to answer any question, because almost everything’s on the web.”



Who put it there? You did, of course.



“When you type ‘Easter Bunny’ into the image search bar,” Kelly wrote in 2016, “and then click on the most Easter Bunny-looking image, you are teaching the AI what an Easter Bunny looks like. Each of the three billion queries that Google conducts each day tutors the deep learning AI over and over again.”



We’re now up to 16 billion Google queries per day!



So, really you should be on the cover of Time Magazine this week — for the many years of important Googling you’ve done.



Thank you for your service.



Let’s check the charts.



More power, please:



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="830" height="656" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-96.png" alt="" class="wp-image-110438" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-96.png?w=830 830w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-96.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-96.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-96.png?w=325 325w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-96.png?w=330 330w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-96.png?w=277 277w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-96.png?w=80 80w" sizes="auto, (max-width: 830px) 100vw, 830px" /></figure>



<a href="https://www.a16z.news/p/charts-of-the-week-if-you-cant-join">Per a16z</a>, forecasts for data center power consumption have risen by 36% since just April. AI-related stocks were down today in part because they can’t get enough power to run all the data centers they need (or think they need).



Power to the people:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1230" height="689" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-94.png?w=1024&amp;h=1024" alt="" class="wp-image-110437" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-94.png?w=1230 1230w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-94.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-94.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-94.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-94.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-94.png?w=466 466w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-94.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-94.png?w=80 80w" sizes="auto, (max-width: 1230px) 100vw, 1230px" /></figure>



China’s big advantage in the race to AGI is that soon, it will be generating 3x as much power than the US is.



Investing role reversal:



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="893" height="509" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-99.png" alt="" class="wp-image-110440" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-99.png?w=893 893w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-99.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-99.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-99.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-99.png?w=458 458w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-99.png?w=384 384w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-99.png?w=80 80w" sizes="auto, (max-width: 893px) 100vw, 893px" /></figure>



Paul Kedrosky notes that as a percentage of sales, Microsoft (a traditionally asset-light business) is now spending more than double on capex compared to what Exxon (a traditionally asset-heavy business) does.



Not investing advice:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1376" height="642" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-100.png?w=1024&amp;h=1024" alt="" class="wp-image-110443" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-100.png?w=1376 1376w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-100.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-100.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-100.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-100.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-100.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-100.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-100.png?w=80 80w" sizes="auto, (max-width: 1376px) 100vw, 1376px" /></figure>



A Finra survey finds that 61% of investors under the age of 35 use YouTube for investing advice. To me, this suggests that Australia got it the wrong way around when it banned under-16s from social media this week. They should have banned over-30s instead.



The non-crisis of grocery prices:



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="824" height="590" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-97.png" alt="" class="wp-image-110441" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-97.png?w=824 824w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-97.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-97.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-97.png?w=359 359w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-97.png?w=365 365w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-97.png?w=306 306w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-97.png?w=80 80w" sizes="auto, (max-width: 824px) 100vw, 824px" /></figure>



Contrary to what social media would have you believe, there is no crisis of grocery store prices: As a percentage of disposable income, food at home (in blue) has gotten cheaper. In total (red), our food budget has remained unchanged, but only because we’re getting lazier (yellow).



The stock market isn’t only about AI:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="1059" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-95.png?w=1024&amp;h=1024" alt="" class="wp-image-110442" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-95.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-95.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-95.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-95.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-95.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-95.png?w=388 388w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-95.png?w=394 394w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-95.png?w=331 331w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-95.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



The equal-weight S&amp;P 500 hit an all-time high this week.



A demographic time bomb:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1154" height="882" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-101.png?w=1024&amp;h=1024" alt="" class="wp-image-110444" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-101.png?w=1154 1154w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-101.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-101.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-101.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-101.png?w=336 336w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-101.png?w=341 341w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-101.png?w=287 287w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-101.png?w=80 80w" sizes="auto, (max-width: 1154px) 100vw, 1154px" /></figure>



Sam Bowman <a href="https://x.com/s8mb/status/1998775841459708175?s=20">shares</a> an incredible stat: “Every 100 South Koreans today will have only 6 great-grandchildren between them.” Not six each — six in total. Thankfully, AI should be doing most of the jobs by then.



All the persons of the year:



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="790" height="564" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-98.png" alt="" class="wp-image-110439" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-98.png?w=790 790w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-98.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-98.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-98.png?w=360 360w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-98.png?w=366 366w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-98.png?w=307 307w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-98.png?w=80 80w" sizes="auto, (max-width: 790px) 100vw, 790px" /></figure>



Note that The Computer was Time Magazine’s&nbsp; “person” of the year in 1982. Not labelled in the above is the 2006 winner: you. The 2006 award recognized the individual content creators populating the w<a href="https://en.wikipedia.org/wiki/World_Wide_Web">orld wide web</a> with YouTube videos, blog posts, Instagram photos and Reddit comments.&nbsp;



This year, “you” should rightfully have joined nine US presidents as a repeat winner, because if we hadn’t populated the web with our content, the &#8220;architects of AI” would’ve had nothing to work with.



Your training session is now complete. Please proceed outdoors.



Have a great weekend, readers of the year.



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Friday charts: The many, many architects of AI

Kunal Doshi

This is a segment from the 0xResearch newsletter. To read full editions, <a href="https://blockworks.co/newsletter/0xresearch" target="_blank" rel="noreferrer noopener">subscribe</a>.



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Performance across major assets diverged yesterday. Gold, BTC, and the S&amp;P 500 posted gains of 0.95%, 0.55%, and 0.39%, respectively, while the tech-heavy Nasdaq slipped -0.12%.



The divergence was driven largely by Oracle, whose shares fell -11% after disappointing quarterly revenues and higher spending guidance. That miss reignited <a href="https://www.cnbc.com/2025/12/10/stock-market-today-live-updates.html">concerns</a> around the durability of the AI trade and sparked a rotation out of tech and into lagging parts of the market, pushing the Dow Jones Industrial Average to fresh highs.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="846" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-93.png?w=1024&amp;h=1024" alt="" class="wp-image-110431" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-93.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-93.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-93.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-93.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-93.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-93.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-93.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-93.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-93.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Crypto sector performance echoed the uneven tape. Despite renewed skepticism around AI, Crypto Miners were the standout performers, rising 4.5% on the day. IREN, which makes up 24% of the index, gained 4.4% and helped lead the move. DeFi followed with a 1.93% gain, driven by strength in AAVE, ENA, and HYPE, which together account for 44% of the index and all closed higher.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="841" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-92.png?w=1024&amp;h=1024" alt="" class="wp-image-110430" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-92.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-92.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-92.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-92.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-92.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-92.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-92.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-92.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-92.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



On the downside, DePIN continued to struggle, falling -3.2%. The sector was dragged lower by FIL and GRASS, which dropped -6.2% and -7.2%, respectively. L1s were another surprise laggard, down -2.5% on the day. Even with BTC in the green, most L1 constituents finished lower, with SEI and BERA both posting losses of -9%.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1221" height="555" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-91.png?w=1024&amp;h=1024" alt="" class="wp-image-110429" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-91.png?w=1221 1221w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-91.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-91.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-91.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-91.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-91.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-91.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-91.png?w=80 80w" sizes="auto, (max-width: 1221px) 100vw, 1221px" /></figure>



Flows remain a headwind. After a strong $346.2 million day of ETF inflows on Dec. 9, momentum faded again with both BTC and ETH ETFs seeing outflows of -$154.2 million and -$42.3 million, respectively, yesterday. The lone bright spot continues to be SOL ETFs, which are still attracting low single- to low double-digit millions in daily inflows.



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0xResearch Newsletter

BTC is up and L1s are down as flows turn messy again

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



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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Trading is a hard way to make easy money.” — Wall Street aphorism
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<h2 class="wp-block-heading"><a href="https://open.substack.com/pub/zeneca33/p/letter-89-the-golden-age-of-crypto?utm_source=share&amp;utm_medium=android&amp;r=3qcul">The golden age of crypto is over</a></h2>



The newsletter writer Zeneca uses his perspective as a former poker player to declare that crypto’s golden era of easy money is over: “It’s only going to get tougher from here on out,” he warns.



When Zeneca started playing poker for money in 2003, he says “the average level of skill was extremely low,” and as a result, “basic strategies worked” to make money.



From there, however, the game progressively professionalized, and by 2010 making money in poker required learning math, statistics and game theory.&nbsp;



Today, the game is so efficient that, to have any chance of being profitable, you have to learn to play theoretically perfect poker from AI solvers. (Which really takes the fun out of it.)



This newsletter writer, using his perspective as a former equities player, can relate.



In the 1990s, you could make money in equities just by being a little quicker or paying a little closer attention than your human competitors.&nbsp;



If, say, you saw a positive headline about a company on the Reuters ticker, you had a few seconds to buy some stock that you could probably sell a few minutes later for a profit. It wasn’t that hard.



Better yet, investor flows were often bigger than traders could collectively accommodate.&nbsp;



This created easy money for anyone who cared to take it, sometimes by doing something as obvious as shorting stocks that were scheduled to drop out of an index and buying the ones being added, for example.&nbsp;



But equities professionalized on about the same timeframe as poker.&nbsp;



Starting in about 2000, quantitative and algorithmic trading made markets increasingly efficient at the same time that more and more people were trying to trade them.



By about 2005 there were too many traders trading against not enough investors — you could still make money trading, but it was increasingly hard work.



Now, though? Fuhgeddaboudit. Equity markets are so efficient you need a doctoral degree in a quantitative science to have any hope of trading them.



The crypto market seems to be progressing along the same path.&nbsp;



Zeneca likens crypto now to poker in 2012: “It’s still possible for many people to make it with a bit of work. But it’s no longer like shooting fish in a barrel.”



As with poker and equities, that’s partly because you’re now often competing with algorithms — sniper bots being one example.



Mostly, though, I think it’s what happened to equities by 2005: There are too many traders in crypto relative to the amount of investors in crypto.&nbsp;



Zeneca warns that traders waiting for a new wave of retail enthusiasm to make trading crypto easy again will be disappointed: “Just about anyone that has ever had any interest in speculating on crypto would have done so by now.”



I agree: Trading crypto won’t get any easier until there are more investors to trade against.



<h2 class="wp-block-heading"><a href="https://blockworks.co/news/blockworks-solana-investor-relations-platform">Blockworks launches investor relations platform</a></h2>



Blockworks is doing its part to attract the new investors crypto needs now with a platform offering “high-fidelity” data, institutional research, “ecosystem intelligence,” and investor relations workflows for Solana-based projects — in short, all the things that professional investors have long taken for granted in equities.



The platform will even provide quarterly reports, Dan Smith <a href="https://www.youtube.com/live/uju9vU4lfzo?si=lnLpCqY1kjlm_SIp&amp;t=18983">promises</a> — in a form that I’m guessing will make equity investors feel more at home in crypto.



Crypto builders looking to attract those kinds of investors can sign up <a href="https://lightspeed.vip/get-access">here</a>.



<h2 class="wp-block-heading"><a href="https://obviously.substack.com/p/why-your-coin-isnt-pumping">Why your coin isn’t pumping</a>&nbsp;</h2>



The crypto-native investor Santiago Roel Santos thinks it’s no mystery why tokens have been going down: “We valued casino flow like recurring software revenue.”



Token investors began paying attention to revenue this cycle and protocols began to prioritize, with notable success: An all-time high of <a href="https://1kx.network/writing/2025-onchain-revenue-report">$1.9 billion of value</a> was distributed to token holders in Q3.&nbsp;



But, perhaps disappointingly, these payouts have not helped token prices much.



Santos says that’s primarily because the quality of the revenue is so low: “You don’t give a Shopify multiple to a business that only makes money when the casino is full every three to four years.”



Critics responded to Santos by calling this a boomer take: Protocols are not businesses, they argue, they’re networks, so traditional metrics don’t apply.



Santos responded in turn with a <a href="https://obviously.substack.com/p/crypto-is-priced-for-network-effects">follow-up post</a> arguing that valuing crypto on its network effects leads him to the same conclusion: Tokens are egregiously overpriced.



“Crypto is valued at 5x–50x more market cap per user than Meta,” Santos says, “without having any of the economics that justify it.”



That’s kind of surprising, in a way: The purpose of crypto is to disintermediate businesses like Meta by creating peer-to-peer networks controlled by users who can come and go as they please.



Surely a user in that kind of network will be less valuable than a user trapped in a network like Facebook? Alternatively, it might be that crypto investors are paying up for tokens in anticipation of the imminent tokenization of everything — in which case, a huge influx of users will justify today’s valuations even if the open nature of blockchains makes it hard to monetize them.&nbsp;



Santos thinks the influx of users is possible, but doesn’t want to pay for it: “Right now,” he concludes, “too much future is priced in upfront.”



<h2 class="wp-block-heading"><a href="https://www.complexsystemspodcast.com/episodes/understanding-perpetual-futures/">Will crypto successfully export perps?</a></h2>



Patrick McKenzie thinks perpetual futures are unlikely to catch on with equities speculators, mostly because “liquidations are not the business model of traditional brokerages.”



“Liquidations” is a good business: Binance, McKenzie notes, charges a 0.5% liquidation fee on the notional value of the perps trades it liquidates.&nbsp;



On a trade leveraged 20x, that’s a 10% fee!



(This might explain why Binance’s BNB token is valued at $122 billion.)&nbsp;



McKenzie doesn’t think TradFi customers will pay those kinds of fees — especially as “learning on a day when markets are down 20% that you might be hedged or you might be bankrupt is not a prospect that fills traditional finance professionals with the warm and fuzzies.”



In other words, TradFi professionals are unlikely to accept the perps market practice of auto deleveraging (ADL).



McKenzie concisely defines ADL from the perspective of the broker: “You can either force the customer to enter a closing trade or you can assign their position to someone willing to bear their risk in return for a discount.”



Those are the only two options because perpetual futures are a “closed system” in which winning traders can only win as much as losing traders are willing to lose.



ADL is the clever mechanism by which trading venues ensure there are always enough losers to pay the winners. But it’s a messy process: By <a href="https://x.com/tarunchitra/status/1998451762232177041?s=20">one estimate</a>, perps venues liquidated winners 28x more than necessary during the Oct. 10 crash.&nbsp;



This estimate is <a href="https://x.com/chameleon_jeff/status/1998567869848891699?s=20">highly disputed</a>, but whatever the real ADL numbers are, margining practices are much friendlier in equities.



So it’s hard to argue with McKenzie’s conclusion that the crypto industry is unlikely to “export” its perpetual futures to traditional markets.&nbsp;



On the other hand, using perps to import retail speculators in search of easy money might still work.



People love to trade.



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crypto traders

Links: Trading, valuations, and the end of crypto’s ‘golden age’

Shaunda Devens

Fixing crypto’s broken investor relations

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



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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
&#8220;The dollar is always going to be the reserve currency. Anyway, for a long time.&#8221;&nbsp;



— Jerome Powell
</blockquote>



When the price of oil suddenly quadrupled in 1973, Saudi Arabia was wholly unprepared for the billions of dollars that started flooding in.



Strictly speaking, the money never actually made it “into” the Kingdom: Global buyers of Saudi oil sent their payments to accounts at Citibank and JPMorgan in New York — where the money sat idle because Saudi finance officials barely knew how to move it, let alone invest it.



With billions piling up in non-interest bearing accounts, the Saudi Arabian Monetary Agency (SAMA) reluctantly asked an American banker, David Mulford, to manage it for them.



Mulford and a small team moved to the underdeveloped port town of Jeddah where they scrambled to secure accommodation in houses newly-built in a part of the desert with no roads (to get there, you simply drove over the sand).



The houses lacked telephones, televisions, mail delivery and even trash removal (the bankers left their trash in the sand for Bedouins’ goats to feed on).



The office they commuted to six days a week was even worse.



They were assigned a single room in a “decrepit” building, furnished with only chairs and desks — no computers or telephones.



“Across the hall from our room a simple toilet was set in a long, deep room with an open drain behind it,” Mulford wrote in his <a href="https://www.amazon.com/Packing-India-DAVID-MULFORD-ebook/dp/B00NU62U36/ref=sr_1_3?dib=eyJ2IjoiMSJ9.LOBUN5zB9XV0oSGK2tFiXyc1UhA-SVwKAJG3H-rIy99eO7oIlMLcXWcgl9PADmuEt9Hy5s6wE3QoN9rE02IQC7zz1VkT34SDz96Fs0ogcn-bAkQralgtN-7sViJC32oW-vO3BPg-oitFRYSLCnH6M6Np266erYCcdqKUlerTOuHbSV-S8O6TbMGy5BTH3QTF1KsrZmuzjZHUvaQAGLysjbso_Us7htB-mbFGYhXrLzY.QIz7Ev6QkEqIZ1X--TazBzBNkN2BkOtqT8I2pULHYIY&amp;dib_tag=se&amp;qid=1765389659&amp;refinements=p_27%3ADAVID+MULFORD&amp;s=digital-text&amp;sr=1-3&amp;text=DAVID+MULFORD">autobiography</a>. “This was used by our section of the building and flushed once a day at three in the afternoon.”



Investment deals were negotiated, agreed and processed via the building’s single telex machine (a kind of hybrid typewriter/telegraph) that was constantly in use — a single deal required dozens of telex messages and weeks to complete.



And yet, as Mulford recalls, “we had to invest money at the rate of approximately $500 million per day just to prevent ourselves from falling behind.”



Mulford’s account of his nine years at SAMA debunks the persistent conspiracy theory that the Saudis invested their oil money in US Treasurys as a quid pro quo for a security guarantee.



Instead, the Saudis invested in US Treasurys because they had to: No other market in the world could absorb the $20 billion a month the Saudis had to invest.



And none was so safe and easy to invest in — important factors when investing by telex.



SAMA actually tasked Mulford with moving 30% of their investment funds out of the US market. But he struggled to do it.&nbsp;&nbsp;&nbsp;



“In most markets outside the US in those days, a currency trade of $5-10 million was enough to move markets,” he explains, “so there were practical limitations on the amount of currency diversification that we could achieve.”



This, I think, challenges the idea that dollar dominance can be engineered through either coercion or clever policy: The Saudis chose Treasurys because of what America was, not what it promised or demanded.&nbsp;



Even in the 1970s economy — plagued with both recession and inflation and a president that resigned in disgrace — US financial markets retained the depth (quantities of high-quality assets), liquidity (easy tradability of those assets) and safety (rule of law) that made it the best option for the world’s largest investor.



Today, the US has all the best companies, too: Non-US investors own roughly <a href="https://www.apolloacademy.com/foreign-ownership-of-us-equities-treasuries-and-us-credit/">$19 trillion</a> of US equities (more than double what they own in Treasurys).



It also has a central bank that&#8217;s retained its inflation-fighting credentials despite political pressure to finance ever-bigger fiscal deficits.



The current head of that central bank, Jerome Powell, fundamentally <a href="https://finance.yahoo.com/news/powell-says-expects-dollar-remain-173200618.html?utm_source=chatgpt.com">attributes</a> the dollar dominance to “democratic institutions” and “the rule of law.”



That institutional foundation is central to its appeal.



“I think the dollar will remain the reserve currency as long as those things are in place,” he added.



There’s no guarantee they forever will be, of course — and many economists doubt they will be for much longer.



Ken Rogoff, for example, <a href="https://www.hoover.org/research/dollar-dominance?utm_source=chatgpt.com">warns</a> that the dollar is “fraying at the edges” as foreign investors worry about a “breakdown of our institutions,” unpredictable policy making (that may disadvantage foreign capital), and threats to central bank independence.



All of which is adding up to “a loss of confidence in investing in the United States.”



If so, efforts to manufacture demand for the dollar — through, say, promoting stablecoins — are unlikely to help much.



Stablecoins are in demand precisely because the dollar is in demand — a dynamic that’s unlikely to ever work in reverse.&nbsp;



If the US chooses to surrender the dollar’s structural advantages, no amount of manufactured demand will save it.



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Dollar

Dollar dominance can’t be manufactured

Jason Yanowitz

Michael Ippolito

The story of crypto is a story about adoption. In the beginning, crypto was purely a retail game. This was the bootstrap era.



Anonymous founders. White papers and dreams. Bitcointalk threads. Discords and Telegrams. If you wanted in, you had to live on Twitter/X and dig through governance forums and GitHub repos at 2 am.



Fun era. Important era. But from an institutional perspective, mostly uninvestable.



Then came the second phase: the scale-up era.



Exchanges professionalized. Custody got solved. DeFi protocols like Uniswap and Aave found product-market fit. Onchain businesses started to look less like toys and more like companies. Podcasts, newsletters, conferences and research gave the industry a real narrative layer.



That opened the door for the first serious capital.



Today, we are entering a new phase: the institutional era.



Stripe has a chain. Robinhood has a chain. Banks are issuing stablecoins. Prediction markets are integrating with major news outlets. Real revenue and cash flows are accruing onchain.



And the marginal buyer is changing.



For most of the last decade, flows came from two places: retail and crypto venture. Now, the next dollar is coming from liquid token funds, multi-asset hedge funds, asset managers, macro shops, family offices, and eventually, pensions and endowments.



The institutions want to buy our tokens.



We still make it way too hard for them.



<h3 class="wp-block-heading">The Institutional Gap</h3>



If you sit inside a fund and try to build a serious Solana allocation, you run into the same problems again and again:



<ol class="wp-block-list">
<li>Everything is fragmented. Data, docs, dashboards, governance, research, Twitter threads. Fifteen tabs open. No canonical place to diligence an ecosystem or a token.</li>



<li>You do not trust the numbers. Public aggregators are often wrong or inconsistent. Labels change. Definitions change. One bad input flows into your model or IC memo and the idea dies.</li>



<li>Nothing is written in your language. Most materials are built for crypto natives. Not for investment committees that think in revenue, retention, unit economics, risk, users, cash flows and execution.</li>
</ol>



This is not a talent problem or an interest problem. It is an information problem.



<h3 class="wp-block-heading">Introducing Lightspeed IR</h3>



Today, Blockworks is partnering with the <a href="https://x.com/solana">Solana Foundation</a> to launch <a href="https://lightspeed.vip/get-access">Lightspeed IR</a>, an investor-relations platform built for professional investors and token issuers.



We are starting with Solana because they sit at the intersection of crypto nativity and institutional relevance. They have real users, real applications, real revenue, and a cracked founder ecosystem. The story is there — it just needs to be delivered in a way institutions can underwrite.



Lightspeed IR is a gated, professional environment for:



<ul class="wp-block-list">
<li>Liquid token funds</li>



<li>Institutional allocators and asset managers</li>



<li>Family offices</li>



<li>Solana ecosystem teams and large token holders</li>
</ul>



What you get in one place:



<ul class="wp-block-list">
<li>High-fidelity onchain data&nbsp;on the Solana network and leading applications, powered by Blockworks’ data infrastructure</li>



<li>Institutional research&nbsp;that turns raw onchain activity into simple, fundamental frameworks and IC-ready memos</li>



<li>Ecosystem intelligence and IR workflows&nbsp;for roadmap updates, KPI packs, governance changes, token events and direct communication between teams and allocators</li>
</ul>



If you run a fund, Lightspeed IR becomes your Solana starting point.



If you build on Solana, it becomes your investor hub.



In a world of noise, Lightspeed IR is the signal.



We launch in Q1.



<a href="https://lightspeed.vip/get-access">Complete this form</a> to be the first to know when we go live.



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</ul>

Blockworks

Blockworks launches investor relations platform with Solana

Marc Arjoon

Boccaccio

This is a segment from the 0xResearch newsletter. To read full editions, <a href="https://blockworks.co/newsletter/0xresearch" target="_blank" rel="noreferrer noopener">subscribe</a>.



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



Markets leaned cautiously risk-on, with crypto outperforming a mixed backdrop in traditional assets. ETF flows had their biggest one-day surge since October as CPI, Treasury auctions and a dense FOMC week could reset risk appetite. In addition, we discuss the new WET token, the native token of the HumidiFi prop AMM.



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



Markets leaned risk-on, with crypto leading and traditional assets mixed. BTC posted a modest gain (+2.3%), outperforming equities where the S&amp;P 500 (-0.3%) and Nasdaq 100 (-0.2%) softened, while Gold held nearly flat (+0.3%). The standout laggard was the Perp Index, which contracted by -5.1%.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="900" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-80.png?w=1024&amp;h=1024" alt="" class="wp-image-110386" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-80.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-80.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-80.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-80.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-80.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-80.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-80.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-80.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-80.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Perps (-5.1%) were the day’s clear laggard, weighed down by a sharp intraday spike-and-fade across dYdX, GMX, and specifically HYPE. A midday squeeze briefly lifted the sector before momentum stalled and flows reversed into the close. JUP rose as much as 9% before retracing most of its gains. Meanwhile, HYPE has been struggling as of late, as builder codes create new frontend relationships with users, and the market anticipates a TGE from <a href="https://blockworks.co/news/lighter-opens-public-mainnet">rival Lighter</a>.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="900" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-79.png?w=1024&amp;h=1024" alt="" class="wp-image-110378" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-79.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-79.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-79.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-79.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-79.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-79.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-79.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-79.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-79.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Looking ahead, markets will pivot toward this week’s CPI print and a slate of mid-week Treasury auctions, both of which could reset risk appetite. With implied volatility still suppressed across majors, any macro surprise risks producing outsized moves.



<h2 class="wp-block-heading">Market Update&nbsp;</h2>



Flows finally turned meaningfully positive. BTC ETFs drove the bulk of the move ($287 million), ETH had its best day since Oct. 28 ($142 million) and SOL contributed marginally ($16 million). This is the first clean signal of risk appetite returning after nearly a month of choppy to negative prints. The flow spike likely reflects short-term positioning ahead of catalysts such as FOMC, inflation data, and jobs. It can also be attributed to quarter-end optics, as allocators often re-express benchmark exposure into liquid wrappers during macro-heavy weeks.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1124" height="624" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-77.png?w=1024&amp;h=1024" alt="" class="wp-image-110376" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-77.png?w=1124 1124w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-77.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-77.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-77.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-77.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-77.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-77.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-77.png?w=80 80w" sizes="auto, (max-width: 1124px) 100vw, 1124px" /></figure>



Still, AUM-to-market-cap ratios tell a different story. BTC remains stuck near ~6.6–6.8%, ETH continues its multi-month slide from ~3.3% to ~2.8%, and SOL, while rising, sits just under 1%. This divergence implies that price appreciation, not sticky inflows, has been the dominant force maintaining ETF sizes.



Meanwhile, BTC’s inflow looks more like tactical re-risking than renewed conviction. Derivatives markets show elevated basis but falling perp OI, a sign that capital currently prefers directional spot exposure over leverage.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1124" height="624" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-75.png?w=1024&amp;h=1024" alt="" class="wp-image-110375" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-75.png?w=1124 1124w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-75.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-75.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-75.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-75.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-75.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-75.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-75.png?w=80 80w" sizes="auto, (max-width: 1124px) 100vw, 1124px" /></figure>



ETF flows are becoming increasingly important for BTC, because traditional “DATCO” buyers aren’t carrying the bid anymore. The latest treasury holdings data shows that, aside from Strategy (MSTR), corporate accumulation has been effectively flat for months. Names like NAKAMOTO, SMLR, SQNS, and the smaller treasury cohorts have added marginal amounts at best, contributing almost nothing to incremental demand. Even MSTR can’t continue to accumulate in the same way it did before.&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1124" height="624" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-76.png?w=1024&amp;h=1024" alt="" class="wp-image-110377" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-76.png?w=1124 1124w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-76.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-76.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-76.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-76.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-76.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-76.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-76.png?w=80 80w" sizes="auto, (max-width: 1124px) 100vw, 1124px" /></figure>



This is especially true as the major BTC DATCOs have mNAVs below 1, removing the once BTC-accretive play of diluting shareholders. In other words, the corporate balance sheet bid that helped define the prior cycle and earlier in this cycle isn’t showing up any time soon for BTC.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1124" height="624" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-78.png?w=1024&amp;h=1024" alt="" class="wp-image-110379" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-78.png?w=1124 1124w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-78.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-78.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-78.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-78.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-78.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-78.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-78.png?w=80 80w" sizes="auto, (max-width: 1124px) 100vw, 1124px" /></figure>



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ETFs flash a bid, HumidiFi tokenizes

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



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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Money has been reduced to a simulacrum of its former self, a mere obligation by a counterparty to perform bookkeeping functions.” — Stefano Gogioso, A Quantum Moneyfesto
</blockquote>



In Star Trek, it took only seconds to travel from the Starship Enterprise down to a nearby planet.



Crewmembers only had to step into the Transporter, which dematerialized them into a pattern of energy (accurate to the quantum level) and beamed them to a target location where the energy would be converted back into matter so the person could be reassembled.



But is the person who beams back up the same that beamed down?



The official, in-universe answer is that they’re one and the same. The consciousness of transported crewmembers remains continuous, they say, thanks to the perfection of the Transporter’s quantum-level scan and reconstruction.&nbsp;



As proof, they cite crewmembers claiming a memory of being in transit.



But we’ve since learned how quantum-level transportation works, and that’s not it.



In quantum teleportation, first <a href="https://journals.aps.org/prl/abstract/10.1103/PhysRevLett.70.1895">discovered in 1993</a>, the only thing being teleported is information.



Teleporting, say, a qubit, requires that the original quantum state of that qubit be destroyed: By the laws of physics, collecting precise information on a quantum state collapses its superposition, thereby destroying it.&nbsp;



But the collected information can then be sent as classical data (ones and zeros) over a satellite or fiber optic cable and then, thanks to the physics-magic of entanglement, reassembled (from other particles) at its destination.



So the unsettling truth is that the Transporter on the Starship Enterprise can only have worked by killing its passengers — the crewmember who beamed down is not the one who beamed back up.



This has some sci-fi implications for the future of money.



In banking, the way money is &#8220;sent&#8221; from Bank A to Bank B is that Bank A subtracts a number in its spreadsheet and sends a message to Bank B instructing it to add the same number to theirs.



Only the message is sent, not the money — which is why we need banks: to send each other messages about our money.



With quantum money, however, the money sends its own messages.



Quantum money is the idea that value could be represented by the quantum state of a particle and exchanged via quantum teleportation.



“The most important thing to understand here is that quantum [money] behaves like a resource, not like data,” <a href="https://x.com/fabgenovese?s=20">Fabrizio Genovese</a> explained in an email.&nbsp;&nbsp;



Where a bank deposit is information about money and Bitcoin is a consensus record representing money, quantum money would be the money itself — an uncopyable atom, photon, or molecule that is money.



Not data about money but the physical resource of money.



This has utility because it would allow money to be secured and transported according to the unbreakable laws of superposition, entanglement and the no-cloning theorem.&nbsp;



In other words, physics might someday do what databases and distributed ledgers do now, but without the database or distributed ledger.



Quantum money would therefore have the self-custodial properties of physical cash: You could keep qubits of money in a hardware device the same way you keep cash in your pocket.



That would make exchanging money perfectly permissionless (no intermediary required) and perfectly private (there’s no ledger of transactions).



But quantum money would also have the transportable properties of digital money: Destroying the money on your device creates the sendable information required to recreate it on another device, however far away.



(There is a moment when the quantum state, in transit as classical data, does not exist — which proves that the Star Trek Transporter really is a suicide machine.)



Sending quantum money will be like sending physical cash in the mail. But better, because it arrives instantly.



Sending money over great distances created the need for banks, but solving that problem introduced the intermediaries that now control nearly all of our money.



Bitcoin, of course, is a way of making peer-to-peer transactions possible over great distances.&nbsp;



But quantum money would be the unstoppable way to do it.



“Blockchain transactions are not quite peer-to-peer,” Stefano Gogioso <a href="https://www.youtube.com/live/_ZoKdulXcVk?si=deNi9vnwICRAulOa">says</a>, “because there’s always going to be part of the mechanism that can stop your transaction from going through. For economical, political, or technological reasons.”



Nothing will stop a quantum transaction, for any reason.



There is one limitation, however: Unlike Star Trek, where Captain Kirk could beam down to a newly discovered planet, quantum money can only be transported to a hardware device prepared to receive it.



That device does not yet exist, so quantum money is not yet feasible — we’re three or four years away from the earliest iteration, Gogioso estimates.&nbsp;



When it arrives, though, it will be the safest conceivable way to send money.



Getting security from quantum states, Genovese says, is like getting energy from the Sun: “It’s what the universe gave us.”



As such, he expects all cybersecurity will eventually be done through quantum states — including money.



We&#8217;ll still have to give that money value, however, which might prove to be the hardest trick.&nbsp;



Building a transporter to teleport qubits is one thing; getting others to accept them as payment is another.



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Cybersecurity

Beam-me-up money

Carlos

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Over the past several days, the exchange between Kamino and Jupiter has escalated from healthy competition to a clear public dispute. The events started on Nov. 27, when Jup Lend introduced a <a href="https://support.jup.ag/hc/en-us/articles/23407960232092-All-about-Refinance">refinancing tool</a> on its frontend to migrate looping positions from Kamino Multiply directly into Jup Lend with a single click. The refinance operation initiated an atomic transaction involving four steps:



<ol class="wp-block-list">
<li>Repay outstanding debt on Kamino.</li>



<li>Withdraw the associated collateral.</li>



<li>Transfer these assets to Jupiter Lend.</li>



<li>Recreate the position inside Jupiter Lend, maintaining the same loan amount and collateral ratio.</li>
</ol>



On Dec. 2, Kamino <a href="https://x.com/prady_v/status/1995756192988323845?s=20">updated</a> its smart contracts to block Jupiter’s program, preventing one-click refinancing. Both the Jupiter and Fluid teams (Jup Lend uses Fluid in the backend) framed the move as anti-competitive and against “open-finance principles.”



On Dec. 6, Kamino’s co-founder publicly <a href="https://x.com/y2kappa/status/1997333295474802777?s=20">explained</a> the rationale for blocking Jup Lend’s migration tool, noting that Jupiter had repeatedly suggested that borrowers’ collateral is isolated, implying it is neither rehypothecated nor exposed to cross-contamination risk. However, this claim was not true, with even Fluid’s co-founder <a href="https://x.com/smykjain/status/1997075350799736981?s=20">acknowledging</a> rehypothecation within Jup Lend.



​Notably, Kamino never prevented users from repaying their loans manually and withdrawing their capital to Jup Lend. Whether against open-finance principles or not, the move to block the refinancing program was fundamentally a business decision, much like Jup Lend’s decision not to open-source its code (though it has plans to do so). In this regard, it’s interesting to analyze the competitive dynamics between both money markets over the past few months.



Since its launch in late August, Jup Lend has grown to $1.6 billion in deposits and $610 million in borrows. The chart below shows that Kamino’s deposits and borrows have decreased by $1.3 billion (-28%) and $460 million (-26%), respectively, during the same period.&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="900" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-74.png?w=1024&amp;h=1024" alt="" class="wp-image-110353" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-74.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-74.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-74.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-74.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-74.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-74.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-74.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-74.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-74.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



The top five assets by deposit growth since Jup Lend’s launch are USDC ($485 million), JLP ($225 million), SOL ($206 million), syrupUSDC ($174 million), and jupSOL ($85 million). During the same period, Kamino has seen sizable outflows for all of these assets, except syrupUSDC. However, even for syrupUSDC, Jup Lend still attracted roughly 3x more inflows.&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="900" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-73.png?w=1024&amp;h=1024" alt="" class="wp-image-110352" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-73.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-73.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-73.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-73.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-73.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-73.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-73.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-73.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-73.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Kamino’s growth over the past few months has come from assets not yet supported by Jup Lend. In particular, stablecoin inflows in Q4 have been driven by PYUSD ($42 million) and Phantom’s CASH ($125 million). Kamino has also been proactive in onboarding DATCO LSTs; most notably dfdvSOL and more recently fwdSOL.



Kamino’s PRIME integration stands out as a catalyst that can bring net new inflows into the money market. PRIME gives users exposure to a regulated credit pool backed by US real estate loans originated and serviced through Figure. This integration effectively gives access to a source of yield uncorrelated from crypto markets that may attract more institutional borrowers.



Wrapping up, Kamino and Jup Lend are obviously competitors, and competition is healthy as it drives innovation and ultimately benefits users. That said, as Solana Foundation’s Lily Liu<a href="https://x.com/calilyliu/status/1997563223193849952?s=20"> noted</a>, instead of fighting with each other, Kamino and Jupiter should focus on growing the pie and capturing market share from other chains and TradFi thereafter. Combined, both money markets still account for less than 10% of Aave’s deposits, and without initiatives like the PRIME integration, it will be impossible to close this gap.



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Analyzing Jup Lend vs. Kamino

Luke Leasure

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While crypto prices have shown a modest recovery in the short term, negative breadth and relative underperformance to TradFi benchmarks on the monthly suggests a prevailing bearish environment. 



Zooming out, we look at the secular growth trends within stablecoins and lending as durable sectors for multi-year growth.



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



Crypto markets remain rangebound after November’s harsh selloff. The past week has shown a modest recovery, with BTC at $90,400 now being 12% off of its recent correction low of $80,700. Over the trailing 24 hours, the AI and Modular sectors were the top winners, with TAO (+6.4%)  and TIA (+6.2%) as notable contributors to this short-term strength. The Perp Index was the top loser, with DYDX (-3.1%) and HYPE (-0.6%) accounting for the sector’s weakness. 



<img loading="lazy" decoding="async" width="720" height="405" src="blob:https://cms.blockworks.co/b89f7e71-0662-4e87-a1ab-377c7de8b679">



Zooming out to the monthly, the picture remains unfavorable. TradFi benchmarks like Gold, Nasdaq and the S&amp;P 500 are all green over the past month, while every crypto index we track is measuring negative returns.



Breadth is decisively negative on the monthly for all crypto indices, with no safe haven provided. Notably, the Protocol Revenue index is the top performing among crypto sectors, suggesting relative strength in protocols with strong fundamental positioning.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1488" height="837" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-70.png?w=1024&amp;h=1024" alt="" class="wp-image-110344" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-70.png?w=1488 1488w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-70.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-70.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-70.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-70.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-70.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-70.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-70.png?w=80 80w" sizes="auto, (max-width: 1488px) 100vw, 1488px" /></figure>



Despite recent strength, it remains to be determined whether this rally is countertrend to a prolonged downtrend, or if the low is in for the rest of 2025.



<h2 class="wp-block-heading">Market Update</h2>



Amid the downtrend, don’t lose sight of the bigger picture, and take a moment to appreciate just how far we’ve come. At the bear market low, lending applications within DeFi accounted for just $5 billion in deposits, a rounding error within the larger financial system. In the years since, this figure has grown to $71 billion in deposits, having just previously tagged near $100 billion.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="900" height="500" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-69.png" alt="" class="wp-image-110342" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-69.png?w=900 900w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-69.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-69.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-69.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-69.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-69.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-69.png?w=80 80w" sizes="auto, (max-width: 900px) 100vw, 900px" /></figure>



Similarly, loans outstanding on these applications amounted to $1.6 billion at the bear-market low. Since, active loans have risen to over $27 billion now, and recently passed $38 billion. These figures have grown to a scale worth paying attention to, not just for the crypto native. Variance can cut both ways, to the upside and to the downside, for both key metrics and spot prices. But 20x growth in topline metrics in just a few years suggests this sector is a long way off from its terminal growth rate.&nbsp;



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="900" height="500" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-68.png" alt="" class="wp-image-110343" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-68.png?w=900 900w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-68.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-68.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-68.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-68.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-68.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-68.png?w=80 80w" sizes="auto, (max-width: 900px) 100vw, 900px" /></figure>



Amid the drawdown in crypto prices, the aggregate stablecoin supply has retraced back up to its all-time high of $310 billion, after a brief period of -$10 billion in outflows.&nbsp;



The growth in stablecoins is a trend that I would not bet against. Onchain money markets stand as primary beneficiaries of the growing stablecoin supply, purporting to be the primary applications for utilization. Stablecoin lenders seek yield, while borrowers look for leverage. While spot assets will remain volatile, this secular trend should remain a persistent and durable tailwind for DeFi applications.&nbsp;&nbsp;&nbsp;&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="900" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-72.png?w=1024&amp;h=1024" alt="" class="wp-image-110346" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-72.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-72.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-72.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-72.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-72.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-72.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-72.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-72.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-72.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Notably, continued growth in the stablecoin supply comes amid very modest onchain yields. Benchmark supply rates on lending applications are reading 3.6%, a discount to SOFR at 3.9%. Growing depth in onchain stablecoin liquidity may continue to dampen the upside in supply rates, and absent a material risk premium to legacy rates, growth in stablecoin utilization on money markets may falter.&nbsp;



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="900" height="500" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-71.png" alt="" class="wp-image-110345" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-71.png?w=900 900w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-71.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-71.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-71.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-71.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-71.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-71.png?w=80 80w" sizes="auto, (max-width: 900px) 100vw, 900px" /></figure>



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Rangebound markets, resilient onchain lending

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
&nbsp;“Productivity isn’t everything, but in the long run it is almost everything.”



— Paul Krugman
</blockquote>



“Total factor productivity” (TFP) is how economists measure the contribution of technological innovation to economic growth — the sustained ability of an economy to produce more output with the same amount of inputs.



As such, it’s arguably economists’ most important measurement, because the continual process of producing more with less is how life gets better.



“A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker,” Paul Krugman explains.&nbsp;



Technology is what makes that happen and TFP is how it’s measured.



To get a more tangible sense of how important technology-generated productivity is, consider this: A <a href="https://www.nber.org/system/files/chapters/c15154/c15154.pdf">recent paper</a> from the National Bureau of Economic Research (NBER) estimates that an additional 0.5% of annual TFP growth would stabilize the US government&#8217;s finances at today’s level of debt-to-GDP.



0.5%! It doesn’t sound like a lot, but if sustained over the next 10 years, NBER estimates that would reduce the baseline forecast for US government debt by $2 trillion.



Over 30 years, a sustained 0.5% boost to TFP would make the US government’s debt-to-GDP ratio 42 percentage points lower than NBER’s baseline forecast (and 80 percentage points lower than its pessimistic one).



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="835" height="465" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-67.png" alt="" class="wp-image-110337" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-67.png?w=835 835w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-67.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-67.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-67.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-67.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-67.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-67.png?w=80 80w" sizes="auto, (max-width: 835px) 100vw, 835px" /></figure>



Given the seemingly hopeless state of government finances, maintaining today’s level of indebtedness is a dream scenario that seems too good to be true.



But researchers at Anthropic think we can do even better.



Anthropic conducted a study of 100,000 Claude.ai conversations to “estimate how long the tasks in these conversations would take with and without AI assistance, and study the productivity implications across the broader economy.”&nbsp;



Its conclusion? LLMs could raise total factor productivity by 1.1 percentage points.



1.1%!



If 0.5% would stabilize the US government’s finances for decades, what would 1.1% do? It would probably fix almost everything.&nbsp;



There are reasons to be skeptical of this optimistic forecast, of course.&nbsp;



The study finds, for example, that Claude saves teachers four hours of labor by creating curricula in just 11 minutes. But estimating how such time-savings might lead to higher economic output requires the kind of economic modelling that’s full of best-guess assumptions and false precision.



So, even if Anthropic is right about the time savings, it might be wrong about productivity: It might be that we use all the time AI saves us to do something economically unproductive, like watch more TikTok videos or read more newsletters.



In that case, AI would raise our welfare (more free time) but not our wealth (more economic output) — still great news for people, but no help to governments hoping for a silver bullet solution to their debt problem.



Conversely, there are reasons to think Anthropic’s model is being too pessimistic: “We don’t take into account the rate of adoption” it explains, “or the larger productivity effects that would come from much more capable AI systems.”



In other words, its study assumes we continue to use AI only as we do now and that we’re still using today’s language models, unimproved, for another 10 years.



Language models get noticeably better every few months and we’ve only just started learning how to use them — so Anthropic is right to say its estimate might represent an “approximate lower bound on the productivity effects of AI.”



If so — if 1.1% is the lower bound for AI-induced productivity — we might pay down government debt and have much more time for TikTok.



And that’s only taking into consideration AI’s impact on non-physical work — just wait until we get robots!&nbsp;



To dismiss such optimism entirely is to think the trillions of dollars that corporations are planning to spend on AI capex and R&amp;D will all be wasted.



Which it might be — technology revolutions don’t always arrive on schedule.



But the biggest reason for optimism is that Anthropic’s 1.1% estimate is based solely on AI “making existing tasks faster to complete” — &nbsp;its model does not account for AI’s potential to completely change the way we complete those tasks.



“Historically,” Anthropic notes, “transformative productivity improvements — from electrification, computing, or the internet — came not from speeding up old tasks, but from fundamentally reorganizing production.”



There’s no way to model these new ways of doing things, but it seems likely its impact will be bigger than the one Anthropic has tried to measure.



Anthropic’s researchers are careful to caveat their hopeful findings by enumerating the limitations of their methodology and documenting the many assumptions they’re making.&nbsp;



And even if all those assumptions work out and AI productivity solves the US government’s debt problem, lawmakers will probably spend their way right back into it.



But given the 100% probability everyone seems to put on looming fiscal disaster, even a small chance Anthropic’s estimates prove correct is a reason to update our priors: The US government’s finances are not as intractable as we think, and the US dollar is not as doomed as we think.



In the long run, productivity is almost everything — and AI might be on the verge of making us a lot more productive.



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The productivity bull case for almost everything

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Today, we break down the BTC move over the past week, how ETFs have seen net inflows for the first time in nearly four weeks, and application and chain revenue. We also look into who President Trump&#8217;s next Federal Reserve Chair nominee might be.



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



BTC bounced off $85,000 lows, and is back up to $92,000. Over the past three weeks, BTC has increased 5%, with significant volatility throughout. In particular, BTC has been underperforming through the EU session, while outperforming in the US and APAC sessions.



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1600" height="838" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-58.png?w=1024&amp;h=1024" alt="" class="wp-image-110314" style="width:648px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-58.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-58.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-58.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-58.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-58.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-58.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-58.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-58.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-58.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Over the past week, oracles, lending and Ethereum ecosystem tokens performed well, with each up just over 4%. Crypto equities performed the best, up 6.7%, primarily due to outperformance by HOOD.&nbsp;&nbsp;



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1600" height="900" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-62.png?w=1024&amp;h=1024" alt="" class="wp-image-110319" style="width:686px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-62.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-62.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-62.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-62.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-62.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-62.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-62.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-62.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-62.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



The Nasdaq 100 (+1.70%) and S&amp;P 500 (+0.78%) continue to grind up, while Gold underperforms slightly (-0.85%).



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="895" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-65.png?w=1024&amp;h=1024" alt="" class="wp-image-110324" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-65.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-65.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-65.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-65.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-65.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-65.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-65.png?w=467 467w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-65.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-65.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="900" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-66.png?w=1024&amp;h=1024" alt="" class="wp-image-110325" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-66.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-66.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-66.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-66.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-66.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-66.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-66.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-66.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-66.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



In terms of worst-performing, gaming has outperformed significantly toward the downside, with -23% returns over the past week. LGCT was the worst performer, and declined in price by -75% over the past week.&nbsp;



<h2 class="wp-block-heading">Charts for The Week</h2>



Odds have surged (up to 78% on Kalshi) that Kevin Hassett will be President Trump&#8217;s next Federal Reserve chair nominee, an announcement Trump recently confirmed is imminent. Hassett, a close White House ally, is favored because he aligns with the president&#8217;s demand for much lower interest rates to provide cheaper consumer loans and mortgages.



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1600" height="825" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-59.png?w=1024&amp;h=1024" alt="" class="wp-image-110315" style="width:619px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-59.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-59.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-59.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-59.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-59.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-59.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-59.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-59.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-59.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Bitcoin ETF flows reversed sharply in November, posting significant net outflows after a steady run of inflows from May through October. The month saw roughly $3.46 billion in redemptions, completely erasing the $3.42 billion in new inflows seen last month and the worst outflows since February 2025 ($3.56 billion). The reversal highlights how quickly sentiment deteriorated despite months of strong accumulation. The alignment between ETF flows and price action remained intact, with November’s outflows closely mirroring BTC’s double-digit monthly decline.



The first week of December has been the first positive net inflow week for BTC ETFs since the last week of October, with $70.2 million in net BTC ETF inflows. Ethereum and Solana ETFS have both seen higher net inflows this past week, at $312 million and $108 million, respectively.



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1600" height="889" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-64.png?w=1024&amp;h=1024" alt="" class="wp-image-110321" style="width:682px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-64.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-64.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-64.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-64.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-64.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-64.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-64.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-64.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-64.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



In terms of network revenue, we’re seeing similar figures to what we saw the week prior, with Hyperliquid leading the charge with 35% of all network revenues, followed by Tron (20%) and Solana (15%). Noticeably, BNB revenue is still at lows following the highs it put in October, and the majority of that has been captured by Hyperliquid and Solana.



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1600" height="889" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-60.png?w=1024&amp;h=1024" alt="" class="wp-image-110317" style="width:715px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-60.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-60.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-60.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-60.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-60.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-60.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-60.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-60.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-60.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Application revenue has stopped declining (now at $38 million, 10% higher than last week), following four weeks of net decline across all tracked applications. Hyperliquid continues to lead the way (35%), followed by pump.fun (25%) and Axiom (8%).



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1600" height="889" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-61.png?w=1024&amp;h=1024" alt="" class="wp-image-110318" style="width:740px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-61.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-61.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-61.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-61.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-61.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-61.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-61.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-61.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-61.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Helius’ Lostin and Ichigo proposed SIMD411, which aims to accelerate Solana’s emission schedule by doubling the disinflation rate from -15% to -30%, keeping the 1.5% terminal inflation unchanged. This simple, predictable parameter change would bring inflation from ~4.14% today to 1.5% in ~3.1 years (early 2029), rather than ~6.2 years (early 2032). If implemented, SIMD411 would cut 22.3 million SOL ($2.9 billion) in emissions after six years vs. the current inflation path, reducing the “leaky bucket” sell pressure.



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1600" height="900" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-63.png?w=1024&amp;h=1024" alt="" class="wp-image-110320" style="width:753px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-63.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-63.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-63.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-63.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-63.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-63.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-63.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-63.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-63.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



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Risk back on the table as crypto ETFs bounce back

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Conventional measures of economic growth omit some of the largest gains in living standards and therefore underestimate economic progress.”



— William Nordhaus
</blockquote>



In 1906, Upton Sinclair went undercover in Chicago&#8217;s meatpacking plants to expose the brutal realities of poverty that he depicted in The Jungle: families living in overcrowded squalor, children working in hazardous, dehumanizing factories, workers maimed and discarded by industrial capitalism with no safety net whatsoever.



In 2025, we have a new kind of data-driven muckraker: Michael W. Green, an asset manager, whose brave discovery that American families making less than $140,000 are living in poverty has gone viral.&nbsp;



One can only marvel at how these families survive on such meager six-digit incomes! By Green’s logic, two-thirds of Americans should be eligible for food stamps.



Unlike Sinclair, however, Green doesn&#8217;t appear to have spent any time with the families he&#8217;s championing. If he had, he might have sensed that his spreadsheet was leading him astray.



Economists who are more adept at interpreting data are seemingly unanimous in their assessment of Green’s <a href="https://www.yesigiveafig.com/p/part-1-my-life-is-a-lie">viral thesis</a>.



Scott Winship <a href="https://scottwinship.substack.com/p/how-not-to-redefine-poverty">calls</a> it “the worst poverty analysis I have ever seen.”&nbsp;



Tyler Cowen <a href="https://www.thefp.com/p/the-myth-of-the-140000-poverty-line">finds</a> that Green’s study is “all wrong. The underlying concepts are wrong, the details are wrong, and the use of evidence is misguided.”



Jeremy Horpedahl <a href="https://economistwritingeveryday.com/2025/11/26/the-poverty-line-is-not-140000/">says</a> “it’s ridiculous to use $140,000 as a poverty measure.”&nbsp;



Noah Smith <a href="https://www.noahpinion.blog/p/the-140000-poverty-line-is-very-silly">says</a> Green “gets his own numbers completely wrong” and that his conclusions are “very silly.”



Green responds to some of these critiques <a href="https://substack.com/home/post/p-179828750">here</a>, but you probably don’t need to be a credentialed economist to sense the critics are right — because surely no one making $139,000 a year is going hungry?



Green’s argumentation is admittedly more nuanced than that.



He cites, for example, MIT’s “cost of thriving” index which estimates that it took 30 weeks of the median male’s earnings to live a good life in 1985 vs. 63 weeks now.&nbsp;



I’m not an economist, and I would not have even made the waitlist at MIT. But, having been alive in 1985, I can authoritatively say that things are now both easier and better than they were back then — economically, at least.



(Television shows, movies, music, fashion and celebrities were all far better in the 1980s, of course. Not to mention the blissful lack of both cellphones and adult supervision.)



But cars, appliances, power tools, video games, beer? Virtually anything you can buy to make your life better is better today than it was then.&nbsp;



In nearly all cases it’s cheaper too, when adjusted for quality.



Even housing.



“Green notes that housing costs have risen,” Cowen writes, “but Americans today have more living space on average than ever before, and live alongside fewer people.”



And healthcare!&nbsp;



Cowen explains that “the overall trend in healthcare has been deflationary, rather than inflationary — or, in economics speak, that the cost of buying an extra expected year of life has been going down rather than up.”



More intuitively, Cowen says simply, “I would rather have current healthcare at current prices than 1972 healthcare at 1972 prices.”&nbsp;



Me, too: I’d rather have current anything at current prices than 1985 anything at 1985 prices.



This intuition — that the statistics Green is looking at miss massive improvements in what our dollars actually buy us — is more than just anti-nostalgia, if that’s a word. (Presentism? Currentism?)&nbsp;



William Nordhaus famously demonstrated this systematically by measuring the cost of lighting in lumens. By tracking lumen-hour costs across technologies like candles, kerosene and electric bulbs, Nordhaus showed how ignoring quality change (more light per unit input, in the case of lighting) massively underestimates historical assessments of economic growth.



The cost of lighting a room for three hours — which took about three hours of work to afford in 1800 — requires just a fraction of a second of labor now: a roughly 43,000-fold improvement that official statistics missed almost entirely.



With this, Nordhaus demonstrated the larger point that because technological change is not fully reflected in GDP statistics, we tend to underappreciate how much our standard of living has improved.



The flip side is that failing to account for these changes can lead to some absurd conclusions about the cost of living, as expressed in this classic <a href="https://x.com/dril/status/384408932061417472?s=20">tweet</a>:



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="816" height="297" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-48.png" alt="" class="wp-image-110300" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-48.png?w=816 816w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-48.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-48.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-48.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-48.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-48.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-48.png?w=80 80w" sizes="auto, (max-width: 816px) 100vw, 816px" /></figure>



The joke is that someone stuck buying 1800s lighting technology at 1800s costs would indeed be impoverished because they wouldn’t have anything left over to spend on modern healthcare, housing or smartphones.



Green seems to make the same statistical mistake: He looks at modern families spending on vastly superior goods and services without accounting for the vastly superior value they’re getting.



“There is a major conceptual error in Green’s focus on high prices,” Cowen concludes. “Prices are high in large part because demand is high, which can only happen because so many more Americans can afford to buy things.”



$140,000 a year buys a lot of things.&nbsp;



Let’s check the charts.&nbsp;



Moving on up:



<figure class="wp-block-image size-full is-resized"><img loading="lazy" decoding="async" width="842" height="574" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-56.png" alt="" class="wp-image-110308" style="width:660px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-56.png?w=842 842w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-56.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-56.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-56.png?w=377 377w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-56.png?w=383 383w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-56.png?w=321 321w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-56.png?w=80 80w" sizes="auto, (max-width: 842px) 100vw, 842px" /></figure>



The US middle class has been shrinking, but only because the upper class has been expanding. In 1967, 5.2% of US families earned over $150,000 (inflation adjusted) vs. nearly 34% now.



People have been moving up into the middle class, too:



<figure class="wp-block-image size-full is-resized"><img loading="lazy" decoding="async" width="802" height="570" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-52.png" alt="" class="wp-image-110304" style="width:644px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-52.png?w=802 802w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-52.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-52.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-52.png?w=362 362w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-52.png?w=367 367w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-52.png?w=308 308w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-52.png?w=80 80w" sizes="auto, (max-width: 802px) 100vw, 802px" /></figure>



The percentage of Americans with income more than 200% of the federal poverty line (c. $60,000 for a family of four) has risen by 8.5 percentage points since 1975.&nbsp;&nbsp;



Poverty, however measured, is trending down:



<figure class="wp-block-image size-full is-resized"><img loading="lazy" decoding="async" width="965" height="439" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-55.png" alt="" class="wp-image-110309" style="width:706px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-55.png?w=965 965w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-55.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-55.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-55.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-55.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-55.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-55.png?w=80 80w" sizes="auto, (max-width: 965px) 100vw, 965px" /></figure>



This chart from the <a href="https://www.economicstrategygroup.org/publication/kearney-sullivan-poverty/">Economic Strategy Group</a> shows that poverty has fallen by roughly half according to income-based measures and by more than 80% using consumption-based measures — in both cases, more than government statistics indicate.



Consumption is up:



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1203" height="737" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-57.png?w=1024&amp;h=1024" alt="" class="wp-image-110307" style="width:688px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-57.png?w=1203 1203w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-57.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-57.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-57.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-57.png?w=419 419w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-57.png?w=426 426w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-57.png?w=357 357w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-57.png?w=80 80w" sizes="auto, (max-width: 1203px) 100vw, 1203px" /></figure>



An <a href="https://sites.nd.edu/james-sullivan/files/2023/10/2022-Consumption-Poverty-Report_10_20_2023.pdf">academic study</a> of &#8220;consumption poverty&#8221; (in green) and &#8220;after-tax poverty&#8221; (in red) shows that the official, CPI-based measure of poverty fails to capture decades of improvement.



More food:



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1254" height="743" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-50.png?w=1024&amp;h=1024" alt="" class="wp-image-110302" style="width:746px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-50.png?w=1254 1254w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-50.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-50.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-50.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-50.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-50.png?w=441 441w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-50.png?w=370 370w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-50.png?w=80 80w" sizes="auto, (max-width: 1254px) 100vw, 1254px" /></figure>



Americans consume about 3,800 calories a day — 15% more than we did in 1985 and roughly 50% more than we’re supposed to.



More healthcare:



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1033" height="619" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-51.png?w=1024&amp;h=1024" alt="" class="wp-image-110303" style="width:701px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-51.png?w=1033 1033w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-51.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-51.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-51.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-51.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-51.png?w=436 436w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-51.png?w=365 365w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-51.png?w=80 80w" sizes="auto, (max-width: 1033px) 100vw, 1033px" /></figure>



8.2% of Americans were uninsured in 2024, down from 16% in 2010.



Candles were once a luxury good:



<figure class="wp-block-image size-full is-resized"><img loading="lazy" decoding="async" width="789" height="752" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-54.png" alt="" class="wp-image-110306" style="width:618px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-54.png?w=789 789w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-54.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-54.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-54.png?w=270 270w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-54.png?w=274 274w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-54.png?w=230 230w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-54.png?w=80 80w" sizes="auto, (max-width: 789px) 100vw, 789px" /></figure>



This is a reminder that as recently as 1800, candles were so expensive that it was economic for people to venture out into the oceans and risk their lives hunting whales.&nbsp;



Illuminating:



<figure class="wp-block-image size-full is-resized"><img loading="lazy" decoding="async" width="1001" height="609" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-49.png" alt="" class="wp-image-110301" style="width:729px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-49.png?w=1001 1001w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-49.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-49.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-49.png?w=422 422w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-49.png?w=429 429w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-49.png?w=360 360w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-49.png?w=80 80w" sizes="auto, (max-width: 1001px) 100vw, 1001px" /></figure>



A million lumen-hours is roughly the amount of light you’d get from an ordinary household light bulb running continuously for about two months. In the year 1300, that would have cost the equivalent of $52,000. Yikes.



In Nordhaus terms:



<figure class="wp-block-image size-full is-resized"><img loading="lazy" decoding="async" width="960" height="592" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-53.png" alt="" class="wp-image-110305" style="width:664px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-53.png?w=960 960w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-53.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-53.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-53.png?w=417 417w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-53.png?w=423 423w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-53.png?w=355 355w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-53.png?w=80 80w" sizes="auto, (max-width: 960px) 100vw, 960px" /></figure>



William Nordhaus made economic progress more tangible by calculating the “time-price” of light. In 1830, you had to work three hours to afford a single hour of candlelight. Today, you earn that same hour of light in one-thirteenth of a second.



Have a great weekend, upper-class readers.



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Economy

Illuminating progress: Is a $140K income ‘poor’?

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Crypto markets are ending the week on a muted note, with BTC giving back part of its rebound and equities largely flat ahead of next week’s FOMC meeting. Against this backdrop, Solana ecosystem tokens showed remarkable relative strength.



BTC retraced part of its recent rebound on Thursday, closing down -1.38%, though it remains up nearly 10% from Monday’s $84,000 intraday low. As seen below, the S&amp;P 500 and gold were flat on the day, while the Nasdaq slipped -0.14%.&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="898" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-45.png?w=1024&amp;h=1024" alt="" class="wp-image-110282" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-45.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-45.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-45.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-45.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-45.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-45.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-45.png?w=465 465w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-45.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-45.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



On the macro front, Kevin Hassett now appears to be the frontrunner for Fed Chair, with Polymarket pricing his nomination at roughly 75%. Currently the Director of the National Economic Council and a close Trump ally, Hassett’s appointment would mark a clear shift toward tighter alignment between Fed policy and the administration’s economic agenda. As for the current Fed, a December rate cut is almost certain just five days ahead of the final FOMC meeting of the year, with the CME FedWatch tool assigning an 87% probability to a 25 bps cut.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="900" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-47.png?w=1024&amp;h=1024" alt="" class="wp-image-110284" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-47.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-47.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-47.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-47.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-47.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-47.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-47.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-47.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-47.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Regarding cross-sector performance, the only three crypto-related indices that were positive on the day were Miners (+6.1%), Solana Eco (+1.8%), and Crypto Equities (+0.9%). Even with Thursday’s bounce, the Miners index is still down 28% over the past 30 days, making it the worst-performing index after Memecoins (-33%).&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="902" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-44.png?w=1024&amp;h=1024" alt="" class="wp-image-110281" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-44.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-44.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-44.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-44.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-44.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-44.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-44.png?w=463 463w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-44.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-44.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Looking at Solana ecosystem tokens, amongst the top 10 components on our index, CLOUD (Sanctum) was the best-performer yesterday (+13%). The move comes after Forward Industries launched its own LST (fwdSOL) powered by Sanctum earlier this week. Back in May, DeFi Dev Corp. launched dfdvSOL, also using Sanctum’s infrastructure.



Instead of natively staking SOL and losing liquidity, an LST enables Solana DATCOs to earn staking yield while distributing their liquidity into other DeFi applications to expand yield earnings. Working with Sanctum, DATCOs can easily design and deploy their own LSTs to fulfill their mandate of increasing SOL per share. The Forward Industries team has bootstrapped fwdSOL with ~25% of their SOL holdings (represented by over 1.7 million fwdSOL), leading to an all-time high of 13.1 million SOL locked in Sanctum LSTs. 



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="889" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-46.png?w=1024&amp;h=1024" alt="" class="wp-image-110283" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-46.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-46.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-46.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-46.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-46.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-46.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-46.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-46.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-46.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



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Solana tokens see gains amidst weeklong crypto slump

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Even when I was little, I was big.”



— William Perry
</blockquote>



<a href="https://pca.st/episode/421fde7c-e03b-452e-b0dc-e12b35d63e4f?t=1087">The first prop bet</a>



Michael Lewis dates the beginning of betting on everything to 1985 when Caesars Palace offered 20-1 odds on William “Refrigerator” Perry scoring a touchdown in the Super Bowl.



He did — a one-yard rumble into the end zone — and Caesars lost at least $250,000 on the bet (a substantial sum in an era when bettors had to call Las Vegas by phone to place wagers).



That was the first known &#8220;proposition” bet — a bet on anything other than the score or result of a game, and as such, the primordial ancestor to today’s prediction markets that offer odds on seemingly everything.



Despite the loss it took, the president of Caesars called it the best bet they’d ever taken: “We’ve had so much publicity on the bet, whatever we’ve lost was worth it.”



“The next day, just about every book in town, your phone started to light up from every big city in the country,” the bookmaker Jimmy Vaccaro told Lewis. “They heard about Perry scoring a touchdown.”



Now, bookmakers “write” more business on the props — will the coin toss be heads or tails? what will the first commercial be for? will there be a wardrobe malfunction? — than they do on the games.



Before The Fridge, there were only about three bets to make on the Super Bowl: the winner, the total points, the halftime score.



Now, there are hundreds.



As it turned out, that was the last of The Fridge’s three career touchdowns despite his 10 additional years in the league (playing on defense).



But those three short rumbles set us on the path to today’s world of betting on virtually anything with prediction markets.&nbsp;



(Although we still mostly want to <a href="https://x.com/AlexKolicich/status/1995936524492476798?s=20">bet on sports</a>.)



<a href="https://open.substack.com/pub/freesystems/p/inside-the-markets-aggregating-political?utm_source=share&amp;utm_medium=android&amp;r=3qcul">A look inside political markets</a>



Here’s a measure of how sophisticated prediction markets have gotten: When Andy Hall watches sports, he’s now gotten in the habit of checking prediction markets right before a big play “because the markets move several seconds before my TV feed does.”



Hall teaches political science at Stanford, so he’s more interested in how prediction markets are “changing how we monitor and understand politics.”



Hall seems cautiously optimistic that booming prediction markets will prove to be a public good because they should offer “a clearer shared picture of a highly complex political environment.”



But he’s also concerned about the “strange feedback loops” they create.



As an example, he cites a Virginia Attorney General race where unverified claims about exit polls circulating on social media moved prediction markets, which caused social media to post the “BREAKING NEWS” of the move in prediction markets, which, in turn, caused the prediction markets to move even further.&nbsp;



That probably did not do the public any good.&nbsp;



Hall notes that prediction markets are also raising questions about what it means to “win” an election.



“In a world where prediction markets are increasingly seen as sources of truth — many people pointed to when Kalshi ‘called’ the mayoral election in New York City as the proof that Mamdani had won — determining these edge cases will be exceedingly fraught.”



So what does it mean if Kalshi calls a close presidential election in 2028?



I’m not sure I want to find out.



(For another foreboding example of prediction markets affecting reality, see this <a href="https://archive.is/IS2cx">story</a> about bettors changing maps of the frontline in Ukraine.)



<a href="https://red.anthropic.com/2025/smart-contracts/">AI agents are very good at hacking smart-contracts</a>



Researchers at Anthropic report that their AI agents successfully exploited 56% of smart contracts known to have vulnerabilities.&nbsp;



More impressively (or worryingly), when tested on 2,849 smart contracts with no known vulnerabilities, the agents also discovered two novel “zero-day” exploits — a demonstration that agents can find new vulnerabilities autonomously.



Perhaps most worryingly, the agents are getting better at an astonishing rate: “Over the last year, frontier models&#8217; exploit revenue…doubled roughly every 1.3 months,” the researchers report.



(They want you to know that no blockchains were harmed in this experiment — they tested on “blockchain simulators.”)



To put that in perspective, Moore&#8217;s Law describes the performance of semiconductors doubling every two years.



These AI agents are doubling their capacity to exploit smart contracts every six weeks.



Amazing. And terrifying.&nbsp;



Anthropic does not have a particular interest in crypto. Instead, it has run this experiment to measure how adept agents will be at hacking code of any sort: “The same capabilities that make agents effective at exploiting smart contracts — such as long-horizon reasoning, boundary analysis, and iterative tool use — extend to all kinds of software.”



Here’s another amazing thing it’s found: “It costs just $1.22 on average for an agent to exhaustively scan a contract for vulnerability.”



“As costs continue to fall,” it concludes, “attackers will deploy more AI agents to probe any code that is along the path to valuable assets, no matter how obscure.”



Consider investing in a lockbox to hold all the physical cash and gold coins we’ll soon be back to using.&nbsp;



<a href="https://epicenter.tv/episode/627-what-will-quantum-computing-change">Quantum computers are coming for crypto first</a>



The risk that quantum computers pose to crypto is often dismissed with a hand-wavy assertion that once the computers get that good, everything will be at risk, so we’ll have bigger things to worry about.&nbsp;



But the latest episode of Epicenter explains why crypto is uniquely vulnerable.



“Most of the classical cryptography community…has been working on this for years,” Stefano Gogioso explains. “They already have protocols they could use if quantum were to happen tomorrow.”



In Web2, “you have centralized authorities,” he adds. If worse comes to worst, “you have banks that would refuse to transact for a day or two.”



In crypto, however, there are two problems: 1) blockchains use “new applications of cryptography” that have gotten little attention from researchers studying quantum resistance and 2) even if we had solutions, there are so many different voices, opinions and vested interests in decentralized crypto, “it would be challenging to change the infrastructure.”



Even more fundamentally, Gogioso notes, “we built an entire ecosystem for the very purpose of making [our data] available to everybody at all times” — which means that once quantum computers are available, they’ll be able to decrypt the entire transaction history of every blockchain.&nbsp;



So, if you’ve been using a privacy chain like Monero to make illicit transactions, you might want to relocate to a non-extradition country sometime soon.&nbsp;



“Monero is already broken,” Gogioso says.&nbsp;



Gogioso also expects governments to use quantum computers to identify who hasn’t been paying capital gains taxes on their crypto winnings: “They’re certainly going to send them a bill for the money they haven’t been paid yet.”



(Personally, I look forward to the refund I&#8217;ll get on all the crypto losses I&#8217;ve been too lazy to report.)



Other fun scenarios include someone moving one of Satoshi&#8217;s coins — how will we know if that’s Satoshi himself or just a guy with a quantum computer?



Or consider a US rival like China targeting Bitcoin — not to make money, but to destabilize a system that&#8217;s become ingrained in US finance.



But the biggest threat of all might be Gogioso’s final prediction: that quantum technology could create a form of permissionless, digital money that solves the double-spend problem without resorting to crypto’s exploit-prone model of distributed consensus.&nbsp;



Whatever the risks, the response has been woefully inadequate.&nbsp;



John Lilic notes that because crypto has a $3 trillion market capitalization, if there’s even a 1% chance of total loss, &#8220;we should be spending $30 billion” on making crypto quantum resistant.



His assessment of the current investment? “We’re not spending anything.”



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Thursday links: Prediction markets, agent hackers, quantum risks

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One of Hyperliquid’s core innovations is builder codes. These codes function as a protocol-level parameter in transaction payloads, allowing interfaces to append a builder address for automated, onchain fee capture. Builders can attach a surcharge of up to 100 basis points (1%) on spot and 10 basis points (0.1%) on perps.



This decoupling of execution from settlement enables frontends to monetize proprietary flow without the technical complexities of maintaining an orderbook or the capital inefficiency of bootstrapping liquidity. As shown below, third-party frontends integrate Hyperliquid perps and add their own variable fee tiers on top, effectively creating a differentiated pricing landscape for the same underlying execution.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="900" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-38.png?w=1024&amp;h=1024" alt="" class="wp-image-110261" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-38.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-38.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-38.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-38.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-38.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-38.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-38.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-38.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-38.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



As such, builder codes have unlocked a powerful distribution flywheel. Nearly 40% of daily active users now trade through third-party frontends rather than the native UI, a share that briefly crossed 50% in late October. The top three builders alone, Based, Phantom, and pvp.trade, have collectively captured more than $31 million in fees.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="900" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-39.png?w=1024&amp;h=1024" alt="" class="wp-image-110262" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-39.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-39.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-39.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-39.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-39.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-39.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-39.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-39.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-39.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



From a market structure perspective, this pushes Hyperliquid away from the fully-integrated crypto exchange model and closer to the layered intermediation of traditional equities. In a centralized exchange like Binance, one entity controls the full stack across onboarding, routing, matching and custody.



Hyperliquid’s design mimics the US equity market, where retail brokers (Robinhood, Schwab) own the client relationship and monetize distribution, while routing orders to wholesalers (Citadel Securities, Virtu) that handle execution and settlement. In effect, the stack becomes two-tiered:



<ul class="wp-block-list">
<li>A broker-like distribution layer, where builders compete for order flow and differentiate on product and fee pass-through.</li>



<li>A central execution venue, where Hyperliquid concentrates liquidity and handles matching and margining.</li>
</ul>



While new to crypto perps, this decoupling mechanism has already played out on Solana. Trading terminals like Photon and Axiom controlled the user flow by focusing on the consumer layer. Photon grew first by being the fastest Solana memecoin sniper, while Axiom eventually challenged it with a broader product suite and more aggressive points and rebate designs. These terminals effectively functioned as builders: They sat on top of DEXs, bolted on their own fee markups, and maintained accounting manually. Hyperliquid’s builder codes essentially turn that pattern into a native protocol primitive.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="900" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-42.png?w=1024&amp;h=1024" alt="" class="wp-image-110265" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-42.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-42.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-42.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-42.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-42.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-42.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-42.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-42.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-42.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



However, the Solana example also highlights the risk. Trading terminals captured 77% of Solana&#8217;s DEX revenue over the past year, $633 million vs. $188 million for DEXs, a 3.4x multiple that highlights that owning the frontend is often more valuable than owning the backend. Specifically, is the frontend too valuable for Hyperliquid to give away?



The relationship between frontends and backends is rarely purely symbiotic. Frontends like Jupiter aggregate various backends (Meteora, Raydium, Orca) and return the best route given size, fees and slippage constraints. 



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1072" height="494" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-43.png?w=1024&amp;h=1024" alt="" class="wp-image-110266" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-43.png?w=1072 1072w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-43.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-43.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-43.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-43.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-43.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-43.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-43.png?w=80 80w" sizes="auto, (max-width: 1072px) 100vw, 1072px" /><figcaption class="wp-element-caption"><a href="https://jup.ag/">Source: Jupiter Frontend Aggregation Example</a></figcaption></figure>







This forces DEX backends into severe margin compression. With zero moat, they must be the cheapest route to win flow. Since they don&#8217;t own the user, backends are also at risk of replacement. We see this when pump.fun replaced Raydium as its liquidity backend with its own in-house AMM, significantly impacting Raydium&#8217;s volume share.&nbsp;



Right now, Hyperliquid does not face this problem. By pioneering builder codes on perps, it is effectively a singular-builder code environment. However, if builders evolve from a UI on top of HL into true routers that can send flow to competing backends, they start to resemble a smart-order router in traditional finance. In this scenario, builders can:



<ul class="wp-block-list">
<li>Optimize all-in cost: Calculate spread/slippage + taker/maker fees + builder surcharge − rebates + expected funding.</li>



<li>Bargain with venues: Demand higher builder shares or rebates with the threat of routing flow elsewhere.</li>



<li>Capture the user relationship: While venues are forced to compete purely to be the cheapest, best-execution wholesale liquidity provider.</li>
</ul>



Similarly, in traditional finance, wholesalers compete with broker-dealers for volume. Robinhood routes to Citadel Securities, Virtu, and Jane Street based on which provides the best execution and payment for order flow.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1318" height="748" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-40.png?w=1024&amp;h=1024" alt="" class="wp-image-110263" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-40.png?w=1318 1318w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-40.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-40.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-40.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-40.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-40.png?w=460 460w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-40.png?w=386 386w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-40.png?w=80 80w" sizes="auto, (max-width: 1318px) 100vw, 1318px" /><figcaption class="wp-element-caption"><a href="https://www.federalreserve.gov/econres/feds/files/2024080pap.pdf">Source</a></figcaption></figure>







While rival DEXs like Drift and Ostium have integrated builder codes, none have emerged as genuine competitors to date. However, a significant structural risk remains: If a venue like Lighter were to pair builder rebates with its zero-fee model, it could theoretically allow wallets like Phantom and Rabby to bypass Hyperliquid’s 4.5 bps fee. This would enable frontends to capture the entire fee stack, effectively doubling their revenue per trade compared to the current Hyperliquid model.&nbsp;



<a href="https://docs.tryliquid.xyz/trading/trading">LiquidTrading</a> serves as a leading indicator of this future. The Paradigm-backed terminal, which raised $7.6 million in its seed round, has facilitated $5.6 billion in volume on Hyperliquid. But crucially, it also allows users to trade on Ostium and Lighter via the same interface. If larger builders follow this path and begin actively routing flow based on venue rebates rather than loyalty, Hyperliquid builder frontends could evolve into a commoditized perp aggregator, directly threatening the protocol&#8217;s ability to capture value.



Still, there is a fundamental difference. Spot is easy to aggregate because each swap is atomic and the asset is fungible across venues. One transaction equals one fill, and a router can seamlessly split a trade across multiple pools. However, with perps, positions are persistent and venue-specific. A BTC-PERP position on Venue A is not fungible with a BTC-PERP position on Venue B due to differences in index composition, funding rates, liquidation engines and risk limits.



To route perps across venues meaningfully, the market needs one of two difficult solutions:



<ul class="wp-block-list">
<li>User fragmentation: Users must keep collateral on multiple venues, which is capital inefficient and results in poor UX.</li>



<li>Prime brokerage layers: The router must act like a clearing layer, solving the hard problems of credit extension, cross-margining and liquidation coordination.</li>
</ul>



While non-fungibility offers a short-term defense, the harsh reality is that frontends are rational economic actors; they will migrate if a competitor offers superior margins. Yet, the data suggests this threat is currently contained. Despite the high user counts on third-party interfaces, the vast majority of volume, over 90%, still originates from Hyperliquid’s native frontend.&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="900" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-41.png?w=1024&amp;h=1024" alt="" class="wp-image-110264" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-41.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-41.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-41.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-41.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-41.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-41.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-41.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-41.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/12/image-41.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Furthermore, the HYPE token adds a retention layer. Builders can hold HYPE to access fee discounts, allowing them to stack revenue streams: referrals, builder fees, and volume-based discounts. With this, the cost of switching for incrementally better fees may not be worth it for existing frontends. Finally, the flow coming from builders appears to be additive rather than cannibalistic. These are new users entering the ecosystem via wallets and terminals, not users switching interfaces.&nbsp;



Therefore, while builder codes offer an effective expansion vector, expecting Hyperliquid to maintain total dominance over its distribution layer is unrealistic. As the sector matures, Hyperliquid will face a tougher grind to defend its lead against aggregators and low fee competitors. However, building a performant onchain orderbook remains an immense technical moat, and with frontend margins remaining healthy, the incentives for builders to switch are low. Still, in a rapidly expanding market, this is not a battle to retain volume, but rather a more competitive race for growth where Hyperliquid remains the heavyweight to beat.



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