DRAC (Ordinals)

Ben Strack

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



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When examining crypto stocks, chatting with a co-portfolio manager of the long-running blockchain-focused Amplify Transformational Data Sharing ETF (BLOK) makes for a good convo.&nbsp;&nbsp;



Dan Weiskopf told me he’s more optimistic about 2025 now than he was about this year at the end of 2023.



A main reason? The “crazy opportunity” for BLOK investors that’s set to come as more pure-play crypto companies go public.&nbsp;



Some expect <a href="https://blockworks.co/news/circle-files-ipo">stablecoin issuer Circle</a> could be among the next to do so. Weiskopf also has his eye on <a href="https://blockworks.co/news/figure-raises-60m-launches-dex">Figure Technologies</a>.



While a few more bitcoin miners could also go public, that’s a crowded field, Weiskopf noted. But BLOK would consider holding cloud-computing firm CoreWeave — one of mining giant <a href="https://blockworks.co/news/core-scientific-rejects-coreweave-buyout-bid-after-big-hpc-deal">Core Scientific’s largest clients</a>.



Speaking of Core Scientific, that stock — up ~320% year to date — is BLOK’s No. 1 holding (4.67%). Another interesting miner to Weiskopf is Hut 8 — the ETF’s sixth-largest holding, at 4.16%.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdjjIQ3TRWCtkQk6ivHw2GW5TAVq3y-ciKKxCDTkQ34l1Au-3Vb87-WLZxNdkomVa3Mg9jnJknYCM35rB36hVDDvSyAdi39J25MtZMqjDz9ks0GK0BlOVnW6-kKTlW5bCQIK1uyrg?key=faEA7u4tWkwGB1Ia4pTgPfjp" alt=""/></figure>



“I think we did a really good job repositioning and recalibrating amongst the miners in capturing the diversification <a href="https://blockworks.co/news/btc-miners-evolving-revenue-post-halving">into the AI side</a> of things,” the PM said.



Hut 8 is weighted slightly above MicroStrategy — a stock set to enter the Nasdaq 100 index next week (I’ll write more about that on Monday). BLOK started buying MSTR in August 2020 (when it was $14), Weiskopf and co-PM Mike Venuto <a href="https://blog.amplifyetfs.com/blok/blok-chain-monthly-commentary-december-2024?utm_campaign=BLOK&amp;utm_content=318841101&amp;utm_medium=social&amp;utm_source=twitter&amp;hss_channel=tw-4756273994">noted</a>.&nbsp;



MSTR shares were trading around $350 this afternoon (up more than 400% YTD). Benchmark analysts on Monday upped their price target for the stock to $650 after MicroStrategy increased its bitcoin holdings to 439,000 BTC.



That said, Weiskopf and Venuto recently reduced BLOK’s exposure to MSTR and CORZ as the stocks “rallied past our weighting limits,” they added. In other words, they’re trimming the winners in hopes of moving into other successes.



On that diversification point: As the BLOK money managers await more IPOs in 2025, they started buying Japan-based Metaplanet last month.



While more companies are <a href="https://blockworks.co/news/company-treasuries-btc-reserve-asset">adding BTC to their treasuries</a> (~60 by Weiskopf’s count), many are small. So-called “zombie companies” aren’t likely to bounce back just because they’ve bought the crypto asset, he said.



“They make a headline, but do they have a real strategy?” Weiskopf added about evaluating these BTC purchasers.&nbsp;



He argued that Metaplanet, which in April <a href="https://x.com/Metaplanet_JP/status/1777243921867014574">unveiled its intent</a> to emulate MicroStrategy’s efforts, is one committed to these BTC buys. The company said this week it would issue 5 billion yen in ordinary bonds to accelerate bitcoin purchases.



So, for those monitoring crypto stocks, BLOK holdings appear worth peeking at. And then there’re the yet-to-arise opportunities during what could be a transformative year for the segment.



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Crypto stocks to watch in 2025

Macauley Peterson

This is a segment from the 0xResearch newsletter. To read full editions, <a href="https://blockworks.co/newsletter/research">subscribe</a>.



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Ethereum All-Core Devs (ACD) held their final call of 2024 yesterday, which offered key updates on plans to raise the gas limit and progress toward the Pectra upgrade. Discussions revealed the community’s ongoing efforts to balance execution-layer changes, consensus-layer coordination and EIP implementation, reflecting Ethereum’s commitment to “build-in-public” iterative improvement.



In a bold but measured move, Ethereum developers are preparing for a gas limit increase, <a href="https://www.coindesk.com/tech/2021/04/22/ethereum-gas-limit-hits-15m-as-eth-price-soars">mirroring</a> a 20% rise seen over three years ago. This time, the proposed increase aims for 36 million gas, though significant technical constraints temper enthusiasm for higher thresholds. The primary limitation is the consensus layer’s &#8220;GOSSIP_MAX_SIZE,&#8221; which restricts validator block transmission to 10 MiB, equivalent to roughly 10.48 MB.&nbsp;



On the <a href="https://blockworks.co/news/ethereum-devs-milestone-call">Mekong testnet</a> — used for Pectra fork testing — the gas limit has already increased to 36 million, offering a stable testing ground for network performance under higher limits.



While the Mekong testnet runs stably with these changes, developers cautioned against increasing the mainnet gas limit beyond 40 million without addressing the gossip-layer constraints. Validator clients, such as Prysm, face challenges in dynamically adjusting gas limits, which underlines the need for further development.



An increase to the gas limit does not need to wait for a hard fork but can be signaled by validators in support of such a change. To date, only 16.8% <a href="https://gaslimit.pics/">have done so</a>, but the trend is up. Campaigns like PumpTheGas.org aim to build more momentum.



The <a href="https://blockworks.co/newsletter/research/issue/post_a2d3d0b2-7573-4379-a2d8-db9d7c7dc488">Pectra upgrade</a> remains a centerpiece of Ethereum’s 2025 roadmap. It’s on track for a Q1 release, with developers targeting a Devnet-5 launch by year-end. Changes discussed on the call include replacing EIP-7742 with EIP-7840 to offer more flexibility in managing &#8220;blob counts&#8221; — a key element for scaling Ethereum and supporting layer-2 rollups.&nbsp;



By allowing developers to set maximum and target blob counts independently, the network can balance scalability (by allowing more data blobs) with stability (by maintaining operational safety limits). This separation makes it easier to optimize block capacity without overloading the network.



Additionally, EIP-2537 focuses on gas repricing for <a href="https://en.wikipedia.org/wiki/BLS_digital_signature">BLS</a> (Boneh-Lynn-Shacham) precompile operations, which are essential for cryptographic computations in Ethereum. The proposal adjusts gas costs for specific mathematical operations, ensuring that resource-intensive tasks are priced fairly while removing inefficiencies like redundant operations. These updates enhance network efficiency, optimize resource usage and improve cost fairness for developers.



An EVM resource pricing working group will launch in January. This group will work on harmonizing gas cost calculations across various operations, aiming to improve efficiency and fairness in Ethereum&#8217;s fee structure.



EIP-4444, which schedules the rollout of pre-Merge history expiry for May 1, 2025, requires additional testing to finalize.&nbsp;



The call also underscored the need for clearer validator node requirements, with developers seeking community feedback. A further proposal to redefine “Meta” EIPs as solely process-related could simplify hardfork management.&nbsp;



Ethereum’s deliberate and collaborative approach to development was evident throughout the discussions. The Pectra upgrade and proposed gas limit increase reflect the network’s ambition to expand its technical capabilities while prioritizing stability.



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Ethereum to ramp up gas limit as Pectra progresses

<a href="https://overlord.bot/">Overlord.bot</a> is the first autonomous Trader AI Agent built on Arbitrum and living on X (previously Twitter) as <a href="https://x.com/OverlordBot_">@OverlordBot_</a>. Users can interact with Overlord on X to convince him to pump any token living under its reign.



Overlord reinvents how users and AI Agents can launch, trade and interact with the community created tokens on the Arbitrum network. Recently, Overlord has picked up some serious traction on X. Why? Because users have been trying hard to convince Overlord to pump their bags (or be their exit liquidity). The reward? The most convincing user will have Overlord support and pump their token. Who doesn’t want that?



The origins of Overlord stems from being the very first AI Agent launched out of <a href="https://aisweat.shop/">AiSweat.Shop</a>, also known as A.S.S. AiSweatShop is the first AI Agent Launchpad on Arbitrum and backed by Arbitrum Foundation. It was built with the OpenAgent AI Framework (the very first Web3 AI Agent Framework published on Github in March 2024) by <a href="https://open.network/">Open</a> (collective includes <a href="https://rss3.io/">RSS3</a>).&nbsp;



<h3 class="wp-block-heading">Building a New Standard for Sustainable Growth</h3>



With Overlord, the lines between creator, developer, trader, community, and protocol blur. Conviction on-chain can be tokenized and exit liquidity can be democratized through DeAI-Fi. Discussion, persuasion, mindshare, and creativity play as large a role as liquidity and code. It’s a system designed to remove all entry barriers and encourage anyone to collaborate with AI Agents.



Designed to filter out short-lived cash grabs and encourage tokens with real narratives, unique propositions, and staying power, before a token gains full recognition by Overlord, it must achieve a 100K market cap before it graduates. Until then, a 2% platform fee applies with parts going back to Overlord’s own treasury, which will in turn be used to support other new tokens’ liquidity that is collectively decided by Overlord and the community on X (through convincing Overlord). This will motivate issuers to think longer-term and deliver sustainable value to their token. Holders of $OVER (the native token of Overlord), early adopters and compelling projects may enjoy ongoing perks from Overlord, setting the stage for a future where token teams are incentivized from forging meaningful relationships with the Overlord AI.



<h3 class="wp-block-heading">Launch your token with Overlord</h3>



With Overlord, there are no backdoors, zero barriers to entry and it’s so seamless even the image of your token can be automatically generated for you.



How you can get started:&nbsp;



<ul class="wp-block-list">
<li>Launch a token on Arbitrum by posting and mentioning @Overlordbot_ on X.</li>



<li>Engage and convince Overlord that your token deserves to be pumped.</li>



<li>Work your magic and grow your token’s value, aim for that 100K market cap milestone, and watch the Overlord ecosystem respond in real time.</li>
</ul>



If you can convince Overlord of your token’s potential, then Overlord might use its autonomous wallet &#8211; currently holding 50 ETH &#8211; to buy your token within the next 24 hours. Think of it as a real-time, merit-based, AI generated investment decision that rewards authenticity, compelling visions, and community support, rather than empty hype.



<h3 class="wp-block-heading">About AiSweatShop</h3>



AiSweatShop (A.S.S.) is the first DeFi AI Agent OS, an open source DeFi Agentic Infrastructure – allowing for the easy deployment of autonomous AI Agents with various decentralized financial abilities (DeFi) subsequently tokenized to form what is called DeAI-Fi. Powered by <a href="https://open.network/">Open</a> (collective include <a href="https://rss3.io/">RSS3</a>), A.S.S. is designed to challenge the norms of decentralized finance and beyond.



At its core, A.S.S. is set to revolutionize the existing complex UI/UX of DeFi to an autonomous AI agent companion user interface termed AgentUI. The unique positioning of being on Arbitrum, the top Layer-2 (L2) of the Ethereum blockchain with the most DeFi activities is anticipated to help kick off the DeAI-Fi revolution.



<h3 class="wp-block-heading">Find Out More</h3>



With Overlord being the very first AI Agent launched from A.S.S., we’re setting the stage for a more interactive, AI-driven, and community-centric era in token launches—an era where authenticity and vision eclipse empty speculation.



For more information, visit <a href="https://aisweat.shop/">https://AiSweat.Shop</a> or follow <a href="https://x.com/OverlordBot_">@OverlordBot_</a> on X to launch your token.



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



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Convince Overlord to pump your bags

Katherine Ross

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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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What analysts say about the market next year

Jack Kubinec

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



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



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



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



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



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



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



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



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



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



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



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



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



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



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

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



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



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



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



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



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



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



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



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



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



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An ATH for ETH?

Felix Jauvin

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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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Unpacking the Santa rally that never was

Donovan Choy

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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



But that too is changing for Avalanche.&nbsp;



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



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



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Deutsche Bank puts ZKsync in the zeitgeist

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



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



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



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



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



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



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



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



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

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



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



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



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



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



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



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



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



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



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



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Solana staking may become riskier as Anza proposes slashing

David Canellis

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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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Tracking Trump’s crypto footprint

Casey Wagner

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



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



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



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



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



Some highlights from the bill:



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



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



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



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Congress kicks the can

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



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



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



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



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



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



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



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



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



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



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



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



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



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A long-awaited NYSE American listing

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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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

This is a segment from the 0xResearch newsletter. To read full editions, <a href="https://blockworks.co/newsletter/research">subscribe</a>.



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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Base leads explosive growth: Flipside

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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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