Dust Protocol

Byron Gilliam

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



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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Creatures crawl in search of blood / To terrorize y&#8217;all&#8217;s neighborhood” — Michael Jackson, Thriller
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<a href="https://www.fincen.gov/sites/default/files/shared/FinCEN-Notice-CVCKIOSK.pdf">Crypto remains the best money to steal&nbsp;</a>



When Bitcoin Depot went public via a SPAC in 2023, investors marvelled at its ability to charge as much as 25% to use its ATMs.



Now we know why: Bitcoin ATMs are elder-fraud machines.



A recent FinCEN notice details how “convertible virtual crypto kiosks” (CVCs) enable crime by giving scammers a quick way to cash out.



“The speed and difficulty of reversing CVC transactions makes CVCs an attractive payment mechanism for scammers,” it reports. “This generally differs from traditional bank or wire transfers where a payment transaction can remain pending for one to two days before settlement.”&nbsp;



Two-day wire transfers seem like archaic technology, but they’re also a useful deterrent to fraudsters who want their money instantly and irrevocably.



The risk of a bank compliance officer blocking or reversing a transfer is such that fraudsters go through the trouble of convincing their targets to withdraw cash from their bank account, find an ATM and convert the cash to crypto.



These are usually older people: “More than two of every three dollars reported lost to fraud using CVC kiosks was lost by an older adult.”



People like to say crypto is bad to steal because blockchains are transparent, but crypto ATMs provide a vivid counterexample: criminals converting fiat to crypto, because that’s the only way to steal it.&nbsp;



In theory, transparent blockchains should be bad for crime, but revealed preference proves the opposite. Instant, irreversible payments are so helpful to criminals that they pay ATM fees as high as 25% to get their stolen money onchain.



Their money is safer there, even without taking price risk: “Scammers will also often quickly swap scam proceeds into a stablecoin,” FinCEN reports.



Happily, many states have <a href="https://www.governing.com/policy/fearing-scams-states-add-regulations-to-crypto-atms">started regulating</a> crypto ATMs, making them less useful for fraud.



But the revealed preference of criminals paying 25% to use them remains instructive.&nbsp;



<a href="https://www.ft.com/content/d06f66c0-aaf0-42b3-89ad-7db0d0e73946">Crypto dad logic</a>



Financial historian Brendan Greeley reminds us that “over the long run you can’t force people to use a deflationary currency; they either come up with a local workaround or they revolt.”



The founding principle of crypto is that fiat money is inflationary and people should be able to opt out of it.&nbsp;



Greeley thinks of crypto as “finance as if the past never happened.”&nbsp;



He doesn’t mean it as a compliment, but that happens to be my favorite thing about crypto — a chance to rethink finance from first principles.



One thing that doesn’t need rethinking, however, is hard money.&nbsp;



Greeley says he is frequently confronted by “crypto dads,” who have made money in bitcoin and therefore think that hard money is a good form of currency: “To them, an idea can be tested with a bet. If it pays off, they were right.”



By that logic, hard money is good because bitcoin is hard money and the price of bitcoin has gone up.



But hard money, Greeley explains, has only ever benefited pre-modern merchants who traded across oceans and creditors collecting on loans. “For everyone else, hard deflationary standards have been a grinding punishment.”



William Jennings Bryan accusingly labelled the gold standard a “crown of thorns” and a “cross of gold” because hard money favors creditors over debtors and the rich over the poor.



That’s not an indictment of bitcoin — bitcoin is a much needed way for people to voluntarily opt out of fiat. 



But it’s an illogical leap to then conclude that hard money should replace fiat money.



Greeley concedes that if he were a betting man, he would buy bitcoin.



But his focus is elsewhere: “As an American academic who worries about deflation…all I want is for bitcoin to stay the hell away from the dollar.”



I get the logic: I’m an American newsletter writer and occasional betting man who has bought bitcoin because I’m worried about inflation.&nbsp;



But I, too, want it to stay away from the dollar — because the only thing worse than inflation is deflation.



Fiat remains the worst form of currency, except for all the others.



<a href="https://mcga.com/news/trump-media-group-cro-strategy-to-acquire-cro-digital-asset-treasury">The inverted logic of DAT investing</a>



Crypto.com is investing in a digital asset treasury company that will buy tokens issued by Crypto.com.&nbsp;&nbsp;



This creates some unusual incentives.



Investors typically want to buy an asset as cheaply as possible, but Kris Marszalek, CEO of Crypto.com, seems to be taking the opposite approach — his <a href="https://x.com/kris/status/1960502232362967214">public enthusiasm</a> for his new DAT, co-founded with the Trump Media Group, suggests he’s attempting to pay as much as possible for the CRO tokens the DAT plans to buy.&nbsp;



CRO is the native token of Cronos, a nominally decentralized blockchain that <a href="https://www.cryptoninjas.net/news/crypto-com-sparks-chaos-pushes-vote-to-re-mint-70-billion-cro/?utm_source=chatgpt.com">remains controlled</a> by its developer, Crypto.com.



In addition to the $200 million already committed for that purpose, “the company will also have access to a further $5 BILLION LINE OF CREDIT from Yorkville to, yes, you guessed it right, acquire even more CRO.”



Telling everyone how much you’re going to buy something before you can buy it is an unorthodox investing strategy that would seem to benefit the asset (CRO, partially owned by Crypto.com) far more than the buyer of the asset (the CRO DAT, also part-owned by Crypto.com).



It also seems like a tacit admission that Marszalek knows he’s playing a greater-fool game.



Despite its integration with Crypto.com, the Cronos blockchain has not gotten much traction: The chain collected just <a href="https://defillama.com/chain/cronos?tvl=false&amp;chainFees=true&amp;groupBy=monthly">$58,000 in fees</a> last month.&nbsp;&nbsp;



That appears to give CRO very little value, so it makes sense for Marszalek to focus on doing something about its price: “The mission of Trump Media Group CRO Strategy,” he <a href="https://x.com/kris/status/1960321095309144508">explained</a> on X, is to enhance shareholder value by maximising THE FLYWHEEL EFFECT: more funds raised, more CRO bought, prices appreciate, allowing for more funds to be raised and more CRO to be bought.”



This, I think, further explains his pay-as-much-as-you-can investing strategy: When price is the only source of an asset’s value, the more you pay for it, the better.



That appears to be his plan.



The SPAC’s fundraising, Marszalek notes, “will add up to an UNPRECEDENTED amount of DRY POWDER for any Digital Asset Treasury company, exceeding the total market cap of<a href="https://x.com/search?q=%24CRO&amp;src=cashtag_click"> $CRO</a> as of the time of announcement.”



Smart!&nbsp;



Promising to spend more on an asset than its entire market cap is a surefire way to make the price of the asset go up.



CRO has in fact doubled this week, so mission accomplished, I guess.



Even more remarkable, however, is CRO’s fully diluted valuation (FDV), which is now up to $31 billion — 43,000x its annualized revenue!&nbsp;



In addition to doubling this week, CRO’s FDV recently tripled when Crypto.com <a href="https://unchainedcrypto.com/burned-tokens-are-gone-forever-right-for-70-billion-cro-maybe-not/">decided</a> to re-issue 70 billion CRO tokens that were “burned” in 2021.



Projects typically burn tokens by sending them to an address from which they are unretrievable, thereby permanently reducing the maximum supply of the token.



Cronos, however, appears to be a magical place where deceased tokens can rise from the grave.



Token holders were understandably <a href="https://x.com/Wyll_BBK/status/1896452917722296775">unhappy</a> to have their investment diluted by 70%.



But the CRO token traded up on the news — so maybe crypto really is a magical place where normal investing rules don’t apply?



If the new DAT really does have $5 billion to spend on CRO tokens, I guess that could work out for all of its holders — for a trade at least.



But here’s some old fashioned investing advice: Beware of tokens that come back from the dead.



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The Breakdown Newsletter

Thursday links: ATMs, dad logic and zombie tokens

Blockworks

21Shares today filed a form S-1 with the Securities and Exchange Commission, seeking to register the 21Shares Sei ETF, a trust offering direct exposure to SEI, the Sei Network’s native token.



The filing names Coinbase Custody Trust Company as the ETF’s custodian, with Coinbase, Inc. acting as prime broker. Net asset value would be calculated using the CF SEI-Dollar Reference Rate — New York Variant, published by CF Benchmarks, which aggregates prices across multiple spot venues to ensure transparency and reduce reliance on any single market feed.



The filing also allows for discretionary staking of SEI if regulators and tax authorities determine it would not compromise compliance.



21Shares is a crypto-native ETP provider that pioneered the world’s first physically-backed crypto exchange-traded product (ETP) — dubbed “HODL” — on the SIX Swiss Exchange.&nbsp;



By the end of 2024, it was one of the largest global issuers of crypto ETPs with 44 listed products in numerous currencies. The company <a href="https://blockworks.co/news/21shares-parent-company-valued-at-2b-after-marshall-wace-led-fundraise">raised</a> funding in 2022 at a valuation of around $2 billion and is now part of the 21.co Group.



If approved, the Sei ETF would join bitcoin and ether ETFs already trading, alongside pending SEC applications for Solana and XRP.



This is a developing story.



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This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="https://blockworks.co/author/jeffrey-albus" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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21Shares

21Shares files for spot Sei ETF

Rain announced on Aug. 28 that it raised $58 million in a Series B round led by Sapphire Ventures, underscoring its ambition to become the leading enterprise-grade stablecoin platform.&nbsp;



The <a href="https://www.rain.xyz/resources/rain-raises-58m-series-b-led-by-sapphire-ventures-to-become-the-enterprise-stablecoin-platform-of-record">funding</a> follows the company’s direct integration with Visa’s network. Rain became a Visa Principal Member in March 2025, a move that underpins its ability to directly issue cards on the Visa network.



The company positions itself as an API-first infrastructure provider, enabling fintechs, corporations, and financial institutions to build stablecoin-linked cards and settlement tools across multiple jurisdictions. Rain claims its platform can connect to more than 1.5 billion users through a single integration, making it one of the most broadly connected providers of stablecoin payments.



This raise adds to Rain’s active 2025 funding year. In March, the company secured $24.5 million in a round led by Norwest Venture Partners to expand its stablecoin-powered card issuing globally.



By combining blockchain-native settlement with traditional payment rails, Rain is pursuing a dual track that targets both enterprise infrastructure and consumer-facing use cases.



The timing coincides with expanding regulatory clarity around stablecoins, with Europe’s Markets in Crypto-Assets (MiCA) law now fully in effect and the U.S. GENIUS Act, signed in July 2025, entering its implementation phase.



This is a developing story.



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This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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Rain

Rain raises $58M to expand enterprise stablecoin platform

Felix Jauvin

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



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To the keen observer, there are many crosscurrents hitting the Federal Reserve right now —&nbsp;and those currents are beginning to <a href="https://blockworks.co/news/fed-independence-in-question">erode Fed independence</a>.&nbsp;



The idea of a Fed independent from political influence has ebbed and flowed over the years.&nbsp;



During World War II, the Fed was entirely subservient to the Treasury and was not independent by any means. It existed mostly to fund the war and ensure Treasurys were well bid.&nbsp;



In 1951, the Fed Treasury accords formally established the Fed as independent from the Treasury and, therefore, the executive branch.&nbsp;



In the 1970s, Chair Paul Volcker solidified this independence by hiking rates to tame inflation despite pressure from the president at the time. Someone even showed up to the Federal Reserve building with a loaded gun to try and stop them from raising rates.&nbsp;



In the 40 years since, we’ve seen a steady, secular downshift in interest rates and peacetime for the Fed.&nbsp;



Now, that era is changing. President Trump, referring to his own nominees on the Fed’s board of governors, <a href="https://www.cnbc.com/2025/08/26/trump-fed-majority-cook-interest-rates.html">said</a> Tuesday: “We’ll have a majority very shortly.”&nbsp;



The idea of viewing the composition of the FOMC as one party’s majority vs. the other is new.&nbsp;



Historically, governor appointments were seen as apolitical, although bias still naturally trickled in through the lens of academic perspectives on monetary policy leading more left or right, depending on their background.&nbsp;



With the attempted firing of Governor Cook — (setting aside how valid it was, that’s for the court to decide tomorrow) — it now opens the door to Trump being able to get a majority among Fed governors as well as a heavier hand in deciding which regional Fed presidents are elected. For a better explanation of these dynamics, check out Quinn’s explanation in last week’s roundup: 



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Trump wants to fire Fed governor Lisa Cook, but there&#39;s a lot more to his takeover plan.<a href="https://twitter.com/qthomp?ref_src=twsrc%5Etfw">@qthomp</a> breaks down how Trump could soon control a majority of the Fed’s voting power ↓ <a href="https://t.co/ClcwsYLoLc">pic.twitter.com/ClcwsYLoLc</a>&mdash; Forward Guidance (@ForwardGuidance) <a href="https://twitter.com/ForwardGuidance/status/1960344759224172599?ref_src=twsrc%5Etfw">August 26, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



So, where does that shift bring us and how can we quantify this emerging tail risk?&nbsp;



One method I’ve found helpful is the chart below, which contrasts five-year inflation swaps with the price of oil. Oil is one of the primary contributors to expectations of inflation on a medium-term basis, since it’s a large driver of headline inflation. It’s also a key input cost into nearly everything that is consumed.&nbsp;



Typically, when the price of oil rises, inflation expectations also rise.



What’s interesting about 2025, however, is we are seeing five-year inflation swaps grinding higher while oil does the opposite.&nbsp;



My read is that the market is beginning to price in a new risk premium associated with tail risks around the Fed. Specifically, the Fed losing control of prices and inflation expectations becoming unanchored due to the erosion of independence.&nbsp;



Whether this risk premium is warranted or not is a story for another day. Regardless, it&#8217;s evident that the market is beginning to worry about this dynamic.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1200" height="725" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-7.png?w=1024&amp;h=1024" alt="" class="wp-image-106818" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-7.png?w=1200 1200w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-7.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-7.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-7.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-7.png?w=425 425w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-7.png?w=432 432w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-7.png?w=362 362w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-7.png?w=80 80w" sizes="auto, (max-width: 1200px) 100vw, 1200px" /></figure>



When long-held correlations like this diverge, they can be explosive. The last one was in 2022, when we saw gold meaningfully decouple from its long-held inverse correlation with real yields.&nbsp;



That divergence is only increasing as the market digests new variables, like concern for fiat currency stability.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="966" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-8.png?w=1024&amp;h=1024" alt="" class="wp-image-106819" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-8.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-8.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-8.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-8.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-8.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-8.png?w=426 426w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-8.png?w=432 432w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-8.png?w=363 363w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-8.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Keep an eye out for these correlations over the next 12 months — I think it’s going to become very important to do so.



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Donald Trump

What does a Trump takeover of the Fed look like?

On Aug. 28, 2025, the Commodity Futures Trading Commission (CFTC) issued Staff Letter 25-27 — an advisory affirming that offshore derivatives exchanges, including those listing crypto products, can legally be accessed by US participants if they register as a foreign board of trade (FBOT) under Part 48.



This <a href="https://www.cftc.gov/PressRoom/PressReleases/9111-25?utm_source=govdelivery">clarifies</a> that “located in the U.S.” refers to physical presence, not legal domicile, and that these exchanges need not become designated contract markets (DCMs) to serve US traders.



This advisory builds on CFTC’s July 2024 final rule amendment to Regulation 48.4, which added introducing brokers (not just FCMs or CPOs/CTAs) as permissible intermediaries. That change has enabled more nuanced routing of US customer orders through global venues.



For Web3, decentralized trading, and crypto-native platforms, this represents a critical turning point. By lowering structural hurdles and codifying a clear on‑ramp through FBOT registration, the CFTC is effectively signaling that offshore platforms can integrate into US markets under defined conditions, without resorting to broad geographic blocking or being forced into full domestic exchange registration.



The agency is also positioning FBOT registration as a tool to shift trading activity into a more transparent and compliant environment, reducing the reliance on regulatory enforcement after the fact.



In recent months, the agency has rescinded old crypto‑specific staff advisories, including those on digital asset derivatives and clearing risks, and prioritized regulatory clarity over punitive action.



This dovetails with Acting Chair Caroline Pham’s vision of supporting responsible innovation, as seen in initiatives like the crypto CEO forum and digital asset sandbox ambitions.



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This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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CFTC

CFTC opens door for Web3 exchanges via FBOT registration

Macauley Peterson

On August 27, 2024, <a href="https://blockworks.co/tag/makerdao">MakerDAO</a> formally transitioned into Sky, a new identity meant to signal a fresh era of modular governance, ecosystem scaling, and real-world integrations.&nbsp;



One year later, the core pillars of that transformation are in place, but the adoption story remains mixed.



The renamed protocol now oversees over $7.8 billion in <a href="https://blockworks.co/tag/stablecoins">stablecoin</a> liabilities across DAI and its successor <a href="https://blockworks.co/price/usds">USDS</a>. But despite heavy investments in marketing incentives and ecosystem spinoffs, Sky’s headline stablecoin metrics have flatlined, or in some cases, reversed. Meanwhile, capital restructuring efforts and a sweeping token migration have begun reshaping protocol governance entirely.



The organizations’ financials are also a bit of a puzzle, Sky co-founder Rune Christensen said during a <a href="https://www.youtube.com/watch?v=OdtG-ewrp8E">community call</a> Wednesday.&nbsp;



“We have three different ways of measuring this stuff, and none of the three tend to agree,” said Christensen. He described the gap between on-chain PnL estimates, like the Steakhouse <a href="https://forum.sky.money/t/protocol-economics-report-2025-q2/27111">report</a> ($8 million Q2 profit), and dashboard forecasts ($300 million run-rate), as a function of “capital transaction” accounting.&nbsp;



“By not counting capital transactions, we&#8217;re actually lowering profits,” Christensen explained.



Critics like PaperImperium have <a href="https://x.com/imperiumpaper/status/1956719059187212681">questioned</a> the effectiveness of management. “The cumulative cost to design, plan, and launch USDS is pretty high,” he wrote on X. “Around $44M went into it over the last few years… expenses currently run around $100m/year annually.”&nbsp;



He noted that, despite these incentives, USDS has not meaningfully surpassed DAI or other stablecoin competitors in market share, even in a favorable environment.



Blockworks contacted the Sky team with questions but was referred to the community call.



Rajiv, a lead contributor to Sky’s analytics effort, offered some nuance on the community call: “It just feels like the sweet spot for sUSDS is really these large, more institutional-type holders who really value the immediate liquidity.” Crypto funds like Galaxy Digital were cited as recent stakers, even as smaller long-tail users pulled back from Sky token reward participation.



Etherscan <a href="https://etherscan.io/token/0xa3931d71877C0E7a3148CB7Eb4463524FEc27fbD">shows</a> sUSDS, which receives the Sky savings rate (currently 4.75%), is held by a total of 4,656 wallets. That excludes some sUSDS pledged as collateral in certain DeFi smart contracts, but the figure should be fairly representative of the number of individuals or entities making use of the protocol.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcp9eHWoCuDQBGDyXpWbsJf8fzPSpYpqpCNpa3Sx3VuNALHFEPshjSjouu4oLN-888IL9d71VgQ05xszsvcGX0KfFgK1GGcal93Itb5mbrq3_5GV8_tRoKHPNiEBEWMcK-eGOD0Vg?key=zERevXWw5Nm8Lnc9w2d0PA" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://dune.com/virady/sky-multichain-analysis">Dune / Viridian Advisors</a> </figcaption></figure>



Still, the combined USDS and DAI supply ended Q2 2025 essentially flat, with a surprising twist: DAI itself is growing again. “Over the last few weeks, there&#8217;s been a very interesting trend of an uptick in DAI demand,” Rajiv noted.



That observation underscores a broader shift: while Sky is no longer betting on transactional stablecoin PMF, it is leaning heavily into the idea of capital formation through bespoke ecosystem units like <a href="https://blockworks.co/news/spark-launch-ignition-airdrop-campaign">Spark</a> and <a href="https://kitchen.steakhouse.financial/p/introducing-grove">Grove</a>. These “Stars” are expected to embed USDS as a super-senior capital layer while onboarding risk capital into higher-return strategies, Christiansen noted.



“Sky is evolving from just offering a stablecoin to offering the more general value of supporting capital formation,” Christiansen said.&nbsp;



He cited Spark as an example: “Sky put in $25 million, and got out $390 million.”



<h2 class="wp-block-heading">From brand to token</h2>



Another core milestone: the transition from MKR to SKY, now nearing completion.&nbsp;



As of May 2025, SKY has exclusive governance authority, with MKR holders able to convert 1:24,000. The pace of conversion spiked sharply in Q2, as shown in Blockworks Research data, following the announcement of a “Delayed Upgrade Penalty” — the planned 1% decay in the conversion ratio every three months starting on September 18.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXenaLzsy6OJr0LldHATULgt7uMddAZ4ta9SZDXul4r8U9Ln7HAxFAJJ6AfgH6Ew-TdM_jMeIw5V5IdOJ9ZZli9LwgCSSO7TskV9hk6NxJJBV-tHAg-to27DPfOeeMGsFOTFyaPQDg?key=zERevXWw5Nm8Lnc9w2d0PA" alt=""/></figure>



Source: <a href="https://app.blockworksresearch.com/analytics/makerdao?dashboard=109">Blockworks Research</a>



“It’s an important step towards eliminating fixed costs and ensuring income flows to SKY holders,” Christiansen <a href="https://blockworks-research.beehiiv.com/p/the-rev-debate">said</a> of the transition at the time. Sky staking is also a bright spot, enabling rewards in USDS, or compounding back into SKY via <a href="https://yearn.fi/v3/1/0xaF71a4f5d93fb88B24C67760BCF9688a6C3A54D4">Yearn Finance</a> liquid-staking vault.



Looking ahead, Sky’s governance architecture is expected to further evolve via the “Core Council,” and staking reforms could introduce lockups and anti-LST protections. Rune framed that as a “two-year” roadmap item, part of a longer arc toward institutional-grade governance and capital structure management.



So far, the market hasn’t rewarded the protocol with breakout usage, although the architecture is in good shape.



“Sky will grow as an entire economy,” Christiansen said. “More vertically integrated growth… [rather than] USDS being used everywhere for some particular specific niche.”



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DAOs

One year into Sky, adoption lags behind vision

Kate Irwin

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



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The metaverse is long over.



And yet, it’s always been here, since the dawn of the internet. You&#8217;re in the metaverse as you read this.



The metaverse in the 2022-era sense of the word was little more than a fancy marketing play around rebranding VR. But every video game, every livestream, and every social media app is arguably all part of the existing metaverse that is the internet.



Paradoxically, the metaverse as corporate executives imagined it never materialized, because it was already here this whole time.



Today we’re unpacking some details about what’s been going on at The Sandbox, one of the OG crypto metaverse projects, and the massive overhaul it now faces.



<h2 class="wp-block-heading">The Sandbox gets slashed, pivots to memes</h2>



Ethereum-based metaverse land game The Sandbox is being gutted and restructured, facing layoffs and executive changes as Animoca Brands reshapes its future.



The crypto newsletter TheBigWhale first <a href="https://x.com/Raph_Bloch/status/1960687502391451716">reported</a> the news on Wednesday. Animoca Brands confirmed to Blockworks that a “restructuring” has occurred.



Animoca Brands has laid off over half of The Sandbox’s 250 employees and moved the game’s co-founders — Sébastien Borget and Arthur Madrid — into new roles.&nbsp;



Animoca CEO Robby Yung was internally appointed The Sandbox’s new CEO about two weeks ago, TheBigWhale notes, with an internal source adding that Borget and Madrid “no longer have executive powers” in their new roles.



In a statement shared with Blockworks, Animoca confirmed the role changes but said that both of The Sandbox’s cofounders “remain deeply involved” with the project.



Borget is taking on the role of “ambassador,” while Madrid is taking a “chairman” role. In a phone call with TheBigWhale, Borget reportedly said: “I remain the person who best represents The Sandbox around the world.”



Borget did not respond to my request for comment.&nbsp;



Animoca suggested in its statement to Blockworks that the layoffs may have been in part due to generative AI.&nbsp;



“The impact of AI advancements in the gaming industry has been well documented: AI allows us to accelerate our deployment of content, features and LiveOps while maintaining a leaner, more agile team,” Animoca’s statement reads.



It continues: “While decisions that impact personnel are always difficult are never made lightly, they are necessary to adapt to technological advances and ensure The Sandbox’s long-term success.”



The Sandbox employees in Argentina, South Korea, Thailand, Turkey and Uruguay are among those most impacted by the layoffs.&nbsp;



<h2 class="wp-block-heading">Many offices for the metaverse</h2>



It’s currently unclear how many offices The Sandbox has open — but I was able to independently verify that The Sandbox has had offices in at least a half-dozen different cities around the world, with offices reported in at least nine.



TheBigWhale’s reporting notes that the game’s offices in Lyon, France are expected to close. Offices in Argentina, Uruguay, South Korea, Thailand and Turkey are also being closed.



A <a href="https://officesnapshots.com/2024/03/25/the-sandbox-offices-los-angeles/">page</a> on the interior design site OfficeSnapshots published last year details how interior design firm Koko3 decorated The Sandbox’s lavish 8,611 square-foot space in Culver City, Los Angeles. The space features arrangements of plush modern chairs, glass-walled meeting rooms and digital screens displaying Bored Ape NFTs.&nbsp;&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdG8XEKzKUPiyEiwt8VdAnDeYP6uwn4lrcsBPECcDTG_rnEqob0c408-waTAvIJz_8WTe7sbTRs5gaZ2fXDYPcBJExHP09I6if9wvfJ7ElwdZaS716XtYLpZhKLA6dlu2LaUx1w?key=Gx6a7qGP8XhsxiVHDplqTw" alt=""/><figcaption class="wp-element-caption">Image: A close-up of The Sandbox metaverse map showing land plots for Faze Clan, Atari, Snoop Dogg, OpenSea and many others.</figcaption></figure>



The Sandbox’s <a href="https://docs.sandbox.game/en/about/about-the-sandbox/the-sandbox-team#the-offices">website</a> confirms the game company has a corporate office in Paris, a game development office in Buenos Aires, an office in Maldonado, Uruguay focused on web operations, plus additional offices in Seoul and London, as well as a “presence” in Hamburg, Germany.&nbsp;



But now, at least six of The Sandbox’s many offices are expected to close as a result of the massive restructuring at the company.&nbsp;



Animoca confirmed to Blockworks that four offices have been closed, and says The Sandbox will still have “a formal presence” in 9 locations globally.



As a blockchain gaming publisher and investor, Animoca is one of The Sandbox’s biggest financial backers. It is The Sandbox’s main shareholder, according to TheBigWhale’s report.&nbsp;



Animoca has offices in Hong Kong and Australia, with its Hong Kong office recently <a href="https://www.coindesk.com/web3/2024/10/29/as-hong-kong-firms-downsize-animoca-built-a-workspace-the-size-of-10-tennis-courts">becoming</a> “the size of 10 tennis courts” late last year.&nbsp;



Animoca has raised over $860 million in total funding, according to Crunchbase <a href="https://www.crunchbase.com/organization/animoca-brands-corporation#financials">data</a>, with its most recent round being a $358.9 million round in 2022 that put it at a pre-money valuation of $5.1 billion.&nbsp;



A source told TheBigWhale that Animoca spent $300 million on The Sandbox in the past eight years, and isn’t impressed with how things have gone. The Sandbox is still believed to have anywhere from $100 million to $300 million, primarily in ETH and stablecoins.&nbsp;



Last year, The Sandbox <a href="https://www.animocabrands.com/the-sandbox-announces-usd20m-funding-at-usd1b-valuation-cap">raised $20 million</a>, putting it at a $1 billion valuation. Crunchbase data shows The Sandbox has raised <a href="https://www.crunchbase.com/organization/the-sandbox-f24f#financials">$115 million</a> to date.



A Dune dashboard indicates that The Sandbox has seen <a href="https://dune.com/KARTOD/the-sandbox-main-dashboard">over $100 million</a> in total NFT volume.&nbsp;



<h2 class="wp-block-heading">Dwindling numbers</h2>



Despite all that cash, however, The Sandbox hasn’t seen many players. A source told TheBigWhale that “many” of the game’s “few hundred” remaining daily users “are bots in South America.”&nbsp;



But even back in the metaverse heyday, reports suggest The Sandbox’s crypto game version had never really seen a userbase that compared to Decentraland or Axie Infinity — and certainly nowhere near the non-crypto metaverse giants like Minecraft, Roblox, and VRChat.&nbsp;



Naavik noted in a January 2022 <a href="https://naavik.co/deep-dives/jan-2022-premium-sandbox/">report</a> that investors were effectively valuing The Sandbox’s <a href="https://medium.com/sandbox-game/we-raised-93m-to-grow-the-sandbox-open-nft-metaverse-a8a2a0411d90">30,000 MAUs</a> reported in November 2021 at $472,000 dollars each — while the game was still technically in alpha.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc8vDgB4qIFAXoo5xNKoDLZw9magcZO5FRQACOvk5JT7Q1hYAKFIxPGdQkE2B9X4XUAzRKtidzq7Aexa1fNugSeHn6Noc-MVc6JmcO2j96dgPQRgUrgSDoWgSoUc64fAjsPLrH3yg?key=Gx6a7qGP8XhsxiVHDplqTw" alt=""/></figure>



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe6c7oIbNCDRnwUt2CY6h1kZj0mxj-sHndSnmZIlRZqvhP3YdEUEo2f4t0a8dtitCL1o4CM4TF-YskdYdzkMNOgITayMCpLxlodI--1tia1u8J9QcmbkbyXlaQ9WZ7BzibcBkCyGw?key=Gx6a7qGP8XhsxiVHDplqTw" alt=""/><figcaption class="wp-element-caption">Images: 2022 data comparing The Sandbox to other metaverse-style games.</figcaption></figure>



So what’s happening now?&nbsp;



The Sandbox is reportedly pivoting to building crypto apps. A pump.fun-inspired memecoin launchpad that uses Base is in the works.



“From the outset we&#8217;ve held to our line on gaming, but you have to take market developments into account,” Borget told TheBigWhale.&nbsp;



It’s unclear what will happen to the game’s SAND token. Its price has remained flat in the past day, and is down 4% in the past month.



Has The Sandbox’s crypto-powered metaverse vision been officially put to rest after so many years? It sounds like it.



But Animoca insists: “The Sandbox is not pivoting away from its core mission, and we are very excited about the opportunities that lie ahead.”



Madrid and Yung did not respond to my requests for comment.&nbsp;



I wonder how Snoop Dogg’s metaverse neighbor who paid <a href="https://decrypt.co/87524/someone-paid-450k-snoop-dogg-metaverse-neighbor">$450,000</a> to “live” next to him in The Sandbox feels right now.



Probably not too great.



Updated 8/28/2025 at 2:30 p.m. ET with additional comments.



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Gaming

The Sandbox co-founders ousted from exec roles amid mass layoffs

Donovan Choy

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



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Solana validators have begun voting on SIMD-0326, the governance proposal for its new <a href="https://blockworks.co/news/solana-alpenglow-next-gen-consensus-layer-speed">Alpenglow consensus protocol</a>.



The proposal needs at least 33% of validators to reach quorum. As of this morning, at least 11.8% (135) of Solana’s ~1.3K validators have voted in favor, based on <a href="https://dune.com/kagren0/simd-0326-voting-status">Dune</a>.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe8qXRrteOvrnBbGBNTTt81f6yKynyWZAN1kemQ1T-A85QMfoXg0kKkFi75J-4J3xZq_e3qRx35Cy0ARfrnQdTBFeUvvdQbvN0AnQI_dwgW4XwJQ18BH1zZ1QBK2OArDrejNrui?key=g93vGr6mMwKrQnYKnL2EnQ" alt=""/></figure>



When you send a transaction on Solana today, the chain takes about ~12.8 seconds (32 slots * 0.4s slot time) to reach deterministic finality, though it is also sometimes informally referred to as having a soft/optimistic transaction finality of 500-600ms.&nbsp;&nbsp;



12.8 seconds is fast compared to the 12.8 minute finality of Ethereum’s Gasper consensus, but it pales in comparison to the consensus speed of newer chains like Sui’s Mysticeti, with 390-500ms.



Alpenglow <a href="https://blockworks.co/news/solana-prepares-for-alpenglow">promises to collapse</a> the 12.8-second time window further to 100-150ms, bringing about a 100x improvement, depending on where a validator is geographically located.



It does so by eliminating a few core legacy pieces of Solana’s chain like <a href="https://blockworks.co/news/solana-proof-of-history">proof-of-history</a> (PoH), Tower BFT and gossip-based vote propagation.



The average Solana user has no idea what these are, nor do they need to care, so I&#8217;ll try to keep it simple.&nbsp;



PoH and Tower BFT are the twin core pieces of Solana’s architecture today that allow validators to order blocks without having to interact.&nbsp;&nbsp;



Think of PoH as a pre-consensus cryptographic stopwatch that timestamps blocks. Those timestamps serve as a shared clock which the Tower BFT algorithm then serves up to validators for commitments. This way, the Solana blockchain is able to keep producing blocks without requiring a synchronous consensus round as is typical with traditional chains.



This protocol design has served Solana well, but there are trade-offs.



For one, it creates an overhead cost for voting transactions, which makes up something like 70% of Solana’s onchain transactions (see gray chart below). Vote transactions are distinctly separate from the kinds of transactions that ordinary users send to use the chain; they are an attestation that validators have to pay to lock in their commitments for Tower BFT, or a cost of doing business.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdYseNq0kL6YtWTBAaXpsynKarYP0qNRKRVMx6BszJ81PZ7SztPeA91Lo-03As6z_rf6ZAkBp2qFGUXkP2sFgM6Hb0RCDdHoHOZyCq_58jiO0_MKGZmNj4hiPu0ZKoPVrIVjrP-Iw?key=g93vGr6mMwKrQnYKnL2EnQ" alt=""/></figure>



This has created something of a longstanding pernicious problem for Solana validators.



The bigger the stake of a Solana validator, the more earning opportunities they are given to produce blocks. But every validator, regardless of the size of their stake, pays the same fees to vote.



This “fixed cost, variable income” economics results in a situation where large validators end up with a greater stake over time, in effect centralizing network stake from smaller to large validators. Network decentralization suffers because it’s unprofitable to run a validator unless you’re coming in with deep pockets.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd2dpfuDdqfXstqBVAXWT6TUF_jb5rudhGATKOGQGjrm3H4zsnkzfAmXG7o7xGuanieI09GUaaDp7ciIqvqEiQTIdECBbh0MyOdss4kF-y8997cBuVVAZaHwyT_ml_0ZIVzWj4w?key=g93vGr6mMwKrQnYKnL2EnQ" alt=""/></figure>



(That also explains why the Solana Foundation has an <a href="https://solana.org/delegation-criteria">initiative</a> to subsidize smaller validators in their first year of operations.)



Alpenglow aims to nip this problem in the bud by getting completely rid of voting costs. That’s where its new components, Votor and Rotor, come in.



Votor shifts validator voting off-chain, but records the aggregate as a compact onchain certificate. Alpenglow therefore replaces per-slot vote transactions with a fixed fee, compressing consensus into one-two rounds to achieve its target finality of 100-150ms.



Rotor, on the other hand, is an improved block propagation protocol that replaces Turbine. It uses a simpler relay scheme to reduce the number of times data jumps from node to node, shaving off end-to-end network latency.



Votor and Rotor jointly underpin Alpenglow’s promised “20+20” resilience model. Under this new model, the Solana network preserves safety and liveness even with 20% of stake controlled by malicious validators and an additional 20% offline.



If this is still all too confusing, just picture AI Peter Griffin dancing through a Minecraft map — somehow, consensus starts to make sense.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">solana alpenglow in less than 100 seconds (brainrot version) <a href="https://t.co/QPtHd5QQct">pic.twitter.com/QPtHd5QQct</a>&mdash; doppelbanger (brainrot lead) (@doppelbanger_gm) <a href="https://twitter.com/doppelbanger_gm/status/1958478061692707100?ref_src=twsrc%5Etfw">August 21, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



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Alpenglow

Solana validators commence vote on landmark Alpenglow consensus protocol

Lombard Finance has launched its liquid-staked Bitcoin token, LBTC, on Solana, bringing yield-bearing Bitcoin to the high-throughput blockchain.



The token, which represents Bitcoin staked through a decentralized consortium of 14 regulated custodians, has a circulating supply of around 1.5 billion LBTC and generates roughly 1% yield denominated in BTC.



<a href="https://www.lombard.finance/blog/lbtc-comes-to-solana-yield-bearing-bitcoin-meets-high-performance-de-fi/">According</a> to Lombard, the move enables users to deploy LBTC across Solana’s decentralized finance platforms for lending, perpetual trading, and other applications without sacrificing speed or security. The expansion follows LBTC’s rapid growth across Ethereum and other ecosystems, where it has reached more than $2 billion in supply and established integrations with over 70 protocols.&nbsp;



Earlier this month, Lombard <a href="https://www.lombard.finance/blog/yield-bearing-bitcoin-lbtc/">introduced</a> automatic yield accrual, simplifying user experience by embedding staking rewards directly into the token’s value. Partners on Solana include Drift, Jupiter, Kamino, Meteora, and oracle providers such as Pyth and RedStone, positioning LBTC as a base asset in trading and liquidity strategies.



In the release, Solana Foundation growth lead Jiani Chen welcomed the news, saying “Lombard’s LBTC is the first yield-bearing Bitcoin to join the ecosystem, with the scale and liquidity needed to position Solana as a high-performance liquidity hub for BTC. LBTC’s native yield and deep DeFi integrations unlock a new chapter for Solana DeFi.”



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



This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="https://blockworks.co/author/jeffrey-albus" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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tokens

Lombard brings yield-bearing LBTC to Solana

Caliber, a Scottsdale-based real estate asset manager listed on Nasdaq under the ticker CWD, announced on Thursday that it will adopt Chainlink’s LINK token as the foundation of a new digital asset treasury strategy.



The move <a href="https://www.globenewswire.com/news-release/2025/08/28/3140686/0/en/Caliber-Establishes-LINK-Token-Digital-Asset-Treasury.html">positions</a> Caliber among the growing ranks of US-listed companies to establish a blockchain-based reserve policy, aiming to leverage LINK for both long-term appreciation and staking yield. The initiative comes as Caliber works to reassure investors amid regulatory scrutiny.



According to a <a href="https://ir.caliberco.com/static-files/75add673-836e-4cd4-b001-e05cbcc678e4">filing</a> with the SEC on August 27, Caliber reported a $17.6 million stockholders’ equity deficit, prompting Nasdaq to issue a compliance notice.



Per Caliber’s release, the firm’s board approved a dedicated Digital Asset Treasury Policy, which sets guidelines for acquiring, managing, and reporting LINK token holdings. In addition, Caliber announced the creation of a Crypto Advisory Board to provide oversight and guidance on its new digital asset policy, according to external reporting.



Chainlink, widely used as a decentralized oracle network that connects blockchains with real-world data, has become a cornerstone of decentralized finance (DeFi) infrastructure. By aligning its treasury with LINK, Caliber is betting on the protocol’s long-term utility and market relevance.



The announcement <a href="https://blockworks.co/news/chainlink-labs-commerce">coincides</a> with Chainlink revealing a new partnership with the US Department of Commerce to bring official macroeconomic indicators such as GDP and the PCE Price Index on-chain. The integration, which also involves Pyth Network, spans ten blockchains and underscores Chainlink’s growing role in bridging public institutions with decentralized systems.



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



This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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treasury companies

Caliber adopts Chainlink treasury as stock faces Nasdaq scrutiny

Shaunda Devens

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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Solana’s consensus stack, proof-of-history sequenced with TowerBFT, has always delivered faster block times than competitors. But finality still sits around <a href="https://www.helius.dev/blog/solana-commitment-levels">10-20 seconds</a>, far from the <a href="https://blockworks.co/news/nasdaq-on-solana-opening-bell-sol-strategies">Nasdaq-level</a> latency Solana aspires to.



<a href="https://forum.solana.com/t/simd-0326-proposal-for-the-new-alpenglow-consensus-protocol/4236?utm_source=chatgpt.com">SIMD-0326 (“Alpenglow”)</a> proposes cutting finality to ~100-150ms by moving validator voting off-chain. Today, validators continuously post votes onchain to signal fork choice, and these votes dominate throughput despite carrying no user value.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXep-a2mLDrML2PqhV7_I3cZcXheUNUMCvLGzKzNsibs7NUiDFVpVXsJR5spqn8eQ4GI4iiaRDP7IDBz3JBNePOjlWx8B1i0dDBywoA5NIPArzpJp4X9RKow_rlOo7Fn5q8__6meyw?key=bDbckPlQ3bo3NOrYyaM8OA" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://solscan.io/analytics#txs">SolScan</a></figcaption></figure>



Under Alpenglow, validators instead pay a fixed “Admission Ticket” of 1.6 SOL per epoch, burned to the network. Leaders then gather votes off-chain through a component called Votor, compress them into certificates, and write those certificates onchain. The result is a swap: Millions of low-value vote transactions are replaced by one predictable fee per validator, lowering consensus overhead by ~20% and freeing blockspace for user activity.



The design also adjusts fault tolerance. TowerBFT today remains live unless more than 33% of stake is adversarial. Alpenglow introduces a “20+20” model, where the chain stays live with 20% malicious stake and another 20% offline. For applications like DeFi, specifically perpetual exchanges like Drift, sub-second finality transforms Solana from “fast” into a real-time settlement layer.



The economics are still under debate. Smaller validators face a flat 1.6 SOL per epoch fee regardless of stake, while reward flows remain undefined. Governance discussions (epochs 833-842) have emphasized the need for a clear rollout path, including sequencing for Alpenglow’s components. Still, if implemented, SIMD-0326 would represent one of Solana’s most significant structural upgrades.



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0xResearch Newsletter

Solana prepares for Alpenglow

Chainlink has launched a new set of data feeds that deliver official U.S. Department of Commerce macroeconomic statistics directly to blockchains, the company announced on Thursday.



The <a href="https://blog.chain.link/united-states-department-of-commerce-macroeconomic-data/">initiative</a> is part of a broader collaboration that also <a href="https://www.pyth.network/blog/pyth-network-selected-by-u-s-department-of-commerce-to-verify-and-distribute-economic-data-onchain">involves</a> Pyth Network, with both oracle providers confirming they are working with the Commerce Department to bring Bureau of Economic Analysis (BEA) data on-chain.



The program makes government-released indicators such as gross domestic product (GDP), the Personal Consumption Expenditures (PCE) Price Index, and Real Final Sales to Private Domestic Purchasers available on-chain through decentralized oracle networks.



Initial deployment spans ten blockchains, including Ethereum, Base, Avalanche, Arbitrum, Optimism, Mantle, Linea, Botanix, Sonic and ZKsync.



The integration builds on Chainlink’s broader role as a provider of verifiable data feeds, which already support functions ranging from token price updates to weather insurance claims. By extending this framework to US government economic data, Chainlink and Pyth position themselves as bridges between public institutions and blockchain ecosystems.



The feeds are secured by the same decentralized infrastructure that underpins Chainlink’s price oracles and Pyth’s aggregated data network.



Commerce Secretary Howard Lutnick said earlier this week that the department would begin publishing GDP and other statistics on-chain, signaling a potential expansion of the model to additional U.S. agencies.



Primary documentation of the integration, including live contract addresses for the data feeds, is already available on Chainlink’s <a href="https://docs.chain.link/data-feeds/us-government-macroeconomic/addresses?utm_source=chatgpt.com">developer portal</a>. The announcement follows prior expansions into weather and sports data, continuing Chainlink’s strategy of embedding external information directly into blockchain systems.



Updated 8/28/2025 at 10:22 a.m. ET to include Pyth involvement.



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This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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Chainlink

Chainlink integrates U.S. Commerce Department macroeconomic data

David Canellis

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



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Whether you’re bullish, bearish, or channeling some other animal spirit, you’re forgiven for feeling the pressure right now.



It’s been two weeks since bitcoin’s last all-time high and only four days since ether set a new price after almost three years.



Bitcoin could trend sideways and even downward for all anyone would care.&nbsp;



ETH sets the tempo for the foreseeable future. Scary stuff.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">top signals are just apparently no longer a thing we had ETF&#39;s &#8211; now we&#39;re trading higher we had Trump election &#8211; now we&#39;re higher we had Trump token &#8211; now we&#39;re higher we had eth volumes flip btc volumes for over a month straight &#8211; now we&#39;re higher now we&#39;re issuing GDP…&mdash; merp (@0xMerp) <a href="https://twitter.com/0xMerp/status/1960790841632678300?ref_src=twsrc%5Etfw">August 27, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">This is good for ETH</figcaption></figure>



Before we zoom in on ETH, let&#8217;s see the momentum it&#8217;s inherited from bitcoin.



The chart below plots every bitcoin bull market together, as if they all started on the same day. Green dots point to cycle peaks, and each bull phase starts at the previous bear market’s lowest price.



By these (very basic) rules, bitcoin has now been on a bull market for 1,023 days — 2.8 years.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeVutT6n0LXr1uWqXJU0OboUaz2fRFwjZJqXtcC0HENCgLG4oAKSsHolLUIJrdkNCU0zguJQZC68hI7ff6LTnJQQyURFPq45JabxJfjyY7ExFiZPe8k8Q4YiAVCd26VTpWE2PM-og?key=LrYZb3WcbLF2uZa5P-FQPg" alt=""/></figure>



If the bitcoin top is not yet in, then bitcoin is on track to soon enter its longest bull market on record. It took another 40 days or so from here for bitcoin to reach its November 2021 peak.



Returns so far are about what you would expect, considering how large the market cap of bitcoin has grown.&nbsp;



At this point in the past two cycles, bitcoin had posted up to 100x and around 21x, respectively.&nbsp;



Two weeks ago, when bitcoin hit $124,100, that was the equivalent of about a 7x from the late 2022 bottom.



Here’s the same chart, but for ETH.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXev3LTC8Ptqp59Pvpz7CUbYIPhy6ApuYeCrJecljkR2w2zTAr-m7mybN7-YPtNYthREp0I4y5F64s7Hp210jMzzSp2f929SXUGmifQqItECtyVmdOd-YtvYU6cCRL4mcL6WFo9IZg?key=LrYZb3WcbLF2uZa5P-FQPg" alt=""/></figure>



It’s similar. But technically, ETH has now entered its longest bull market on record — or in other words, this all-time high took longer than ever before



What’s glaring is that ETH’s cycle returns are tracking far below the previous bull market.&nbsp;



Perhaps Solana has something to do with that, considering bitcoin has no analogous direct rival.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Yesterday, we published our note on the top holders of Ethereum ETFs. Advisors are dominating the known holders and have pulled away from Hedge Funds. <a href="https://t.co/qvP6ZGN3VI">pic.twitter.com/qvP6ZGN3VI</a>&mdash; James Seyffart (@JSeyff) <a href="https://twitter.com/JSeyff/status/1960726566406651920?ref_src=twsrc%5Etfw">August 27, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">The advisoooors have done something</figcaption></figure>



But if it’s true that ETH is the thermometer for where crypto is headed for the next year, year and a half, then the pink line will need to catch up to the purple line, fast.



Updated 8/28/2025 at 10:07 a.m. ET: ETH’s cycle returns and length have been corrected.



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ETH poised to set tempo for the rest of the bull run

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



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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“He that is neither one thing nor the other has no friends.”



— Aesop’s Fables
</blockquote>



When President Reagan announced his Strategic Defense Initiative (SDI) in a televised address from the Oval Office, it was met with derision.



Scientists explained that a plan to shoot down Soviet missiles from space using lasers and particle beams was simply impossible with 1980s technology.



The press sarcastically renamed his plan “Star Wars,” because it sounded as fictional as the soon-to-be-released Return of the Jedi.



Only one constituency took it as seriously as President Reagan: the Soviets.



Soviet scientists doubted their American counterparts could pull it off. But they couldn’t rule it out either, and the Kremlin wasn’t willing to take a chance that they might.



The Soviets saw Reagan’s plan as an existential threat — so much so that it forced them to the negotiating table.



“SDI is a key reason that the Soviets have been willing to negotiate cuts in offensive weapons,”&nbsp; the US Secretary of State <a href="https://www.latimes.com/archives/la-xpm-1986-10-13-mn-3014-story.html">said</a> at the time.



By taking SDI so seriously, the Soviets transformed Reagan’s idea from sci-fi daydream into political reality.



“If the Russians keep appearing alarmed by SDI,” a <a href="https://scholarship.law.nd.edu/cgi/viewcontent.cgi?article=1309&amp;context=jleg&amp;utm_source=chatgpt.com">contemporary study</a> concluded, “it will be politically impossible for Congress to vote it down.”



In other words, the magnitude of the Russian response to SDI made SDI seem more credible to Americans.



Now, something similar may be happening with stablecoins.



In support of the GENIUS Act, President Trump <a href="https://www.whitehouse.gov/fact-sheets/2025/07/fact-sheet-president-donald-j-trump-signs-genius-act-into-law/?utm_source=chatgpt.com">has promised</a> that “stablecoins will play a crucial role in ensuring the continued global dominance of the US dollar as the world’s reserve currency.”



As commonplace as that sentiment has become, there are reasons to be skeptical: The dollar is the world’s reserve currency because of America’s deep capital markets, predictable rule of law, independent central bank and trusted institutions.



If the world were to lose faith in these things, even trillions dollars of demand for US debt wouldn’t keep the dollar afloat for long.&nbsp;



Europe, however, has reacted to the GENIUS Act as if stablecoins are not only a lifeline for the dollar, but an existential threat to the euro.



Last week, the Financial Times <a href="https://www.ft.com/content/8ad60169-d1e5-4d2c-b928-d53d668f0ec6">reported</a> that EU officials are now “rethinking plans for the digital euro” because the GENIUS Act makes stablecoins seem more threatening.&nbsp;



Specifically, EU officials are “considering running a digital euro on a public blockchain such as Ethereum or Solana rather than a private one.”



That is no small change for Europe, where some countries limit cash transactions to just €1,000, few object to the idea of CBDCs and law enforcement has long been prioritized over financial privacy.



But now it’s going to put their sovereign currency on Solana? To mix with memecoins???&nbsp;



Europe must really be worried.



One ECB official recently <a href="https://www.ecb.europa.eu/press/blog/date/2025/html/ecb.blog20250728~e6cb3cf8b5.en.html?utm_source=chatgpt.com">warned</a> that “without a strategic response,” stablecoins could undermine Europe’s banking system, threaten its financial stability and even lead to “geopolitical dependency.”



(Note to Europe: Can we call this strategic response the Stablecoin Defense Initiative? Please???)



The ECB’s most senior official, Christine Lagarde, has similarly <a href="https://www.idnfinancials.com/news/55648/christine-lagarde-stablecoins-threaten-national-sovereignty">warned</a> that if stablecoins are left unchecked, “central banks will struggle to influence the economy through monetary policy.”



If you still need evidence of the power of blockchains, I think we now have it.



Blockchain-based dollars have tied the EU in knots, with monetary officials now trying to figure out a digital euro that’s good enough that people will use it instead of dollar-denominated stablecoins, but not so good that they use it instead of bank deposits.



That’s a tough needle to thread — tougher even than hitting an incoming missile with a laser beam from an orbiting satellite.&nbsp;



The EU’s plans for a CBDC have been half-hearted, including ways to limit their usage, and its stablecoin legislation is similarly hedged, requiring issuers to hold deposits with banks.



The economist Luis Garicano <a href="https://www.mercatus.org/macro-musings/luis-garicano-future-digital-money-and-lessons-learned-history-euro">says</a> that a not-too-good-not-too-bad digital euro is “an unusual design problem” that leaves the ECB in “no man’s land.”



He characterizes the central bank’s position as, “we’re scared of stablecoins, but we don’t want to give a big advantage to a CBDC,” either.&nbsp;&nbsp;



This seems unlikely to end well: A digital euro that’s half-stablecoin, half-CBDC risks the fate of Aesop&#8217;s bat — by trying to be everything to everyone, it will be useful to no one.



But is Europe right to be that worried?



President Trump’s claim that stablecoins will significantly extend the dollar’s dominance sounds no more plausible to me than Reagan’s claims about SDI.



Back then, the scientists were proven right — Reagan’s lasers and particle beams were science fiction.&nbsp;



Even now, 40 years later, President Trump’s plan for a “Golden Dome” is not much more feasible.&nbsp;&nbsp;



But Star Wars still had a real effect.



And it demonstrated that if nothing else, the strength of the reaction to a threat reveals the size of the interests it threatens.



For Europe, we now know, stablecoins are as threatening as lasers from space.



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</ul>

Europe’s monetary Star Wars moment

Ben Strack

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



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Seeing 112 organizations sign their name in support of the same issue is pretty rare. Chances are it’s probably pretty important.&nbsp;



A Wednesday letter drafted by the DeFi Education Fund called on policymakers to “provide robust, nationwide protections for software developers and non-custodial service providers in market structure legislation.”



It was addressed to Sens. Tim Scott and Elizabeth Warren (of the Senate Banking Committee) and Sens. John Boozman and Amy Klobuchar (of the Senate Agriculture Committee). Members of those bodies, which oversee the SEC and CFTC, will have a big role in shaping a final market structure bill.&nbsp;



The latest letter cites Electric Capital data showing the plummeting share of open-source software developers in the US — a decline the President’s Working Group on Digital Asset Markets <a href="https://www.whitehouse.gov/wp-content/uploads/2025/07/Digital-Assets-Report-EO14178.pdf">vowed</a> to reverse.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1846" height="912" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-6.png?w=1024&amp;h=1024" alt="" class="wp-image-106728" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-6.png?w=1846 1846w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-6.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-6.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-6.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-6.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-6.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-6.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-6.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-6.png?w=80 80w" sizes="auto, (max-width: 1846px) 100vw, 1846px" /></figure>



Many attribute this trend to a lack of regulatory certainty. A quote that stood out to me from Solana Policy Institute CEO Miller Whitehouse-Levine:&nbsp;



“Public blockchains are neutral infrastructure just like the internet, roads or bridges. The US doesn’t criminalize the engineers who build our highways when someone uses them to commit a crime.”



The thought goes that Congress must apply that same principle to digital infrastructure builders.



Gavin Zavatone, policy lead at the DeFi Education Fund, told me the Keep Your Coins Act and the Blockchain Regulatory Certainty Act are a solid start. Those were included in the CLARITY Act <a href="https://blockworks.co/news/dc-embraces-defi-genius-clarity-amendments?utm_source=mail.blockworks.com&amp;utm_medium=newsletter&amp;utm_campaign=monday-july-21">passed by the House</a> last month, as well as the Senate Banking Committee’s more recent market structure discussion <a href="https://www.banking.senate.gov/newsroom/majority/scott-lummis-colleagues-release-market-structure-discussion-draft-issue-request-for-information-from-stakeholders">draft</a>.



Those provisions recognize the differences between intermediated finance and decentralized networks, and protect the right to self custody and engage in peer-to-peer transactions. They must remain in the draft legislation, Zavatone explained.&nbsp;



“However, developers need additional robust, nationwide protections from misclassification under securities and commodities laws,” he added.



This is non-negotiable, these organizations are making clear. This is the segment, remember, that put big money toward getting Donald Trump and other pro-crypto policymakers elected.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The whole point of market structure legislation is to give regulatory certainty to the people building in crypto. The bill must protect developers from a return to Biden-era hostility, full stop.<a href="https://twitter.com/fund_defi?ref_src=twsrc%5Etfw">@fund_defi</a> + 114 crypto companies to the Senate: no dev protections, no bill 👇 <a href="https://t.co/sd1PIkuUl3">https://t.co/sd1PIkuUl3</a>&mdash; Jake Chervinsky (@jchervinsky) <a href="https://twitter.com/jchervinsky/status/1960692876892897779?ref_src=twsrc%5Etfw">August 27, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Some of what Chervinsky called Biden-era hostility has been addressed.&nbsp;



You might recall the end of what became known as the <a href="https://blockworks.co/news/defi-broker-rule-saga-resolution-25#">“DeFi broker rule” saga</a> in April. I’m referring to the resolution that nixed an IRS rule requiring “certain decentralized finance industry participants to file and furnish information returns as brokers.”



Not all has been rosy for crypto sector advocates, though. The <a href="https://blockworks.co/news/roman-storm-guilty-one-count">partial verdict</a> against Tornado Cash developer Roman Storm, in my colleague Macauley Peterson’s <a href="https://blockworks.co/news/opinion-tornado-cash-conviction-raises-alarm">words</a>, “dampens hopes of giving DeFi protocols greater access to the US market by sending chills through the entire open‑source community.”



The called-for protections must make explicit that no individual/entity is subject to regulation for simply engaging in activities core to creating and maintaining blockchains, the letter notes. Legislation must also shield developers from being misclassified or prosecuted as operators of money transmitting businesses.



I wrote a week ago about Sen. Scott’s remarks at the Wyoming Blockchain Symposium about the road to passing another crypto bill.



Even after getting the stablecoin-focused GENIUS Act to the finish line, Scott called market structure “a far <a href="https://blockworks.co/news/market-structure-bill-complicated">more complicated</a> piece of legislation.” He added that Sen. Warren, for example, standing in the way of some Democrats who might support it is “a real force to overcome.”



The letter also notes the importance of preserving “historical protections afforded to open-source software development.” This relates to what Interop Labs (initial developer of the Axelar Network) <a href="https://www.axelar.network/blog/senate-banking-rfi-letter">submitted</a> to the Senate Banking Committee earlier this month.



Interop Labs compared today’s blockchain infrastructure to the early internet. Composability and open communications protocols can set the stage for an innovation boom in finance, it argued — like the economic transformation the Transmission Control Protocol/Internet Protocol (TCP/IP) framework unlocked at the turn of the century.&nbsp;



I feel lucky to have grown up as the internet evolved to what it is today. Seeing where the financial system goes from here as an adult will be a bonus.



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congress

A deeper look at the industry’s crypto market structure demands

Symbiotic, the universal staking protocol, has launched a new rewards feature that allows protocols to distribute their own native tokens directly to stakers and node operators.&nbsp;



Dubbed External Rewards, the mechanism is live across eight partner networks.&nbsp;



The feature is a shift in the incentive alignment Symbiotic brings to its modular, economic coordination role in multichain networks. Native token incentives are combined with <a href="https://blockworks.co/tag/symbiotic">Symbiotic</a> Points — presumed to be a precursor to a Symbiotic-specific token — to bootstrap decentralized security and reward participation for networks, without requiring them to build custom staking systems.



“This launch is a pivotal moment,” said Symbiotic co-founder Misha Putiatin. “External rewards are proof that shared security is delivering measurable value — and networks are willing to pay for access.”



Hyperlane, one of the largest partners live at launch, is distributing <a href="https://blockworks.co/price/hyper">HYPER</a> to stakers securing its Warp Routes. Cycle and Tanssi are offering their native tokens as rewards to incentivize capital formation on their networks. <a href="https://blockworks.co/analytics/spark">Spark’s Overdrive</a> campaign adds SPK staking and points to the mix.



Other use cases include Ditto Network, which rewards keepers who enable trustless automation, and Primev, which compensates validators supporting MEV preconfirmation. Kalypso is using Symbiotic to distribute points in its ZK proof marketplace, while Omni has committed $10 million in rewards to SolverNet participants powering its intent-based execution layer.



The shift, according to Symbiotic, is that shared security is becoming a marketplace. Networks are now competing for validator attention through incentive design, and Symbiotic is positioning itself as the coordination layer where that competition unfolds. The approach echoes a similar strategy from <a href="https://blockworks.co/news/babylon-genesis-launch-l1-bitcoin-liquidity">Babylon</a>, which allows emerging chains to bootstrap economic security by letting users stake BTC natively.



Previously, launching a decentralized security model meant building bespoke staking logic. Symbiotic’s approach abstracts that away. Protocols can offer liquid restaked assets (like ETH or LSTs), hybrid models, or their own native tokens, all within a shared staking interface. Points and token rewards from multiple sources are displayed side-by-side, giving contributors a unified view of their rewards across networks.



While EigenLayer’s Permissionless Token Support now lets AVSs (Actively Validated Services) restake with any ERC-20 token — not just ETH or LSTs — broadening the assets that can participate in Ethereum’s shared security pool, Symbiotic’s External Rewards takes that a step further; tokens are not just security collateral, but actively distributed their native token as a reward to stakers and operators.



Both allow restaking to be applied to financial AVSs, <a href="https://blockworks.co/news/cap-labs-eigenlayer">such as Cap Labs’ credit-underwriting</a> use case.



As more modular chains come online and competition for validator capital intensifies, Symbiotic is betting that unified infrastructure, and flexible reward tooling, will differentiate it among the alternatives for attracting capital.



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<li><a href="https://blockworks.co/newsletter/forward-guidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/supply-shock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

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