Fractal Bitcoin

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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Solana is in love with memecoins, and it just got a Valentine’s Day gift.



The Solana memecoin launchpad pump.fun released a mobile app this morning, representing the viral platform’s first major update since it <a href="https://blockworks.co/news/pumpdotfun-suspends-livestream-feature">disabled livestreams</a> in November. It’s further confirmation that apps users can play with on their phones are becoming table stakes for crypto projects, roughly a month after Donald Trump embraced a mobile memecoin app for his <a href="https://blockworks.co/news/trump-memecoins-rock-solana">token launch</a>.



Perhaps true to form for a platform initially dubbed 4chan for memecoins, pump.fun mobile is a bit rough around the edges. The app’s onboarding process is quite smooth — I entered my email, and pump created a crypto wallet for me, courtesy of Privy — but I found it hard to land transactions without manually adjusting my priority fee and slippage.&nbsp;



By the time I got my transaction through on a dog-themed Valentine’s Day memecoin, early buyers had already nuked the chart to go invest in fresher tokens, and I was left holding a big bag of worthless dogwifrose.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcoOFc4I3lceVrDG41Y0T4fCJhJAWlAxf2u3Xli9Ikxt38hE_nYymGIsLoYaodAxSYlQRFmG_y-QuIfr6fRYWc-SIEWObsTw7YxOOe2STHlYVn41eylE982i2sjH731j3Slcg9xHA?key=tuvzs0i8J4eYRURHd5aQRSro" alt=""/><figcaption class="wp-element-caption">Transactions failing as I tried to buy a memecoin called dogwifrose</figcaption></figure>



The app’s early users seem to be facing some of the same struggles. Pump.fun has a 2.5 star rating on Apple’s App Store and a 2.1 star rating on the Google Play Store (as a note, many of these reviews came before today’s public launch).&nbsp;



“Is it my internet or [is] the pumpfun app kinda slow,” one user asked on X.&nbsp;



Pump.fun going mobile doesn’t seem to be driving much new usage on day one. The platform has seen 27,000 token launches today, according to a Dune dashboard, which is currently down from a range of 48,000-54,000 daily token launches earlier this week.&nbsp;



Still, a mobile app is a longer-term play, and longtime readers of Lightspeed know that we have learned better than to bet against pump.fun’s continued success. A little more than a year after first launching, the platform has <a href="https://dune.com/adam_tehc/pumpfun">generated</a> around $548 million in revenue.  My gut tells me that to take the mantle from Moonshot — the <a href="https://blockworks.co/news/jupiter-majority-stake-moonshot">Trump-favored and Jupiter-owned</a> mobile memecoin app — pump.fun will have to fix the mobile transaction landing woes, even if that means giving users slightly worse prices. Retail users hoping to hit a 100x trade likely wouldn’t be too rankled by a few extra percentage points of slippage if that means their transactions are actually making it to the blockchain.



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Pump.fun releases mobile app

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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President Trump yesterday said his team is off to the races with reciprocal tariffs. Advisers have been instructed to come up with new tariff levels that consider fees and taxes placed on US exports.&nbsp;



The timeline is a bit uncertain. But Commerce Secretary nominee <a href="https://blockworks.co/news/trump-nominates-commerce-dept-leader">Howard Lutnick</a> said the studies may be completed by early April. Lutnick, if confirmed, will work with the office of the US Trade Representative on establishing the new levies.&nbsp;



The import taxes, Trump said, will be designed on a country-by-country basis in order to offset tariffs on US exports and non-tariffs barriers, like exchange rates and value-added taxes.&nbsp;



Markets took Trump’s announcement well, a sign that his comments were not as bad as investors had feared, or at the very least it’s going to take several weeks for tariffs to be implemented. The S&amp;P 500 and Nasdaq Composite both reversed midway through Thursday’s session to close 1% and 1.3% higher, respectively.&nbsp;



The uncertainty around the nature of the tariffs and when they may start is going to leave investors uneasy. But generally, we expect talk of tariffs — and therefore market impact — to die down a bit over the few weeks while advisers conduct their trade studies.&nbsp;



In the meantime, it’s primarily going to be data moving markets. Next week we’ll get some key manufacturing numbers as well as the minutes from the Fed’s FOMC meeting last month, both of which will be useful in determining how long the interest rate-cutting cycle may be paused.



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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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Reciprocal tariffs may be coming, but markets don’t care much just yet 

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 Coinbase reports its quarterly results, crypto and TradFi investors alike tend to tune in.&nbsp;



COIN, after all, is, in the words of Oppenheimer analysts, a gateway for customers to access Web3 given its “leading and focused position in crypto, which benefits the company as onchain becomes the new online.”



And it’s public — unlike some others <a href="https://blockworks.co/news/crypto-ipos-bringing-back-retail">waiting their turn</a>.&nbsp;



Onto the results from yesterday: The crypto exchange’s $2.2 billion of net revenue last quarter was up 143% year over year.



That was $305 million above Oppenheimer analysts’ estimate.



Transaction revenue was nearly $1.6 billion, a 172% increase from Q3. So-called subscription and services revenue grew 15% over that span, to $641 million.



The biggest surprise, Oppenheimer’s Owen Lau told me, was the higher-than-expected participation from the retail segment — showing such users are “gradually coming back.” See, for example, the “consumer” line in the chart below.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeWr-jn1FRkgNWITopySCbliiuEXeyLGEJSWnWOmv9gdlroXdqEw0R_XCJQdmmEZHpPdsSsJW4bk9D_HbhZ7i7QxyXKv_UjB9miz4OvdA6cjqNYeR3a2EP_kUliQ70dkU03JCjVeQ?key=pR55TriNLz_IB-A4BWeYJbgp" alt=""/></figure>



Sure, this was during a quarter where <a href="https://blockworks.co/news/bitcoin-all-time-high">bitcoin</a> and a number of <a href="https://blockworks.co/news/solana-sets-all-time-high-of-263">other</a> crypto assets hit all-time highs following the <a href="https://blockworks.co/news/donald-trump-declared-president-2024-election">victory</a> of Donald Trump and <a href="https://blockworks.co/news/crypto-friendly-congress-steps-into-power">crypto-friendly</a> Congressional candidates.&nbsp;



But even as BTC has remained range-bound in recent weeks below its peak, Coinbase’s early 2025 numbers appear to be strong.



Its 2025 transaction revenue stood at $750 million as of Feb. 11, the company said. Coinbase is forecasting Q1 subscription and services revenue to slightly increase to between $685 million and $765 million.



On that point, Morningstar analyst Michael Miller said his eye will be on the exchange’s USDC revenue in Q1 given the stablecoin recently hitting an all-time high market cap.&nbsp;&nbsp;



“I’ll be curious to see what a full quarter will look like at its scale and if USDC continues to take market share away from other stablecoins,” Miller told me.



COIN’s price was around $278 at 2 pm ET — down nearly 7% on the day.&nbsp;



Oppenheimer’s price target for the stock is $388, while Miller believes the shares are “overvalued” as, post-election, “the market is pricing in too much growth.”



You might recall one of Bitwise’s 10 predictions for 2025 was <a href="https://blockworks.co/news/2025-crypto-industry-predictions">Coinbase surpassing Charles Schwab</a> as the world’s most valuable brokerage. The asset manager said it expects its stock will top $700 per share, citing continued growth in its stablecoin business, L2 Base, and staking and custody services.&nbsp;&nbsp;



Bitwise senior investment strategist Juan Leon has this November 2023 tweet pinned:



<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">How can <a href="https://twitter.com/search?q=%24COIN&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$COIN</a> get to $1,000 in this <a href="https://twitter.com/hashtag/crypto?src=hash&amp;ref_src=twsrc%5Etfw">#crypto</a> cycle? • 2023 Net Revenue Estimate: $2.6B • 2025 Net Revenue Estimate: $14.5B • 2023 Monthly Transacting Users Estimate: 8.5M • 2025 Monthly Transacting Users Estimate: 32M • 2023 Assets on Platform Estimate: $130B • 2025…&mdash; Juan Leon (@singularity7x) <a href="https://twitter.com/singularity7x/status/1729553963677053106?ref_src=twsrc%5Etfw">November 28, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Another catalyst to watch for, Lau said, is COIN’s possible inclusion in the S&amp;P 500.&nbsp;



And then, you know, all the potential regulatory tailwinds that come from having a pro-crypto president, Congress and <a href="https://blockworks.co/news/sec-chair-nominee-crypto-past">SEC</a>. Coinbase CEO Brian Armstrong said “it’s hard to overstate the significance of this change” given it is likely to pressure increased crypto adoption worldwide.&nbsp;



“Up to 10% of global GDP could be running on crypto rails by the end of this decade,” Armstrong said on Thursday’s earnings call — noting Coinbase will be “the preferred partner” due to its “trusted and scalable infrastructure with the longest track record.”



The company said it’s chatting with regulators and legislators to help shape US crypto regulation.



The chance of a stablecoin bill and digital asset market structure bill passing in the 119th Congress? Compass Point’s Ed Groshans, in a Friday note, said 75% and 60%, respectively.



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Coinbase Q4 takeaways, updated outlook

Donovan Choy

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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The permissionless nature of crypto means anyone with a computer and internet connection can have a bag. That makes it really hard to value tokens.



Price-to-sales multiples of L1s like Cardano or Ripple trade at absurd four to five figure ranges, far above actual value-generating L1s like Solana (32x) and Ethereum (227x).



Then there are tokens like OM (who?) that are clocking in the highest price gains of 47.6% since the industry’s biggest liquidation earlier this month.



<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 best advice I can give crypto founders right now is to find the <a href="https://twitter.com/search?q=%24OM&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$OM</a> market maker and hire them. <a href="https://t.co/0NuazFN4N7">pic.twitter.com/0NuazFN4N7</a>&mdash; Lai Yuen (Former .eth) (@0xlaiyuen) <a href="https://twitter.com/0xlaiyuen/status/1888823059584602544?ref_src=twsrc%5Etfw">February 10, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



No rational explanation exists. It’s all narrative and “speculative premiums.”



But is that going to stop investors from trying to formally value tokens? No, because there is a lot of money to be made from unearthing the gems.&nbsp;



In the short history of this industry, investors have <a href="https://youtu.be/aCHY9iPS8sI">tried to value</a> L1s with a variety of now-abandoned tools like the stock-to-flow model, total-value-locked to market cap ratios or proof-of-stake staking cash flow yields.



The latest shift in investor sentiment around token valuations is doubling down on an emphasis on the importance of fundamentals.



Maelstrom fund <a href="https://x.com/MaelstromFund/status/1889706122107338761">points</a> to Vertex perps DEX, arguing that markets are “underestimating” the DEX’s growth and that it “should” be trading at a 200% to 300% greater valuation in line with its peers.



1kxnetwork fund’s recently <a href="https://x.com/pet3rpan_/status/1887140527310864481">published</a> Ronin chain thesis points to the gaming chain’s deflationary burn of SLP, plus rising daily active users and breakout revenue-generating game Pixels ($20.7 million in 2024).



Applications like Raydium, Hyperliquid, Metaplex, GEODNET, and Jupiter are all trading at reasonably “rational” P/S ratios that are based on consistent cash flows and more measurable growth potential.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdXdgcWvGoqtpq_ESTlfJ9JukSDa8GGFbvuPles2tYtLJlUgD_lU5BXqQ7qTOsoEK1zrNsE51XT16BW8vVVmHlV5yCo2UMX3Y_88DSo9Sd4DGc5Bb3GJcyOc5JsV68WB6BGnEk-Qg?key=ttbwXyG5YLiXMxIfjc4w1cbH" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://x.com/artemis/status/1890162713244102993">Artemis</a></figcaption></figure>



Many of these projects are also engaging in huge token buybacks, often perceived as a “fundamentals-driven” strategy to improve the attractiveness of price multiples.



Jupiter’s token <a href="https://x.com/JupiterExchange/status/1890089764218630253">buyback</a> program may quite possibly be the largest (in USD terms) with a commitment of 50% protocol fees. That comes up to a buyback of ~9.4% of JUP’s total circulating supply, based on this rough <a href="https://x.com/alpha_pls/status/1883496465160458659">estimate</a>.



Supporting the point that “fundamentals are back” is also the ugly reality of declining L1/L2 valuations.



The fabled “Layer-1 premium” is slowly evaporating. L1s in the previous cycle like Starknet raised at eye-popping valuations of $8 billion, while newer L1s command less than half of those valuations (Berachain $420 million, Story Protocol $2.25 billion, Celestia $3.5 billion).



The <a href="https://x.com/Febers4/status/1889671466041614568">down-only price action</a> of most L1s/L2s in the last 12 months will likely grind future valuation numbers down even further.



Application revenues are also beginning to outpace the revenues of the underlying L1 and L2 protocols, Blockworks’ <a href="https://x.com/smyyguy/status/1890088127617987066">Dan Smith</a> points out.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXckuTfvYMVthDMuaxyo0WxSxozxN-4YZwPobsaPPaUmQcT4K2xIruQAn44yJA8BoUb5E6Zfje61ASi_i5aQkpFxQgaNovSof5RToq6Ni6pKsbnVvOBvhcSZ84MaeImh33tyn1u0?key=ttbwXyG5YLiXMxIfjc4w1cbH" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.blockworksresearch.com/analytics/l1">Blockworks Research</a></figcaption></figure>



This all hinges on the growing disdain of the industry’s <a href="https://blockworks.co/news/crypto-infrastructure-bloat">infrastructure bloat</a>. The fat protocol thesis is no longer, now is the era of <a href="https://x.com/jon_charb/status/1890210333714960787?s=19">the fat app thesis</a>.



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Crypto fundamentals are back

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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You don’t need to understand it to use it.&nbsp;



That’s Empire co-host Santiago Santos’ ideal situation in building Inversion Chain.&nbsp;



Confused? Think about the 1990s. Businesses used “.com” and — outside of the somewhat ridiculous Homes.com commercial we saw during the Super Bowl — dot com isn’t really used anymore. If you don’t believe me — or Santos — bring it up to your local Gen Zer and you’ll quickly see how out of tune it is.&nbsp;



Point being that the internet is just a part of doing business nowadays. And for Santos, crypto or crypto rails are following in the same path. He doesn’t need to market Inversion Chain to the masses. They won’t know of it unless they pay attention during transactions with potential projects like Helium.&nbsp;



But let me back up: For you lot, my goal is to ensure you understand it — even if you don’t need to.&nbsp;



Inversion Chain was announced by Santos this week, though he’s more or less been thinking about it since he left ParaFi over four years ago. Seven months ago, he started planning and now he’s hiring.



<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">It’s been inspiring seeing the reception to Inversion over the last 24 hours. Fired up So far almost everyone has rallied behind the vision and mission: build the best user acquisition channel for crypto and accelerate mainstream adoption. The mission transcends maximalism at…&mdash; Santiago R Santos (@santiagoroel) <a href="https://twitter.com/santiagoroel/status/1889905071888146727?ref_src=twsrc%5Etfw">February 13, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



There isn’t a set timeline for launch just yet, though Santos told me the goal is “as soon as possible.”&nbsp;



The L1 will be built on Avalanche because, as Santos noted, it’s one of the only places to truly customize the chain for specific use cases and support that covers the gambit.&nbsp;



There are added bonuses, like permissioning your network at the validator, privacy, EVM compatibility and native interoperability as well.



Making his own chain was the clear path for Santos after looking around.



“Having our own chain lets us purposefully build a stack exactly to the specs of the businesses that we acquire and really allows us to go tailor-made,” he explained. “I believe in a multi-chain world.”



Right now, we’re not keeping users. As Santos pointed out to me, folks are coming on chain through an exchange with some sort of speculation in mind — and that’s not totally a bad thing, given that there’ll be room for speculation in crypto (just like there’s room for speculation in stocks), but the goal is to retain users and show them to use cases crypto has to offer.&nbsp;



Which is where Santos hopes we end up, with people not having to think twice about the crypto of it all.&nbsp;



“I think we’re selling ourselves short as an industry, and we can lead. The focus is very specific: You lead with a core service like mobile and FinTech — and when I say FinTech, it really is a stablecoin,” Santos explained.&nbsp;



“My singular focus is to create an onboarding acquisition channel for the next 100, 200, 500 million users that will come onchain.”



Sounds pretty bullish to me. Something Santos explained to co-host Jason Yanowitz on this <a href="https://blockworks.co/podcast/empire/d5b1522c-eaa5-11ef-a4ec-5ff0abfd24ce">morning’s Empire Round Up</a> — was his idea of building Berkshire on-chain.



Santos explained that the analogy “would be what AOL did at the peak of the .com bubble. The stock was quite inflated, so what did they do? They go and acquire Time Warner, a real business,” he said.



“And I think the role [of] the foundations is to really accelerate the adoption of crypto, the uptake. I don&#8217;t think they&#8217;re being strategic enough. The opportunity here is to use, eventually, that Treasury value in a very strategic manner to go and acquire businesses and anchor them to the chain and activate that user base to come on chain,” he continued.&nbsp;



If executed properly, then Santos thinks that the flywheel for the economic activity on that chain is one where you&#8217;re going out and continuously acquiring more businesses, bringing on more users, and that generates” more and more activity.&nbsp;



Bringing it back to Berkshire: For Santos it’s creating an operable base from which you can go and explore other ways to not only be profitable but also not be front and center for the userbase.&nbsp;



If you’re not following along, think about how Warren Buffett does things (and put aside your thoughts about him from an anti-crypto perspective). He goes and finds potentially successful investments but it’s not like we necessarily interact with Berkshire itself on any given day as customers.&nbsp;



They exist in the background, as necessary as your shadow.



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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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Exclusive: Inversion Chain’s plan to be the Berkshire of crypto

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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Outside of L1s, this was also a big week for token announcements.&nbsp;



OpenSea <a href="https://blockworks.co/news/opensea-announces-token-and-open-beta">teased</a> SEA and a new platform, and Doodle’s <a href="https://www.theblock.co/post/340760/nft-brand-doodles-to-launch-solana-based-token-called-dood">plans</a> to launch its own token.&nbsp;



Does it mean that NFTs are back? Eh. But for <a href="https://thedrop.beehiiv.com/subscribe">The Drop’s</a> Kate Irwin, it’s a vibes booster for people, one that’s perhaps necessary right now.



(ICYMI: The Drop is our newest newsletter, and I’ve been following Irwin’s reporting in Web3 and gaming for a few years now.)



She and I chatted about the tokens and OpenSea’s OS2 and she explained that there’s another part to this: XP, which is not a token but is earnable and is “core” to the OS2 rewards program.&nbsp;



“There&#8217;s a lot of other moving pieces as well, besides just the token, which is exciting, because then it&#8217;s not a memecoin. It&#8217;s actually a utility token that has a place in the OpenSea ecosystem,” she added.&nbsp;



Phew. Nice to have an announcement not focused on memecoins.



My big thing is whether or not this comes a little too late. When Irwin and I chatted this through, she made the sage point that this could be simply because OpenSea was worried about the potential regulatory issues that could arise (they were served with a <a href="https://blockworks.co/news/sec-issues-wells-notice-opensea-nfts">Wells notice after all</a>) and now, well, that’s no longer a problem.



But, unfortunately for OpenSea, they are following in Magic Eden’s footsteps after it <a href="https://blockworks.co/news/magic-eden-airdrops-me-token">launched a token first</a>. It, notably, hasn’t dulled the excitement around OS2 or SEA though.  This could also be the beginning of a new wave of tokens, Irwin noted — especially because there is an appetite for tokens that have actual utility and not just speculation.



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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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OpenSea and Doodle token teasers are a potential vibes booster for crypto

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 it comes to crypto adoption, we’ve repeatedly heard how much room there is to run.&nbsp;



If you took a liquor shot every time someone said “early innings” at a crypto conference, you’d have trouble walking a straight line out of there. The need for “more education” is another phrase we hear ad nauseam.



But a recent CoinShares survey of financial advisers confirmed some of this, with specifics. We referenced one stat from it in yesterday’s edition (79% saying their role is shifting to risk management as clients invest in crypto on their own).



There are a few more worth pointing to. CoinShares CEO Jean-Marie Mognetti said he was perhaps most struck by a belief 62% of advisers hold: Recommending bitcoin doesn’t align with their obligation to act in their client’s best interest.



“This highlights a significant perception gap between regulatory approval, client demand and advisers&#8217; fiduciary concerns,” he told me.&nbsp;



Then there was the 55% who said recommending digital assets would harm their reputation with colleagues. This, Mognetti explained, “underscores the cultural and institutional barriers that still exist within traditional financial circles.”



It wasn’t long ago that <a href="https://blockworks.co/news/matt-hougan-crypto-reputational-risk">Bitwise CIO Matt Hougan argued</a> Trump’s election win and a <a href="https://blockworks.co/news/crypto-friendly-congress-steps-into-power">pro-crypto Congress</a> “removes the last vestige of reputational risk from crypto.”



Not everyone feels that way apparently, even with 85% of the advisers that CoinShares surveyed saying their organization’s sentiment toward crypto (and how they’re advising clients) changed since the election.



Another fascinating finding: Gen Z and Millennial advisers are more likely to think recommending speculative assets doesn’t align with their fiduciary duty — and to say that “threats outpace innovation.”



While this younger demographic is often more open to digital assets, they also seem to face “stronger resistance from more established industry norms and colleagues,” Mognetti said.



Back to the education point: Though 71% say their firm is educating them on crypto, 84% are likely to pay for such education (mostly via online courses and conferences).



Also, 43% of advisers cite crypto platforms publishing biased information as a barrier. So maybe read Forward Guidance instead.



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Advisers on crypto: Takeaways from another survey

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Robotics and crowdsourced data startup Frodobots has raised $6 million in seed funding to create BitRobot, which will be a Solana-based embodied AI research network.



BitRobot will aim to connect different subgroups in robotics research using a shared token and network to solve resource allocation and data scarcity. Protocol VC led the funding round, which also drew participation from Big Brain Holdings, Solana Ventures, Virtuals Protocol and Solana co-founders Anatoly Yakovenko and Raj Gokal, among others. Frodobots previously also raised $2 million in pre-seed funding.



Frodobots started out building sidewalk robots that slowly trawled global city streets to build giant crowdsourced datasets including things like audio, video and GPS data. The project aims to add token incentivization to become part of the decentralized physical infrastructure (DePIN) movement.&nbsp;



Over the past several months, however, Frodobots’ ambitions have widened: The lab’s co-founder Michael Chung Yeung Cho said the goal is now to launch BitRobot and “solve embodied AI.” Frodobots will be a subnet in the BitRobot network.



“If we were to be successful, we would be on par with the Teslas and the DeepMinds of the world,” Cho said, adding that the new project would help generate a “series of really performant foundational robotics models that can be deployed across all kinds of robots.”



The problem, Cho and his co-founder Jonathan Victor explained, is that rich robotics data is scarce, and robot developers are working on subsets of a bigger shared problem. Large language models have the entire internet to train on, Victor said, but most robotics businesses outside of Tesla’s self-driving unit are “starting effectively from zero.”



That’s partly because while a new AI model, for instance, could be benchmarked digitally in an hour, robotics faces the bottleneck of having to test products in the real world. You can’t know if a self-driving car really works until you drive it for a trillion miles, Cho said.



BitRobot will create a shared network of “subnets” so that pooled resources and data can more efficiently create robotics data. Humans, fleets of humanoid robots and Frodobots’ sidewalk bots are example subnets, according to a document shared with Blockworks.



With BitRobot, massive amounts of resources could be shifted between researchers based on need, and a DePIN token reward system could align the economic incentives. There is also cross-embodiment learning, which suggests that AI models trained on one type of robot — such as a robotic arm — can effectively transfer learned skills to entirely different robotic systems, like drones or wheeled robots. This works because many robotic tasks share core design needs.



A white paper containing more details on BitRobot, as well as the project’s tokenomics, will be released in a few weeks.



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Frodobots raises $6M for Solana-based robotics network

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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President Trump’s <a href="https://blockworks.co/news/trump-appoints-crypto-council-head">crypto advisory council</a>, established by <a href="https://blockworks.co/news/trump-vs-biden-crypto-orders">executive order</a> during his first week in office, may not be shaping up to be exactly what the industry had envisioned.&nbsp;



<a href="https://unchainedcrypto.com/trump-is-having-second-thoughts-about-his-crypto-council/">Unchained</a> reported yesterday that the council may be scrapped altogether. In its place, according to unnamed sources, the Trump team would organize “policy summits” to discuss legislation with industry stakeholders.&nbsp;



I’ve also heard that policy summits are on the table. Two other sources familiar with the matter told me that if there’s an advisory council at all, it would likely be made up of government employees rather than industry executives.&nbsp;



It’s no secret that a lot of people wanted roles on that council. The <a href="https://nypost.com/2025/02/04/business/everyone-in-crypto-begging-for-a-spot-on-trump-advisory-council/">NY Post</a> reported there were at one point two dozen seats up for grabs, although I haven’t been able to confirm that figure.&nbsp;



What I’m hearing: Trump’s team is trying to avoid having too many cooks in the kitchen.&nbsp;



On the one hand, they’re in a tough spot. They want to avoid alienating certain sections of the industry —&nbsp;many of which were big donors during the campaign — but the act of bringing everyone together will lead to inter-industry conflict. Enter the “policy summit” pitch.&nbsp;



It wouldn’t be unprecedented. The House Financial Services GOP retreat earlier this month featured a 45-minute presentation and Q&amp;A with a16z’s Chris Dixon, according to people familiar. Industry execs and lobbyists are on the Hill all the time trying to inform policy.&nbsp;



We’ll be monitoring the council situation. You just monitor your inbox.



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The advisory council that may not be 

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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A lot has changed in the six months since the Fed decided to <a href="https://blockworks.co/news/treasury-yields-on-the-rise">cut rates</a>.&nbsp;



If we rewind back to September, things looked very different:



<ul class="wp-block-list">
<li>The unemployment rate was looking weak and had surged to 4.2%, triggering the Sahm rule and causing a cacophony of concerns that a recession was imminent.</li>
</ul>



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeipYKDPTaXosKM0XXDfYUqA41i93sp7tG6ObRX2wJ_QF5NUsALsPsBaAKJD57g62peXw8nZHVIQZ3xkQQxqQtPx7JVlrkzi0JAmCgGXZ6I7KDG2WBlaeMJLt4cHSv4ljRvgiFcLg?key=kjWSye0LKEZ2ZNu3yDR95a1x" alt=""/></figure>



<ul class="wp-block-list">
<li>At the same time, inflation looked like it was close enough to the Fed’s 2% target that it could forego concerns about stable prices and hone in on supporting the labor market by beginning to cut the fed funds rate.</li>
</ul>



With this balance in mind, the Fed went ahead and cut 100 basis points in that time up until today:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc1sVeB-n2hGRryeMExy1pZqn4ySn4OY9HFmQvyIVaKX2eajxlZGFQOBBttrSTGrpUKVoFi_FEmuIHZLiTj4YJlPBZBrmKeTuQOecJgwZY87F4U7q-f2CiGxUrh6uEi532wVUqYgQ?key=kjWSye0LKEZ2ZNu3yDR95a1x" alt=""/></figure>



During these months, it became easy to be complacent that we were set into an easing cycle and it was time to ride that wave.&nbsp;



However, coming back to the present day, the environment could not be more different. For all intents and purposes, the cutting cycle is over.&nbsp;



Looking at the labor market, it has improved significantly. Comparing the unemployment rate to the Fed’s forecast from only December, we can see that it has come down significantly.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdW_7-hJvlEqvj-K5AnU352EjtKR3If4MOp0FgDluNBoTL1JuQdlXNa0nMh43FrTAMUtEDM9Rdpwy3EdZoVsUjqxdMe3wdOhq_jc3vlBbNAIriv54O0mVZGbW90t7LmFoCzTs9eIg?key=kjWSye0LKEZ2ZNu3yDR95a1x" alt=""/></figure>



Therefore, if one is looking to the employment side of the Fed’s dual mandate, there is no reason whatsoever for it to be easing at this juncture.&nbsp;



And so, the onus for any marginal easing from the Fed falls to the inflation side of the dual mandate.&nbsp;



This week we received the <a href="https://blockworks.co/news/first-2025-inflation-print">CPI print for January</a>, and it was a hot one by all accounts.



Core CPI came in at 0.4%, a notable jump higher from recent data.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc8eIJo23vwtJMmSvPcTTkLRTTCZaGg4de6DrhwQJVvCyqyLoJhcLuuEkp_uHYYAVvTjUYJ7PQQ5EkENBSAAyV2otAAh3WVAffqmfHmnRRZTne4QXJBpRRuQUeffHxjkJM0zGqx?key=kjWSye0LKEZ2ZNu3yDR95a1x" alt=""/></figure>



The theme of the inflation story over the last two years has been goods disinflating while services remain stubbornly high. As seen in the chart below, the major issue today is that goods are inflating again and services are refusing to take the baton of disinflation: <img loading="lazy" decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdtxrTxJjfxrbmG56fLSEwTL9_EHvXUHxhikS5eknV3_Q0FGSOSSlUZPvWp3MSrC4mL6eJfBqupk4Js3GEbEPiPTVe5ImHmtAJNKQX1HIE0tnCV_UREoq4pziKYS9wdKBAlXvxv1A?key=kjWSye0LKEZ2ZNu3yDR95a1x" width="480" height="480">



The simple takeaway from this granular data is that inflation is remaining above the Fed’s 2% target and bouncing around the 3-4% level. As long as this is occurring, there’s little reason for the Fed to cut rates when both sides of its dual mandate are seeing such strength.&nbsp;



Putting it all together, we are now seeing a rate-cutting cycle that is seemingly over. As it stands today, the market has moved from expecting a rate cut in March to the end of this year instead:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXedzUg08_FjkBwZLD8-p1EyH3IuLE4ciUWcdhrMwBmOLPkyuKE1KR5Wg-Qw73q-JhGHpwZgMWcHvStVVIsUbJdby61YDwgcRBOnJL8nhYkP8mPUMaVBoklfRc_-DVE5osLRv7_mbQ?key=kjWSye0LKEZ2ZNu3yDR95a1x" alt=""/></figure>



If the data continues to come in above the Fed’s targets, it’s reasonable to think that these cuts will continue to get pushed out until they no longer exist.



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The cutting cycle is dead. Long live the cutting cycle

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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When I interview Web3 founders, I like to ask one question: “Which thinkers in history inspire you?”



One name invariably comes up more than any other: Friedrich Hayek.



Aave’s Stani Kulechov, Base’s Jesse Powell and many more said the same.



<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">Reality: Ethereum is the most capitalistic network.&mdash; Stani.eth (@StaniKulechov) <a href="https://twitter.com/StaniKulechov/status/1889956363255816280?ref_src=twsrc%5Etfw">February 13, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Polymarket founder Shayne Coplan even mandates Hayek’s famous essay “The Use of Knowledge in Society” as compulsory reading for employees, according to <a href="https://www.forbes.com/sites/ninabambysheva/2024/07/31/meet-the-26-year-old-building-a-billion-dollar-prediction-marketplace/">Forbes</a>.



I don’t know what Vitalik would say. But given his close association with many George Mason scholars — like <a href="https://marginalrevolution.com/marginalrevolution/2018/07/conversation-vitalik-buterin.html">Tyler Cowen</a> and <a href="https://vitalik.eth.limo/general/2024/11/09/infofinance.html">Robin Hanson</a> — it wouldn’t be a stretch to consider him something of a Hayekian (George Mason is a university renowned for its Hayekian scholarship).



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfxrXmdlk1vz3kHP39bW-BQRudp_5TkkqOowhNvb2xCP1Yt9ywC4dey3_J0Y3-aTflHtwFh_Mwd8B6XXZAvXmMYscsCnLe80yxrURAzY2JKxV5qXICMuAT7FzvU_1vA6JVApoFFrQ?key=wRDchsL9xz3IML1H0rj2VGRs" alt=""/></figure>



For the uninitiated, Hayek was a 1974 Nobel Laureate and a pioneer of the Austrian School of Economics, a school of thought closely associated with free market libertarianism and early Bitcoin thinking.



Hayek’s key insight was that markets work best when individuals can freely act on their local knowledge.&nbsp;



For individuals to do so requires economic certainty provided by a rule of law, a free price system, robust property rights and a profit-loss calculus that is not distorted by state regulation.



When this “recipe” of institutions is in place, the outcome is market innovation.



These ideas are consistently applied in crypto. For example:



<ul class="wp-block-list">
<li>The idea of immutable smart contracts comes as close to having sacrosanct property rights in a rule of law. In the real world, laws are subject to constant rent-seeking pressures to change.</li>



<li>Capital markets are permissionless. Anyone can write a smart contract and issue assets without approval. In the real world, regulators give approval.</li>



<li>Anyone can launch an unsustainable liquidity mining campaign with their token, but the unsustainability inevitably shows up in falling prices in a free price system. In the real world, prices are distorted by regulations that benefit incumbents like tariffs.</li>



<li>Ethereum’s open source culture enables the endless code-forking of protocols with incremental improvements and the composable nature of DeFi. This is closely related to Hayek’s ideas around “<a href="https://en.wikipedia.org/wiki/Spontaneous_order">spontaneous orders</a>” (and how market competition acts as a knowledge “<a href="https://www.adamsmithworks.org/documents/garret-edwards-competition-discovery-procedure">discovery procedure</a>”). In the real world, intellectual property laws don’t allow for this.</li>
</ul>



The institutional design of the Ethereum protocol (or any other blockchain for that matter) is the furthest thing from “communism,” where market processes are controlled from the top-down and where people are outlawed from acting on individual information.



Even Ripple cannot unilaterally inflate the total token supply of XRP. That’s the rule of law (immutable smart contracts) at work.



Ethereum <a href="https://blockworks.co/news/ethereum-foundation-governance-debate">critics</a> <a href="https://x.com/ameensol/status/1889758396166926527">complain</a> that the “culture” of Ethereum is left-leaning. They point to the Ethereum Foundation or Gitcoin’s initiatives on “public goods” funding.



But these public goods are crowdsourced by private funding. No taxpayers were fleeced.



Gitcoin’s quadratic funding mechanism matches more central funds based on the amount of individual contributor funding.



That is a blatantly market-oriented idea. It’s a fundraising process that works best when markets signal they want it — plus it’s all onchain (property rights).



Contrary to popular belief, capitalism is not about unbridled greed. Neither is it against communal public goods. Both exist in all political systems.



Capitalism is a <a href="https://www.amazon.sg/dp/0199219206?ref_=mr_referred_us_sg_sg">liberal archipelago</a>. You’re free to work on Wall Street, or go live in a socialist commune.



Therein lies the beauty of the crypto industry. No one cares what your political identity is. You can be a raging Milton Friedman acolyte or a diehard 19th century Trotskyist.



But no matter which political tribe you preach, everyone has to abide by the blockchain’s rule of law.



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Ethereum’s political identity is on trial (again)

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I’m going to be honest with y’all: I’ve been down bad with the flu this week but from where I’m sitting, CT’s vibes are still off.&nbsp;



And, unfortunately, Bitwise’s crypto asset sentiment index is <a href="https://experts.bitwiseinvestments.com/cio-memos/the-most-important-chart-in-crypto-right-now?_gl=1*aqblej*_gcl_au*MTE4ODUxNjMzMi4xNzMxOTQwODUy&amp;_ga=2.20635067.245398238.1739373176-805437865.1731940852">echoing</a> the same vibes we’ve picked up on.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXewFS4h-8fK5B2_fdbOmTe7sh4_6sPtgkGCtXqAgauI23X5GJxfdPxveWCs48a8Mb4Rzr2spA4vtr5nyXr2Ig95pEQJ4LcIxdZywLuxGypdGhYqqLgyUrT-GbOGyzJMm1g9QChDlA?key=JOAUs5lZRL4PgoRC0B8h7JAu" alt=""/></figure>



Everyone’s left wondering — unless you’re David — where altcoin season is and if it’s even possible at this point. (If you didn’t <a href="https://blockworks.co/news/altcoin-season-may-already-be-here">read yesterday’s Empire</a>, then you’re in for a somewhat optimistic surprise about altcoin season’s potential.)



Is this potentially a sign that we’re still early in the cycle? Perhaps, given that historically altcoin season comes at the tail end of the bull market, but we can’t ignore that things are different this time around.&nbsp;



For Bybit, one potential difference is the institutional entry because they’ve changed the way that capital has traditionally flown. And, to add to that, Bitwise’s Matt Hougan said that the institutional sentiment in crypto is “the most bullish I’ve ever seen.”



But those institutional investors? They’re not going to swap out their bitcoin holdings for altcoins even with a friendlier regulatory environment, which could explain some of the down bad energy we’re seeing.



Though Bybit’s not willing to throw in the towel just yet, with analysts <a href="https://learn.bybit.com/crypto-insight/bybit-x-block-scholes-institution-report-altcoin-rotation-why-this-time-is-different/">noting</a> that “robust stablecoin supply growth and record exchange volumes point to ongoing retail engagement, suggesting that while the script may have changed, an altseason-like frenzy could yet materialize if the right confluence of events aligns.”



This could be likely, especially when looking at Robinhood’s <a href="https://investors.robinhood.com/static-files/42ec63c5-2eb5-4d25-8030-18da1827ce06">earnings</a> from last night. Revenue from crypto trading in its last quarter surged 700%.&nbsp;



I obviously have to caveat that this data is from the prior quarter before we saw the market selloff, but I don’t think that actually makes a huge difference here.&nbsp;



The point remains that retail has come running back.



Vibes are one thing, but data is another and I’m more inclined to lean into the data personally.



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Institutional investors could be blocking the path for altcoin season

Kate Irwin

OpenSea has finally confirmed the launch of a token, dubbed SEA, via the OpenSea Foundation.&nbsp;



OpenSea is also releasing its OS2 open beta, the next iteration of its token marketplace, which will include memecoins as well as other tokens in addition to NFTs, the company announced Thursday.



The SEA token will be usable on OS2 and is intended to “recognize active and loyal users” as well as early adopters. OpenSea Foundation General Manager James Hu said the SEA token will support the Seaport Protocol and is a “major step” to support the OpenSea community.



SEA’s release date has not yet been announced, however.



OS2 is intended to be “an expansion toward fun-filled trading,” an OpenSea spokesperson told me. Before the open beta, OpenSea had an OS2 waitlist set up where users could join the private beta waitlist by connecting their wallet or entering their email address. OpenSea Genesis NFT holders also <a href="https://x.com/opensea/status/1883908501380153742">had access</a> to the private beta if they held the NFT on Jan. 26.&nbsp;



The OS2 private beta offered two main visual modes: Collector Mode or Pro Mode.&nbsp;



Collector Mode presents a graphic-forward, colorful look that lets you see NFT art details, while Pro Mode shows small images with a data-heavy focus as well as analytics that show charts upfront with data over time.The open beta will also be for casual collectors and advanced users, Stephanie Rheingold, OpenSea director of marketing and communications, confirmed via email.&nbsp;



Easy cross-chain purchases, aggregated marketplace listings, liquidity aggregators, live analytics and an improved search are just a few of OS2’s features that set it apart from its predecessor.



OS2 also has XP — gamerspeak for experience points — which can be earned by listing NFTs for sale and making collection-wide offers. XP is not a cryptocurrency or financial asset. It’s a non-transferable rewards feature, Rheingold said.



OpenSea confirmed the SEA token is coming just days after a few Crypto Twitter users shared links to an “OpenSea Foundation” website. The site, which no longer loads at the time of writing, showed a page to connect a crypto wallet with an image of a shipping container and the words: “Get ready to set sail,” according to <a href="https://x.com/jbondwagon/status/1888958746724069411">multiple</a> <a href="https://x.com/makisalpha/status/1888887431019254132">screenshots</a> shared on social media.&nbsp;



Some posts also claimed to summarize the Terms of Use on that site, noting that US residents would not be eligible and VPNs would be blocked to geo-fence the airdrop. While these restrictions have been the trend with some recent token launches (like <a href="https://blockworks.co/news/berachain-pengu-burn">Berachain</a>), Rheingold told me the OpenSea Foundation has decided SEA will be available to US-based users.&nbsp;



The verified OpenSea Foundation X account then <a href="https://x.com/openseafdn/status/1888972001886249363">responded</a> to such posts earlier this week with the message: “None of the rumors on X today are true. Only trust links that we post from this account.”



OpenSea CEO Devin Finzer also responded to the screenshots indirectly: “Disappointed to see false rumors spreading,” he said in a <a href="https://x.com/dfinzer/status/1888997311084167526">post</a> on Monday.



In a separate post, Finzer <a href="https://x.com/dfinzer/status/1889001705674621145">clarified</a>: “There was some boilerplate language — not actual terms and conditions — on a test website for a short period of time. If it was official, the foundation would have linked to it.”



In 2023, OpenSea launched “<a href="https://blockworks.co/news/opensea-pro-nft-launch-blur">OpenSea Pro</a>,” another version of its NFT marketplace, that caters to “power traders” and <a href="https://blockworks.co/news/blur-opensea-royalties-nft-creators">Blur</a> users.&nbsp;&nbsp;



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OpenSea unveils SEA token and new version of its exchange

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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There’s endless shared trauma in crypto. But among the most common feels would be the kick to the guts that is buying a coin only to have it crash almost immediately.



Buyers of ETH ETFs are going through it right now.&nbsp;



They’re collectively down an estimated $1.16 billion on their capital to date, after contributing the bulk of their inflows when the price of ETH was closer to $3,300, or around 27% higher than it is right now.



To be clear, the share prices of the ETFs themselves more-or-less track the price of ETH. The losses referred to here point to the ETH value each fund holds compared to how much was spent acquiring it.



How to calculate: Take the daily US dollar <a href="https://farside.co.uk/ethereum-etf-flow-all-data/">flows</a> for each ETF and divide them by the daily reference <a href="https://www.cfbenchmarks.com/data/indices/ETHUSD_NY">rate</a>. This gives a rough outline of how many ETH units the ETFs buy and sell every trading day.



Then, tally those ETH units and multiply the total by the price of ETH — that will give the current value of each fund’s ETH holdings, which technically belong to their respective shareholders.



Divide the current value of each fund’s ETH by the total amount of US dollars that have flowed into each one to date, and you’ll get a reading on how well each fund has actually performed for its shareholders so far.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd9aj-ZFcmQkoAu9Dsw6N38mCD3WhIqtNTI4Z5B7RvbfY13bhPfP1NFV5EOg3Ps7V1u-AdOMdTeL0twqIvQEtewz38uCECBf5VsMgWpjXmfV9k9Md6B7wtW2a-H3oUAOgsxnTqYUw?key=JOAUs5lZRL4PgoRC0B8h7JAu" alt=""/><figcaption class="wp-element-caption">Each line shows the performance of each fund. The blue line at the bottom plots the price of ETH.</figcaption></figure>



(Grayscale’s ETFs weren’t included in this analysis as most of their capital flows occurred long ago, so their performance isn’t easily calculable.)



As it turns out, 21Shares’ CETH, in light blue, is the only ETF ahead on its net flows.



CETH is currently holding about $18.11 million in ETH, while its total cumulative net flows were only $16.9 million — putting it $1.21 million in the green, or nearly 7.2%.



Fidelity’s FETH is the worst performer of the bunch. It’s sitting on $1.21 billion in ETH from almost $1.5 billion in net flows, so it’s down $289.2 million or just under 20%.&nbsp;



BlackRock’s ETHA is otherwise down 17.6%, which is slightly better performance based on percentages, but due to the size of the fund it has lost its shareholders more dollars than any other — the equivalent of $782.5 million.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc-IcxeyV4I46CWiutl8GJEfkgLVQdqHHr_Azwp6YSobuqim6J7cbxMANhq2fH2iuc11HCnvpJa0lRqjXSKGgMekGnJQlLqBuXZ7HMCFIvwP20sYUH7A2Ln9YQFiVNZMgLetpBQ?key=JOAUs5lZRL4PgoRC0B8h7JAu" alt=""/><figcaption class="wp-element-caption">The strategy is buy low and sell high. But ETF customers haven’t quite nailed that yet. Net daily flows are the columns in the background, the blue line is the price of ETH.</figcaption></figure>



Why are some funds performing better than others? Simple: it depends on when ETF customers contribute and withdraw their capital.



Take 21Shares’ CETH. Most of its inflows to date occurred between September and November last year, when ETH had traded for well under $2,500 at times.&nbsp;



Then, CETH customers redeemed $15 million worth of shares between November and December, when ETH had rallied by around 60% from local lows to briefly clear $4,000. Literally, CETH holders had bought low and sold high.  In any case, a clear cure-all would be for the price of ETH to go up. Vitalik’s recent <a href="https://x.com/VitalikButerin/status/1889771554512200166">tweet</a> about “making communism great again” hasn’t gone over well — might I suggest posting almost <a href="https://blockworks.co/news/cz-tweets-gm-bitcoin-goes-up">exclusively about the roadmap</a>, as that seems to do the trick.



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ETH ETFs down over $1.1B on net flows to date

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 long-awaited Solana update has gone live. All optional priority fees paid by users will be sent to the validators running the blockchain.



Solana’s median priority fee dropped 40% from the time period right before the new feature was activated, according to Solana Compass. However, it’s too early to tell whether that trend will hold. A more immediate consequence is that liquid staking tokens — which allow validators to pass along priority fee rewards, whereas regular Solana staking does not — just became the highest-yield show in town.



Solana users can pay a priority fee on top of the network’s base fee to increase a transaction’s chances of making it to the blockchain. Under Solana’s initial architecture, half of these priority fees went to the validators who run Solana’s software, and half were burned, or effectively removed from circulation.&nbsp;



In May 2024, <a href="https://blockworks.co/news/solana-validators-tackle-side-deals">validators voted</a> to begin sending 100% of priority fees to validators. The justification was that the 50% burn was causing some validators to cut mutually beneficial side deals with traders. As SIMD-0096’s activation date approached, some developers <a href="https://blockworks.co/news/solana-validator-revenue-stakers">began pointing out</a> that Solana lacks an in-protocol way for validators to share priority fee rewards with stakers. This means that validators would get relatively richer at the expense of the stakers who delegate stake to them.



A future proposal, SIMD-0123, could allow in-protocol priority fee sharing, but it won’t be activated for some time. Until then, one of the most effective ways for validators to share the extra yield with stakers is via liquid staking tokens, which are tokenized claims on a share of the yield generated by a pool of staked SOL. If validators transfer the extra SOL that they’re earning into stake pools, then the LST holders receive more yield.



Solana LST provider Sanctum <a href="https://blog.sanctum.so/lst-for-all">announced</a> this morning it would be creating an LST for every validator on the network. That would bring Solana’s total number of LSTs to over 1,000 — a more than tenfold increase.&nbsp;



Solana LSTs mostly saw their yields go up across the board today. Jupiter’s is 11.96%, up from 10.69% in the period prior, and most LSTs followed suit.



LSTs may not be a perfect solution, though. For one, converting native stake into an LST could <a href="https://x.com/0xDigitalLaw/status/1889741314914128054">create</a> a taxable event for SOL holders. Another critique stems from the fact that LST holders must trust that validators are passing the full yield along.



“I absolutely hate ‘trust me bro’ situations,” Sol Strategies head of staking Max Kaplan wrote on X. “I believe the LST method is confusing, a bad UX, and opens the door for potential [rug pulls].”



Jito (which operates the largest Solana LST) recently debuted TipRouter, which automatically doles out priority fees and can be verified onchain.



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Solana yield is now flowing to liquid stakers

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Jerome Powell was back on Capitol Hill for his second day of testimony today.&nbsp;



We do not envy him. Senators yesterday grilled Powell on everything from the dismantling of the CFPB to Trump’s tariff policies, and today was more of the same.&nbsp;



Since Powell is Powell, he generally kept his answers short and diplomatic, making it particularly exasperating to watch.&nbsp;



“I think the standard case for free trade and all that logically still makes sense. It didn’t work that well when we have one very large country that doesn’t really play by the rules,” Powell said. We’re thinking he’s talking about China here.&nbsp;



“And in any case, it’s not the Fed’s job to make or comment on tariff policy.”



Sen. Elizabeth Warren, a key architect of the CFPB’s creation in the aftermath of the 2008 financial crisis, said not having the agency is akin to having “no cop on the beat.”&nbsp;



Powell agreed that there is no other regulator currently tasked with monitoring banks and ensuring consumer protections. He added, though, that bank accounts are “safe.”&nbsp;



Over in the House, crypto banking did get a little shoutout in the midst of the <a href="https://blockworks.co/news/bessent-locks-down-on-cfpb">CFPB-talk</a>.&nbsp;



“Are there any backstops that we can use, any firewalls that we can put in place that might insulate the traditional banking system… if we have a collapse of a major crypto issuer?” Rep. Stephen Lynch asked on Tuesday.&nbsp;



Powell conceded that it’s “appropriate” to make sure banks understand the risks that are involved in crypto activity if they’re taking on these clients, but at the same time “you don’t want to go too far.”&nbsp;



“In Fed regulated banks, there are lots of crypto activities happening now,” Powell added. “They&#8217;ve just happened under a framework where we made sure that the bank understood, and we understood, exactly what they&#8217;re doing.”&nbsp;



In terms of specifics on monetary policy, which was somewhat ironically the least-discussed topic on Tuesday and Wednesday, Powell simply reiterated that the committee will take its time lowering interest rates.&nbsp;



“We’re in a pretty good place with this economy,” Powell said Tuesday. “We want to make more progress on inflation.”&nbsp;



Wednesday’s testimony of course came after the latest CPI report showed inflation hit 3%.



Powell told reps that today’s CPI proves that “we are close but not there on inflation.”&nbsp;



“So we want to keep policy restrictive for now,” he added.&nbsp;



For those riding the quantitative easing train, it was easy to miss Powell’s quick comment about the practice, but he did make one:



“Quantitative easing is a tool we only use when rates are already at zero,” he said.&nbsp;



Remember, QE + near zero rates almost always equals pain. Weaker currency, long-term inflation risks, the list goes on. Here’s to hoping we don’t get there.



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