Hoge Finance

Donovan Choy

Crypto memecoins have been decorated with dogs, cats and frogs, but we haven’t had a baby hippo until now.



The latest animal-themed memecoin to sweep crypto is MOODENG. The coin was inspired by viral internet sensation Moo Deng — whose name translates to “bouncy pig” — a two-month-old pygmy hippopotamus in Thailand’s Khao Kheow Open Zoo.&nbsp;



MOODENG marks the first memecoin token to hit a $200 million market cap in recent months.&nbsp;



The token was launched on Solana with the pump.fun memecoin maker, and is currently valued at a $255 million market cap with about $64 million in trading <a href="https://dexscreener.com/solana/22wrmytj8x2trvqen3fxxi2r4rn6jdhwomtpssmn8rud">volumes</a> in the last 24 hours. It’s now the 22nd largest memecoin by market capitalization.



Read more: <a href="https://blockworks.co/news/empire-newsletter-memecoin-resilience">A ‘speculative appetite’ may push memecoins higher: GSR</a>



The <a href="https://blockworks.co/tag/meme-coins">memecoin</a> has already inspired accompanying memecoins for Moo Deng’s mother, Jonah, and her siblings Moo Toon and Moo Waan. Moo Deng also has an unofficial Twitter <a href="https://x.com/ArkhamIntel/status/1839293517744501045">fan page</a> with almost 50,000 followers, and has gained token listings on several CEXs including MEXC and HTX.



<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">MOO DENG FOR PRESIDENT <a href="https://t.co/kY7EDb0knD">pic.twitter.com/kY7EDb0knD</a>&mdash; beeple (@beeple) <a href="https://twitter.com/beeple/status/1837324776978714725?ref_src=twsrc%5Etfw">September 21, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



According to <a href="https://x.com/ArkhamIntel/status/1839293517744501045">Arkham Intelligence</a>, an $800 purchase of MOODENG by one trader four hours after the token launch has grown into $3.5 million within 15 days.



<h2 class="wp-block-heading">Audius launches pay-to-unlock</h2>



After almost eleven months in private beta, the Web3 music streaming service Audius <a href="https://x.com/audius/status/1839334137095971249">announced</a> on Friday the launch of its “pay-to-unlock” monetization features to all users.



Fans on Audius will now be able to pay artists through the platform for streaming music (or via buying songs directly) with their credit cards, which is then converted and received by artists in USDC.



Under Audius’s revenue-sharing model, 10% of every payment is paid to the Audius treasury for onchain governance.



Audius has entered into licensing deals with several music publishers, most notably <a href="https://x.com/audius/status/1833928503416561776">Kobalt</a>, one of the largest independent music publishers in the UK.



<h2 class="wp-block-heading">One interesting stat:</h2>



<ul class="wp-block-list">
<li>The Ethereum Name Service domain name uber.eth was <a href="https://x.com/EnsSalesBot/status/1838291126345961880">bought</a> for 13 ETH ($34,938).</li>
</ul>



<h2 class="wp-block-heading">Also of note:</h2>



<ul class="wp-block-list">
<li>Polymarket <a href="https://x.com/Polymarket/status/1839441684884807826">launched</a> an app on the App Store.</li>



<li>Chiliz Group, the blockchain company behind the Socios rewards platform and <a href="https://blockworks.co/news/sports-fan-token-launch-socios">fan token-focused L1 </a>Chiliz Chain is <a href="https://www.chiliz.com/chiliz-launches-chiliz-sports/">launching</a> Chiliz Sports, an independent division to bridge the world of sports and blockchain.</li>



<li>Iggy Azalea <a href="https://x.com/MOTHERprovides/status/1837204050686918728">announced</a> Motherland, an online casino and gaming platform that will be integrated with her MOTHER memecoin token.</li>
</ul>



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Web3 Watch: Hippo-themed ‘Moo Deng’ memecoin soars to $255M market cap

Casey Wagner

Ben Strack

Today, enjoy the On the Margin newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the On the Margin newsletter</a>.



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Welcome to the On the Margin Newsletter, brought to you by Ben Strack and Casey Wagner. Here’s what you’ll find in today’s edition:



<ul class="wp-block-list">
<li>Before the Tornado Cash case heads to trial, Casey breaks down what to know, and why crypto supporters are disappointed.</li>



<li>Ben unpacks the latest PCE report and why it likely means more dovish policy from the Fed.</li>



<li>Happy Friday! Find our weekly recap of economic data below. </li>
</ul>



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



<h2 class="wp-block-heading">US v. Storm will proceed to a jury trial</h2>



The US government’s case against Tornado Cash founder Roman Storm will proceed to a jury trial, <a href="https://blockworks.co/news/tornado-cash-motion-to-dismiss-denied">a federal judge ruled yesterday</a>.&nbsp;



A quick recap: Storm and fellow <a href="https://blockworks.co/tag/tornado-cash">Tornado Cash</a> co-founder Roman Semenov were <a href="https://www.justice.gov/usao-sdny/pr/tornado-cash-founders-charged-money-laundering-and-sanctions-violations">indicted</a> in August 2023. The pair was charged with three federal counts: conspiracy to commit money laundering, conspiracy to commit sanctions violations and conspiracy to operate an unlicensed money transmitting business.



Storm, in March 2024, <a href="https://blockworks.co/news/bitcoin-fog-founder-convicted-by-jury">filed a motion to dismiss all charges</a> — arguing that simply building the protocol is not money laundering, which requires a “financial transaction involving a financial institution.” Since users maintain control of their assets when using Tornado Cash and no fees are charged, the protocol cannot be a “financial institution,” Storm’s team <a href="https://storage.courtlistener.com/recap/gov.uscourts.nysd.604938/gov.uscourts.nysd.604938.30.0.pdf">said</a>.&nbsp;



Prosecutors — in their opposition to the motion — argued that Tornado Cash was a money transmitting business and, therefore, a financial institution.&nbsp;



Storm also filed a motion to compel discovery, which was a formal request for prosecutors to hand over any and all communications between federal agencies and Dutch officials relating to Storm, Semenov, the case and Alexey Pertsev (more on him in a bit).&nbsp;



Judge Katherine Polk Failla, who is also overseeing the SEC’s case against Coinbase, denied both motions in a telephone conference Thursday afternoon. The jury trial is scheduled to begin on Dec. 2. But given the amount of discovery in this case, I wouldn’t be surprised if it got pushed back.&nbsp;



“At this stage in the case, this court cannot simply accept Mr. Storm&#8217;s narrative that he is being prosecuted merely for writing code,” Failla said. “For starters, that&#8217;s an overstatement of what&#8217;s actually charged in the indictment.”



In his motion to dismiss, Storm’s team argued the charges infringed upon his First Amendment rights, asserting that computer code is speech and therefore protected by the Constitution. Prosecutors, and the judge, ultimately, disagreed.&nbsp;



“It is true that computer coding can be ‘expressive conduct’ protected by the First Amendment,” Failla said. “But when a programmer is using a code to direct a computer to perform various functions, that code is not protected speech.”&nbsp;



Additionally, Failla said, the government has sufficiently shown to have “substantial interest in promoting a secure financial system by combating money laundering,” unregistered money transmitting services and sanctions evasion.&nbsp;



Among Storm’s supporters are three crypto-focused advocacy groups: the Blockchain Association, Coin Center and the DeFi Education Fund — each of which filed amicus briefs last spring in support of the defendants.&nbsp;



These parties, as expected, were disappointed in Thursday’s decision.&nbsp;



“Judge Failla&#8217;s ruling denying<a href="https://x.com/rstormsf"> </a>[Storm&#8217;s] motion to dismiss the indictment is an assault on the freedom of software developers everywhere,” Jake Chervinsky, a lawyer on DeFi Education Fund’s team, wrote on <a href="https://x.com/jchervinsky/status/1839412423096467753">X</a>. “This will go down in history as a perversion of law and a travesty of justice.”



Amanda Tuminelli, also representing DeFi Education Fund, <a href="https://x.com/amandatums/status/1839424351495725232">added</a> that Failla’s decision to dismiss on a “matter of law,” versus considering the factual issues, was “offensive.”&nbsp;



Thursday’s ruling comes months after a Dutch court <a href="https://blockworks.co/news/alexey-pertsev-tornado-cash-guilty">found Pertsev guilty</a> of laundering $1.2 billion of crypto through Tornado Cash.&nbsp;



Storm’s attorney did not immediately return Blockworks’ request for comment.&nbsp;



— Casey Wagner&nbsp;



<h3 class="wp-block-heading">$83 million</h3>



The assets under management (as of Sept. 26) in the T-Rex 2x Long MSTR Daily Target ETF (<a href="https://www.rexshares.com/mstu/">MSTU</a>) — only about a week after the fund hit the market.&nbsp;



REX Shares debuting MSTU followed Defiance ETFs’ launch of the Daily Target 1.75X Long MSTR ETF (MSTX) in August. The latter product <a href="https://www.globenewswire.com/news-release/2024/09/26/2954168/0/en/MSTX-The-First-Leveraged-MicroStrategy-ETF-in-the-U-S-Surpasses-300-Million.html">surpassed</a> $300 million in assets yesterday.



Bloomberg Intelligence analyst Eric Balchunas <a href="https://x.com/EricBalchunas/status/1839643067533430882">said</a> the T-Rex fund’s AUM puts it in the top 20% of the 515 ETFs launched this year. It shows “just how much &#8216;need for speed&#8217; there is out there,” he added.



At 2 pm ET, MSTR shares were trading at $177.79 — up 7% from 24 hours ago.&nbsp;



<h2 class="wp-block-heading">Bitcoin breaks $66k after PCE data release&nbsp;</h2>



Bitcoin reached $65,000 yesterday and went above $66,000 Friday morning ET — the latter level being a first since late-July.&nbsp;



In short, the latest Personal Consumption Expenditures (PCE) data reinforced expectations of a continued dovish Fed policy stance.&nbsp;



The break of $66k came a little over an hour after the US Bureau of Economic Analysis <a href="https://www.bea.gov/news/2024/personal-income-and-outlays-august-2024">published</a> the August PCE data, which showed a slight increase of 0.1% from July (rising 2.2% year-over-year). The report is the Fed’s preferred inflation gauge.&nbsp;



Casey noted in yesterday’s edition that Morningstar senior economist Preston Caldwell was predicting a 0.15% month-over-month PCE boost. FactSet consensus estimates had pegged a 2.7% jump on an annual basis.



Any significant rise above estimates could have dampened the prospect of further rate cuts by the Fed, wrote Derren Nathan, head of equity research at Hargreaves Lansdown, in a Friday note.&nbsp;



As we now know, that didn’t happen.&nbsp;



“Today’s lower-than-expected PCE numbers have strengthened the dovish sentiment sparked by last week’s rate cut, fueling optimism that inflation pressures are cooling faster than anticipated,” said 21Shares crypto research strategist Matt Mena.



The US central bank’s current forecast suggests another half-point reduction by the end of 2024, Nathan said.&nbsp;



The probability of a Fed rate cut amounting to 50 basis points at its November meeting was at nearly 57%, as of 2 pm ET — up from about 49% a day ago, CME Group <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html">data</a> shows.&nbsp;



Let us remember there’s an additional opportunity for the Fed to lower rates in December.&nbsp;



All things considered, Mena expects the stage is set for BTC to possibly retest the range between $68,000 and $70,000 — noting <a href="https://on-the-margin.beehiiv.com/p/china-s-recovery-tour">China’s recent liquidity injection</a> as well.



Mena had noted that as of early Friday, the CoinDesk 20 Index was up nearly 8% this week, compared to a less than 1% gain by the S&amp;P 500.&nbsp;



At 2 pm ET, BTC was up about 1% from 24 hours ago. The S&amp;P 500 was roughly flat over that span.&nbsp;



Mena added: “This highlights the growing confidence in BTC and digital assets<a href="https://blockworks.co/news/on-the-margin-newsletter-inevitable-institutional-digital-assets-involvement"> as investors increasingly seek</a> alternative stores of value and high-yield opportunities amid a favorable macroeconomic backdrop.”&nbsp;



— Ben Strack



<h2 class="wp-block-heading">Did You Notice</h2>



Happy Friday! Ben already broke down this week’s headline economic report, the PCE print. But there were some other notable data points from the past few days. Here’s a recap:&nbsp;



<ul class="wp-block-list">
<li>US initial jobless claims once again ticked lower during the week ended Sept. 21, coming in at 218,000, Thursday’s <a href="https://www.dol.gov/ui/data.pdf">report</a> shows. Economists had predicted 223,000 first-time filers. We are now at a four-month low for initial claims. It’s a positive sign that the labor market is remaining strong, which bodes well for those hoping for a 50bps interest rate cut from the Fed in November. </li>



<li>Thursday’s Durable Goods Orders report showed annual orders for durable goods (defined as long-lasting items, ranging from computer equipment to industrial machinery) were virtually flat in August — posting a very modest $100 million increase. This comes after a large increase in July (9.9%), which was mostly attributed to a large increase in aircraft orders. All in all, the report shows the Fed’s coveted soft landing is still achievable as a decline in orders would signal an economic slowdown. </li>



<li>The final Consumer Sentiment index revision on Friday came in at 70.1 vs. the expected 69.3 and previous read of 67.9. It’s not usually a market-moving report (especially the last revision), but we are now at a five-month high for consumer sentiment. <a href="https://www.conference-board.org/topics/consumer-confidence">Consumer Confidence</a>, on the other hand, is on the decline, with Tuesday’s report showing confidence is now at a three-year low. The latter report, conducted by The Conference Board, likely ticked lower because consumers are growing increasingly concerned about the labor market and stagnant wage growth. </li>
</ul>



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



<ul class="wp-block-list">
<li>Japan’s governing party elected Shigeru Ishiba as its leader, setting him up to become prime minister in the coming days. Ishiba is supportive of the Bank of Japan’s interest rate hikes, helping to boost market confidence even as his victory surprised investors. The yen rallied as much as 1.4% following Ishiba’s win. </li>



<li>The US House Foreign Affairs Committee this week advanced a <a href="https://docs.house.gov/meetings/FA/FA00/20240924/117671/BILLS-118HRes1348ih.pdf">resolution</a> demanding the Nigerian government to <a href="https://blockworks.co/news/continued-detainment-binance-executive-outrageous">release Binance executive Tigran Gambaryan</a>. The resolution can now proceed to a full floor vote, but one has not been scheduled and the House is now in recess ahead of the election.</li>



<li>We are a little over a week out from <a href="https://blockworks.co/event/permissionless-iii">Permissionless III</a>. The Blockworks conference in Salt Lake City will feature congressional leaders, legal experts and the biggest names in the crypto industry. Plus, Casey, Ben and Felix will all be on the ground. Get your tickets today!</li>
</ul>



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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 On the Margin newsletter</a>.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Judge rules Tornado Cash is not protected under the First Amendment

Bitcoin rose above $66,000 after analysts stated that Personal Consumption Expenditures (PCE) data had reinforced expectations of a continued dovish Fed policy stance.



BTC had retreated back below that level at 2 pm ET, but remained slightly up from a day ago.&nbsp;&nbsp;&nbsp;



The surge past $66,000 came a little over an hour after the US Bureau of Economic Analysis <a href="https://www.bea.gov/news/2024/personal-income-and-outlays-august-2024">published</a> the August PCE data. The Federal Reserve’s preferred inflation gauge, the PCE figures showed a slight increase of 0.1% from July (rising 2.2% year over year).



Morningstar senior economist Preston Caldwell had predicted a 0.15% month-over-month PCE boost. FactSet consensus estimates had pegged a 2.7% jump on an annual basis.



Any significant rise above estimates could have dampened the prospect of further rate cuts by the Fed, wrote Derren Nathan, head of equity research at Hargreaves Lansdown, in a Friday note.&nbsp;



Read more: <a href="https://blockworks.co/news/on-the-margin-newsletter-uk-japan-rate-decisions">A look at central bank rate decisions around the world</a>



“Today’s lower-than-expected PCE numbers have strengthened the dovish sentiment sparked by last week’s rate cut, fueling optimism that inflation pressures are cooling faster than anticipated,” said 21Shares crypto research strategist Matt Mena.



The US central bank’s current forecast suggests another half-point reduction by the end of 2024, Nathan said.&nbsp;



The probability of a Fed rate cut amounting to 50 basis points at its November meeting was at nearly 57%, as of 2 pm ET — up from about 49% a day ago, CME Group data shows. The Fed has another meeting in December.&nbsp;



Mena expects the stage is set for a BTC to possibly retest the range between $68,000 and $70,000 — noting other global factors at play, such as <a href="https://blockworks.co/news/on-the-margin-newsletter-china-stimulus-stagnation">China’s recent liquidity injection</a>.



Mena had noted that, as of early Friday, the CoinDesk 20 Index was up nearly 8% this week, compared to a less than 1% gain by the S&amp;P 500.&nbsp;



At 2 pm ET, BTC was up about 1% from 24 hours ago. The S&amp;P 500 was roughly flat over that span.&nbsp;



Mena added: “This highlights the growing confidence in BTC and digital assets as<a href="https://blockworks.co/news/on-the-margin-newsletter-inevitable-institutional-digital-assets-involvement"> investors increasingly seek</a> alternative stores of value and high-yield opportunities amid a favorable macroeconomic backdrop.”



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



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 On the Margin newsletter</a>.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

BTC surpasses $66K after release of PCE data

Katherine Ross

The Securities and Exchange Commission settled charges with Mango Markets on Friday.&nbsp;



Mango Markets settled without admitting or denying the SEC’s findings and agreed to “destroy their MNGO tokens, to request the removal of MNGO tokens from trading platforms, and to refrain from soliciting any trading platform to allow trading in or offering or selling MNGO.”



The SEC accused Mango of the unregistered offering of MNGO and also claimed that it — alongside Blockworks Foundation — operated as an unregistered broker.



Read more:<a href="https://blockworks.co/news/mango-markets-dao-sec-settlement"> DAO behind Mango Markets votes for SEC settlement</a>



“According to the SEC’s complaint, starting in August 2021, Mango DAO, a purportedly decentralized autonomous organization, or DAO, and Blockworks Foundation, a Panamanian entity, raised more than $70 million from unregistered offers and sales of MNGO tokens, the so-called governance tokens of the Mango Markets platform, to hundreds of investors worldwide, including in the US,” the <a href="https://blockworks.co/tag/sec">SEC</a> said.



The Blockworks Foundation, according to Mango Markets documents, is a non-profit incorporated in Panama. It is not linked to Blockworks, the New York-based media and research company.&nbsp;



The two entities will also pay $700,000 in civil penalties.&nbsp;



“Since the inception of our crypto enforcement program, our view has been that the label ‘DAO’ does not change the reality of who is behind a project, what activities they engage in, or whether their activities need to be registered. Nor does engaging in intermediation of securities with the aid of automated or open source software change the nature of such activities,” said the SEC’s Jorge G. Tenreiro.



<a href="https://blockworks.co/tag/mango-markets">Mango Markets</a> is also currently nearing a settlement offer with the Commodity Futures Trading Commission, according to a <a href="https://app.realms.today/dao/MNGO/proposal/35uJRJBQ64zQ82N4x32km9vRnDtvpJ5jF3MfwfzBoXvL">proposal</a> from the DAO.&nbsp;



Earlier this year, <a href="https://blockworks.co/news/mango-markets-trader-guilty">Avraham Eisenberg was convicted</a> following a trial related to his 2022 trades on Mango Markets. He was accused of manipulating Mango Markets futures contracts.



Eisenberg, who was charged with wire fraud, commodities fraud and commodities manipulation, is <a href="https://blockworks.co/news/mango-markets-avi-eisenberg-seeks-new-trial">seeking a new trial or acquittal.</a>&nbsp;



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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 On the Margin newsletter</a>.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Mango Markets to destroy MNGO tokens following SEC settlement

Jack Kubinec

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



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There’s been much made of <a href="https://blockworks.co/news/lightspeed-newsletter-solana-defi-activity-expanding">Solana’s DeFi resurgence</a> that has put it neck-and-neck with Ethereum in multiple key metrics.&nbsp;



But by one count, Ethereum is now pulling meaningfully ahead of the next-biggest smart contract blockchain.&nbsp;



Total economic value (TEV) is a Blockworks Research-created stat that measures a blockchain’s transaction fees and maximal extractible value (MEV) tips. This can be thought of like the income a blockchain receives, and it’s a helpful counterpoint to active addresses — a mostly-meaningless measure that’s been having too much time in the sun lately.



For most of the blockchains’ respective histories, Ethereum’s TEV has been several multiples of Solana’s. But earlier this year, as more Ethereum activity fled to layer-2s in search of cheaper fees and Solana saw a memecoin-inspired volume frenzy, Solana basically evened the score.&nbsp;



Outside of a brief Ethereum income spike around the beginning of June that roughly coincided with ether ETFs being approved, Solana and Ethereum TEV have moved roughly in tandem for most of this year — until the past couple weeks, when Ethereum spiked to seven times Solana’s TEV.&nbsp;



The gap has narrowed slightly in the past couple days, but it’s still the most meaningful TEV divergence we’ve seen in months.&nbsp;



Amid the spike in Ethereum TEV, Ethereum’s average gas price climbed nearly 500% over the past 10 days above its prior 30-day moving average, according to Coinbase <a href="https://www.coinbase.com/institutional/research-insights/research/weekly-market-commentary/weekly-2024-09-27">analysts</a>.&nbsp;



When I <a href="https://x.com/whosknave/status/1838962132727058625?s=46">posed</a> to X the question of why Ethereum is retaking the lead, I was quickly told that Ethereum’s base layer has seen a resurgence in memecoins, ever the driver of blockchain income.&nbsp;



But digging a bit deeper, it’s not quite clear that this is the case. A couple weeks ago, <a href="https://blockworks.co/newsletter/research/issue/post_46cb0b24-4b89-4928-9766-b2e970da2c77">Ethervista tried</a> to manufacture the pump.fun zeitgeist on Ethereum, but a Dune analytics <a href="https://dune.com/obchakevich/ethervista">chart</a> suggests it’s already joined SunPump in the graveyard of would-be competitors to the Solana memecoin launchpad.&nbsp;



Uniswap is still the biggest fee-generating app for Ethereum. The decentralized exchange generated roughly $9 million in fees over the past week, which is around double that of the biggest Solana DEX in Raydium and triple that of pump.fun, according to DeFiLlama data. Among the top ten Uniswap tokens by volume over the past week, you’ll find just one memecoin: Doggo. If you look at the highest market cap memecoins, they’re still largely Solana upstarts, with the exception of Base-based Brett.



So there may be another explanation at play than that Ethereum is the new home for memes.&nbsp;



Blockworks Research analyst Westie said the TEV divergence may be “reversion back to the mean,” a statistical observation that things straying far from their usual baseline tend to move closer to that baseline in the long run. Despite Solana’s recent success, ETH still overlooks a sprawling ecosystem with a much larger market cap than SOL.&nbsp;



“This huge spike is likely because [Ethereum] mainnet has had extremely low fees for a while as people have [not] been doing much on mainnet since the spring,” Westie said.



So, Solana’s memes may be safe. But even still, here comes Ethereum.



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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 On the Margin newsletter</a>.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

It may be mean reversion time for Ethereum and Solana

David Canellis

The Kingdom of Bhutan continues to mine millions of dollars in bitcoin.



Bhutan is currently generating anywhere from 55 BTC ($3.6 million) to 75 BTC ($4.9 million) every week from its mining operations.



The government utilizes mining pools including AntPool, Braiins and Foundry, according to on-chain data via Arkham Intelligence.&nbsp;



Bhutan operations are backed by access to cheap, clean hydropower, and by a reported $500 million closed-ended fund launched last May. The fund is in <a href="https://www.bitdeer.com/news/bitdeer-and-druk-holding--investments-to-jointly-develop-green-digital-asset-mining-operations-in-the-kingdom-of-bhutan">partnership</a> with Bitmain spinoff Bitdeer, itself operated by Bitmain co-founder and former CEO Jihan Wu.



Read more: <a href="https://blockworks.co/news/bhutan-investment-fund-crypto">Bhutan’s investment arm invested millions in crypto, according to Celsius documents</a>



Bhutan’s sovereign holding company, Druk Holdings, was <a href="https://www.dhi.bt/">formed</a> in 2007 to manage investments for the crown “for the long-term benefit of the people of Bhutan.” Its portfolio includes manufacturing and construction, a bank, an airline — and crypto.



Druk’s identified onchain <a href="https://platform.arkhamintelligence.com/explorer/entity/druk-holding-investments">data</a> shows that it’s been active in crypto since at least February 2021, when it <a href="https://mempool.space/tx/9f821f7cfeb10f9d97de0556bba73479c7299d45e2ae66363038f92e0643d2a0">received</a> its first bitcoin: 0.0267 BTC ($1,770) worth around $1,280 at the time.&nbsp;



Following the provenance of that first deposit ends with AntPool, so that may be when Druk (or another arm of the Bhutan government) first started dabbling in bitcoin <a href="https://blockworks.co/tag/mining">mining</a>.



A Forbes <a href="https://www.forbes.com/sites/iainmartin/2023/11/22/bhutan-secret-bitcoin-mine-locations/">report</a> last November, which sought to identify the sites of Bhutan’s four bitcoin mining farms, otherwise cited a spokesperson who’d said the fund had made a series of bitcoin investments “in a period in 2019.” Bhutan’s bitcoin mining operations then ramped up in 2020, according to an analysis of satellite imagery.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfOlVqxjGgXIjLdhiMG_BBSoon2-eeROFkEj25bQ9-KXD7_F96hMvxjLzZtOIIxAr-QcD1dJfPjTNL9VdIqxbOOwQeIkVOQC-K03qMAReLVyFl_UKUQ0I3SBN-5J1kjIoRcx10TIH5wepfueaZGlLS03i8?key=0vmCdh8u4YcDJ24LIKmE-A" alt=""/><figcaption class="wp-element-caption">Here’s exactly how much bitcoin Bhutan has mined over time</figcaption></figure>



It appears that Bhutan also mined ether for a time. From December 2021 right up until the network’s <a href="https://blockworks.co/news/ethereum-switches-to-proof-of-stake-after-7-years-of-work">switch to proof-of-stake</a> in September 2022, Bhutan received 92.53 ETH ($245,000) in a steady stream from an address tied to AntPool.&nbsp;



Much smaller than the 27,727 BTC ($1.36 billion) overall mined by Bhutan in the past three and a half years or so.



<h2 class="wp-block-heading">Bhutan chased the yield</h2>



Between 2021 and 2022, Bhutan also sent and received over $817 million in cryptocurrency — including bitcoin, tether, usdc, chainlink and ether — to and from lending platforms BlockFi, <a href="https://blockworks.co/news/bhutan-investment-fund-crypto">Celsius</a> and Hodlnaut, all of which have since filed for bankruptcy.&nbsp;



Read more: <a href="https://blockworks.co/news/how-blockfi-went-from-tech-unicorn-to-crypto-burnout">How BlockFi went from tech unicorn to crypto burnout</a>



The chart below plots Bhutan’s onchain moves against crypto’s total market cap.&nbsp;



Pink circles represent outflows to crypto exchanges such as Binance and Kraken, purple circles show inflows from those platforms and others back to Bhutan, and the orange and yellow ones indicate where crypto has been deposited (staked) and withdrawn (unstaked) with lending startups.



(To put the scale in perspective: The largest circles are worth around $57 million and the smallest are under $100.)



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfkRfSecYvPZWa4n14jp1itsXIxpB-3NT0OdMC2vQeH-gQum5u2fRXX4GinnLiZDJm3Tqj6XmrckoSBFOGRVbPsN1j_cXHiNzHi80Q73y7U5zyMPdBzsn98f2ygd1hoXGqp06-CNGQ_e9ebKBCYc1BkygO6?key=0vmCdh8u4YcDJ24LIKmE-A" alt=""/><figcaption class="wp-element-caption">Bhutan’s activity on crypto platforms has died down since 2022</figcaption></figure>



It’s difficult to properly calculate how much cash Bhutan’s crypto operations have brought in for government coffers.&nbsp;



Bhutan has sent 16,897 BTC to exchanges over the years, worth $1.1 billion now but $578.5 million at the individual time of transfers.



But it has also directed over $237 million in stablecoins and $13.4 million in ETH to trading platforms, and received sums of stablecoins, bitcoin, ether, bnb and chainlink in return.&nbsp;



That could imply Druk has previously actively traded crypto markets, but it’s not totally clear.



Aside from bitcoin, Druk is still holding 656 ETH ($1.74 million) — specifically wrapped beacon ETH — with those coins flowing into its addresses from Binance in March around <a href="https://blockworks.co/news/bitcoin-all-time-high">bitcoin’s all-time high</a>.



Druk is, however, currently sending bitcoin to exchanges at a regular pace.&nbsp;



It deposits bitcoin at least once a month, altogether totalling 1,358.64 BTC since June, valued at almost $90 million right now. That’s 318 BTC ($21 million) more than it mined in the same period.



Bhutan overall retains 13,119 BTC ($860.4 million) in its own addresses, the equivalent of a touch under half its total identified haul.



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



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The Kingdom of Bhutan is onchain and mining millions in BTC

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There’s a manic electricity in the air right now. OpenAI is going through it. So is Eric Adams. Diddy is roomies with SBF.



You know what they <a href="https://www.brainyquote.com/quotes/j_d_martinez_1091369?src=t_spark">say</a> — sometimes you just need a spark, and then boom, boom, boom, now the bats come alive. Who knows what’s around the corner, but I’d hold onto your hats.&nbsp;



In the meantime, here’s all you need to know about Bhutan’s crypto and how the big brains are thinking about markets right now.



— David Canellis



<h2 class="wp-block-heading">Royal Bitcoin</h2>



The Kingdom of Bhutan’s bitcoin mining operations are raking it in.



Bhutan is currently generating anywhere from 55 BTC ($3.6 million) to 75 BTC ($4.9 million) every week from its mining operations.



The government utilizes mining pools including AntPool, Braiins and Foundry, according to onchain data via Arkham Intelligence.



Bhutan’s sovereign holding company, Druk Holdings, was <a href="https://www.dhi.bt/">formed</a> in 2007 to manage investments for the crown “for the long-term benefit of the people of Bhutan.” Its portfolio includes manufacturing and construction, a bank, an airline — and crypto.



Druk’s onchain <a href="https://platform.arkhamintelligence.com/explorer/entity/druk-holding-investments">data</a> shows that it’s been active in crypto since at least February 2021, when it received its first bitcoin: 0.0267 BTC worth around $1,280 at the time.&nbsp;



Following the provenance of that first deposit ends with AntPool, so it could be that that’s when Druk (or another arm of the Bhutan government) first started dabbling in bitcoin mining.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfrl5OF5K085T_ecN2K5hSZOrc-tvbEVWou8GMe8J70bwsOqyYZmpdIEc3kisWtOoriZ-q8xS--DUpx6hkTk0KxHJMPYk7QPRDGq66GebohX-fqELOGlaRphZ_VNKGrGBCktpvDWbrODbVoaNGc6OqvRCY?key=JNbtBoDQ6eDyfra-2tD3GQ" alt=""/><figcaption class="wp-element-caption">Here’s exactly how much bitcoin Bhutan has mined over time</figcaption></figure>



It appears that Bhutan also mined ether for a time. From December 2021 right up until the network’s <a href="https://blockworks.co/news/ethereum-switches-to-proof-of-stake-after-7-years-of-work">switch to proof-of-stake</a> in September 2022, Bhutan received 92.53 ETH ($245,000) in a steady stream from an address tied to AntPool.&nbsp;



Much smaller than the 27,727 BTC ($1.36 billion) overall mined by Bhutan in the past three and a half years or so.



Between 2021 and 2022, Bhutan also sent and received over $817 million in cryptocurrency — including bitcoin, tether, usdc, chainlink and ether — to and from lending platforms BlockFi, <a href="https://blockworks.co/news/bhutan-investment-fund-crypto">Celsius</a> and Hodlnaut, all of which have since filed for bankruptcy.&nbsp;



The chart below plots Bhutan’s onchain moves against crypto’s total market cap.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfsY6BGaeLrMPmhlkQHK2Ole6wWs3vn4snGZB-qK-XdIFqFs0BwmCrIYK7wy3HzHnhQrinPvUEwtnRuPzsy2_Q-4wE-3JUTn_Lvo1waJhtEjqkNwD0oKrRbhiEl0vkfqhTVXJUWTB1wnvN5-QeTTprrjAcp?key=JNbtBoDQ6eDyfra-2tD3GQ" alt=""/><figcaption class="wp-element-caption">Bhutan’s activity on crypto platforms has died down since 2022. (Scale: the largest circles are worth around $57 million and the smallest are under $100.)</figcaption></figure>



Pink circles represent outflows to crypto exchanges such as Binance and Kraken, purple circles show inflows from those platforms and others back to Bhutan, and the orange and yellow ones indicate where crypto has been staked and unstaked with lending startups.



It’s difficult to properly calculate how much cash Bhutan’s crypto operations have brought in for government coffers.&nbsp;



Bhutan has sent 16,897 BTC to exchanges over the years, worth $1.1 billion now but $578.5 million at the individual time of transfers.



But it has also directed over $237 million in stablecoins and $13.4 million in ETH to trading platforms, and received sums of stablecoins, bitcoin, ether, bnb and chainlink in return.&nbsp;



That could imply that Druk has previously actively traded crypto markets, but it’s not totally clear.



Aside from its bitcoin, Druk is still holding 656 ETH ($1.74 million) — specifically wrapped beacon ETH — with those coins flowing into its addresses from Binance in March around bitcoin’s all time high.



And out of the bitcoin that Bhutan has mined to date, it has retained 13,119 BTC ($860.4 million) in its own addresses, the equivalent of a touch under half its total identified haul. Not bad at all.



— David Canellis



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



It’s not easy being a bull in a sideways market, Empire hosts Jason Yanowitz and Santiago Santos noted in the <a href="https://blockworks.co/podcast/empire/74f5c4b8-7c5f-11ef-b333-5f884d99cd6d">Friday round up.</a>



“I’m uncomfortably bullish at this point,” Yanowitz clarified.



“I think people are so uncomfortably offside right now because they&#8217;ve gotten so caught in this, like, consolidated period of six months of choppiness that they forget what could be coming.”



With the rate-cutting cycle and now the election — “where I [Yano] don’t think it necessarily even matters who’s going to be elected” — we’re getting closer to eliminating a lot of the uncertainty that caused the market to go sideways in the first place.&nbsp;



The chart is still “noisy,” Santi noted. But he’s also feeling good about the traction.&nbsp;



“I continue to believe we&#8217;re entering a concern application phase of this industry. You&#8217;re seeing it in different pockets … And a lot of times it&#8217;s … very important to re-underwrite your thesis and I appreciate some of these things might have been tried in 2014, 2016, 2018, 2020, 2022. The space is moving fast and you need to be constantly on top of it,” Santi said.&nbsp;



And now you know.&nbsp;



Only last week <a href="https://blockworks.co/news/empire-newsletter-memecoin-resilience">I wrote about the September seasonality</a> — which could turn it into a down month — and how it was starting to look like bitcoin might buck the trend.



Now, a week later, and there’s a lot of green throughout the broader crypto market. Look at AI tokens and altcoins over the past week (though I don’t disagree with David that <a href="https://blockworks.co/news/waiting-for-altcoin-season">some green does not a season make</a>).&nbsp;



We’re also seeing bitcoin break through levels where it was previously stuck. This morning, it’s up to $65,500, its highest since early August, with ETH getting a bump to $2,650 as well.&nbsp;



To Jason’s above point, there are still unknowns. However, it&#8217;s becoming clear that price action might not care about the outcome of certain events (like the election) as much as, perhaps, some folks do.&nbsp;



Looking past November, the fourth quarter has long been tipped as a turning point. Ledn’s John Glover has been steadfast in saying that he thinks we could see bitcoin take off in the final months of the year. His core case, <a href="https://blockworks.co/news/btc-price-action-technical-analysis">he told Empire readers this summer</a>, is $85,000 to $95,000 by year-end.&nbsp;



And PitchBook’s Robert Le <a href="https://blockworks.co/news/crypto-funding-recovery-signs">told us</a> that he feels “pretty good” about a full-swing bull market next year.&nbsp;



The seedlings of positive vibes are definitely there, they just seem to need a bit more nurturing before they fully mature.&nbsp;



— Katherine Ross



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Bhutan continues to rake in the bitcoin

A US federal judge has denied two court motions from Roman Storm, a co-founder of Tornado Cash, ruling that the US government’s case against him will continue.&nbsp;



Judge Katherine Polk Failla denied Storm’s motion to dismiss all three charges against him and his motion to compel discovery.&nbsp;



“At this stage in the case, this court cannot simply accept Mr. Storm&#8217;s narrative that he is being prosecuted merely for writing code,” Failla said during a telephone conference Thursday. “For starters, that&#8217;s an overstatement of what&#8217;s actually charged in the indictment.”



Storm and fellow <a href="https://blockworks.co/tag/tornado-cash">Tornado Cash</a> co-founder Roman Semenov were <a href="https://www.justice.gov/usao-sdny/pr/tornado-cash-founders-charged-money-laundering-and-sanctions-violations">indicted</a> in August 2023. The pair was charged with three federal counts: conspiracy to commit money laundering, conspiracy to commit sanctions violations, and conspiracy to operate an unlicensed money transmitting business.



Read more: <a href="https://blockworks.co/news/empire-newsletter-crypto-mixers-in-court">Crypto mixers have their day in court</a>



“While publicly claiming to offer a technically sophisticated privacy service, Storm and Semenov in fact knew that they were helping hackers and fraudsters conceal the fruits of their crimes,” US Attorney Damian Williams said in a statement at the time.&nbsp;



Storm in March 2024 <a href="https://blockworks.co/news/bitcoin-fog-founder-convicted-by-jury">filed a motion to dismiss the charges</a>, arguing that simply building the protocol is not money laundering, which requires a “financial transaction involving a financial institution.” Since users maintain control of their assets when using Tornado Cash and no fees are charged, the protocol cannot be a “financial institution,” Storm’s team <a href="https://storage.courtlistener.com/recap/gov.uscourts.nysd.604938/gov.uscourts.nysd.604938.30.0.pdf">said</a>.&nbsp;



Prosecutors, in their opposition to the motion, argued that Tornado Cash was a money transmitting business and, therefore, a financial institution.&nbsp;



Failla on Thursday said that the US government’s indictment against Storm met the requirements for “sufficiency.”&nbsp;



“As I understand the charges in the indictment, the Tornado Cash enterprise was not an altruistic venture,” Failla added. “Among other things, the indictment alleges that Mr. Storm and other Tornado Cash founders solicited approximately $900,000 in financing from a venture capital fund in exchange for an expectation that the funds would receive a share of future profits from the Tornado Cash service.”



Storm in March also attempted to order the government to release any and all communications between government agencies concerning Storm and Semenov, Tornado Cash and Tornado Cash developer Alexey Pertsev.&nbsp;



In her denial of the motion to compel, Failla said the defense did not adequately prove that this information is “material to the defense’s preparation.”&nbsp;



Thursday’s ruling comes months after a Dutch court <a href="https://blockworks.co/news/alexey-pertsev-tornado-cash-guilty">found Pertsev guilty</a> of laundering $1.2 billion of crypto through Tornado Cash.&nbsp;



Storm and Semenov’s case will proceed to discovery, Failla ruled. A jury trial is scheduled to begin on Dec. 2, 2024.



This is a developing story.



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Judge denies motion to dismiss case against Tornado Cash founder 

Felix Jauvin

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<h2 class="wp-block-heading">China opens the stimulus floodgates</h2>



China never really recovered from the COVID pandemic like the US has, and has been stagnating and bleeding ever since.&nbsp;



For what was previously the global powerhouse of economic growth, we can see that China’s inflation has been flat at best, and outright deflationary at worst: 



<img loading="lazy" decoding="async" width="568" height="291" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfPY26LEpMZegIofTfIn2boatEdoZ3eycUlslJyg7MPteVF3LrZE2WorIi4JSH0vhPM5_UZFu7rTi0CZkOfSFzi6OG__e1F_N0DYGTaYu5-pydlaygEByx2lfDb_bX5OaDNz_C_fQV4AYyGdkYux1ByHsHX?key=MICkgWemIZzQ4OwtZqISGg">



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdbYcyzd-6RZDH6zaRmc8IbuGAmGQANXlQ1Qrx9Gc4qmaVsCq8jmam7AiriblBV7d8WIMbkQS2WMmtRHufQSontLj6M-Lv-jayXw6KVuIhwOxwuGD2EKRbYu_mhsRagw_AXzdy3HdcXI-bZVzQMgWaw1hZB?key=MICkgWemIZzQ4OwtZqISGg" alt=""/></figure>



There are a few reasons why the nation has been so stagnant. The primary one is that China is in the early stages of a balance sheet recession (as explained in a recent Forward Guidance <a href="https://www.youtube.com/watch?v=KRSpfG6hRTQ">episode</a>).&nbsp;



A balance sheet recession, as coined by Richard Koo, occurs when high levels of private sector debt causes businesses and households to focus on repaying that debt rather than spending or investing. This in turn leads to economic stagnation. This recession type is characterized by a need to repair balance sheets, where conventional monetary policies like lowering interest rates may be less effective, and fiscal policy might be more crucial for recovery.



The balance sheet recession that China has been experiencing has recently begun to accelerate, leading many to believe that China is going to miss its intended annual goal of 5% GDP growth. This led to Chinese bond yields absolutely cratering in a flight to safety trade as Chinese equities bled constantly:



<img loading="lazy" decoding="async" width="624" height="391" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcqt-U59cCSgFGAHbBc75e1ZBKS3Mlbl1KSs4RU2NcwkV9jGFaXqUZnG4Ie9lVevDwy2AcDNAXPyZbz3NDAJYh696mVgrppAg-Fn4hbpNpFMmmumiC8oSyGE4gUW_ZUTGd1kU5AejTSjcJT-IBCc8mQoSKb?key=MICkgWemIZzQ4OwtZqISGg">



However, ever since the US Fed announced its first rate cut and <a href="https://blockworks.co/news/on-the-margin-newsletter-interest-rate-cut">the cutting cycle began</a>, the Chinese government has taken this as the green light to go big on stimulus. Due to both governments easing in tandem, China can do so without as much currency rate risk.&nbsp;



In quick succession, the Chinese government has announced new monetary and fiscal policies.&nbsp;



Monetary policies:



<ul class="wp-block-list">
<li>Reserve requirement ratio (RRR) cut: reduced by 50-basis points to boost lending activities.</li>



<li>Mortgage rate cut: cutting interest rates for existing mortgages and lowering minimum down payments to 15% on all types of homes. </li>



<li>Launch of new monetary policy tools: PBOC Governor Pan Gongsheng announced new lending facilities aimed at providing buying pressure on Chinese equities.</li>
</ul>



Fiscal policies:



<ul class="wp-block-list">
<li>Sovereign debt issuance: plan to issue $284 billion in sovereign debt as part of the fiscal stimulus.</li>



<li>Fiscal spending order: President Xi ordered sufficient fiscal spending, with details expected in October.</li>



<li>China will distribute a one-time allowance to disadvantaged people ahead of a national holiday next week, a government statement said.</li>
</ul>



It’s clear that China is committed to throwing everything they can at the wall until something sticks and things improve. Luckily, with all other global central banks in an easing bias (apart from Japan), China has the currency cover to do so.&nbsp;



The big question at hand now is: Will it be enough for China to recover? We simply don’t know. However, FXI (iShares China large-cap ETF) is up 16% over the past five days, and setting some of the largest daily gains in history is surely a positive sign that Chinese authorities are getting underneath this thing.



— Felix Jauvin



<h3 class="wp-block-heading">$184.4 million&nbsp;</h3>



The amount of inflows BlackRock’s spot bitcoin ETF posted on Tuesday, according to data from Farside Investors. The figure breaks the September record for daily inflows to a single fund.&nbsp;



IBIT’s inflows come amid a broader streak for spot bitcoin ETFs in the US. The 11 products collectively have posted inflows for the past five trading days.&nbsp;



<h2 class="wp-block-heading">What Wall Street expects from the August PCE report&nbsp;</h2>



The Fed’s preferred inflation gauge (PCE) is slated to drop tomorrow morning.&nbsp;



Here’s a quick review of what analysts are expecting and how we’d interpret different outcomes:



Headline PCE is predicted to come in at 2.3% higher year-over-year in August. This would represent a decline from the 2.5% figure reported in July and would also put annual inflation at its lowest point in four years.&nbsp;



Analysts expect core PCE (excluding volatile food and energy prices) to increase slightly and come in 2.7% higher annually, as compared to 2.6% in July.&nbsp;



Preston Caldwell, senior US economist at Morningstar, is <a href="https://www.morningstar.com/markets/august-pce-report-forecasts-show-more-good-news-inflation">forecasting</a> a 0.15% increase in overall PCE. He says core PCE will come in at 1.9% annualized over the past three months and at 2.4% over the past six months.&nbsp;



Should his predictions come true, Caldwell believes this will set up the FOMC for two additional 25bps rate cuts, one in November and one in December.&nbsp;



Remember, the latest dot plot shows that most committee members see us ending 2024 50bps lower than where we currently stand. <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">Fed fund futures</a> markets on Thursday put the odds of a 50bps cut in November at 53%.&nbsp;



The report will be published at 8:30 am ET Friday. Stay tuned for our recap in On the Margin.&nbsp;



— Casey Wagner



<h2 class="wp-block-heading">Harris, Democrats quietly court crypto industry</h2>



Vice President Harris continues to cautiously signal to crypto-focused voters that she intends to be more supportive of the industry than the current administration is.&nbsp;



In a <a href="https://www.youtube.com/watch?v=XokApnr_Cak">speech</a> Tuesday evening at the Economic Club of Pittsburg, Harris promised that under her leadership, the US will “remain dominant in AI, quantum computing, blockchain and other emerging technologies.”&nbsp;



The comments coincide with an apparent broader push in the Democratic Party to change the narrative around crypto. Sen. Elizabeth Warren, arguably <a href="https://blockworks.co/news/sec-wrong-bitcoin-etf-elizabeth-warren">one of the industry’s biggest adversaries</a> on the Hill, told <a href="https://www.semafor.com/article/09/26/2024/harris-escalates-her-courtship-of-crypto">Semafor</a> she “has no problem with people buying and selling crypto.”&nbsp;



“We need to make sure we have curbs in place, like we do in every other part of our financial system, so that crypto can’t be used by terrorists, drug traffickers and rogue nations,” she added. Now that sounds more like the <a href="https://blockworks.co/news/elizabeth-warren-challenger-senate">Warren we know</a>.&nbsp;



Still, the shift from Dems — slight as it may be — is significant.&nbsp;



To be clear, I am not saying that Harris is going to be a pro-crypto president (I haven’t said that about Trump, either). Trump’s <a href="https://blockworks.co/news/bitcoin-2024-nashville-recap">efforts to woo the industry</a> have, in my opinion, forced the Harris camp to address the topic, and now we have both candidates talking about digital assets.&nbsp;



That’s just not a reality I had foreseen even one year ago.&nbsp;



Maybe now we’ll see an actual, formal crypto platform from either one of them, although I wouldn’t hold my breath.&nbsp;



— Casey Wagner



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



<ul class="wp-block-list">
<li>Worldcoin’s native WLD token is surging following recent <a href="https://money.usnews.com/investing/news/articles/2024-09-26/openai-departures-from-company-not-linked-to-restructuring-ceo-says">reports</a> that OpenAI is looking to shift to a for-profit model. Sam Altman, OpenAI’s CEO, is also the co-founder of Worldcoin, a cryptocurrency project focused on <a href="https://blockworks.co/news/lightspeed-newsletter-worldcoin-reputation-problem">using biometrics to confirm identity</a>. WLD is up 4% over the past 24 hours and more than 30% in the past week. </li>



<li>New York City Mayor Eric Adams faces five federal public corruption charges, a newly unsealed indictment reveals. Adams had previously been viewed by many as a <a href="https://blockworks.co/news/new-york-mayor-elect-gives-city-token-seal-of-approval">pro-crypto politician</a>, promising in 2022 that he would take his first three paychecks as mayor in cryptocurrency, a plan that was ultimately <a href="https://statescoop.com/new-york-mayor-eric-adams-paycheck-cryptocurrency-bitcoin/#:~:text=Technically%2C%20Adams'%20can't,being%20paid%20in%20U.S.%20dollars.">thwarted</a> by the US Department of Labor. </li>



<li>SEC Chair Gary Gensler and billionaire investor Mark Cuban posed for a <a href="https://x.com/GaryGensler/status/1839359206291652974">photo</a> on the set of CNBC’s Squawk Box. Whether the pic was snapped before or after Cuban told the world he’d like to <a href="https://www.cnbc.com/video/2024/09/26/billionaire-investor-mark-cuban-our-place-in-the-world-depends-on-our-ability-to-invest-in-ai.html">take Gensler’s job</a> remains unknown.</li>
</ul>



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China goes big on stimulus to recover from stagnation

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Crypto’s chattering class has been beefing over transactions per second (TPS) lately, a metric that’s often used in the abstract to demonstrate a blockchain’s throughput. Solana boasts a higher TPS than its main rival, Ethereum.



The most recent social media go-round was ignited by the news that Firedancer, a high-performance client being developed by Jump Crypto and meant to push Solana’s TPS lead even further, had <a href="https://blockworks.co/news/lightspeed-newsletter-solana-firedancer-testnet">entered its testnet phase</a>. Jump chief scientist Kevin Bowers said in a <a href="https://blockworks.co/tag/solana">Solana</a> Breakpoint talk that Firedancer had <a href="https://x.com/SolanaCompass/status/1837025861201269027">hit</a> 1 million TPS in synthetic testing.&nbsp;



A crypto VC then <a href="https://x.com/QwQiao/status/1837210195774296303">posted</a> about Solana shipping a “1m tps client” while the Ethereum world was consumed in archaic debates about “whether eth is money,” and the engagement bait went down hook, line, and sinker.



Namik Muduroglu, part of the founding team for the yet-unreleased layer-2 MegaETH, <a href="https://x.com/NamikMuduroglu/status/1838622154872512961">posted</a> a GitHub screenshot noting that the Solana protocol is currently limited to around 81,000 TPS at a maximum and that MegaETH’s block times would be shorter than Solana’s, meaning transactions could be processed some milliseconds faster.&nbsp;



Solana folks shot back, arguing that the 81,000 TPS parameter can be changed and pointing out that MegaETH is, to paraphrase Chris Brown, hating from outside the [existent blockchain] club.



As an idea, TPS is pretty easy to grok — how many transactions can a blockchain process every second? One million is a nice, large, round number, but things get more complicated in practice.



For one, TPS is often cited aspirationally. Firedancer’s 1 million TPS came in a testing environment, without actual user transactions. Unreleased blockchains <a href="https://www.theblock.co/post/278182/monad-10000-tps-devnet-launch">Monad</a> and <a href="https://www.theblock.co/post/274816/founders-fund-backed-layer-n-hits-120k-tps-in-testing-ahead-of-february-public-testnet">Layer N</a> also drew media coverage for TPS numbers that came in testing.&nbsp;



Solana’s own TPS is heavily affected by whether or not one includes “vote” transactions which come from validators processing blocks. To this point, developer João Mendonça pointed out to me that TPS can measure a blockchain’s demand and capacity. Vote transactions don’t demonstrate demand, but they do show capacity, Mendonça argued.&nbsp;



This is all separate from block times, which measure how quickly new blocks are created. Solana’s block time is 400 ms, which is a figure that can get faster with better hardware, the Solana Foundation <a href="https://solana.com/">says</a>. Muduroglo implied that MegaETH wants to push block times closer to 10 ms.



But TPS also assumes demand for transactions in the first place. Solana Foundation institutional head Nick Ducoff <a href="https://x.com/nickducoff/status/1839310190992306293">told</a> me on X that higher TPS is meaningful for use-cases like high frequency trading, an algorithm-driven style of trading can involve making tons of transactions very quickly.&nbsp;



This comports with Solana’s vision for a decentralized Nasdaq — but that would require many more firms deciding they want to do such business onchain.



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Debates flare up over blockchain TPS in testing environments

Crypto markets are giving hints of altcoin season. But we’re not there yet.



The total crypto market cap has jumped almost 20% since earlier this month, swelling by over $360 billion to $2.35 trillion. Altcoins are responsible for about 40% of those gains, with the rest coming from bitcoin.



But first, let’s define altcoin season.



One sometimes-cited <a href="https://www.blockchaincenter.net/en/altcoin-season-index/">index</a> says an altcoin season starts when three-quarters of the top 50 coins have performed better than bitcoin over the past 90 days.



Only 34% of the top 50 have beaten bitcoin across that period. There was a very brief period at the start of the year where those conditions were met but it didn’t pan out into a full-blown altcoin season.



As loyal Empire readers would know (<a href="https://blockworks.co/newsletter/empire">subscribe to the daily newsletter here</a>), a <a href="https://blockworks.co/news/bitcoin-bull-markets-comparison">different way</a> of tracking altcoin seasons includes much more of the market than just the top 50. But even that still says we’re far away.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1600" height="1034" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/09/image-4.png" alt="" class="wp-image-92309" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/09/image-4.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/image-4.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/image-4.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/image-4.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/image-4.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/image-4.png?w=398 398w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/image-4.png?w=404 404w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/image-4.png?w=339 339w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/image-4.png?w=80 80w" sizes="(max-width: 1600px) 100vw, 1600px" /><figcaption class="wp-element-caption">Altcoin seasons are possible when the blue line (altcoins) rises above the orange line (bitcoin).</figcaption></figure>



It goes like this: Altcoin season potentially starts when the market cap growth of the entire crypto market — minus the top 10 — eclipses that of bitcoin, starting from the cycle bottom.



A full-blown season is only confirmed if the wider crypto market grows faster than bitcoin for at least 90 days in a row.



It’s not a perfect model, but it holds up during backtesting. It’s also generous to altcoins. In many cases, market cap growth merely reflects the rate at which tokens are unlocked and added to circulating supplies — not price appreciation.



Based on these rules, crypto has seen three distinct altcoin seasons in the past eight years, as shown by the green shaded areas on the chart below.



<ul class="wp-block-list">
<li>18 months between July 2016 and January 2018 — litecoin, monero, ethereum classic, dash and proto-prediction market token augur were in the top 10.</li>



<li>Six-and-a-half months between December 2018 and July 2019 — bitcoin cash, EOS, stellar and bitcoin sv were close to blue-chip status.</li>



<li>Nearly 18 months between May 2020 and November 2021 — polkadot and chainlink sat at the top end.</li>
</ul>



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1184" height="851" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/09/image-3.png" alt="" class="wp-image-92308" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/09/image-3.png?w=1184 1184w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/image-3.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/image-3.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/image-3.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/image-3.png?w=358 358w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/image-3.png?w=363 363w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/image-3.png?w=305 305w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/image-3.png?w=80 80w" sizes="(max-width: 1184px) 100vw, 1184px" /><figcaption class="wp-element-caption">Altcoin seasons have arrived directly after bitcoin halvings, but not always.</figcaption></figure>



The current market cycle started on Nov. 21, 2022, when crypto’s total market cap slipped to $727.58 billion following the FTX debacle, its lowest point since December 2020.



Bitcoin’s market cap has grown by almost four times from that cycle bottom — from $313.4 billion to $1.27 trillion ($15,500 to $64,400).



Altcoins, meanwhile, have grown by less than 2.8x over the same period, which means we’re over a whole order of magnitude away from altcoin season.&nbsp;



That gap had increased dramatically between April and the start of this month, when altcoin season was the furthest away it’s been all cycle. It was at its closest when bitcoin peaked in March.



All that implies that most recent altcoin rallies are really just solid bounces. Altcoin prices corrected hard after bitcoin’s recent all-time high and have only now broadly returned to where they were at the end of July.



Bears would say that altcoin season won’t arrive before the bull market runs its course.&nbsp;



Bulls, however, might reason that we’re in for what could be the most powerful altcoin season on record — considering how far they still have to run.



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



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Waiting for altcoin season: Why recent rallies may just be strong bounces

Alison Haire

We are inviting a crisis of innovation and security by allowing a small handful of elites to centralize control over AI compute. The monopolization of this critical resource stifles competition, creates dangerous single points of failure and restricts access to the most transformative technology in human history. We must embrace decentralized compute networks that democratize access and empower innovators globally. Without this shift, AI will be governed by profit-driven oligopolies, and its potential to serve the greater public good will be irrevocably squandered.



AI is not just a buzzword. It’s not just hype used in fundraising pitches or marketing decks. This technology is going to radically <a href="https://www.weforum.org/agenda/2023/06/generative-ai-business/">transform</a> every aspect of society — how we work, play, communicate and create. Personally, I believe AI’s impact will rival, if not surpass, that of the internet, modern computing and even the printing press. I also think it will be central to <a href="https://bigdataanalyticsnews.com/artificial-intelligence-statistics">solving</a> the most pressing challenges of our time; diagnosing diseases with unprecedented accuracy, predicting climate patterns, making our cities smarter and providing us with personalized learning experiences, to name a few. As <a href="https://blockworks.co/tag/artificial-intelligence">AI</a> models become more complex, so does the need for greater infrastructural support. So much so that computing resources are now being referred to as “<a href="https://theaiinsider.tech/2024/04/10/compute-is-the-new-oil-ceo-of-groq-jonathan-ross-on-pioneering-ais-future/#:~:text=Looking%20towards%20the%20future%2C%20Ross,become%20more%20complex%20and%20widespread.">the new oil</a>.” In fact, over the last 13 years, the amount of computing power used to train AI systems has skyrocketed by a staggering <a href="https://arxiv.org/pdf/2402.08797">factor of 350 million</a>. Yet today, 90% of the world’s data and compute resources are <a href="https://www.statista.com/chart/18819/worldwide-market-share-of-leading-cloud-infrastructure-service-providers/">controlled</a> by a handful of corporations. This is not just an economic issue — it’s a structural vulnerability. One recent example of the risks inherent to centralization was the Crowdstrike outage — one of the largest IT <a href="https://www.bbc.com/news/articles/c903e793w74o">failures</a> in history, which <a href="https://www.cnbc.com/2024/07/19/latest-live-updates-on-a-major-it-outage-spreading-worldwide.html">disrupted</a> critical services across healthcare, transportation and emergency sectors, and caused over $1 billion in revenue <a href="https://www.washingtonpost.com/business/2024/07/24/crowdstrike-microsoft-crash-bug-report/?itid=lk_inline_manual_7">losses</a>. The clearest takeaway is that when backbone infrastructure is centralized, the resulting single points of failure become a massive liability.



Read more: <a href="https://blockworks.co/news/empire-newsletter-crypto-ai-intersection-grows">The intersection between crypto and AI is growing</a>



Beyond security, centralization also stifles competition. In the US alone, the AI market is <a href="https://www.forbes.com/sites/jiawertz/2024/03/16/how-ai-is-uprooting-major-industries/#:~:text=Artificial%20Intelligence%20(AI)%20is%20revolutionizing,how%20businesses%20operate%20and%20compete.">anticipated</a> to climb from $118 billion in 2021 to nearly $300 billion by 2026. But if only a few players dominate the AI landscape, my fear is that smaller innovators will be locked out for good. This would create an environment where diverse perspectives and approaches — so vital to humanity’s greatest breakthroughs — are lost. The “<a href="https://www.nytimes.com/2024/04/29/technology/ai-startups-financial-reality.html">end of the beginning</a>” of the AI boom could easily be characterized by stagnation, where innovation is sacrificed in favor of protecting entrenched interests. And worse still, it will aid in the proliferation of existing biases by mirroring the priorities of these powerful corporations.



Decentralized compute offers a viable alternative. Distributed networks rely on open infrastructures and tap into unused computational resources, such as GPUs in personal devices and data centers that provide affordable compute power on a global scale. This allows more individuals and companies to participate in AI development, and fosters a more inclusive ecosystem.



Just as peer-to-peer platforms like Uber and Airbnb disrupted traditional industries by democratizing resources, decentralized compute networks can do the same for AI. By spreading compute power across a global network, these systems are more resilient and stand to deliver faster performance and reduce the risk of critical failures that plague centralized alternatives.



Moreover, decentralized networks provide the key advantage of reducing costs. The ability to access compute resources through a decentralized system would <a href="https://www.techspot.com/news/100059-eu-regulators-name-big-six-tech-gatekeepers-fall.html">bypass</a> expensive intermediaries, making AI development more affordable and accessible for all. This is especially critical for scientific research, which benefits from the collaborative, open-source nature of these networks.



Read more from our opinion section: <a href="https://blockworks.co/news/web3-flashy-functional-infrastructure">Web3 doesn’t need flashy — it needs functional</a>



Early efforts in decentralized compute, such as BOINC, struggled due to weak incentive structures. However, the integration of blockchain technology offers a solution to this challenge. By utilizing decentralized payment systems and trustless coordination mechanisms, decentralized compute networks can incentivize participation while ensuring secure, transparent interactions without intermediaries.



The future of AI must not be controlled by a small cabal of technological gatekeepers. The convergence of distributed compute research, blockchain infrastructure and the growing demand for AI makes this the perfect time to invest in decentralized systems. The potential benefits are enormous — AI that serves public welfare driven by fairness, openness and trustless infrastructure. I truly believe that we have a collective responsibility to build technological frameworks that underpin these values. The future of AI must be open, fair and accessible. If we want to ensure that these breakthroughs serve the whole of humanity, our time to act is now.



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A small group of tech giants are holding AI’s future hostage

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<h2 class="wp-block-heading">PUMPkin spice latte</h2>



Crypto markets are giving hints of altcoin season. Sadly, we’re not there yet.



As with most things ‘round these parts, there are hardly any formal definitions on which we all agree.&nbsp;



Does a bitcoin bear market start when it corrects over 20% from its local top, as is the case with traditional finance? Obviously not.&nbsp;



Is a protocol “decentralized” because it has a governance token? Life would be easier if that were always true.



The total crypto market cap has jumped almost 20% since earlier this month, swelling by over $360 billion to $2.35 trillion. Altcoins are responsible for about 40% of those gains, with the rest coming from bitcoin.



So, what exactly is an altcoin season?&nbsp;



One sometimes-cited <a href="https://www.blockchaincenter.net/en/altcoin-season-index/">index</a> says an altcoin season starts when three quarters of the top 50 coins have performed better than bitcoin over the past 90 days.



Only 34% of the top-50 have beaten bitcoin across that period. No altcoin season, although there was a very brief period at the start of the year where those conditions were met.



As loyal Empire readers would know, I have a <a href="https://blockworks.co/news/bitcoin-bull-markets-comparison">different way</a> of tracking altcoin seasons that includes much more of the market than just the top 50. But even that still says we’re far away.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXckITEQEE3deVbwWBjCCu-iTB_3ufLeLU-faKpyr1FRvgeLN0-RksZKnBOXIBkl-AurPF8u3SyXVVuniph0z4jXco-fVAjESdVPboOBXMJ_-t5UcHlwNDldF11G-4Xd95Rkd6YYvM2zEMixI0p_X-1nxB3B?key=i-3_N6WKac_EgjfwX7W6tA" alt=""/><figcaption class="wp-element-caption">Altcoin seasons are possible when the blue line (altcoins) rises above the orange line (bitcoin)</figcaption></figure>



It goes like this: Altcoin season potentially starts when the market cap growth of the entire crypto market — minus the top 10 — eclipses that of bitcoin, starting from the cycle bottom.



An altcoin season is only confirmed if the wider crypto market grows faster than bitcoin for at least 90 days in a row.



It’s not a perfect model, but it does hold up during backtesting. It’s also generous to altcoins: In many cases, market cap growth merely reflects the rate at which tokens are unlocked and added to circulating supplies — not price appreciation.



Based on these rules, crypto has seen three distinct altcoin seasons in the past eight years, as shown by the green shaded areas on the chart below.



<ul class="wp-block-list">
<li>18 months between July 2016 and January 2018 — litecoin, monero, ethereum classic, dash and proto-prediction market token augur were in the top 10.</li>



<li>Six-and-a-half months between December 2018 and July 2019 — bitcoin cash, EOS, stellar and bitcoin sv were close to blue-chip status</li>



<li>Nearly 18 months between May 2020 and November 2021 — polkadot and chainlink sat at the top end.</li>
</ul>



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe9iG2td4ZqNzppTyVWFm68I9u78oE8CjiSN3A-OTltIVPWbQPk7FqwDQCCmhqPeRK39MEqH7jZlmG3Op25n31voYkQxw_IdcoGzKwEk0B4NbZNpjnkoHlAw4Btr_wYIRj70q1O3ae9Sn3By1UW11PsDbEl?key=i-3_N6WKac_EgjfwX7W6tA" alt=""/><figcaption class="wp-element-caption">Altcoin seasons have arrived directly after Bitcoin halvings, but not always</figcaption></figure>



The current market cycle started on Nov. 21, 2022, when crypto’s total market cap slipped to $727.58 billion following the FTX debacle, its lowest point since December 2020.



Bitcoin’s market cap has grown by almost four times from that cycle bottom — from $313.4 billion to $1.27 trillion ($15,500 to $64,400).



Altcoins, meanwhile, have grown by less than 2.8x over the same period, which means we’re over a whole order of magnitude away from altcoin season.&nbsp;



That gap had increased dramatically between April and the start of this month, when altcoin season was the furthest away it’s been all cycle. It was at its closest when bitcoin peaked in March.



All that implies that whatever rallies are happening in altcoins right now are really just solid bounces.&nbsp;



Altcoin prices corrected hard after bitcoin’s recent all-time high and have only now broadly returned to where they were at the end of July.



Bears would say that altcoin season won’t arrive before the bull market runs its course.&nbsp;



Bulls, however, might reason that we’re in for what could be the most powerful altcoin season on record — considering how far they still have to run.



— David Canellis



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



<ul class="wp-block-list">
<li>BTC is up 1% in the past day and is eyeing another run at $64,500, after bouncing off it at least three times in the past seven days.</li>



<li>ETH is flat after meeting its own resistance at $2,640.</li>



<li>Only two top-100 tokens are down in the past <a href="https://www.coingecko.com/">week</a>: KAS has shed 6%, XMR 5%.</li>



<li>Ether again slipped into <a href="https://ultrasound.money/">deflationary</a> status overnight, but not for long.</li>



<li>Base <a href="https://defillama.com/chain/Base">TVL</a> has set a new record above $2 billion for the first time ever, adding over $600 million in the past 18 days.</li>
</ul>



<h2 class="wp-block-heading">Take a breath</h2>



This week has been quiet when it comes to volatility, but it might not stay that way for very long.



You see, $5.8 billion of options expire tomorrow in one of the largest expirations so far this year.&nbsp;



20% of bitcoin options are in the money, meaning that the larger expiry “is likely to heighten market volatility or activity as traders close or roll over their positions, which could also impact price,” Deribit CEO Luke Strijers said.&nbsp;



“Overall the options market (all parties) has seen a good year with volumes growing month over month. Despite a lot of new competition, we have not seen a very large loss of market share, which is a healthy signal as the market is growing — exchanges do not compete for the same clients, we jointly grow the pie and activate new ones,” Strijers continued.



With this looming, let’s zoom out and look at the broader market since David’s provided us with a nice snapshot into altcoins. A K33 note earlier this week showed that CME traders are “cautiously optimistic.”



“CME premiums pushed toward 9% for BTC and ETH following the FOMC’s rate cut announcement. Open interest on CME peaked at 161,040 BTC last Thursday after the FOMC, amidst an aggressive 6,500 BTC increase in exposure from active market participants. Since then, open interest has retraced to 152,000 BTC,” the analysts wrote.&nbsp;



But perp traders aren’t feeling as optimistic and some bearish sentiment remains, which could “set the stage for a sizable short squeeze.”



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdpfi7gF_a9Df5Ec1Tr0x-gLF5AiCKu8AWKlEb04TJI58s204-fvfeAXI-Sm4xmpHNhXVuzG5wnEk9FAJOQlCRxN5382oc3_LBhrAnNFnD_LuK4jRIiCfzuggj00Gq-rQFAbW-x3E9rH7kw20XGy3GKbGN4?key=i-3_N6WKac_EgjfwX7W6tA" alt=""/><figcaption class="wp-element-caption">Source: Deribit</figcaption></figure>



“Perp traders have begun to lean more conservative since the initial FOMC-related rally, with a widening perp discount amidst steady price action. This coincides with an increase in open interest which still hovers near yearly highs,” per analysts Vetle Lunde and David Zimmerman.&nbsp;



The fear and greed <a href="https://alternative.me/crypto/fear-and-greed-index/#google_vignette">index</a>, for those of you that follow it, is neutral after showing some fear last week.



The macro influence isn’t going away any time soon, with K33 noting: “We also expect economic indicators to continue influencing bitcoin price action. Next week sees the monthly release of important US labor market statistics, accompanied by a banking holiday season in the Eastern hemisphere, which may heighten emphasis on US-related data.”



We’re getting closer and closer to the November election and the fourth quarter, which still looks to be a potentially positive time for crypto.&nbsp;



For the bulls, it’s almost go time.



– Katherine Ross



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



<ul class="wp-block-list">
<li>Ethena is <a href="https://www.coindesk.com/markets/2024/09/26/ethena-announces-ustb-stablecoin-backed-by-blackrocks-buidl/?utm_medium=referral&amp;utm_source=rss&amp;utm_campaign=headlines">launching</a> a stablecoin backed by BlackRock’s BUIDL.</li>



<li>Vice president and presidential nominee Kamala Harris said the US should become “<a href="https://www.theblock.co/post/318216/kamala-harris-says-us-should-become-dominant-in-blockchain-reiterates-digital-assets-in-economic-plan">dominant</a>” in blockchain.</li>



<li>PayPal’s US business customers can now buy, own and sell crypto, the firm <a href="https://newsroom.paypal-corp.com/2024-09-25-PayPal-Enables-Business-Accounts-to-Buy,-Hold-and-Sell-Cryptocurrency">said</a>.</li>



<li>Asset manager Guggenheim tokenized $20 million of commercial paper on the Ethereum blockchain, CoinDesk <a href="https://www.coindesk.com/business/2024/09/26/wall-street-titan-guggenheim-tokenizes-20m-of-commercial-paper-on-ethereum/?utm_medium=referral&amp;utm_source=rss&amp;utm_campaign=headlines">reported</a>.</li>



<li>Curve Finance is considering <a href="https://www.coindesk.com/markets/2024/09/26/curve-finance-mulls-removing-trueusd-as-collateral-for-stablecoin-curve-usd/">removing</a> TrueUSD as collateral for its stablecoin Curve USD.</li>
</ul>



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



Q: Where is crypto headed in 2025?



I’m still only hearing positive things about next year.&nbsp;



Mind you, that hype train has yet to fully leave the station. But the folks on board seem pretty content with the way things are going. And no, a lot of them don’t seem to care who becomes president.&nbsp;



BTC at $1 million is unlikely, so let’s not get too crazy, but $75,000 to $100,000 is still on the table.&nbsp;



A full-swing bull market is also still in play, though it’s hard to tell how likely that is at this point. We’re still a tad too early to make those calls, but hopium is a wild thing.&nbsp;



– Katherine Ross



Only cowards wait until the end of the year for lofty predictions. Here are my top five:



<ol class="wp-block-list">
<li>A memecoin native to Bitcoin will flip PEPE.</li>



<li>A synthetic stablecoin will implode.</li>



<li>DePIN activity will decouple from token prices.</li>



<li>At least one spot ETF will be hacked.</li>



<li>Initial coin offerings will make a comeback.</li>
</ol>



Other weird stuff might start to come true, too. AI trading bots could gamify flash loan attacks. Would they be punished to the same degree as humans?&nbsp;



A public good crypto-lottery might replace Telegram click-to-earn games. After all, what’s the difference between trying to time the top on a memecoin airdrop and leaving it all up to RNG on the blockchain?



Personally, I’m ready for a more chaotic crypto space in 2025. If we wanted calm, we’d be obsessing over pension funds, not magic internet money.



— David Canellis



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It’s been 1,051 days since the last altcoin season

In the wake of two historic approvals for crypto exchange-traded products in the US this year, industry leaders say there is still work to be done.&nbsp;



“If you zoom out, the fact that we got two different types of crypto exchange-traded funds in the marketplace this year actually means that it&#8217;s maybe been the biggest year for regulatory advancement that we&#8217;ve seen,” Teddy Fusaro, president at Bitwise, said during a panel discussion at the DACOM event in New York Wednesday.&nbsp;



“Now, whether or not the [Securities and Exchange Commission] really wanted to do that or if their hand was maybe forced, based on what happened in the courts, is another story,” Fusaro added, referring to <a href="https://blockworks.co/news/judges-grayscale-sec-ruling">Grayscale’s win over the SEC</a> in federal appeals court last year.&nbsp;



The panel, held at the Solidus Labs-hosted event, focused on what the industry needs to continue growing and attracting institutional players.&nbsp;



Read more: <a href="https://blockworks.co/news/on-the-margin-newsletter-inevitable-institutional-digital-assets-involvement">Digital assets involvement becoming ‘inevitable’ for more institutions</a>



“These products were a watershed moment,” Chris Tierno, deputy general counsel at Gemini, said of both the bitcoin and ethereum spot <a href="https://blockworks.co/tag/etfs">ETFs</a>. “When I think about institutionalization, I think about buyers, sellers, infrastructure providers and regulators all working in a concerted effort to build an industry.”&nbsp;


<div class="wp-block-image">
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This last prong, Tierno said, is essential when it comes to onboarding traditional players.&nbsp;



“When we start approaching our partners in the industry, they don&#8217;t want to risk their primary source of their business for what could potentially be five or 10% revenues; they&#8217;re not going to put that at risk for a product that doesn&#8217;t have certainty,” he said. “So we really need to work closely with the regulators.”&nbsp;



Read more: <a href="https://blockworks.co/news/on-the-margin-newsletter-bear-market-vibes">Our industry is in limbo. What’s going on?</a>



The comments come moments after Commodity Futures Trading Commission Commissioners Caroline Pham and Summer Mersinger delivered a keynote address Wednesday. The pair, who are known for their dissenting opinions related to crypto enforcement actions brought by the <a href="https://blockworks.co/tag/cftc">CFTC</a>, expressed frustration with the current agenda at their agency.&nbsp;



“There’s this broader issue with the trend the CFTC has taken in its enforcement priorities, which is that we are increasingly bringing cases for registration or compliance violations instead of focusing on true bad actors — people who are lying, cheating or stealing,” Pham said.&nbsp;



Pham earlier this month issued a dissenting <a href="https://www.cftc.gov/PressRoom/SpeechesTestimony/phamstatement090424">opinion</a> after the <a href="https://blockworks.co/news/cftc-uniswap-settlement-dissenting-opinion">CFTC settled charges against Uniswap</a> for alleged commodities law violations. The commission’s ultimate decision, Pham said, was “legally simplistic.”&nbsp;



Mersinger, in her own dissenting <a href="https://www.cftc.gov/PressRoom/SpeechesTestimony/mersingerstatement090424#:~:text=But%2C%20imagine%20if%20J.,at%20play%20in%20this%20settlement.">opinion</a>, said going after Uniswap in the first place was a misguided use of agency resources, especially given that commissioners had alleged no harm to customers or market participants.&nbsp;



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Crypto needs ‘to work closely with the regulators:’ Gemini deputy general counsel

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Welcome to the On the Margin Newsletter, brought to you by Ben Strack and Casey Wagner. Here’s what you’ll find in today’s edition:



<ul class="wp-block-list">
<li>Ben unpacks some of the latest updates in the world of tokenization as the sector continues attracting more traditional players. </li>



<li>Casey shares updates from Washington on where we stand with crypto legislation headed into the election. </li>



<li>Speaking of the election, we look at how grassroots movement “Crypto4Harris” is ramping up its efforts. </li>
</ul>



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



<h2 class="wp-block-heading">Tokenization efforts not slowing down </h2>



Are you sick of reading about tokenization yet?



We wouldn’t blame you, as we’ve heard about the segment’s potential for a while now.&nbsp;



But the exploration of this sector by financial majors seems to be living up to the hype, at least in terms of the volume of initiatives. As big companies continue to figure out the best way into the space, many industry watchers expect the trials and tribulations to ultimately <a href="https://blockworks.co/news/tradfi-blockchain-trials-mass-adoption">bear massive fruit</a>.&nbsp;



Tokenization has been a hot topic in recent years. <a href="https://blockworks.co/news/stablecoin-with-yield-franklin-templeton">Franklin Templeton launched</a> its OnChain US Government Money Fund in 2021 and started allowing institutional investors to transfer shares of the fund to other shareholders earlier this year.



Asset management behemoth BlackRock also joined that space, introducing its own <a href="https://blockworks.co/news/empire-newsletter-blackrock-buidl-milestone">tokenized money market fund</a> in March.



A recent report by Kraken subsidiary CF Benchmarks noted that while tokenized money market funds eliminate intermediaries and boost accessibility via asset fractionalization, these benefits are only scratching the surface.&nbsp;



Investors across a broad range of financial instruments will be given better liquidity, transparency and efficiency thanks to tokenization, analysts Gabe Selby and Mark Pilipczuk wrote.



“Tokenized assets can integrate with DeFi, enabling stocks, bonds and real estate to be used as collateral or traded on decentralized exchanges,” they added.&nbsp; Selby and Pilipczuk project tokenized assets to breach the $20 billion mark over the next 12 months. Here’s where they note that space stands now:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeo5oV7p0HE5sPCN8Q-2VFrQFYhCDbFgek2sFt6HrKufQX8uZ6Df4X4ZZBj2SQbTPIRWTXniEvxuB1qA8jN1P_j_fF7QokZ6Zng-ZK6tQxhv8zEbU3-P23fAhzyP7al6F98rIg7rxzh5e1nJitX6aj6OII?key=b7MAt857_rhYBDJEp0GrFg" alt=""/></figure>



WisdomTree — a fund group that manages $110 billion in assets — debuted its “direct-to-business counterpart” to the “blockchain-enabled” <a href="https://blockworks.co/news/blockchain-wisdomtree-app?utm_source=on-the-margin.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=the-fed-has-spoken&amp;_bhlid=7b4433bb14ca99a7cd67b2a50f6ed8e4d399434b">consumer app it launched last year</a>.&nbsp;



Designed to unlock tokenized real-world asset access to more users, the new platform hopes to ultimately enable them to interact with any WisdomTree-issued token across wallets and blockchains.



There’s also crypto-focused Amina Bank, which said last week it’ll be exploring how tokenization can enhance wholesale cross-border payments. It will be facilitated by <a href="https://www.bis.org/press/p240403.htm">Project Agorá</a>, launched earlier this year by the Bank for International Settlements and the Institute of International Finance.



Another development: After offering tokenized physical gold to institutional investors last year, banking giant HSBC tested “quantum-secure technology” for buying and selling such assets.



Finally, there were SkyBridge Capital founder Anthony Scaramucci’s <a href="https://x.com/Scaramucci/status/1837182481054773501">comments</a> at <a href="https://blockworks.co/news/lightspeed-newsletter-solana-breakpoint-2024">Solana Breakpoint</a>, as he explained “why we want to tokenize everything.”&nbsp;



Spoiler: The cost of various transaction verification systems worldwide, which he pegged at $7 trillion, is one of the biggest reasons.



“Just imagine if we can start tokenizing things and take third parties out of the equation, use the distributed network to trust each other, take that $7 trillion and put it back into the economy,” he posed to the crowd.



Plenty are indeed imagining, and plenty are working toward such a world. But there will also be plenty of waiting as we see which specific blockchain tech use cases win out.



— Ben Strack



<h3 class="wp-block-heading">4 </h3>



The number of SEC commissioners who said “yes” when asked whether or not the US should “encourage innovating technologies like digital assets.” The question came from <a href="https://x.com/RepWileyNickel/status/1838668378153877759">Rep. Wiley Nickel</a>, D-N.Y., during <a href="https://blockworks.co/news/sec-commissioners-lawmakers-clash">yesterday’s SEC oversight hearing</a> in the House Financial Services Committee.&nbsp;



The sole witness who did not give a simple “yes” was SEC Chair Gary Gensler, who responded with the following: “Protecting investors, I agree with that for sure. Promoting innovation? Yes, but protecting investors for sure.” When pressed to give a “yes” or “no” answer, Gensler again reiterated that protecting investors is his biggest priority.&nbsp;



<h2 class="wp-block-heading">Emmer at crypto event: Bipartisanship is alive and well</h2>



I found myself trekking to Midtown Manhattan not once, but twice this week. Given the ongoing UN General Assembly meeting, this was no small feat.&nbsp;



I braved the nightmarish commute first for a Crypto4Harris event on Tuesday evening (more on that later) and then for the Solidus Labs DACOM event Wednesday.&nbsp;



The Solidus event was headlined by government speakers: Rep. Tom Emmer, D-Minn., CFTC Commissioners Caroline Pham and Summer Mersinger, and NY State Department of Financial Services Superintendent Adrienne Harris.&nbsp;



Emmer, who appeared virtually in a pre-recorded address (unfortunate, but as organizers said, it’s crunchtime to pass a funding bill before the end of the Congressional session), said he’s reassured by recent progress in Congress.&nbsp;



He pointed to the <a href="https://blockworks.co/news/house-passes-act-fit21-with-bipartisan-support">passage of FIT21 in the House</a> last spring, and bipartisan support for efforts to <a href="https://blockworks.co/news/house-committee-resolution-against-sab121">block the SEC’s SAB 121 guidance</a>. Still, Emmer said, with the election looming, it will be difficult to pass meaningful legislation until the dust settles after November.&nbsp;



Cody Carbone, president of the Chamber of Digital Commerce, said there’s a strong chance we see a divided Congress in 2025, with the Senate potentially flipping Republican and the House going to the Democrats.&nbsp;



But this may not be the nail in crypto legislation’s coffin. In fact, a divided Hill may be just the push lawmakers need to get something through.&nbsp;



“Hopefully digital assets is one of those nonpartisan issues that [members of Congress] can look to very early, where there&#8217;s already been so much bipartisan progress,” Carbone said. “This is an issue now that both parties are starting to rally behind, and you&#8217;re looking for any opportunity to show — when you&#8217;re early in leadership — that you can pass something bipartisan.”



— Casey Wagner&nbsp;



<h2 class="wp-block-heading">Rep. says Harris is committed to a crypto ‘reset’</h2>



Crypto industry leaders, lawmakers, legal experts and one journalist (about 30 or so of us in total) gathered Tuesday evening in New York for a Crypto4Harris fundraiser.&nbsp;



(A quick note: I attended this event as a member of the press; I did not and have not donated to Harris or any other political campaign.)



The grassroots movement — spearheaded by industry leaders including Amanda Wick, principal at Incite Consulting, and Jason Gottlieb, partner at Morrison Cohen — is focused on rallying the crypto industry against Donald Trump, who, to date, has been <a href="https://blockworks.co/news/more-crypto-remarks-likely-coming-from-trump-harris">far more vocal about crypto policy</a>.&nbsp;



“You want to hear something akin to what Trump says, I can’t offer you that,” Rep. Dan Goldman, D-N.Y., said at the event, where he spoke virtually.&nbsp;



Trump will say whatever he needs to in order to win, argued Goldman (who served as lead counsel on Trump&#8217;s first impeachment). But ultimately, he will always “reverse course.”&nbsp;



<a href="https://blockworks.co/news/kamala-harris-crypto-policy-reset-outlook">Harris’s comments on crypto may be limited</a>, Goldman went on to say, but they are “legitimate in that they are not over the top.”&nbsp;



The comments come as Harris was recently downgraded from a “B” to “NA” on nonprofit Stand With Crypto’s political ranking.&nbsp;



Harris had initially been upgraded to “B” after her comments at a New York City fundraiser over the weekend, where she told the crowd she’d “encourage innovative technologies like AI and digital assets while protecting consumers and investors,” <a href="https://x.com/jeneps/status/1837941967050686719">according</a> to Bloomberg’s Jennifer Epstein.&nbsp;



— Casey Wagner&nbsp;



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



<ul class="wp-block-list">
<li>Apparently 92% of the crypto-related enforcement actions from the SEC under Chair Gensler have involved alleged registration violations, according to <a href="https://x.com/brendanpmalone/status/1838257516506935611">Brendan Malone</a>, policy manager at Paradigm. This compares to around 87% of crypto actions brought under former SEC leaders involving such allegations.</li>



<li>The Bank of New York Mellon is moving forward with providing custody services for bitcoin and ether held by ETF clients without listing the custodied assets as a liability on the bank’s balance sheet, <a href="https://www.bloomberg.com/news/articles/2024-09-24/bny-plans-to-custody-crypto-for-etfs-after-sec-review?utm_source=substack&amp;utm_medium=email">Bloomberg</a> reported Tuesday. The development appears to be an exception to the SEC’s <a href="https://blockworks.co/news/house-committee-resolution-against-sab121">SAB 121 guidance issued in 2022</a>. </li>



<li>The IRS will finalize tax reporting requirements for digital asset brokers by the end of this year, the US Treasury Office of Tax Policy said Tuesday during the American Bar Association Virtual Fall Tax <a href="https://events.americanbar.org/event/b6660c8b-b3e9-4216-b9aa-1f22063cc471/summary">Meeting</a>.</li>
</ul>



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Tokenized assets to exceed $20B over next year: CF Benchmarks

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Sky, the longtime Ethereum DeFi giant formerly known as MakerDAO, is weighing a deployment of its native tokens on Solana, its co-founder Rune Christensen detailed in a forum <a href="https://forum.makerdao.com/t/sky-on-solana-short-term-crosschain-strategy-proposal/25172">post</a>.



Christensen has long admired Solana, and even <a href="https://forum.makerdao.com/t/explore-a-fork-of-the-solana-codebase-for-newchain/21822">proposed</a> moving MakerDAO to a fork of the Solana codebase last year. It seems to be opportunistic timing for Christensen as Sky tries to boost adoption of its decentralized stablecoins while Solana DeFi comes off a period of rapid growth.&nbsp;



And the pending deployment also sets the stage for what could be a battle between a few stablecoin giants competing to absorb liquidity in a DeFi ecosystem that appears to have more room to grow.



Sky launched as MakerDAO in 2015 and created the DAI stablecoin in 2017. The decentralized stablecoin and the lending and borrowing protocols it’s plugged into became an early DeFi success story, and DAI is still the third-largest stablecoin by market capitalization, trailing USDT and USDC. DAI is now known as USDS <a href="https://blockworks.co/news/maker-rebrands-as-sky-dai-will-be-changed-to-usds">following Maker’s rebrand</a> roughly a month ago.&nbsp;



These days, Sky’s <a href="https://makerburn.com/#/rundown">most-used</a> product is its peg stability module, which helps maintain USDS’ peg in part by taking in USDC and issuing USDS. Locking DAI in Sky’s Aave-like Spark protocol to receive elevated yields via sDAI (now known as sUSDS) is also popular.&nbsp;



To grow the PSM and Spark, Sky is now looking to <a href="https://blockworks.co/tag/solana">Solana</a>, where it will launch USDS and yield-bearing sUSDS. The deployment would take place via the Wormhole bridge for now as Sky prepares Solana SkyLink, which will be a native launch of Sky on Solana.&nbsp;



Solana is the “rare” venue for stablecoins that is “sizable” and “looks susceptible to disruption,” longtime Maker and Sky participant PaperImperium told me in a direct message.&nbsp;



Solana’s <a href="https://blockworks.co/tag/stablecoins">stablecoin</a> market capitalization — which, size-wise, is sandwiched between Ethereum layer-2s Arbitrum and Base — is 68% USDC, according to DeFiLlama. This dominance was closer to 75% before PayPal’s PYUSD stablecoin <a href="https://blockworks.co/news/kamino-seeing-benefits-from-liquidity-incentives-on-pyusd">began a Solana liquidity incentive program</a> that earned it roughly 9% of Solana’s stablecoin market.



Sky looks primed to follow a similar route to PYUSD. In a text, Christensen said Sky would run a liquidity incentive program meant to make USDS and sUSDS “liquid on Dexes.” The co-founder added that this could look similar to PYUSD’s incentives program in the short term, but once SkyLink makes Sky natively accessible on Solana, the stablecoin will offer more features.&nbsp;



“Solana is a growing DeFi ecosystem that&#8217;s still missing a major decentralized stablecoin with built-in rewards,” Christensen said.



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