Let's BONK

Byron Gilliam

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



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PUMP token holders now find themselves in the odd position of hoping the money they just sent to Pump.fun will soon be returned to them.



That’s the mood on Crypto Twitter, at least, where influential accounts keep pointing to Pump.fun’s estimated $2 billion cash pile as the bull case for PUMP (see <a href="https://x.com/suganarium/status/1948765211881865443">here</a>, <a href="https://x.com/Yaki_fomoArt/status/1950475784348717418">here</a>, <a href="https://x.com/chooserich/status/1948412910331371670">here</a> and <a href="https://x.com/DukeD_Defi/status/1950496129831084180">here</a>).



The problem, of course, is that token holders have no claim on that cash — even though they supplied most of it.



In IPOs, stock market investors send their money to a company in return for an owner’s claim on assets that’s roughly equivalent to the money they just sent.



In the PUMP ICO, however, crypto investors sent their money to Pump.fun in return for a token with no claim on anything whatsoever.



They knew that. But they also expected to be treated as if they had a claim on the revenue of Pump.fun.



So far, they have been.&nbsp;



Over the past week or so, Pump.fun has used roughly <a href="https://fees.pump.fun">100% of its revenue</a> to buy back the PUMP token.



If you assume it does that forever, the token seems reasonably priced: Annualizing last week’s revenue, PUMP is trading on only about 16x (by market capitalization).



But that’s assuming they also burn all those tokens — and what’s the point of issuing tokens if you’re immediately going to start burning them?



It seems more logical, as people have also been <a href="https://x.com/Dumpster_DAO/status/1949127244112081071">speculating</a>, to do the opposite: either airdropping tokens to users or paying them out as incentives.&nbsp;



Luca Netz, for example, <a href="https://x.com/frontrunnersx/status/1948733725900243248">thinks</a> Pump.fun should airdrop 10% of the token’s supply to the community.



This would “nuke the token,” as he puts it, but that’s part of the appeal: “The token nuking is fine, especially because he has so much cash.”



By “he,” Netz means Pump.fun’s three co-founders, which is instructive: They own the $2 billion of cash that token holders are hoping to have an informal claim on.



If the co-founders are intending to use that cash to buy the token, as people hope, it would make sense to get the token price down first.



“It’s in his interest to buy as much of the token as possible at the lowest price possible,” Netz explained.



In other words, the incentives between the owners of the protocol and the owners of the token are grievously misaligned.



Charlie Munger would say that’s exactly what PUMP token holders should be thinking about.



Equity investors don’t have to worry much about incentives because management is aligned with shareholders by both law and precedent.



The cult of shareholder value that was popularized by the fictional Gordon Gekko in the 1980s is now so ingrained in equity markets that investors are almost always treated like owners.&nbsp;



In crypto, by contrast, token holders have neither law nor precedent to rely on, so they do have to think hard about incentives.



Take Grass, for example — a buzzy AI project (“multimodal search”) that’s already earning “millions of dollars a month,” <a href="https://youtu.be/osFIJBjVXtQ?si=nBnjGOtL8ZXxdivW">according</a> to its founder.



But that’s the full extent of Grass’s disclosure: That revenue is neither onchain nor otherwise made public.&nbsp;



So when <a href="https://x.com/_dshap">Dan Shapiro</a> tried to value the DePIN project for Blockworks Research, he could only take a guess at what “millions a month” might really mean.



“Although Grass keeps network revenue data private,” he wrote, “one can make some educated assumptions from publicly available data licensing deals to estimate the value of the network.”



In other words, he had to look at data licensing agreements made by the likes of OpenAI and Reddit to hazard a guess at what kinds of agreements Grass might also be making.



To value the Grass token, he also had to do things like “assume data sales have similar margins to ad sales” — things that an equities analyst would determine by calling the company and asking them.



If all of the assumptions Shapiro was forced to make turned out to be roughly correct, he thought there could be an interesting investment case for GRASS: “In its current state, Grass’ free floating market cap of $585m is justified based on the value of its multimodal data alone.”



But now Grass “appears to have pivoted to data labeling” (i.e, away from multimodal), <a href="https://x.com/Daveeemor/status/1950499366239638009">according</a> to one disillusioned token holder, who adds that “little information has been shared with token holders.”



I couldn’t find any information at all. Which is weird.



Imagine if shareholders had to find out from a random X account that Apple had pivoted from making smartphones to making sneakers.



Grass is earning some amount of revenue, but we don’t know how much; however much it is earning, token holders haven’t seen any of it and don’t know if they ever will; and the business may or may not have gone off in a new direction.&nbsp;



Such is the state of affairs in crypto “investing.”



It doesn’t have to be that way.



Holders of the MAPLE token, for example, don’t have to guess what portion of the revenue earned by Maple Finance will be returned to them. Instead, they decide that themselves by <a href="https://x.com/maplefinance/status/1950302668028559714">voting on it</a>.&nbsp;



As a result, MAPLE investors probably don’t have to think about incentives much more than equity investors typically do.&nbsp;



“No fees are allocated to the Labs entity,” <a href="https://x.com/shaundadevens">Shaunda Devens</a> wrote for Blockworks Research, “and the Labs entity is funded exclusively through grants, not through revenue-generating activities.”



That makes MAPLE holders a lot like owners, I think.&nbsp;



Shareholders have disclosure rules, legal claims, SEC enforcement actions, decades of precedent and the movie Wall Street to substantiate their ownership claims.



Token holders have only smart contracts.&nbsp;



Have crypto investors properly accounted for this lack of both rights and transparency?



Anecdotally, there doesn’t seem to be any risk premium built into opaque, rights-light tokens. Most of them still seem inexplicably expensive to me.



Nor is there much differentiation between projects with ownership-like tokenomics and those with tokenomics you can only guess at.



I imagine it’s only a matter of time until there is, however. And the sooner the better.



The best thing for crypto investors may be if Pump.fun follows Netz’s advice and “nukes the token.”



That might finally get crypto thinking harder about the power of incentives.



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<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



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



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



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



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

The Breakdown Newsletter

Investing in crypto is investing in incentives

Donovan Choy

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



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Switchboard’s new “Surge” oracle network goes live on mainnet today.



As Solana continues to reckon with competition from high-speed upstarts like Hyperliquid, one of the network&#8217;s biggest price oracles is getting much faster. The oracle will be free to integrate, and is claimed by the Switchboard team to be the fastest on Solana yet.&nbsp;



How fast? Surge promises to deliver price feeds at a sub-100ms latency — a performance gain of about 8x faster and at roughly 1/100th the cost of existing oracle providers, according to the team’s press release.



That <a href="https://thepriceisright.xyz/">latency</a> falls even lower to 8-25 ms should protocols choose to colocate with a Surge node on their backend, rivaling the oracle speeds of even CEXs.



The performance gain is achieved by key architectural changes under the hood.



Conventional “pull” oracles collect data, post it onchain and wait for network consensus before apps can read it — a pipeline that typically adds 2-10 seconds of delay.



Surge <a href="https://docs.switchboard.xyz/switchboard-surge/surge-overview">replaces</a> that model with a direct WebSocket stream from the data source to applications, thereby bypassing the consensus step.



Prices are pushed by oracle nodes only when market prices change within a set range. This eliminates the wasteful slot-by-slot polling and gas spend that is standard fare on conventional “on-demand” oracles.



It’s an oracle targeted at high volume use cases in DeFi, in particular “latency-sensitive protocols/products like DeFi derivatives and oracle AMMs,” Switchboard co-founder Chris Hermida told Blockworks.



Surge is built on Switchboard’s open-source SAIL (switch forward attestation inference layer) framework, which uses trusted execution environment (TEE) hardware attestation to verify that each oracle node is running authorized Switchboard software code before it is allowed to onboard the network and serve data.&nbsp;



A snapshot of Solana’s oracle market today shows a fairly competitive market.



In terms of total value secured (TVS), Pyth leads the segment with $2.3b, followed by Edge ($2b) and Switchboard ($1.2b), <a href="https://defillama.com/oracles/chain/Solana">DefiLlama</a> data shows.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe5jxk8tIOKTGsccp1F56z3xfItDRJyWw0SsxV1WUtJFvjyK3YKDd3rkHJd5oJT79PRR_iXjQltjZA7oUqLtHE44caEqnXj97BJ8P4fX4QtoDU1PruPZQwxBPyhCPJ0gc4MQXrb?key=NoBvhBfKDd5ihUChnXLLtg" alt=""/></figure>



Note, though, that TVS measures the value of collateral that an oracle touches, not how often an oracle feed is consumed.



Blockworks Research’s Ryan Connor has <a href="https://blockworks-research.beehiiv.com/p/3-blockchain-metrics-that-suck?_bhlid=e7ec9d125f96db219eb346b82d394dbd8574633a&amp;utm_campaign=3-blockchain-metrics-that-suck&amp;utm_medium=newsletter&amp;utm_source=blockworks-research.beehiiv.com">argued</a> that a better gauge for oracle market share is total transaction value (TTV) — the notional volume actually priced by the feed — because a high-frequency perps DEX can ping an oracle thousands of times more often than a passive money market securing the same dollar amount can.



If Surge gains adoption with high latency use cases, Switchboard’s share of activity could expand faster than its share of TVS.



For now, low-latency data on Solana is becoming a public utility — and Switchboard is first out of the gate.



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<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



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



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



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



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

Lightspeed Newsletter

Switchboard launches Surge, Solana’s fastest oracle yet

Casey Wagner

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



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Yesterday I wrote about how stocks were on the recovery path after last week’s disappointing data. I also said I wasn’t sure how long the rally would last. Go figure, US equities and cryptos are back in the red today. 



In the first few hours of trading, the S&amp;P 500 was trading 0.5% lower while the Nasdaq Composite had lost 0.6%. BTC was 2% lower over the last 24 hours at that time.&nbsp;



Some of the biggest names on Wall Street say stocks have further to fall. In a Monday note,&nbsp; Morgan Stanley strategist Mike Wilson projected the S&amp;P 500 is due for a decline of up to 10%. Also on Monday, Evercore senior managing director estimated the index will lose up to 15%.&nbsp;



Why might we be due for a correction?&nbsp;



First of all, US equities have been on a tear this summer, and not just Big Tech. Let’s rewind: Megacap tech stocks were among the biggest losers in the Liberation Day aftermath — Nvidia, Microsoft, Amazon and Broadcom, to name a few.&nbsp;



Positive economic data and optimism that the reciprocal tariff rates would decline significantly from the initially announced figures helped fuel a rally across the board. By late June, around 80% of companies in the S&amp;P 500 were closing above their 50-day moving average, which is about where the percentage stood in fall 2024.&nbsp;



You know what they say, what goes up must come down. If there’s one thing we know about stocks, it’s that a decline always follows a rally eventually, and vice versa.&nbsp;



Second, economic data is painting a less positive picture these days. Inflation is inching higher, job growth and consumer spending are slowing.&nbsp;



The tariff situation is also not yet resolved — the Aug. 1 deadline most countries faced was <a href="https://www.whitehouse.gov/presidential-actions/2025/07/further-modifying-the-reciprocal-tariff-rates/">extended to Aug. 7 last week</a>. Rates on imports from Mexico are still in flux as negotiations continue and China faces a separate deadline of Aug. 12 to pen a deal. Since April, the rate levels, due dates and impacted industries have changed more times than I can count, so who knows when markets will get clarity.&nbsp;



Maybe investors would be able to shrug off the trade war limbo if the economic data was more positive. That’s what they’ve been doing most of the summer, at least.&nbsp;



Third, it’s August! Yes, this just may be reason enough to send stocks lower. August and October (but we’ll focus on the former for the time being) are historically volatile months for equities.&nbsp;



Over the past 35 years, the S&amp;P 500 has averaged a return of -0.6% in August, according to data from StoneX.&nbsp;



We just may have the perfect storm for a decline, but I’ll also note that anything can happen, and I’m not in the business of giving out investment advice.



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<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



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



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



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



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

Forward Guidance newsletter

Why Wall Street is bracing for a correction in stocks

Macauley Peterson

Early Tuesday morning, Coinbase’s Base network experienced a rare outage, halting block production for about 33 minutes. The root cause, classified on Base’s <a href="https://status.base.org/">status page</a> as an “unsafe head delay,” was quickly identified and resolved by the Base team.



The cause was “an unexpected issue during an automated system switch,” a Base spokesperson told Blockworks, adding, “we’re close to a long-term fix.”



At around 2:15 am ET, BaseScan detected the final block stuck at height 33,792,704. With no new blocks for over 19 minutes, developers and users alike raised concerns across social channels. But the tone wasn’t all negative.&nbsp;



As Save and Suilend protocol founder Rooter <a href="https://x.com/0xrooter/status/1952632681843523702">quipped</a>: “People only make a fuss about downtime for chains with actual users. Bullish downtime.”



They may have a point, and the incident naturally <a href="https://x.com/0xMert_/status/1952648061701820825">spawned</a> comparisons to <a href="https://blockworks.co/news/solana-price-dips-after-another-network-outage">Solana’s growing pains</a>.



Base’s recent momentum is one of the reasons people take notice of a snafu. The July <a href="https://blog.base.org/a-new-day-one">rollout</a> of new Base App — Coinbase’s ambitious attempt to create a crypto super app — has turned Base into one of the most active layer-2s of late. By combining wallet, social, payments, and mini-app functionality, Base App draws parallels to a crypto-native spin on WeChat.



<a href="https://blockworks.co/analytics/base">Blockworks data</a> confirms the surge in onchain activity. Daily <a href="https://blockworks.co/news/zora-latest-content-coin-fad">token launches on Zora</a> spiked to nearly 40,000, with 15–50% of that volume attributed to Base App users — up sharply from around 4,000 daily average prior to launch.&nbsp;



Breaking out creator rewards on Zora shows daily payouts exceeding $33k as of Aug. 4, with a surge in token activity and engagement following the Base App launch.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcPl7NQYltvvRGlm2jPBlgxou-o6x-U39BarBTI8O0DBp7Qrii6ioDWSMNNrgLo7fKHr1Jy9wv9pj0X1suzcUX2EvdRubP0DWSj7njSSy7oYXjxJSvUn7SmHg38FhChMCOZAELs?key=xb2l4K_b4YIi45V4nJtVWg" alt=""/><figcaption class="wp-element-caption">Blockworks charts also show sustained creator monetization through content coin trading, validating broader adoption.</figcaption></figure>



The app leverages <a href="https://blockworks.co/tag/farcaster">Farcaster</a>, Zora, and Noice, a <a href="https://docs.base.org/base-app/build-with-minikit/quickstart">mini-app</a>, to blend content creation, tipping, and tokenization. Meanwhile, Base Pay — a USDC-powered tap-to-pay system — brings a strong offering to the competitive crypto payments space. A planned 1% cashback incentive for USDC payments on <a href="https://blockworks.co/tag/shopify">Shopify</a> aims to sweeten the deal.



Critically, Base App relies on account abstraction to onboard users without private keys or manual signatures. Wallets can be spun up with just an email, <a href="https://x.com/privy_io/status/1951312169133326731">via Privy</a>, and gas fees are abstracted away or sponsored.



Tuesday’s downtime doesn’t negate Base’s progress. Unlike other chains that stall with barely a whisper, Base’s outage sparked immediate attention precisely because users rely on it.



At the same time, the outage caused minimal disruption to DeFi protocols. Lending platforms like Aave, Morph, and Moonwell were temporarily frozen due to <a href="https://docs.chain.link/data-feeds/l2-sequencer-feeds">Chainlink’s Sequencer Uptime Feed</a> disabling price updates, which successfully prevented mispriced liquidations. Once block production resumed, liquidation bots processed queued positions with no bad debt reported.&nbsp;



Overall, the incident demonstrated effective circuit breakers and risk management across Base DeFi.



Updated August 5, 2025 at 11:03 am ET: Added data for clarity. 



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<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



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



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



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



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

Base

Base outage highlights growing pains of a chain with real users

Katherine Ross

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



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We’ve talked about a lot of sectors in crypto and how the past year has shaped them or redefined their approaches to the industry, but we haven’t really discussed one aspect, which is crypto comms.&nbsp;



As crypto hits the mainstream and momentum picks up, firms like the <a href="https://x.com/aubreystrobel/status/1950217035629076948">newly announced Halcyon</a> act as the liaison between projects and the mainstream media.&nbsp;



Halcyon co-founder Aubrey Strobel hopped on the phone with me to chat about comms in 2025 and the changes she’s seeing as someone who’s been in the space for a while.



“It feels like there&#8217;s still a huge gap for the mainstream media, and we want to fill that in…things aren&#8217;t just the same as press releases and op-eds. There&#8217;s a lot of visual content for the attention economy,” she said.&nbsp;



Nowadays, tech companies have changed the way they make their own announcements. Instead of issuing a press release, some — like <a href="https://www.youtube.com/watch?v=vich2C-Tl7Q">Astronomer’s video response to the infamous cheating scandal</a> — have found a more direct-to-audience approach to have a greater impact than hoping for press coverage.&nbsp;



“Going direct is one of the biggest ways to really break through, and I think a lot of companies have realized that. I don&#8217;t think founders and entrepreneurs always know how to get their message across. There&#8217;s a lot of really good tech being built, and crypto has the numbers to back up its success,” Strobel told me.&nbsp;



For Halcyon, that also means offering content and video production services for firms who are interested in going that route, versus the more traditional press release.&nbsp;



“So, it&#8217;s helping them write those stories and go direct if they need to, because sometimes going direct is better. There are times when you don&#8217;t want to tell them to go to the media. I would say, ‘No, this isn&#8217;t a press release, but it could be a really interesting story.’ And even so, if a crisis moment breaks out, sometimes, you can give a quote to the media, or you can really own the narrative.”



She also acknowledged a problem in crypto that will continue to persist even as we see more mainstream adoption: The industry excludes people by using terms or language that’s not easily understandable.&nbsp;



“There&#8217;s some terms that you can&#8217;t totally change the meaning of because they are inherently tech…[so] there&#8217;s a lot of terms that we make up on our own that are not totally accurate, and I think that we need to do a better job of choosing the words that we write, and being strategic and creating those words for ourselves,” she noted.&nbsp;



One of her goals with Halcyon is simple: Make it so that the public can digest crypto and can feel like it’s meant for them.&nbsp;



When my work focused on traditional finance, I found that it had a very similar problem with jargon and exclusionary language (and systems) designed to keep the financially illiterate out. Crypto, if it’s really for the masses, can’t have the same problem.



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<ul class="wp-block-list">
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<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



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



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



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



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

Empire Newsletter

Crypto needs more innovative stories for mainstream adoption: Halcyon co-founder

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



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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
&#8220;There are three kinds of lies: lies, damned lies, and statistics.&#8221;



— Mark Twain
</blockquote>



The 2004 edition of the Economic Report of the president included a creative proposal it hoped the statistical agencies would consider: reclassifying fast-food cooks as manufacturing workers.



&#8221;When a fast-food restaurant sells a hamburger,” the <a href="https://www.presidency.ucsb.edu/sites/default/files/books/presidential-documents-archive-guidebook/the-economic-report-of-the-president-truman-1947-obama-2017/2004.pdf">report</a> asked, “is it providing a &#8216;service&#8217; or is it combining inputs to &#8216;manufacture&#8217; a product?&#8221;&nbsp;



I hear you snickering, but it did make some fair points.



The report noted, for example, that “mixing water and concentrate to produce soft drinks is classified as manufacturing” — so why shouldn’t assembling a hamburger count, too?



The answer lies in the Census Bureau’s definition of manufacturing, which the job counters at the BLS follow: “the mechanical, physical, or chemical transformation of materials, substances, or components into new products.”



Heating a frozen hamburger patty does indeed create a “chemical transformation” — heat causes a burger’s proteins to unfold and reconfigure in ways that irreversibly change it.



(You can freeze and melt a soda as many times as you like and still drink it, but try that with a burger and you’ll regret it.)



It would be a stretch, however, to argue that heating a burger transforms it into a “new product,” so it’s no surprise that the BLS continued to categorize burger flippers as service workers.&nbsp;



If the BLS rejected the White House’s suggestion on its merits, everyone else rejected it on its politics — a transparent attempt by the White House to make the manufacturing sector look healthier than it was.



It wasn’t the first time the seemingly mundane process of counting jobs became a political flashpoint.&nbsp;



In 1971, the Nixon White House shut down BLS press briefings after the agency unenthusiastically described a 0.2% drop in unemployment as only “marginally significant” (the Secretary of Labor described the same data as “of great significance”).



A month later, a statistical error caused the BLS to overstate a further drop in unemployment, this time raising fears that the White House was manipulating the data to make the economy seem better than it was.



Investigations found no evidence of political influence on the jobs data, but the OMB nevertheless responded by issuing a directive that tightly restricted early access to the data for political appointees.



More surprisingly, there have also been accusations that the White House manipulated jobs data to make the economy look worse than it was.



In 1961, Reader’s Digest published an article accusing the Kennedy White House of using data techniques to “magnify the unemployment problem” as a pretext for more government spending and regulation.



Again, an investigation found no basis for the claim.



A similar investigation in 1944 dismissed similar claims that the BLS had &#8220;obsequiously acquiesced&#8221; to White House demands to understate inflation, with the goal of keeping wages down too (while the government had war-time powers to set wages).



All of these unfortunate episodes are <a href="https://www.bls.gov/opub/mlr/2018/article/the-current-population-survey-tracking-unemployment.htm?utm_source=chatgpt.com">recounted</a> on the BLS website, which highlights just how much precedent there is behind President Trump’s new accusations of political bias at the non-partisan agency.



In fact, his shock decision to fire Erika McEntarfer wasn’t even the first time a BLS commissioner lost their job for political reasons.



In 1932, Ethelbert Stewart was “involuntarily retired” as head of the BLS for publicly disagreeing with the Hoover administration’s rosy portrayal of the Depression-era labor market.



In response, The San Francisco News <a href="https://fraser.stlouisfed.org/title/first-hundred-years-bureau-labor-statistics-5181/fulltext#:~:text=%E2%80%9D%20The%20San%20Francisco%20News%20was%20more,his%20honest%20work%20on%20employment%20is%20particularly">opined</a> that &#8220;in the city named for George Washington, it seems they fire people for telling the truth.&#8221;



Now, by contrast, McEntarfer has been fired for the gravest form of not telling the truth: statistics.



On Friday, President Trump accused the BLS commissioner of “miscalculations” that he is sure were politically motivated.&nbsp;



But every jobs report is a miscalculation — by design.



When the BLS reported on Friday that the US economy had added 73,000 jobs in July, McEntafer and everyone involved with the number knew it was wrong.



Like every month, July’s report was based on incomplete data: The BLS doesn’t wait for all 121,000 surveyed employers to respond. 



Instead, it goes with what it’s got at the end of the month — typically just 60% or so of what it’d like to have — and then updates its models as additional responses trickle in afterwards.



But even with all the data in, it’s still just an estimate based on a lot of assumptions.



Without adjusting for seasonality, for example, the BLS would have reported that the US economy lost <a href="https://www.bls.gov/regions/mid-atlantic/data/xg-tables/ro3fx9585.htm#ro3fx9585.f.p">1,066,000 jobs</a> in July.



The difference between 1,066,000 and the 73,000 that everyone thinks of as “the” number of jobs created in July is just one measure of how “wrong&#8221; the BLS’ model is.&nbsp;&nbsp;&nbsp;



“All models are wrong,” as statistician George Box famously said, “but some are useful.&#8221;



The BLS model that comes up with a monthly jobs number is one of the useful ones — an early warning system that allows businesses, investors and the Federal Reserve to adjust to the direction of the job market.&nbsp;



The true size of the job market won’t be known until everyone reports their taxes in a year or so, as I’m sure the president is aware.&nbsp;



But the president also seems acutely aware of the power of numbers to affect our perception of reality.



A hamburger, for example, is far more than its calorie count: It’s protein, a night out with friends and a piece of culture, too.&nbsp;



But the moment you read &#8220;1,600 calories&#8221; on the menu, a bacon cheeseburger becomes something else entirely: judgment. Liability. Guilt.



Numbers often wield more power than the reality they attempt to represent, so we should of course try to get them correct.



That’s especially true with economic data, where feedback loops can cause the perception of a slowing economy to become the reality of a recession.



But with high-frequency data like non-farm payrolls, correct is the enemy of useful.



And always has been.



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The ‘jobs’ number is always wrong

Jack Kubinec

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



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Phantom has acquired the Solana trading and analytics platform Solsniper, Blockworks has learned exclusively. Phantom declined to disclose the deal terms.



Solsniper is one of a raft of platforms that provide advanced features and tracking tools for memecoin traders. Solsniper’s web app will continue to operate as a standalone platform, and Solsniper’s team, led by co-founder and CEO Max Zhuang, will join Phantom.



While Phantom cut its teeth as a crypto wallet, the acquisition perhaps signals the <a href="https://www.theblock.co/post/335305/phantom-wallet-raises-150-million-at-3-billion-valuation">well-funded</a> platform’s plans to deepen its trading capabilities, especially after Phantom began offering perpetual futures trading <a href="https://blockworks.co/news/phantom-hyperliquid-integration-winners">by way of Hyperliquid</a>.



Solana’s memecoin craze has been lucrative for token creation platforms like pump.fun and Letsbonk, but it has also been quite profitable for the picks and shovels that facilitate the discovery, tracking and trading of those memecoins.



DEX Screener, which offers popular trending token lists, made $2.9 million in the past month just by charging memecoin projects to update their token information, Solana onchain analyst adam_tehc <a href="https://x.com/Adam_Tehc/status/1952281150283808969">noted</a> recently.



Over time, popular trading venues have begun integrating these picks and shovels-like services. Jupiter and pump.fun both offer in-house trading terminals. With the Solsniper acquisition, Phantom may be poised to do the same, although it has not yet made announcements on that front.



“We see a wide variety of experience levels in crypto today, from new folks to professional traders. This acquisition helps Phantom provide more advanced tools that grow with the user’s expertise. Solsniper has done a great job of building a platform, and we’re excited to bring Phantom’s distribution and infrastructure into the product,” Phantom head of corporate development Joe Wadcan said.



Sweetening the deal further, Solsniper also offers a Telegram trading bot, which is a popular product among some memecoin traders.



Picks and shovels may be valuable to trading platforms because value often flows to the venues and platforms where users actually are. This is why memecoin industry watchers tend to be <a href="https://blockworks.co/news/why-owning-the-end-user-is-profitable-lessons-from-axiom-and-google">bullish on Axiom</a>, which is attempting to win end users while staying agnostic to specific networks or platforms.



By acquiring Solsniper, Phantom could take a segment of its users who currently leave the wallet app to go track, trade, or discover memecoins somewhere else and bring them back in-platform.&nbsp;



Phantom’s acquisition plans likely will not end with Solsniper.



“As we build the next evolution of Phantom, we expect to aggressively pursue acquisitions to expand our product surface area and build the leading consumer finance platform,” Phantom co-founder and CEO Brandon Millman said in a blog post.



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Phantom acquires Solana trading terminal Solsniper

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



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It’s bounce-back day on Wall Street after Friday’s jobs report-fueled dip.



After the first three hours of trading Monday morning, the S&amp;P 500 and Nasdaq Composite indexes were up 1.3% and 1.8%, respectively. I’m not shocked to see things back in the green, but I’m curious as to how long the rally may last.&nbsp;



Investors are going to be watching for any additional fallout from the July jobs report. As a reminder, Friday’s release showed the economy added just 73,000 new positions last month (compared with expectations for 104,000).&nbsp;



May and June also received significant downward revisions (a combined -258,000 positions), marking the biggest revision since 2020. The unemployment rate was unchanged at 4.2%.&nbsp;



The numbers were not good for stocks, although the report did help boost expectations of a September interest rate cut from the Fed.&nbsp;



Chair Powell has stressed in the past that he’s primarily concerned with the unemployment rate as opposed to the number of positions added. Last week’s Fed decision (in which it opted to once again hold interest rates steady) came with an addendum we haven’t seen in decades: a double dissent.&nbsp;



JPMorgan chief US economist Michael Feroli called the <a href="https://blockworks.co/news/powell-resolute-amid-rate-dissents">two dissenting opinions</a> in last week’s Fed decision (from Governors Waller and Bowman) a “job application,” and I’d have to agree. With Powell’s term set to <a href="https://blockworks.co/news/fomc-june-powell-term-end">expire next May</a> (and Trump’s <a href="https://blockworks.co/news/trump-criticizes-fed-chair-powell">vocal distaste</a> for Powell), the position is up for grabs.&nbsp;



Here’s an excerpt from Waller’s opinion:&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“While the labor market looks fine on the surface, once we account for expected data revisions, private-sector payroll growth is near stall speed, and other data suggest that the downside risks to the labor market have increased. With underlying inflation near target and the upside risks to inflation limited, we should not wait until the labor market deteriorates before we cut the policy rate.”
</blockquote>



From Waller’s mouth to the president’s ears? We’ll have to wait and see.&nbsp;



Aside from Powell, there’s another (former) government official on Trump’s bad side: Bureau of Labor Statistics Commissioner Erika McEntarfer. He fired her on Friday following the release of July’s employment report, accusing her of manipulating the data to show a bias against his administration.&nbsp;



“A lengthy history of inaccuracies and incompetence by Erika McEntarfer, the former Biden-appointed Commissioner of the Bureau of Labor Statistics, has completely eroded public trust in the government agency charged with disseminating key data used by policymakers and businesses to make consequential decisions,” the White House wrote in a Friday statement.&nbsp;



The BLS earlier this year said it would have to reduce its data collection on consumer prices, which impacts its CPI report. Last week the agency clarified that the changes were implemented “to align survey workload with resource levels.”&nbsp;



The situation adds a layer of political complexity to Friday’s disappointing report, and takes a hit to investor confidence in data. Noelle Acheson, from Crypto is Macro Now, put it best in her note today:&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“So, will the next BLS commissioner be able to avoid large revisions going forward? Obviously, they’ll have to if they want to keep their job, which elevates the temptation to publish late or to suppress new information as it comes in. Neither will be an improvement on the current situation.”
</blockquote>



We’ll be on “labor report fallout watch” all week, so keep an eye on your inbox.



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Stocks move higher after July jobs report dip

Hot on the heels of Ethereum’s <a href="https://blockworks.co/news/reflections-ethereum-10th-anniversary">10th anniversary</a>, the <a href="https://blockworks.co/tag/ethereum-foundation">Ethereum Foundation</a> has unveiled a bold new vision for the decade ahead.&nbsp;



Published by researcher Justin Drake, the “Lean Ethereum” initiative represents a fresh formulation of the network’s long-term priorities: survive anything, scale everything, and simplify the core.



Once known internally as “<a href="https://blockworks.co/news/ethereum-consensus-beam-chain">Beam Chain</a>,” the idea of overhauling Ethereum’s consensus layer has now evolved into a more holistic reimagining of the entire L1 stack.&nbsp;



The renaming isn’t just aesthetic; it reflects a broader philosophical commitment to modularity, minimalism, and resilience and extends the principles across consensus, execution, and data availability layers. The shift from Beam to Lean signals that what began as a network-layer refactor has become a cohesive strategy for Ethereum’s evolution.



<h2 class="wp-block-heading">Fort mode…</h2>



Drake frames this vision in two modes. First, “fort mode,” in which <a href="https://blockworks.co/tag/ethereum">Ethereum</a> must survive even the harshest adversaries — such as hostile nation-states or quantum computers breaking today’s cryptography. This means moving away from dependencies like BLS signatures and <a href="https://blockworks.co/news/ethereum-rollup-data-availability-alternatives">KZG commitments</a> and toward simpler, hash-based primitives with post-quantum security.



That long view of resilience resonates with core Ethereum developer Preston Van Loon, who helped lead the transition from <a href="https://blockworks.co/tag/proof-of-work-2">proof-of-work</a> to <a href="https://blockworks.co/tag/proof-of-stake">proof-of-stake</a>.&nbsp;



“Ethereum’s 100% uptime since genesis is more than just a technical milestone; it represents a decade of resilience through countless challenges,” Van Loon told Blockworks. “From failed network attacks to major upgrades like <a href="https://blockworks.co/tag/Ethereum-Merge">the Merge</a>, the chain has never stopped producing blocks. That reliability has become the foundation of trust for the entire ecosystem.”



Van Loon also emphasized the evolution of Ethereum’s development process: “What began as a small, [Ethereum Foundation-led] initiative has grown into a decentralized network of hundreds of independent developers and multiple client teams. This distributed model has made Ethereum more resilient, more secure, and better equipped to handle the complexity of its future.”



<h2 class="wp-block-heading">…and Beast Mode</h2>



At the same time, Drake’s “beast mode” embraces the need for Ethereum to remain competitive and performant at planetary scale, with ambitions for one <a href="https://blockworks.co/news/conduit-gigagas-throughput-sequencer">gigagas</a> per second on L1 and one teragas per second on L2 — throughput targets for the base layer and rollups, respectively. These shorthand metrics describe orders of magnitude increases in transaction-processing capacity compared to today.



The urgency implied in “beast mode” echoes Blockworks Research analyst Marc Arjoon’s observation, in <a href="https://app.blockworksresearch.com/flashnotes/ethereum-july-2025-update">his July 2025 update</a>, that while Ethereum’s fundamental metrics have improved of late, the network “still trails <a href="https://blockworks.co/analytics/solana">Solana</a> and <a href="https://blockworks.co/tag/tron">Tron</a> in <a href="https://blockworks.co/analytics/chain-comparison/chain-compare-overview/blockchain-key-stats">REV share</a>, and its burn rate, while up month-on-month, remains historically low.”



But REV is <a href="https://blockworks.co/news/valuing-blockchains-rev-debate">not the whole story</a>, and Arjoon concludes, “Ethereum’s trajectory took a decisive turn in July, as a surge in price and onchain activity marked a potential inflection point.”



ETH surged about 49% as open interest, transaction count, MAAs, data availability usage, ETF flows, and treasury accumulation all hit all-time highs. L2s pushed monthly data availability usage past 100,000 MiB for the first time, while Ethereum L1 processed 46.7 million transactions — up 11% month-over-month.



<h2 class="wp-block-heading">&#8220;Maturity&#8221; playing out</h2>



The new Lean vision slogans pack a punch, and they’re backed by real architectural proposals. “Lean consensus” imagines a hardened Beacon Chain with finality in seconds and upgraded signature schemes. “Lean data” looks to extend EIP-4844’s <a href="https://blockworks.co/news/ethereum-blobs-balancing-act">blob-based model</a> with variable blob sizing and post-quantum data availability sampling. And “lean execution” proposes a minimal, SNARK-native instruction set — <a href="https://blockworks.co/news/vitalik-ethereum-evm-scaling-l1-plan">possibly based on RISC-V</a> — that remains <a href="https://blockworks.co/tag/evm">EVM-compatible</a> while being much more efficient to verify.



Both Arjoon and Van Loon pointed to <a href="https://blockworks.co/tag/stablecoins">stablecoin</a> adoption as a visible marker of Ethereum’s progress: “We’re now seeing the results of that maturity play out in real-world adoption, particularly in stablecoins,” Van Loon said.&nbsp;



“Ethereum has become the primary home for dollar-backed assets, with record usage and liquidity flowing through the network every day.”



What’s new isn’t just the vision, but the way it’s being communicated and coordinated. The launch of leanroadmap.org, a public research tracker, signals a more transparent effort to organize this multi-year journey. Spearheaded by client developer <a href="https://x.com/ReamLabs">ReamLabs</a>, the site aggregates workstreams around lean consensus and aims to build bridges with client teams, rollup developers, and the broader research community.



The Ethereum Foundation isn’t mandating these changes, but it is laying out a plausible and verifiable path toward them. And with core protocol researchers increasingly vocal about the need to prepare for quantum adversaries and huge data demands, Lean Ethereum is likely to become the playbook for decisions leading up to and long after the upcoming <a href="https://blockworks.co/news/ethereum-consensus-evm-upgrade-fusaka-devs">Glamsterdam</a> hard fork.



In short, Ethereum’s pivot from Beam to Lean marks a maturation of protocol thinking. It’s less about rushing the next upgrade and more about designing for a century of security, <a href="https://blockworks.co/tag/scaling">scalability</a> and simplicity.&nbsp;



In Drake’s words: “This is about legacy. We are builders. We are missionaries. We are Ethereum.”



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blockchain

From Beam to Lean: Ethereum plots a century of resilience

Kate Irwin

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



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Eve Frontier — an upcoming MMO from Eve Online studio CCP Games — isn’t your typical crypto game.



In fact, it’s probably more accurate to call it an expansive survival space MMO with blockchain rails that let players effectively “mod” the game to create their own features and challenges. And yes, there will be an EVE token underpinning it all, as well.



CCP CEO Hilmar Pétursson has been in game development for over 25 years building Eve Online. That game has over 7,800 star systems, a <a href="https://www.youtube.com/watch?v=CrH6jyZ5j7g">complex economy</a> and ever-evolving, long-term battles driven by players.&nbsp;&nbsp;



And it’s been live for 22 years.



“The loop of creation to destruction is kind of the heart of the economy loop,” Pétursson told me in an interview. “And this is often what games get wrong at the heart of it, if things don&#8217;t leave the economy, then it’s, by definition, almost like a mathematical definition, an inflationary economy. The effects of an inflationary economy is that you add stuff into it, but you never take them out.”



When it comes to strategy, the worlds are designed in a way that encourages interactions between players.&nbsp;



“First, we create nature, a strategic landscape that requires specialization, cooperation and conflict. Conflict creates destruction that takes that loop — and we have that look pretty tight from Eve — then we add this energy mechanic. That&#8217;s where the token comes in,” Pétursson said of Eve Frontier.



“So that’s kind of the economy side. When we look at the general blockchain side, then we have created something called <a href="https://poolpartynodes.com/eve-frontier-smart-assemblies-a-beginners-guide/">smart assembly</a>, which is basically a combination of an in-game item and a smart contract. This allows you to basically program all the phenomena inside the world.”



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/WgyB9h_euhw?si=x4YG_6FzPswh8t67" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







Pétursson used an example where one player created a stargate using smart assembly that requires other players to bring the dead body of his enemy in order to use it.&nbsp;



“This is something that the player just programmed into the world without our permission. We needed to do nothing,” Pétursson said.



Eve Frontier is using the EVM L2 chain Redstone (built using the OP Stack codebase) for its blockchain elements.



While Eve Frontier comes from the same parent studio as Eve Online, there’s only overlap in a few areas on the development side that’s been symbiotic.&nbsp;



The new game’s team is building autonomously, Eve Frontier Community Manager Ben Sisson told me in an interview.



CCP has a separate design team for Eve Frontier as well as a separate team focused on the game’s crypto elements. Eve Online and Eve Frontier’s finances and funding are separate as well.&nbsp;



“CCP doesn’t use Eve Online money to pay Eve Frontier staff,” Sisson explained. But like Eve Online, Eve Frontier will generate revenue through a subscription-based model.



Both games do use CCP’s own Carbon game engine, though, so there is some overlap on the platform side.



“We did a huge engine upgrade last year, spent almost all of 2024 working on this engine upgrade,” Sisson said. “That team was doing that at the behest of Frontier. But that is a change that’s also going to benefit Eve Online.”



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Gaming

How EVE Frontier is using crypto to change the game

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



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Is Galaxy really a strong buy?&nbsp;



That was the deep dive in <a href="https://www.youtube.com/watch?v=cNLFPx0m2I8">today’s Empire episode</a> with Duncan from Flood Capital and Matt from Rittenhouse Research, which rated Galaxy a strong buy in a recent research note. 



Both Duncan and Matt made their <a href="https://blockworks.co/podcast/empire/c2d367ac-6f1c-11f0-821d-53761026ec5f">bullish cases for Galaxy</a> in Empire today, highlighting it as one of the more successful crypto firms. But before we dive in, I want to note that Empire co-host Jason Yanowitz and both Matt and Duncan all disclosed they hold GLXY.&nbsp;



“ I basically break down Galaxy into three main buckets. They have their balance sheet, so the market cap today it&#8217;s trading around. You know, just under 28 bucks. So that&#8217;s around a $10 billion market cap. And they have a crypto balance sheet, which consists of, as of March 31st, $1.3 billion in Bitcoin,” Flood Capital’s Duncan noted.



Matt from Rittenhouse took more of a look at the businesses within Galaxy: “There&#8217;s a lot of strategic value in the digital assets business of Galaxy, just because they&#8217;re the only full platform that has this comprehensive set of offerings that&#8217;s tailored specifically for institutions and companies operating within the crypto ecosystem.”



<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">Rittenhouse Research is long Galaxy Digital <a href="https://twitter.com/search?q=%24GLXY&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$GLXY</a> <a href="https://twitter.com/search?q=%24BRPHF&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$BRPHF</a> We believe Galaxy&#39;s flagship data center Helios will generate $1.7B of EBITDA and $32B of equity value in the near-term, w/ significant further upside. Our full thesis can be found via PDF here: <a href="https://t.co/mZ3JwW1CYD">https://t.co/mZ3JwW1CYD</a> <a href="https://t.co/4jNHn10oYV">pic.twitter.com/4jNHn10oYV</a>&mdash; Rittenhouse Research (@RHouseResearch) <a href="https://twitter.com/RHouseResearch/status/1923076150693187726?ref_src=twsrc%5Etfw">May 15, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



If you need a comparison to a traditional firm, Duncan said it’s most like Goldman Sachs.&nbsp;



“They&#8217;ve won really big contracts — being kind of like the Goldman in the room, the adult in the room — like the whole FTX estate deal, right?” Duncan noted. “They were in charge of custodying those assets. They have over $3 billion in staked assets, which I think this is gonna [pick] up a lot in the next few quarters with all these treasury plays. They&#8217;re the fourth-largest validator in Solana,” Duncan said.&nbsp;



And then there’s the trading business, which is also quite large when compared to other crypto firms. 



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/cNLFPx0m2I8?si=lfgM6am4qQVshf4X" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







“So derivatives, lending, trading, structured products. [From] the last quarter, so I think probably March 31st, [it had] nearly a $900 million loan book. So that&#8217;s like the second or third largest CFI lender in all of crypto,” he continued.&nbsp;



Meanwhile, Rittenhouse believes that Galaxy is also a strong way to play the AI data center from the bitcoin mining pivot.&nbsp;



“Galaxy is the most attractive way to play the &#8216;Bitcoin miner pivoting to AI data center operator&#8217; investment thesis,” the note said. “Galaxy benefits strongly from the fact its Bitcoin mining operations were never a material part of its operating business.”



The stock, prior to market open, is trading around $27, up 181% over the past year. And there could be more room for it to run.&nbsp;



“ I think it could be worth like a hundred dollars a share in the next few years. So that&#8217;s personally how I&#8217;m thinking about it. It&#8217;s definitely a long-term investment. I think as they execute on the data center business, if they continue to execute there, then like, I&#8217;m really happy to hold this for a very long time,” Duncan said.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><a href="https://twitter.com/search?q=%24GLXY&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$GLXY</a> is my largest position, take a minute to read why, I think $100/share is on the table in the next few years and there is ample liquidity to size into this. Here is a short summary of why I believe <a href="https://twitter.com/search?q=%24GLXY&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$GLXY</a> is such a sleeper and significantly undervalued/misunderstood by the… <a href="https://t.co/gAkkGqqpTr">pic.twitter.com/gAkkGqqpTr</a>&mdash; Duncan (@FloodCapital) <a href="https://twitter.com/FloodCapital/status/1945176853305606343?ref_src=twsrc%5Etfw">July 15, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



But if you want to boil down the stock price to just what it should be at today, then that would be roughly $55, per Duncan’s analysis.&nbsp;



“ There could be other kinds of green shoots of positive surprises where something in their crypto business allows &#8217;em to make an acquisition or do a joint venture that adds like a ton of value to the company long term,” Matt noted.&nbsp;



Galaxy’s set to report earnings tomorrow, so we’ll have to see whether the bull cases stand.



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Galaxy’s broad crypto strategy covers key ‘buckets’: Flood Capital

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



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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
&#8220;We are not measuring the world, we are creating it.&#8221;&nbsp;



— Niels Bohr
</blockquote>



Two of history’s greatest minds — Albert Einstein and Niels Bohr — disagreed on the fundamental nature of reality.



Is the world around us, as Bohr argued, created only when we observe it?&nbsp;



Or does reality exist independently of our gaze, as Einstein believed?



The two greats debated it throughout the 1920s and ‘30s, and their disagreement has remained central to quantum mechanics ever since — forcing physicists to grapple with what their mathematical equations tell us about the nature of reality.



Until this week, when the debate was settled in favor of Bohr.



By bouncing a single photon off just two atoms, <a href="https://news.mit.edu/2025/famous-double-slit-experiment-holds-when-stripped-to-quantum-essentials-0728">scientists at MIT</a> showed that the behavior of the photon (wave or particle) remained unsettled until they had measured it.



This confirmed Bohr’s belief that observation is not simply a passive act of seeing what already exists, but an active process of creating the very thing being observed.



In other words: Observation changes the system being observed.



This is how markets work, too.



&#8220;Financial markets constantly anticipate events, both positive and negative,” George Soros wrote, “which fail to materialize exactly because they have been anticipated.”



For example: The US labor market is weakening, but because the Bureau of Labor Statistics observes it for us every month, markets have reacted in a way that will change the labor market.



After the BLS report this morning, 10-year Treasury yields fell 20 basis points, and <a href="https://polymarket.com/event/fed-rate-cut-in-2025?tid=1754065758939">Polymarket odds</a> of a Fed rate cut jumped 15 percentage points.



Moves like these can change things: The more that markets anticipate a recession, the less likely a recession becomes.



It works in the other direction, too.



At one point this week, each of the four AI hyperscalers — Microsoft, Alphabet, Amazon and Meta — were valued at over $2 trillion.



In total, the stock market is assigning $10 trillion of market capitalization to those four, based on the observation that they’re likely to be among the primary beneficiaries of next-generation AI.



If so, the act of observing the trend in AI will have played a large part in making AI happen.



Morgan Stanley estimates the four hyperscalers will invest $2.9 trillion in AI capex between 2025 and 2028, but that they’ll be $1.5 trillion short of cash needed to fund it.



Only the massive valuations markets have granted them will make up the difference.



In that sense, what AI becomes will depend, at least in part, on the market’s observations and predictions about it.



Sam Altman, for example, <a href="https://x.com/ns123abc/status/1950806901303754814">predicted</a> this week that we’re on a path to “superintelligence” — self-improving AIs that exceed humans in every domain.



“It&#8217;ll give people incredible superpowers that were sort of science fiction only a couple of years ago,&#8221; he optimistically predicts.



It may already be happening: &#8220;Over the last few months, we&#8217;ve begun to see glimpses of our AI systems improving themselves,” Mark Zuckerberg <a href="https://www.theguardian.com/technology/2025/jul/30/zuckerberg-superintelligence-meta-ai">said</a> on Wednesday, adding that “superintelligence is now in sight.”



The pace of this self-improvement may be about to accelerate.



Also this week, a team of researchers <a href="https://www.semanticscholar.org/paper/AlphaGo-Moment-for-Model-Architecture-Discovery-Liu-Nan/3c721709009511d70b5a1a87aa33dff957df35bc">released</a> an open-source model that “enables AI to conduct its own architectural innovation.”



Experts say this will transform AI research “from a human-limited to a computation-scalable process.”



In other words, AIs will now be bounded only by the amount of computing capacity that humans choose to give them — and the stock market, having observed the trend, is choosing to give them trillions.



Not even Niels Bohr could tell us what the consequences of that observation will be.



Let’s observe some charts and see what else happens.



The AI capex boom:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXco81VtzaDDJ_oU0QHxHEFLVzZAM4h7gbCYTDlaVOLuE1-TlznX_NTrGRrJvlXKQbfx5sRAW6cqbBfWdutDMpkUIClWIX6qgmpQ0PNSbZWOEXdrUXAJxCmR6MjvQ0bD7419bpld?key=F6qrqzkW-hiUC_t6nU_yig" alt=""/></figure>



The Wall Street Journal <a href="https://www.wsj.com/tech/ai/tech-ai-spending-company-valuations-7b92104b?mod=e2twg">documents</a> the surge in capex among the four hyperscalers, which are on pace to collectively spend $400 billion this year alone.&nbsp;



Going all in:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfiBEk6gPS-wB4x19maBkyojgU64dquy-wmXqF7liSmOP9tsOpAhBscGimLUjvs_cwrnqBfnpSOB80Gr8t2V22SrIEc8URuIOzUi7J3TJDJGL_DGOL_JejG_iNPK-jqDoa2P0hfew?key=F6qrqzkW-hiUC_t6nU_yig" alt=""/></figure>



The hyperscalers are both making more money and spending more of it on capex.&nbsp;



This morning’s unemployment data:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeV0Z3l7LxrD_u7kN65oyPZghMj3TRUoh7cycRaIwrFc1GtmWbjTsc2fL7MUtm0armFBHozV5BYHMFYQfMetmxCpV0hGFTKAWbDo9bPv33ulisJ2S_cojnrtTfjPpnQVGVjkJT2?key=F6qrqzkW-hiUC_t6nU_yig" alt=""/></figure>



The US economy is estimated to have added only 73,000 jobs in July. But the shocker in this morning’s report was the 253,000 downward revision to the prior two months, taking the three-month average down to just 35,000. An economy that seemed surprisingly resilient suddenly looks <a href="https://x.com/Markzandi/status/1951283286959071744">unsurprisingly fragile</a>.



Contrary to popular belief…



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdV5U6mDAKg8c9Yxjit792Gi3Ltpt9AWQyXy2C2E2EhFa13islFuPLXASXyrMr7o_ogH2JLkAQ82MociYXftTIEPBorlNDZVCE-S0k0BZU6HGmkUc5dvocJouLWbR-uOcn7GPklsw?key=F6qrqzkW-hiUC_t6nU_yig" alt=""/></figure>



…the jobs do not seem to be going to China. Data from <a href="https://x.com/JonathonPSine">Jonathon Sine</a> shows that “China shed the equivalent of the entire US manufacturing sector (~15 million jobs) over the last 15 years.”



Inflation estimates are more of a guesstimate now:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdutUzvHyckYT0joxtaI0AzmPX34hCuN38St49CClhvSomA2FUl80MMvU2JgqIHxLj-o3YjhetA4c5CGbWeug3mhM70lwGjISUUW3IrI6Gb-k_ktce2UdotahBG1nqH3E7-QmLv?key=F6qrqzkW-hiUC_t6nU_yig" alt=""/></figure>



Thanks to funding cuts, the Bureau of Labor Statistics is collecting less inflation data, which means that a bigger portion of CPI is “imputed” (aka, guessed) based on the data it did manage to collect.



Not out of the inflation woods yet:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc3L2WQj9d5QoLIWMsOO7hslLnkaeTDvnOuapYrfe6TLUiEd6DC4ucIXkcHqVBIPC1kZUCNvBwGJPi-sdpX4J6tFapuxBhaWws9_iLnbC-dKT5wu6rf2TCOqcFxxdY1OiOzhAwS?key=F6qrqzkW-hiUC_t6nU_yig" alt=""/></figure>



The two dissenting FOMC voters will feel vindicated by this morning’s weak jobs report. And the president will be even more irate than he was <a href="https://x.com/DavidBeckworth/status/1951014060465786937">yesterday</a>. But it might still be hard for Powell and the rest of the FOMC to agree on cuts when the price of core goods are rising at a 3.75% pace.



The price of copper is down, at least:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXehaPVtLe_dj3srQ7SZRUKEYZz7flLD8UWpcEt7wRYOWYBm-bkugtjzgpsGGO49kSbg6jtNre9vp2Zwia0OFLj988TUSSmCvx1pQj7K6T1x7X61XFEERLAAIirLVgX22mnnx9e9Eg?key=F6qrqzkW-hiUC_t6nU_yig" alt=""/></figure>



Copper futures fell 20% after it was announced that President Trump&#8217;s latest round of tariffs would exclude metals. That kind of whiplash policymaking is good for volatility traders and bad for anyone trying to run a business that requires copper.



Tariff update:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXckK9zwBADXIeVVTD6vOZbBnM1G3pqlN6Fl_Cv_iavC2PWCrMqhK4EGPERIJJa8VhempXyBx3IYTMlr0dtguk-KcLZJYtM1y5HsnetPwlGPl9WxvL0nVfwUvjPScCBovgCuLjferg?key=F6qrqzkW-hiUC_t6nU_yig" alt=""/></figure>



The pink line is the overall level of tariffs, according to what’s been announced. The black line is what importers have actually paid. The 10 percentage point difference between the two suggests that most of the impact on the economy is still to come.



Railroads next?



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXezBumsqxdj8JpRbe6uQjciA-WhFBbbMBX56kOLl2M4wG6Jg2oGB0qkNCQ4Qu6f94IL-S9Pq_-7cu3iVXarvPzjiJPBMWvWD4EUK9X14NCvScrp7rdrdGhB4eHSn8U5OKsSufar?key=F6qrqzkW-hiUC_t6nU_yig" alt=""/></figure>



As a percentage of GDP, AI infrastructure capex is already bigger than the internet telco boom, but still has a lot of upside to match the railroad boom.



What will AI become if the hyperscalers spend 6% of US GDP on it? Investors seem determined to find out.



Have a great weekend, observant readers.



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<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



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



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

Friday charts: The observer effect

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



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



It’s been a week and a half since <a href="https://blockworks.co/news/jito-upgrade-block-assembly-marketplace">Jito announced BAM</a> (Block Assembly Marketplace), Solana’s most <a href="https://x.com/Lightspeedpodhq/status/1951269192943968490">significant</a> transaction processing upgrade ever.



In my view, much of the public messaging surrounding the upgrade has focused on BAM’s privacy-preserving use of TEEs and ability to give apps better control over transaction execution. What hasn’t been covered quite as much, which both of my guests on the Lightspeed podcast spoke about this week, is how BAM plans to create additional revenue for Solana apps.



BAM plugins are programmable interfaces that apps can use to control how transactions are sequenced. One potential example could be taker speed bumps, a spread-tightening mechanism that the perps DEX Hyperliquid has deployed to great effect.



These plugins will also come with some “TBD fee model,” <a href="https://www.youtube.com/watch?v=nCnxsT5iCyA&amp;t=2301s">Jito Labs CEO Lucas Bruder told me</a>, meaning applications can start generating revenue from the sequencing of transactions through BAM. This value is currently being captured by takers or arbitrageurs in the market, Bruder added.



If BAM works as advertised, plugins could provide applications with a hefty payday.



“What I think we’ll see is applications earning multiples more than validators and stakers,” <a href="https://www.youtube.com/watch?v=oIYN4Xbuw_4&amp;t=1357s&amp;pp=0gcJCccJAYcqIYzv">Blockworks Research Analyst </a><a href="mailto:carlos.campos@blockworks.co">Carlos Gonzalez Campo</a> said.



While Crypto Twitter will probably be none too happy to see more revenue flowing to the likes of pump.fun, keeping applications happy is important if Solana wants to be the <a href="https://blockworks.co/news/solana-market-microstructure-ace">internet’s financial ledger</a>. One of Ethereum’s most successful apps in Uniswap recently created its <a href="https://blockworks.co/news/0xresearch-newsletter-uniswap-layer-2">own layer-2 </a>chain in Unichain, thereby internalizing more value relative to its home chain. And without changes to how value is shared, Solana’s popular apps may someday find it prudent to do the same.&nbsp;



Bruder hopes Solana apps will send this new revenue source back to their native tokens.



“Hopefully [apps] share those fees with the token holders and we&#8217;ll see a mass repricing of Solana DeFi,” Bruder said.



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



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



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



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

Jito’s BAM upgrade set to make Solana apps richer

Ben Strack

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



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Coinbase had a down second quarter from a revenue perspective, but remains undeterred in ultimately trying to bring every asset class onchain.&nbsp;



First, some numbers.



The company’s total revenue of $1.5 billion in Q2 was 26% lower than the prior quarter. Transaction revenue took the biggest hit, dropping 39% quarter over quarter to $764 million amid lower volatility. Subscription and services revenue fell 6% to $656 million.



Worth noting: Competitor Robinhood also saw April-June transaction revenue plummet — dropping 36% to $160 million.



COIN shares were trading around $318 in the early afternoon — down 16% on the day. HOOD’s stock price was pretty flat halfway through the session.



We noted <a href="https://blockworks.co/news/coinbase-outlooks-mixed-q2-2025-earnings/">nuanced outlooks</a> from analysts heading into Thursday’s Coinbase report. And indeed — despite the overall revenue decline — the company claimed some victories.&nbsp;



Its stablecoin revenue, for example, grew 12% from the prior quarter to $332 million as average USDC balances held in Coinbase products reached $13.8 billion.



<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">Coinbase&#39;s stablecoin revenue is up 44% year-to-date vs. the same period last year, despite 100bps of rate cuts since then. <a href="https://t.co/Z1BoNH8Bhl">pic.twitter.com/Z1BoNH8Bhl</a>&mdash; Ryan Rasmussen (@RasterlyRock) <a href="https://twitter.com/RasterlyRock/status/1951023174575157418?ref_src=twsrc%5Etfw">July 31, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Coinbase expects stablecoin revenue momentum to continue given USDC’s new all-time high market cap in July. The company is thus projecting higher Q3 subscription and services revenue ($665–$745 million).&nbsp;



Executives also said they expect July transaction revenue to be $360 million — already nearly half of Q2’s total.



Beyond the numbers, CEO Brian Armstrong on Thursday labeled the number one thing Coinbase’s customers want from the exchange: enabling many more assets to trade in a “one-stop shop” on crypto rails. Coinbase is calling it the Everything Exchange.



Integrating decentralized exchanges into its app will help on the crypto-tokens front. And now Coinbase is working toward bringing tokenized equities “to meet the moment in this new regulatory environment.”



To that last point, Armstrong’s comments came just hours after SEC Chair Paul Atkins made a <a href="https://blockworks.co/news/sec-chair-atkins-project-crypto">speech of his own</a>.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">A portion of SEC chair Paul Atkins&#39; response to yesterday&#39;s White House report. &quot;Project Crypto&quot; underway &#8230; <a href="https://t.co/yO5g0S806i">pic.twitter.com/yO5g0S806i</a>&mdash; Ben Strack 🟪 (@strack_ben) <a href="https://twitter.com/strack_ben/status/1950975816323493918?ref_src=twsrc%5Etfw">July 31, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



And Atkins’ comments followed the White House&#8217;s release of its “Strengthening American Leadership in Digital Financial Technology” <a href="https://www.whitehouse.gov/wp-content/uploads/2025/07/Digital-Assets-Report-EO14178.pdf">report</a>.



The report acknowledges tokenization benefits like “the programmability and peer-to-peer transferability of assets, operational efficiencies…and increased transparency relative to traditional finance markets.”&nbsp;



All things much of the industry <a href="https://blockworks.co/news/stablecoins-tokenization-blackrock-galaxy-das">has already heard</a>, sure — but now the government is saying it formally.&nbsp;



At the same time as Coinbase’s update, Strategy reported its Q2 results. That included $10 billion of net income and ample forward-looking commentary.



Executives outlined a multi-year plan to retire its outstanding convertible debt and replace it with a preferred stock-focused funding model as it continues to accumulate bitcoin. Strategy’s holdings stand at 628,791 BTC.&nbsp;



Strategy’s corporate treasury (~$74 billion worth of BTC) is the fifth-largest in the world, Benchmark analyst Mark Palmer pointed out in a Friday note. Strategy CEO Phong Le envisioned a scenario in 3-5 years where the company’s capital base surpasses that of Berkshire Hathaway ($348 billion).



Palmer raised his MSTR price target to $705, which assumes BTC will hit $225,000 by the end of 2026. MSTR shares were going for $376 at the time of writing — down 6% on the day.



There’s a taste of where these chief crypto stocks stand. No financial advice here.



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Coinbase

Coinbase eyes ‘Everything Exchange’ despite Q2 revenue decline

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



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The 13-year-old design software company Figma IPO’d on the NYSE yesterday.



As I write this edition, Figma’s stock is trading at $115. That’s a ~250% pop from its $33 opening price — above Circle’s June <a href="https://blockworks.co/news/circle-shares-nyse-day-one">IPO pop of 168%</a>, and far above the average 17% day-one IPO pop of past decades.



Great success! But according to the Crypto Twitter commentariat, that’s “<a href="https://x.com/j0hnwang/status/1950957474359488614">legalized theft</a>.”



Specifically, theft by the investment bankers from the retail public.



The general idea underlying this criticism is that:



Investment banks deliberately underprice IPOs below fair value, then allocate shares to their preferred hedge funds and clients. These guys flip them for an easy profit at the expense of unsophisticated retail investors that naively buy into the IPO hype once the stock is already trading higher.



Retail investors lose because IPO offer prices are determined by private markets (as opposed to, say, Hyperliquid pre-launch perps that allowed price discovery pre-PUMP ICO).



Plus they <a href="https://x.com/nearcyan/status/1951012496380404021">don’t</a> get to buy in early — Wall Street does.



This status quo isn’t all that different to memecoins.



Recall the Javier Millei-affiliated <a href="https://blockworks.co/news/libra-latest-solana-memecoin-episode">LIBRA memecoin launch</a> in February. As my colleague David Canellis <a href="https://blockworks.co/news/libra-memecoin-sausage-gross">wrote</a>:&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
&#8230; anyone launching a memecoin in 2025 must fight against unseen forces that nobody has figured out how to beat: onchain snipers who will bid up fresh memecoins at the drop of a hat, only to dump them soon after on anyone buying into the pump they created, usually killing the project in the process.
</blockquote>



It was kind of an open secret in crypto anyway.



But in TradFi, it’s all perfectly legal as per capital market rules. Namely, the Securities Act of 1933, which forces companies to lock in a fixed public offer price before trading.&nbsp;



Like the genesis of most government regulations, the Securities Act wasn’t intended to enrich Wall Street at retail’s expense: It started out as well-meaning and targeted real abuses by bucket shop salesmen in the 1930s.



But today’s capital market laws hard-wire pricing power and share-allocation discretion into the traditional IPO.



<h2 class="wp-block-heading">Project Crypto</h2>



SEC Chair Paul Atkins unveiled yesterday <a href="https://www.sec.gov/newsroom/speeches-statements/atkins-digital-finance-revolution-073125">Project Crypto</a>, an initiative <a href="https://blockworks.co/news/sec-chair-atkins-project-crypto">meant to achieve</a> “President Trump’s vision of making America the crypto capital of the world.”



It reads almost like a Christmas wishlist for the industry: most crypto assets will not be securities, create exceptions and safe harbors for ICOs and airdrops, protect software engineers, protect self-custody, make onchain software part of securities markets, etc.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The SEC&#39;s new &quot;Project Crypto&quot; is the most bullish thing I&#39;ve seen in a long time from a regulator. Read the speech, it&#39;s incredible: * Almost all tokens are not securities * Want to discourage decentralization kabuki theater * Americans should not get excluded by IP/VPN blocks…&mdash; Haseeb ＞|＜ (@hosseeb) <a href="https://twitter.com/hosseeb/status/1950966199116009656?ref_src=twsrc%5Etfw">July 31, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



But the devil’s always in the details.



And no one scrutinizes the details, except for the lobbyists and lawyers at the policymaking table.



How will this wishlist interact with existing laws? What will they morph into 10 or 50 years from now?



No one knows — just like how no one could’ve expected the Securities Act of 1933 to enable “legalized theft” today.



Government regulations are bad not because they were badly designed or that policymakers are evil per se, but because they are created and exist in a set of institutions that are static.



We like to think of the “government” as a precise machinery that voters can modulate to create laws that thwart specific problems. We like to think the government would remove laws that are deemed bad.&nbsp;



But democracy is more messy in practice. In reality, policymakers are saddled up with special interests, and uninformed voters dominate elections.



It’s what economist Mike Munger calls a “<a href="https://fee.org/articles/unicorn-governance/">unicorn problem</a>.”



Atkins’ words today are a breath of fresh air in the post-Gensler era. But don’t be surprised when today’s rules eventually harden around whoever learns to game them best. It’s just politics.



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0xResearch Newsletter

Imagine if Figma’s IPO had Hyperliquid’s pre-launch perps

David Canellis

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



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



When it comes to Bitcoin mantras, “not your keys, not your coins” is as pure as it gets.



But there are levels to it. Sure, you might be self-custodying, but you might still be required to trust a wallet explorer, for example, to tell you your BTC balance.



Run your own full node, however, and you’ll only ever need to trust your own copy of the Bitcoin ledger.



So here&#8217;s one of Bitcoin’s oldest cautionary tales about why the above still matters, a decade and a half later.



Picture this: It’s mid-2011, and there are two major exchanges to buy and sell bitcoin: Mt. Gox, operating out of Japan with about 80% global market share, followed by TradeHill, based in California.



Eastern Europe had its own primary venue: Bitomat from Poland.&nbsp;



Bitomat’s trading volume was small compared to Mt. Gox, only about 17,000 BTC per <a href="https://web.archive.org/web/20110604053716/http://bitcoincharts.com/markets/">month</a> — far below Mt. Gox’s 1 million BTC (worth $7.5 million at the time). But it was still enough for Bitomat to be considered the third-largest bitcoin trading platform in the world.



Until trouble struck.&nbsp;



On August 1, 2011, Bitomat’s admins disclosed the worst had happened: They had accidentally deleted the wallet.dat file for the platform’s hot wallet, immediately losing access to its users&#8217; bitcoin, which coincidentally amounted to 17,000 BTC.



The exchange itself had been paused for about a week by that point. Bitomat’s administrator, Bartek Szabat, had noticed that the main server — powered by an Amazon EC2 virtual machine — had been running at full capacity, and opted to boost its allocation of RAM.&nbsp;



That would’ve required the virtual machine instance to be rebooted.&nbsp;



But the admin had forgotten to enable persistent storage in the cloud server’s configuration settings. So, when the server was rebooted after adding more RAM, the local storage of the virtual-machine instance itself, which contained the exchange’s only wallet.dat file, was wiped, taking the private keys of Bitomat’s users along with it.&nbsp;



Amazon Web Services was unable to recover the file.



In an open letter to the Bitcoin community, Szabat asked for help in investigating the situation (the post has been automatically translated and edited for clarity):&nbsp;



“At the moment, I am unable to clearly determine the cause of crashes. I suppose that it is the result of actions of third parties, which are causing the server to crash to hide their illegal activities, or intentionally wanting the website to disappear,” he wrote.&nbsp;



“If my suspicions are confirmed, I will tell the police and prosecutors, [and] at the same time, take possible action through which it would be possible to recreate lost data. But I need to interact with the server&#8217;s owner [Amazon Web Services], and that, as I mentioned above, is difficult…&nbsp;



“At the same time, I am counting on your help in solving the problem. I realize that the situation is very difficult, and you fear for the fate of your BTC. We are constantly working on a solution to the crisis, and I&#8217;m open to your suggestions.”



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeB6CCaazWIdtzRy4vveH17ALpny7F86E8JlkG3ChzCKRO6OnyDAKCdZEFr1nkZGWzVS6yhgTpkiSa9f9jt4EzDuY9BHxPv861xadQlLaPs4c1J2igSnqkxQG76oggIrhFyywZhqg?key=QW7c4J6OZHHxNOfUyB3E4A" alt="" style="width:700px;height:auto"/><figcaption class="wp-element-caption">Hacker News users had the right idea in July 2011 — only keep bitcoin in exchanges for as long as you need to.</figcaption></figure>



Szabat then offered to sell Bitomat the euro equivalent of 17,000 BTC ($220,000 then, $1.95 billion today), in an overt effort to make users whole.&nbsp;



“I wish to inform you that I had several conversations with potential investors from home and abroad,” he said, and directed anyone interested to reach out via email.



It was actually Mark Karpeles and Mt. Gox that answered the call. The deal meant Bitomat would shut down altogether and its domain would instead forward existing users to a Polish-language localized version of Mt. Gox, where they could log in as normal and trade bitcoin via a new Polish złoty pair.



“The acquisition of Bitomat.pl is a windfall for its users, especially in the wake of such a sudden and unsettling event. Also, for the first time ever on a bitcoin exchange, users are now able to access a substantially larger market with their local currency, so we think it’s a happy ending all around,” Karpeles <a href="https://siliconangle.com/2011/08/11/mtgox-acquires-bitomat-pl-in-bid-to-restore-confidence-in-bitcoin-market/#:~:text=Thursday%2C%20August%2011%20trading%20on,on%20the%20new%20site%20seamlessly">said</a> at the time.&nbsp;



Mt. Gox had only months earlier suffered through two of its many hacking incidents, one for 80,000 BTC ($~65,000) when a thief was able to copy the platform’s own wallet.dat file, and another for 300,000 BTC ($~1.5 million) two months later, with the hacker eventually returning all but 3,000 of the stolen coins.&nbsp;



Of course, Mt. Gox would go completely belly-up nearly three years later, potentially affecting any Bitomat users who had migrated over for a second time.&nbsp;



There’s no question that modern day crypto exchanges, at least the top-tier ones, are different beasts compared to the earliest platforms like Bitomat and Mt. Gox. But for all their assurances, we can never really know for sure how well exchanges are storing user bitcoin.&nbsp;



This is both the coolest and hardest part of using Bitcoin: It takes trust to trade bitcoin and significant operational security to store it yourself (although multi-sigs do help). Anything else is just managing exposure.&nbsp;



If it were easy, everyone would do it. Until then, in exchanges we trust.



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