LooksRare is a community owned, NFT marketplace that rewards buyers and sellers for using the platform. LooksRare redistributes platform trading fees to its consumers and stakers, differentiating itself from similar NFT marketplaces.

LooksRare

Ben Strack

While inflows into spot bitcoin ETFs and anticipation around the Bitcoin halving helped fuel BTC’s price rally in the first quarter, the asset may now need a new upward driver.



Investor demand for the US bitcoin funds have stalled in recent weeks and “halving” headlines have slowed given the event came and went on April 19.



Bitcoin’s price (<a href="https://blockworks.co/price/btc">BTC</a>) was about $60,300 on Tuesday at 3 pm ET — down 13% from a month ago.&nbsp;



The asset had seen a record seven consecutive months of price growth. That is set to end in April, a fate <a href="https://blockworks.co/news/btc-record-monthly-growth-streak-jeopardized">some segment observers had expected</a>.&nbsp;



It’s tricky to determine whether the long-term effects of the latest halving — an event during which per-block rewards for mining bitcoin <a href="https://blockworks.co/news/bitcoin-halving-2024-occurs">dropped from 6.25 to 3.125 BTC</a> — have been priced in, said Hashdex research head Pedro Lapenta.&nbsp;



Bitcoin prices have historically peaked between 12 to 18 months after each halving, indicating BTC’s price might not hit new heights until next year. But bitcoin had never reached a record price so soon before a halving as it did this year — putting into question past trends.



Read more: <a href="https://blockworks.co/news/history-of-bitcoin-halvings">The history of Bitcoin halvings — and why this time might look different</a>



Either way, the recent BTC slump in April shouldn&#8217;t be alarming, Lapenta added.



“With bitcoin seeing seven straight months of gains, it&#8217;s typical for the period following a <a href="https://blockworks.co/tag/bitcoin-halving">halving</a> to involve modest increases or corrections, as we&#8217;re observing now,” he told Blockworks.



Fineqia International analyst Matteo Greco attributes BTC’s price decline to more investors taking profits after entering the market during the downturns of 2022 and 2023. Many ETF investors who saw significant share price appreciation since January did the same, he added.



To that end, the bitcoin ETF category has seen <a href="https://blockworks.co/news/bitcoin-etf-outflows-persist-third-straight-week">three straight weeks of net outflows</a> — an unprecedented streak since such funds hit the US market in January.



Read more: <a href="https://blockworks.co/news/franklin-templeton-institutional-bitcoin-etf-allocation">New mix of bitcoin buyers bode well for ecosystem: Franklin Templeton exec</a>



Those outflows are driven mainly by money exiting the Grayscale Bitcoin Trust ETF (GBTC), which is not new. That said, the category flow-leader — BlackRock’s iShares Bitcoin Trust (IBIT) — has seen zero flows on four straight trading days <a href="https://blockworks.co/news/blackrock-bitcoin-etf-inflows-streak">following a 71-day inflow streak</a>, according to Farside Investors <a href="https://farside.co.uk/?p=997">data</a>.&nbsp;&nbsp;



“Short-term uncertainty remains regarding whether demand for bitcoin ETFs has peaked or if investors are simply cautious due to BTC&#8217;s seven-month streak without a correction since September of last year,” Lapenta said.



K33 Research analysts Anders Helseth and Vetie Lunde wrote in a Tuesday note that “increasingly cautious traders” have indeed contributed to BTC’s price fall in recent weeks — “with the current market neither signaling bullish nor bearish aggression,” they added.&nbsp;



The macroeconomic outlook is set to be a BTC price-mover this week, Helseth and Lunde noted, as traders will listen for the Federal Reserve’s guidance on rate cuts and easing.&nbsp;&nbsp;



“Rate cut expectations have moderated substantially in the past month, with the market now pricing in one rate cut for the remainder of 2024 compared to the market&#8217;s expected six cuts in December 2023,” they wrote in the research note.



Read more: <a href="https://blockworks.co/news/crypto-slides-ahead-of-fed-rate-decision">Cryptocurrencies, stocks slide ahead of Fed rate decision</a>&nbsp;



A less uncertain macroeconomic environment for risk assets would likely contribute to the next positive price movement for bitcoin, Lapenta said.&nbsp;



Renewed demand for bitcoin’s network utility, like <a href="https://blockworks.co/news/runes-bitcoin-token-standard-ordinals">via the Runes protocol</a>, points to a bullish outlook for BTC, he added. So too does large banks, pension funds and other traditional finance players wading deeper into the space, via ETFs or otherwise.&nbsp;



Lapenta noted: “Taking everything into account, our outlook for 2024 remains positive, with a strong possibility of reaching another all-time high by year-end.&#8221;



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What could drive BTC price with halving complete, ETF demand stalled

Bessie Liu

The Runes protocol has gained a lot of interest in the Bitcoin community over the past few months.&nbsp;



Runes is a fungible token standard designed by Casey Rodarmor, the creator of Ordinals. The protocol is designed to be an alternative to BRC-20, an experiment token standard for fungible tokens on Bitcoin.



The BRC-20 standard is built on ordinals, which means it stores information in a Bitcoin transaction&#8217;s witness data, in a similar way, runes data is stored in a data storage function called OP_RETURN, Bob Bodily, the founder of Bioniq, told Blockworks.



Read more: <a href="https://blockworks.co/news/motoko-sentinels-ordinal-volume-bitcoin-halving">Motoko Sentinels gain traction despite ordinal volume decrease post-halving&nbsp;</a>



“Runes is a very elegant byte-efficient protocol; everything is encoded down into integers that you can store in the operator,” Bodily said.&nbsp;



Unlike BRC-20 tokens, which often leave behind “junk” after transactions which can consequently clog the network, runes use Unspent Transaction Outputs (UTXOs), and messages sent using the rune protocol (called runestones) will be <a href="https://docs.ordinals.com/runes.html">stored </a>on Bitcoin transaction outputs.&nbsp;



With Runes, users can deploy (etch), mint, and launch tokens in the same way that they can with ERC-20 tokens.



Read more: <a href="https://blockworks.co/news/bitcoin-halving-runes-launch">Bitcoin Runes look to spice up the halving party</a>



Rennick Palley, the founding Partner at Stratos, a VC firm focused on early-stage crypto projects, believes that Runes may have a bright future in enabling bitcoin miners to remain profitable.&nbsp;



&#8220;By adding a whole new layer of fungible tokens on <a href="https://blockworks.co/tag/bitcoin">Bitcoin</a>, Runes is making the network busier and more versatile. This should mean more transactions and, by extension, more fees for miners. It’s especially promising because it meshes well with Bitcoin’s existing UTXO model, which is a core part of how miners operate,” Palley said.



However, he notes that with Runes&#8217; growing popularity, transaction fees may climb, making everyday Bitcoin transactions less appealing due to their cost.&nbsp;



“It should encourage more BTC to transact off the layer,” Palley remarked. “Overall, I see the rise of layer-2 solutions as a major positive. These technologies will be the key to enabling hyperbitcoinization. Bitcoin would always need layer-2 solutions to scale — <a href="https://blockworks.co/tag/ordinals">ordinals</a>, BRC20s and Runes have just accelerated the timeframe, which is great.”



Alexei Zamyatin, co-founder of BOB, a hybrid layer-2 powered by Bitcoin and Ethereum, shares this sentiment. He notes that although bitcoin miners are likely to remain profitable thanks to the Runes protocol, high fees remain a concern.&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-halving-cycle-miners-energy-strategy">This Bitcoin halving cycle, miners need a new energy strategy</a>



“Ultimately, trading and other DeFi related activity will have to move to Bitcoin layer-2s/sidechains if [they] are to compete with the UX people are used to from Ethereum and Solana. Otherwise, the 10 min[ute] block times and high fees will result in a decrease of activity very quickly once first speculation is done,” Zamyatin said.



Zamyatin also noted that the growing interest in Bitcoin layer-2s can not be credited solely to Runes but remains a net positive for the Bitcoin ecosystem. Additionally, he notes that many projects are currently riding the “hype wave,” though these projects will likely disappear from the ecosystem in the long term.&nbsp;



“There are a number of strong technical and product teams that may be able to create a strong competition for ETH layer-2s. A lot of this still depends on technical innovation in the form of BitVM or a fork to Bitcoin, which I personally do not believe will happen soon, unfortunately,” he said.



Despite this, Zamyatin remains optimistic, noting that <a href="https://blockworks.co/tag/layer-2-2">layer-2s</a> and Bitcoin sidechains will likely bring more value to the Bitcoin blockchain.&nbsp;



“The Bitcoin learning curve is steep and we need to give people a simple way to start playing around with Bitcoin assets — instead of, as previously, tell[ing] them that anything else but Bitcoin is a scam,” he said. “This is certainly something that has changed since Ordinals: Bitcoin has become more welcoming of new developers and builders, with the toxic maximalist culture subsiding into irrelevance.&#8221;



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A look into Runes, a new Bitcoin token standard for issuing fungible tokens

Katherine Ross

Former Binance CEO Changpeng Zhao was sentenced to 4 months in US prison today.&nbsp;



The sentence is lower than some bettors expected, with those on Polymarket expecting the judge to hand down a sentence of six months.



Zhao will now head to a US prison to serve out his sentence, which is lower in comparison to the 36 months sought by the Department of Justice. Zhao’s team only sought five months probation.&nbsp;



Zhao also must pay a $50 million fine, as stipulated in his guilty plea signed in November.&nbsp;



Prosecutors aimed high when requesting Zhao’s sentence — which is double the 18 months at the high end of the guidelines — because they wanted the sentence to match the “gravity” of Zhao’s crimes, the government wrote in their sentencing memo last week.&nbsp;



&#8220;If Mr. Zhao does not face incarceration after deliberately and willfully planning to violate U.S. law to build the largest crypto exchange in the world and get rich in the process … then no one will face incarceration and the BSA will for intents and purposes be a dead letter,” prosecutors argued at the hearing, <a href="https://twitter.com/nikhileshde/status/1785355429582979304">according</a> to CoinDesk’s Nikhilesh De.&nbsp;



We broke down what you need to know about the sentencing in our X article:



<figure class="wp-block-image size-large"><a href="https://twitter.com/Blockworks_/status/1785384325329920330"><img loading="lazy" decoding="async" width="1192" height="872" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/04/Screenshot-2024-04-30-at-3.08.55-PM.png?w=1024&amp;h=1024" alt="" class="wp-image-85087" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/04/Screenshot-2024-04-30-at-3.08.55-PM.png?w=1192 1192w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/Screenshot-2024-04-30-at-3.08.55-PM.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/Screenshot-2024-04-30-at-3.08.55-PM.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/Screenshot-2024-04-30-at-3.08.55-PM.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/Screenshot-2024-04-30-at-3.08.55-PM.png?w=351 351w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/Screenshot-2024-04-30-at-3.08.55-PM.png?w=357 357w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/Screenshot-2024-04-30-at-3.08.55-PM.png?w=299 299w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/Screenshot-2024-04-30-at-3.08.55-PM.png?w=80 80w" sizes="(max-width: 1192px) 100vw, 1192px" /></a></figure>



<h2 class="wp-block-heading">Now what?</h2>



Zhao’s sentencing comes less than a month after former FTX CEO Sam Bankman-Fried received his own legal judgment.&nbsp;



Unlike CZ, SBF didn’t reach a deal with the government and was instead found guilty of fraud by a jury in New York at the end of last year. He’s now serving a sentence of 25 years; far more jail time than the former Binance CEO.



As part of his plea deal, he agreed not to contest a sentence of 18 months.



While this wraps up the DOJ’s actions against Zhao and Binance, the two still face charges from the Securities and Exchange Commission. The regulator was notably absent from the DOJ’s settlement. The agreement included the Commodity Futures Trading Commission, Treasury’s Financial Crimes Enforcement Network, and Office of Foreign Assets Control.



The SEC and Binance, in court documents earlier this month, said that they were in the middle of the discovery process. The filing <a href="https://www.courtlistener.com/docket/67474542/securities-and-exchange-commission-v-binance-holdings-limited/?filed_after=&amp;filed_before=&amp;entry_gte=&amp;entry_lte=&amp;order_by=desc">noted</a> that Zhao “served responses to the SEC’s interrogatories” and the two continue to discuss the SEC’s document requests.



<h2 class="wp-block-heading">What led to Zhao’s jail time</h2>



Zhao&#8217;s guilty plea was part of the multibillion-dollar settlement the government reached with Binance at the end of last year. The agreement&#8217;s sticker price, set at $4 billion, shocked many, although the investigation into the crypto exchange had been reported several times over a period of years.



Prior to the judge’s decision, the former executive received 161 letters of support from family and friends, asking the judge for leniency.&nbsp;



Zhao, in his letter to the judge, wrote that there was “no excuse” for the lack of anti-money laundering and compliance controls at Binance. He said he wished he could “change that part of Binance’s story.”



Since late last year, Zhao has been on US soil as ordered by the court. The former executive is not a US citizen — something that his team brought up to argue for leniency — and resides with his family in the United Arab Emirates. Zhao, his lawyers said ahead of the sentencing, cannot be sent to a minimum security facility because he’s not a US citizen, which they wanted taken into account.



While the Tuesday hearing shuts the book on the DOJ&#8217;s case against Binance and Zhao, the crypto enforcement actions against others in the Web3 space don’t end there. Just last week, the <a href="https://blockworks.co/news/doj-arrests-founders-samourai">Justice Department arrested the founders of Samourai Wallet</a>, alleging that it acted as a mixer for criminal funds. <a href="https://blockworks.co/news/roman-semenov-tornado-cash-ofac-list">It also has open cases</a> against Tornado Cash’s Roman Semenov and Roman Storm.



Want more details about CZ’s sentencing and what’s next? <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter here</a>. ICYMI, Blockworks reporter Casey Wagner <a href="https://blockworks.co/news/empire-newsletter-eigenlayer-airdrop-criticisms">gave some insight</a> into the hearing ahead of CZ’s Tuesday court date.



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Former Binance CEO Changpeng Zhao sentenced to 4 months in prison

Bitcoin investor Roger Ver was charged with tax fraud by the US Department of Justice on Tuesday.



The DOJ is seeking Ver’s extradition for a trial in the US. He was arrested in Spain on US criminal charges. 



The DOJ alleges that Ver evaded $50 million in taxes. Ver, the DOJ noted, became a citizen of St. Kitts and Nevis in 2014, but he still had two US companies — MemoryDealers.com and Agilestar.com. The Justice Department said that Ver bought bitcoin for both himself and the two companies. 



Ver was required to pay an “exit tax” on the capital gains. Both the companies and Ver allegedly owned roughly 131,000 bitcoin in 2014, with the companies specifically owning 73,000 of that sum.



“As a result of his expatriation, Ver allegedly was required under U.S. law to file tax returns that reported capital gains from the constructive sale of his world-wide assets, including the bitcoins, and to report the fair market value of his assets,” the DOJ’s release <a href="https://www.justice.gov/opa/pr/early-bitcoin-investor-charged-tax-fraud">said</a>.



The IRS, the DOJ said, lost “at least” $48 million due to the allegations against Ver.&nbsp;



“The indictment further alleges that by June 2017, Ver’s two companies continued to own approximately 70,000 bitcoins. Around that time, Ver allegedly took possession of those bitcoins and in November 2017 sold tens of thousands of them on cryptocurrency exchanges for approximately $240 million in cash,” a press release from the DOJ said.&nbsp;



Ver also provided “false or misleading information” to a law firm he hired so that he could allegedly conceal the amount of bitcoin both he and his companies held. 



“As a result, the law firm allegedly prepared and filed false tax returns that substantially undervalued the two companies and their 73,000 bitcoins and did not report that Ver owned any bitcoins personally,” the release said.



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DOJ charges Roger Ver with tax fraud

Michael McSweeney

Global authorities are intensifying their war against one of crypto’s core use cases — and no, I don’t mean memecoins. 



Crypto mixers have long been in the regulatory crosshairs for their use by money launderers and other illicit actors. Mixing tech obfuscates the original source of a crypto transaction —&nbsp;anathema to the kind of surveillance conducted by regulators across the world’s financial system.&nbsp;



Such efforts saw a significant expansion with last week’s arrests and indictment of the co-founders of privacy-focused bitcoin wallet Samourai.



The co-founders, accused of enabling more than $100 million in laundered funds, <a href="https://blockworks.co/news/doj-arrests-founders-samourai">face decades</a> in prison if convicted. The US Department of Justice, which shut down Samourai’s services and seized its websites, called it “a haven for criminals to engage in large-scale money laundering and sanctions evasion.”



This case is a big deal —&nbsp;so big, in fact, that one wonders whether the crypto community fully appreciates the gravity of what’s been happening. Or where things could go from here: Self-censorship by developers afraid of legal drama, greater centralization of crypto services and the further abandonment of the US as a destination for technology innovation.&nbsp;&nbsp;



In the past two years, regulators have targeted other mixing services and platforms. Roman Sterlingov, founder of mixing service Bitcoin Fog, was convicted earlier this month on similar charges and faces sentencing in July.&nbsp;



Tornado Cash, the Ethereum-based mixer, was sanctioned in 2022 and one of its co-founders is <a href="https://blockworks.co/news/custodia-bank-will-continue-fed-battle">currently on trial</a>, with a verdict expected next month.



The Bitcoin network’s <a href="https://en.bitcoin.it/wiki/Genesis_block">founding message</a> referenced looming bailouts for British banks. It was, in a sense, a rejection of the old ways of money and finance and a promise, however tiny at the time of genesis block, of something new. That didn’t mean simply breaking away from entrenched financial interests, but breaking away from centralized parties who have the power to oversee and control transactions.



The war on mixing can be viewed as the inevitable reaction to such efforts. Certain transactions — namely, those tucked out of sight — are undesirable, and governments will spare no expense in prosecuting not only the criminals who use mixing tools, but those that dare to develop them.  



Read more from our opinion section: <a href="https://blockworks.co/news/stop-chasing-degens-crypto-adoption">Stop chasing degens</a>



Developers are taking notice. ZkSNACKs, the developer of Wasabi Wallet, another privacy-centric wallet, <a href="https://blog.wasabiwallet.io/">announced</a> over the weekend that it would block US residents from its services.



Users, too, are on notice. On April 25, the FBI said that users of crypto-centric unlicensed money transmission businesses “may encounter financial disruptions during law enforcement actions, especially if their cryptocurrency is intermingled with funds obtained through illegal means.”



The notice later put it more bluntly: “Using a service that does not comply with its legal obligations may put you at risk of losing access to funds after law enforcement operations target those businesses.”



The Samourai indictments represent an aggressive warning to services that operate outside the sphere of surveillance —&nbsp;and that’s the point.&nbsp;



I believe people in crypto should care more about this. Far, far more.&nbsp;



Public policy is unsexy and not nearly as fun as rolling the dice on the latest memecoin. The bar to actually being able to make a difference in such fights is especially high and, perhaps, not one prioritized by some in the industry. This might be especially true for those whose livelihoods may or may not depend on friendly relations with the US government.&nbsp;&nbsp;



Regulators, at least recently, appear set on jailing developers for daring to provide resources to those who don’t want every inch of their financial history dissected. Crypto was always intended to be a path for just that —&nbsp;being your own bank, as the saying once went —&nbsp;but the industry’s original intentions were lost in the memecoin circus. Or perhaps the silly speculation was always the point.&nbsp;



If the FBI notice is any indication, the authorities want you to keep on using the bank —&nbsp;albeit one with a more crypto-friendly face.



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


<div class="wp-block-post-author-biography">Michael McSweeney has worked in crypto media since 2014, including editorships at CoinDesk and The Block. In his spare time, he writes fiction and plays disc golf. Contact Michael at michael.mcsweeney@blockworks.co.</div>


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Samourai Wallet matters more than your memecoins

Coinbase is poised for a strong showing when it reports its first quarter results later this week, analysts said — though some questions remain.&nbsp;



Still, the revenue outlook for Coinbase’s layer-2 network and its international offerings, for example, would give the market a better sense of the crypto exchange’s trajectory, one analyst said.&nbsp;



The lift Coinbase is set to see upon reporting earnings on Thursday is due in part to volatile crypto markets and rising prices seen during the first three months of 2024, noted Morningstar analyst Michael Miller.



Bitcoin’s price rose to an <a href="https://blockworks.co/news/bitcoin-all-time-high">all-time high price</a> around $73,000 in mid-March. Though the asset’s price has retreated in recent weeks to below $61,000, BTC is up roughly 38% year to date. 



“Trading revenue should be much higher than last year, and I expect the company to be solidly profitable,” Miller told Blockworks. “USDC’s market capitalization also staged a major recovery during the quarter, so there will be significant tailwinds to its interest income as well.”



<a href="https://blockworks.co/news/coinbases-circle-investment-reflects-the-shoring-up-of-major-revenue-stream">Interest earned on Coinbase USDC reserves</a> represents a decent chunk of the company’s revenue — amounting to $172 million during the fourth quarter of 2023. That stablecoin revenue figure was roughly 19% of Coinbase’s net revenue during those three months.



Owen Lau, executive director at Oppenheimer &amp; Co, said he too expects a “meaningful beat” for Coinbase given the crypto exchange’s strong trading volumes and likely improved stablecoin revenue.&nbsp;



“<a href="https://blockworks.co/tag/coinbase">Coinbase</a> could also benefit from the mark-up of their corporate investment portfolio due to their adoption of accounting rule ASU 2023-08,” Lau told Blockworks.&nbsp;



The law requires entities to measure certain crypto assets at fair value, with changes in fair value recorded in net income.



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



Oppenheimer analysts anticipate that Coinbase trading volume hit roughly $300 billion during the first quarter — up 95% from the prior quarter, according to an April 3 research note.&nbsp;



The average market cap of USDC increased 12% quarter over quarter to $28 billion, they added.



Lau and his team also project first quarter subscription and services revenue, which comprises income related to <a href="https://blockworks.co/tag/stablecoins">stablecoins</a>, to rise 15% from the prior quarter to $432 million.



They anticipate Coinbase’s total revenue in the first three months of the year to be $1.4 billion. That would be a 48% increase from the $954 million of total revenue notched in last year’s fourth quarter.&nbsp;&nbsp;



Read more: <a href="https://blockworks.co/news/coinbase-earnings-q4-analysis">Coinbase reported Q4 earnings Thursday. Here’s what stood out.</a>



Another result to pay attention to will be Coinbase’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).



The company notched positive adjusted EBITDA in all four quarters in 2023 — amounting to $964 million — as it prioritized expense cuts last year.



Oppenheimer analysts project adjusted EBITDA for the first quarter to have reached $699 million, primarily driven by higher estimated trading revenue than previously expected.



Those total revenue and adjusted EBITDA predictions are 20% and 42% higher than consensus estimates, respectively, according to the Oppenheimer research note.



<h2 class="wp-block-heading">Questions that need answering</h2>



Lau said in addition to seeing how the main metrics compare to Oppenheimer’s estimates, guidance around second quarter subscription and services revenue, as well as its upcoming expenses, will be key to forecasting the outlook for Coinbase.



Miller said he will be listening for executives’ thoughts on the company’s international expansion efforts.



Read more: <a href="https://blockworks.co/news/coinbase-global-expansion">Coinbase is ramping up global efforts with ‘forward-looking regulators’ </a>“We are seeing some strong volume growth from its international futures and spot trading, but this business does have much lower fees per trade than its core business,” Miller told Blockworks. “It would be helpful to get some idea of how this new volume translates into revenue.” Coinbase has also seen <a href="https://blockworks.co/news/base-coinbase-l2-success">increasing use of its Base layer-2 network</a>, the Morningstar analyst noted.



“I’m interested in how they are viewing that business and its long-term monetization potential,” Miller added.&nbsp;



Other questions related to Coinbase’s trajectory are nothing new.



The company continues to navigate its lawsuit with the Securities and Exchange Commission, for example, the result of which is expected to impact the business.



District Judge Katherine Polk Failla denied most of Coinbase’s <a href="https://blockworks.co/news/coinbase-sec-motion-securities">efforts to dismiss</a> the suit last month. <a href="https://blockworks.co/news/judge-rules-against-coinbase-sec-dismissal">She said the regulator “sufficiently pleaded”</a> that the crypto company operates as a clearing agency, broker and exchange under federal laws.&nbsp;



“We currently believe that this case will be a long legal battle and will likely go to the Supreme Court to get the final decision,” Oppenheimer analysts wrote in their latest Coinbase note.



The lawsuit is a “key risk” that could impact Oppenheimer’s price target of $276 for Coinbase, the note adds.&nbsp;



Coinbase’s stock price hovered around $208 at 12 pm ET — up 33% year to date but down 17% in the last month.



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Analysts expect strong Q1 report for Coinbase, but are watching for this 

Casey Wagner

Cryptocurrencies and US equities dipped Tuesday as latest wage data confirmed that inflation is persisting ahead of the Federal Reserve’s interest rate decision.&nbsp;



Bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) and ether (<a href="https://blockworks.co/price/eth">ETH</a>) lost around 3% and 5% over 24-hours, respectively, erasing Monday’s gains. Analysts attribute the dip to the lower-than-expected trading volumes for spot bitcoin and ether exchange-traded products in Hong Kong, which debuted this week. 



“Disappointing ETF volumes out of Hong Kong, however, led to a dramatic selloff, with [bitcoin and ether] dropping ~3.5% to open the day,” Mike Tauckus, head of trading and structuring at BitOoda, said. “Initial indications showed expected inflows to total close to $300 million, while real combined volumes amounted to little more than $11 million.”&nbsp;



Read more: <a href="https://blockworks.co/news/hong-kong-crypto-etf-predicted-inflows">Successful Hong Kong crypto ETF flows would pale in comparison to US funds</a>



Spot <a href="https://blockworks.co/tag/bitcoin-etf">bitcoin ETFs</a>, which hit the market in the US earlier this year, saw more than $4.5 billion in day-one trading volumes, by comparison.&nbsp;



Stocks were also in the red Tuesday. The S&amp;P 500 and Nasdaq Composite indexes were down 0.7% and 0.4%, respectively, midway through the session. The dip comes as wage data from the US Bureau of Labor Statistics showed a 4.4% year-over-year increase in wages and salaries last month. The rise is doing little to calm traders that heightened inflation is a problem of the past.&nbsp;



The Fed’s Open Market Committee meeting kicked off today and central bankers will reveal their interest rate decision Wednesday afternoon. Fed fund futures show a 0.5% chance of a rate cut this cycle, according to <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">data</a> from CME Group.&nbsp;



Markets are starting to get spooked that a rate cut may not come at all in 2024, a possibility that is further fueled by data that shows the economy is relatively strong.&nbsp;



“The best-case scenario would be for [Fed Chairman Jerome] <a href="https://blockworks.co/tag/jerome-powell">Powell</a> to come out and admit that he got the December pivot promise wrong, and that the Fed would continue to monitor the data for signs and cut rates as soon as they are confident that inflation’s downward path has resumed and is sustainable,” Noelle Acheson, author of the Crypto is Macro Now newsletter, said. “This has the benefit of sounding reasonable while leaving cuts on the table.”



As for bitcoin, Tauckus says the crypto is in the clear, for now, but should it dip below $60,000, a more sustained selloff is on the table.&nbsp;



“We view $59,200 as a significant support level for BTC, and should this level get breached with momentum, a pullback to $53,000 is possible,” Tauckus said.



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Cryptocurrencies, stocks slide ahead of Fed rate decision 

David Canellis

<h2 class="wp-block-heading">Stake, not steak</h2>



Don’t call it an airdrop.



EigenLayer’s finally-confirmed token generation event is a “stakedrop” — a very different concept.



Anyone who had staked with Ethereum restaking platform EigenLayer before the March 15 snapshot can receive a linear distribution of EIGEN tokens, scaled to the points they’ve received, between May and September this year.&nbsp;



What makes EigenLayer’s airdrop a stakedrop is that those EIGEN tokens can’t be <a href="https://blog.eigenfoundation.org/announcement/">transferred</a>, which means they can’t be sold or traded until a yet-to-be-determined date.



EIGEN can only be staked with EigenLabs’ proof-of-concept/proof-of-value data availability service EigenDA, at least in the beginning, until other apps building with EigenLayer integrate the token into their own platforms.



Read more: <a href="https://blockworks.co/news/eigen-labs-eigen-token">Eigen Labs drops white paper debuting EIGEN token</a>



That’s one way to get around the day-one dumping problem often associated with token airdrops: hard-coded diamond hands, with a whiff of additional rewards.



There was about 3.14 million ETH ($12.2 billion) in EigenLayer on the snapshot date — now there’s 4.86 million ETH ($15.8 billion). By raw ETH <a href="https://defillama.com/protocol/eigenlayer">count</a>, EigenLayer’s total stake has swelled by about half in those six weeks, and is easily the second-largest DeFi app behind liquid staking platform Lido.



<a href="https://blockworks.co/tag/eigenlayer">EigenLayer</a>’s growth has been largely attributed to the implicit promise of an <a href="https://blockworks.co/tag/airdrop">airdrop</a> scaled to its points program.&nbsp;



There are three main points of contention over the EigenLayer stakedrop:



<ol>
<li>Linear distributions skew unfairly toward well-capitalized <a href="https://blockworks.co/tag/staking">staking</a> whales (the rich get richer).</li>



<li>US users can’t claim EIGEN despite EigenLayer accepting their stakes.</li>



<li>Short vesting schedules that potentially start at distribution, rather than activation of the ability to transfer.</li>
</ol>



There’s some truth to all those concerns.&nbsp;



Yes, it sucks that US users can’t claim an airdrop without deliberately avoiding geoblocks with a VPN. It’s especially ironic given that EigenLabs itself is headquartered in Seattle, and is backed by a bevy of US-based investors, but there were no geoblocks put in place at the app-layer to discourage American stakers.



The Cayman Islands-registered Eigen Foundation, however, is in charge of all token matters. The foundation says no dice for US residents, alongside a number of other jurisdictions — which, in any case, is par for the course in crypto these days.



As for the vesting schedules that could begin at distribution, it does feel grimy that insiders and early investors may start counting down toward a liquidity event (read: selling on exchanges) before users know for sure when they can sell their own stash. Hopefully cooler heads will prevail, and the Foundation will clarify its policy.



By far the most valid concern is the linear distribution schedule, which runs in contrast to the Jito-like airdrops that <a href="https://www.dlnews.com/articles/defi/solana-jito-airdrop-a-boon-for-small-investors/">reward</a> the little guy.&nbsp;



Read more: <a href="https://blockworks.co/news/defi-points-farming-crypto-investments">DeFi ‘points’ farming has reshaped the crypto investment landscape</a>



Taking the <a href="https://dune.com/hahahash/eigenlayer">current</a> EigenLayer points distribution as a proxy for the actual snapshot, EigenLayer has 117,000 unique depositors and 36% have under 500 points, altogether worth 0.2% of the supply, while the top 2,227 depositors (2% of the total) have gathered almost 90% of points supply.&nbsp;



So, napkin math suggests the top ~2% of EigenLayer stakers will receive ~90% of the EIGEN stakedrop, which has been earmarked for 15% of the total supply at launch.&nbsp;



This sends only one message to the average crypto user: Your active participation, in the end, can mean very little.



— David Canellis



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



<ul>
<li>EigenLayer’s total ETH <a href="https://defillama.com/protocol/eigenlayer?denomination=ETH">locked</a> fell 5% overnight, equal to about 150,000 ETH ($453.2 million).</li>



<li>Ether inflation <a href="https://ultrasound.money/">continues</a>, now at more than 10,200 ETH ($31 million) over the past week. Extrapolated over the next year, that’s a 0.45% inflation rate.</li>



<li>Daily bitcoin <a href="https://tokenterminal.com/terminal/projects/bitcoin">fees</a> are at three-week lows as Runes interest dies down.</li>



<li>Over the past two days, 70% of Bitcoin transactions were BTC transfers, with Runes <a href="https://dune.com/cryptokoryo/runes">making</a> up most of the rest.</li>



<li>Worldcoin has paid out $504 million in token <a href="https://tokenterminal.com/terminal/metrics/token-incentives">incentives</a> over the past 90 days, ranked fourth behind Bitcoin, Ethereum and Solana.</li>
</ul>



<h2 class="wp-block-heading">Judgment day</h2>



After some delay, CZ’s big day has finally arrived.&nbsp;



The <a href="https://blockworks.co/tag/binance">Binance</a> founder is scheduled to be sentenced in federal court in Washington state at 12 pm ET (9 am PT) this morning.&nbsp;



We’re not one to place bets, but if we had to, we’d say <a href="https://blockworks.co/tag/changpeng-zhao">CZ</a> is probably going to spend some time behind bars. It’s a high profile case, so he’ll receive credit for cooperating and pleading guilty, but an example still has to be made.&nbsp;



CZ <a href="https://blockworks.co/news/binance-changpeng-zhao-deal-unpacked">entered into a guilty plea agreement</a> in November, admitting he failed to maintain an effective anti-money laundering program at Binance — a violation of the Bank Secrecy Act.&nbsp;



The government says CZ should face three years in prison — double the high end of the federal guidelines range. The defense, unsurprisingly, is going for the lowest end of the recommendations: five months probation, ideally with conditions that allow him to return to his home in the UAE.&nbsp;



Prosecutors say the “gravity” of the crimes, plus CZ’s “willful” involvement, means a stricter punishment is in order. Prosecutors also highlighted national security threats and vulnerabilities, which they say CZ enabled through his negligence.&nbsp;



Read more: <a href="https://blockworks.co/news/government-alleges-cz-threatened-us-security">Government says CZ threatened US security, recommends doubling Guideline sentence</a>



The defense argues CZ faces unfairly harsh conditions if he is incarcerated. Given that he is not a US citizen, he’s ineligible for a minimum-security facility, his team wrote. Plus, he cooperated with the US government.&nbsp;



CZ’s team also hired a private security company to create a plan for home confinement in the UAE should the judge decide house arrest is in order. Again, we aren’t one to place bets, but this seems like a serious long shot. We don’t even want to know what the defense paid this company.&nbsp;



The hearing should be fairly quick. The government and defense will present their sentencing recommendations to the judge, which were filed last week. Victims and advocates will have a chance to address the court, as will CZ.&nbsp;



We expect CZ will take the opportunity to speak. For his sake, we hope CZ is more eloquent and apologetic than Sam Bankman-Fried, FTX’s founder, was <a href="https://blockworks.co/news/sbf-blew-it-final-defense-trial">at his own sentencing last month</a>.



CZ is already miles ahead of his former frenemy <a href="https://blockworks.co/tag/sam-bankman-fried">SBF</a>, though. Binance is still up and running, and <a href="https://www.bloomberg.com/news/features/2024-04-29/ex-binance-ceo-cz-may-be-richest-person-ever-in-jail-in-us">Bloomberg</a> says he’s worth $43 billion. The $50 million fine CZ has to hand over is a drop in the bucket.&nbsp;



— Casey Wagner



<h2 class="wp-block-heading">Sell, sell, sell!</h2>



Executives from a few different crypto companies are raking in the dough this year.&nbsp;



Take <a href="https://blockworks.co/tag/michael-saylor">Michael Saylor</a>. If you’ve been here a while, you know we’ve already discussed his stock sales once — but the MicroStrategy co-founder made roughly $400 million.&nbsp;



MSTR, trading around $1,200 a share, is up nearly 300% year to date as it benefits from the bitcoin bull run we’ve seen so far this year.&nbsp;



Saylor’s sales are a unique case of, dare I say, luck? Last year, the company disclosed that the executive would unload 5,000 shares a day between January and April.&nbsp;



Read more: <a href="https://blockworks.co/news/michael-saylor-bitcoin-chair">Let Michael Saylor cook</a>



Unless someone at <a href="https://blockworks.co/tag/microstrategy">MicroStrategy</a> has a crystal ball, Saylor’s sales came at one of the most beneficial times in crypto. And he still has a “significant ownership stake,” according to CFO Andrew Kang.&nbsp;



While no one at Coinbase has managed to notch nearly $400 million in stock sales, the executive team has made $441 million in net insider stock sales year to date. To put that into perspective, the team notched net sales of $175 million in 2023.&nbsp;



CFO Alesia Haas has sold roughly 90,000 shares for an average of $233 a share. COIN trades around $216 currently, with a 52-week high of $283. It’s in a similar boat as MicroStrategy, up over 325% year to date.&nbsp;



CEO Brian Armstrong comes out on top of the sales though, making $152 million so far. He <a href="https://blockworks.co/news/coinbase-stake-sale-brian-armstrong">finished selling 2% of his stake</a> in the company earlier this year. Like Saylor, the sales were disclosed ahead of time.



These stock sales aren’t unusual when looking at the sales themselves, as executives would want to profit when their stocks are making such dramatic gains.&nbsp;



Read more: <a href="https://blockworks.co/news/microstrategy-second-convertible-senior-notes-offering">MicroStrategy announces another senior notes offering to buy more bitcoin</a>



Saylor’s profits are some of the most interesting, simply because — as Kang said on the earnings call Monday evening — the sales were “programmatic” and Saylor actually had to execute the sales ahead of an options expiration.&nbsp;



Now one has to wonder how much bitcoin Saylor plans to buy with those funds.



— Katherine Ross



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



<ul>
<li>MicroStrategy bought 122 bitcoin for $7.8 million in April, Michael Saylor <a href="https://twitter.com/saylor/status/1785037831175630938">says</a>.</li>



<li>Polymarket traders <a href="https://polymarket.com/event/how-long-will-czs-sentence-be?tid=1714477057562">think</a> former Binance CEO CZ will be sentenced to less than a year in prison.&nbsp;</li>



<li>The spot bitcoin and ether ETFs officially <a href="https://www.reuters.com/markets/currencies/asias-first-spot-bitcoin-ether-etfs-gain-hong-kong-debut-2024-04-30/">debuted</a> in Hong Kong overnight but the reception was “lukewarm,” Reuters reports.</li>



<li>Avalanche <a href="https://www.avax.network/blog/avalanche-integrates-with-stripe-for-crypto-onramping">integrated</a> with Stripe’s brand-new crypto onramp.</li>



<li>ICYMI: The SEC has been investigating ETH for over a year, <a href="https://blockworks.co/news/sec-investigation-of-eth-as-security">according</a> to an unredacted filing from Consensys.</li>
</ul>



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



One foot in, one foot out.



So it seems to go in the <a href="https://www.verdict.co.uk/web-2-5-and-the-future-of-decentralised-finance/">world of Web 2.5</a>, a concept I don’t 100% grok. But it strikes me as one of those phrases bandied about to justify, well, whatever business model is being pursued by these transitory prognosticators.



Some refer to Web 2.5 as the “bridge” between <a href="https://blockworks.co/tag/web2">Web2</a> and <a href="https://blockworks.co/tag/web3">Web3</a> —&nbsp;yes, these varying editions of the internet can be a bit dizzying — though, the ruder interpretation might be that Web 2.5 denizens aren’t ready for the full plunge, so to speak.



I think this is misguided. Bitcoin’s OG pitch was to be one’s own bank —&nbsp;that is, shedding the perceived shackles of the financial system.&nbsp;



Maybe those Web 2.5 folks ought to do the same. Pinch the nose, climb the decentralization diving board and jump. It might be a bit easier to follow exactly what you stand for and what you’re trying to accomplish if you do.&nbsp;



— Michael McSweeney



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Empire Newsletter: What’s wrong with EigenLayer’s airdrop

Motoko Sentinels, a new ordinal collection that launched on the Bioniq Marketplace, saw its trading volume increase following the Bitcoin halving, despite the high trading volumes immediately following the event.&nbsp;



Although total ordinal volume had decreased by over 58% the day following the Bitcoin halving due to <a href="https://dune.com/dgtl_assets/bitcoin-ordinals-analysis">high</a> network fees, the Motoko Sentinel collection saw its trading volume increase by 20%.&nbsp;



Kyle Langham, the director of data and analytics at DFINITY, told Blockworks that this is because the Bioniq marketplace operates on the Internet Computer Protocol (ICP). This network, which is natively integrated with Bitcoin, can maintain lower transaction costs regardless of the fee environment on the native Bitcoin chain.



Read more: <a href="https://blockworks.co/news/bitcoin-ordinals-trading-frenzy">Bitcoin ordinals volume jumps while ERC-404 experiment loses steam</a>



“ICP is what you call a generation three blockchain. We’re not trying to replicate Ethereum or Solana; we’re trying to replicate AWS but on the blockchain,” Langham said.



Applications hosted on ICP will already be integrated with <a href="https://blockworks.co/tag/web2">Web2</a>, enabling developers to make API calls on ICP. The team is also working on Web3 integrations, or what it calls “chain fusion.”



“We integrated with Bitcoin a year and a half ago at the protocol level, so there’s a Bitcoin light node running on ICP facilitating developers to build <a href="https://blockworks.co/tag/ordinals">ordinal</a> marketplaces — like Bioniq — on top of ICP that can communicate directly with the Bitcoin network,” Langham said. 



Bob Bodily, co-founder and CEO of Bioniq, notes that through building on ICP, the marketplace can offer users faster transactions at lower costs.&nbsp;



“You can do more with your ordinals, and with your runes, or BRC-20 tokens when you bridge them to a more programmable blockchain,” Bodily said. “There are a lot of limitations on Bitcoin One.”



Bodily explains that users using ordinal marketplaces on Bitcoin layer-1 may encounter problems like MEV bots and getting sniped in the mempool.



“Generally, it’s expensive to transact on <a href="https://blockworks.co/tag/bitcoin">Bitcoin</a> in a higher fee environment, so the whole goal of Bioniq was to create a layer for people to do more with their ordinals that is fun, interesting and engaging,” Bodily said.



Despite these advantages, Blockworks&#8217; initial tests on the Bioniq platform encountered some technical difficulties, including errors during transactions and registration issues, which were eventually resolved. These challenges highlighted areas for potential improvement in user experience.



Read more: <a href="https://blockworks.co/news/bitcoin-halving-runes-launch">Bitcoin Runes look to spice up the halving party</a>



Motoko Sentinels is Bioniq&#8217;s first project to explore this area. These individual <a href="https://blockworks.co/tag/nfts">NFTs</a> can be sent out on missions to earn experience and “level up.”



“As they level up, you get more layers on your Motoko, and you can eventually go and ascribe them directly on Bitcoin as part of the gameplay,” he said. “This means they’re minted on a Bitcoin layer-2, with the ability to inscribe to Bitcoin at a subsequent later date, which is really handy when fees are high.”



At the time of writing, there are three inscribed Motoko Sentinels. The collection has a trading <a href="https://bioniq.io/collection/motoko-sentinels/inscriptions">volume</a> of 3.75 and a floor price <a href="https://bioniq.io/collection/motoko-sentinels/inscriptions">of</a> 0.002 (~$127).



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Motoko Sentinels gain traction despite ordinal volume decrease post-halving 

The team behind restaking protocol EigenLayer dropped a white paper for a native token on Monday.



The Eigen Labs team went into detail about the structure of the EIGEN token in a 43-page paper. The token will be distributed by the Eigen Foundation and the supply will sit at 1.67 billion at launch, according to a statement provided to <a href="https://www.theblock.co/post/291383/eigenlayer-foundation-formed-introduces-native-token-with-multi-season-stakedrop?utm_source=twitter&amp;utm_medium=social">The Block</a>.&nbsp;



45% of the tokens were allocated to the foundation’s community, while stakedrops, community initiatives and ecosystem development have each been allocated 15%.



Early investors are set to receive nearly 30%, while early contributors receive 25.5%.&nbsp;



According to the Eigen Foundation, <a href="https://docs.eigenfoundation.org/faq/eligibility">season one</a> will focus on users who have staked directly with EigenLayer and those who staked in “EigenLayer via [Liquired Restaking Tokens].”



During <a href="https://docs.eigenfoundation.org/faq/phase2">Phase 2</a>, another 10% will be given to “people who interacted with EigenLayer in more complex ways, where determining the appropriate EigenLayer end user was either not possible or required an opinionated decision.”



“EIGEN serves a fully complementary role to ETH with ETH staking powering objective fault slashing and EIGEN staking powering slashing for intersubjective faults. We view this intersubjective work token as taking the Ethereum ecosystem one step closer to the goal of building the Open Verifiable Digital Commons,” the team wrote.



Read more: <a href="https://blockworks.co/news/eigenlayer-restaking-protocol-on-ethereum">Restaking protocol EigenLayer heads to Ethereum mainnet</a>



Claims, according to the <a href="https://t.co/WO6lhB8QXI">website</a>, are set to start May 10, but the initial float won’t be tradeable until June.&nbsp;



EIGEN “solves fundamental challenges like universality, isolation, metering, and compensation. By using social consensus and forking, EIGEN empowers the secure execution of diverse digital tasks with crypto economic security,” the website said.



Prior to the announcement, founder Sreeram Kannan seemed to indicate that the team was at work behind the scenes after the told Unchained’s Laura Shin that the team hadn’t thought far enough head for a token, though — as <a href="https://blockworks.co/news/empire-newsletter-federal-reserve-custodia-lawsuit">Blockworks editor David Canellis pointed out</a> — Kannan was “giggling” as he issued the denial.&nbsp;



In early April, EigenLayer went to mainnet, with its data availability solution, EigenDA. The project, which has received a lot of buzz, also received $100 million from a16z in February following an early 2023 raise of $50 million.



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Eigen Labs drops white paper debuting EIGEN token

Fraser Brown

Riad Wahby

As the snows of Crypto Winter melt and a thousand seed rounds bloom, too many Web3 teams are making the mistake our forebears have warned about for decades: They’re rolling their own crypto.&nbsp;



Crypto, in this case, means cryptography — the software and mathematical techniques that secure the internet, your credit card and the Web3 protocols we know and love.



Why is crypto different from, say, general app development? Think of it this way. If you&#8217;ve just developed the hottest new platform for streaming bird videos to tech-savvy cats, you&#8217;re probably thrilled if it works 99.9% of the time. But if instead you&#8217;ve built the hottest new crypto wallet, preventing attempted thefts 99.9% of the time obviously won’t work: Attackers will just keep trying until they’ve drained your users&#8217; funds. Persistence is worthwhile when the payoff is a payout.



Unfortunately, as computer security legend Bruce Schneier says, &#8220;Anyone, from the most clueless amateur to the best cryptographer, can create an algorithm that he himself can’t break.&#8221; The tough part, as Schneier says, is building systems other people can’t break. Sadly, Web3 teams emboldened by inexperience (and overworked auditors) keep rolling their own crypto. What’s the result?



<h2 class="wp-block-heading">Bad crypto implementations</h2>



Cryptographic algorithms are incredibly delicate. Even a well understood, secure algorithm is easy to break if it’s implemented poorly.&nbsp;



Consider the hundreds of millions of dollars stolen in the last two years because of a textbook mistake: Generating secret keys in a predictable way that’s easy for attackers to guess. We still see these bugs a few times a year, even though avoiding them is Cryptography Engineering 101.



But not all bugs are that simple. Some take engineering intuition and expertise to spot, and not all cryptographers specialize in engineering. Applied cryptographers and crypto engineering specialists are well-versed in subtle implementation bugs because (hopefully) they’ve written Web2 crypto code, Web3 crypto code, and maybe even papers about how to write crypto code. In contrast, theoretical cryptographers are well-versed in theory, but are much less concerned with code-level intricacies.



In short, don’t be fooled: Not everyone with “cryptographer” in their title has the training or expertise to write cryptographic code that’s used by real people to protect real things.



<h2 class="wp-block-heading">Broken deployments</h2>



Even if a system is theoretically sound and implemented well, it can still be deployed poorly.&nbsp;



Take the Ronin bridge, which lost over half a billion dollars in 2022. Users’ funds were supposed to be protected by a five-of-nine majority voting mechanism, but a series of stunningly poor deployment decisions led to its demise. In the end, five of the nine voting keys were effectively controlled by one company (Sky Mavis), allowing attackers to hijack a majority of the votes with a single compromise. Designing and deploying secure systems that resist attackers is another specialty that’s distinct from cryptography theory and engineering — and it’s one that’s often overlooked in Web3. That’s probably why, in the aftermath of the Ronin attack, commentators tut-tutting about “more decentralization” completely missed the point. The issue was with quality, not with quantity.



<h2 class="wp-block-heading">Harmful complexity&nbsp;</h2>



Finally, there&#8217;s a Web3-specific disease that&#8217;s making all of this worse: A fetish for unnecessary use of bleeding-edge buzzword crypto — things like “fully homomorphic encryption,“ multi-party computation” or “zero-knowledge proofs” — for problems that simply do not need big-iron solutions. These polysyllabic crypto heavyweights aren’t just immature, they’re even more brittle and even harder to implement correctly. And in most cases, they’re being used to attract attention (and investment), not because they’re the right tool for the job.



Read more from our opinion section: <a href="https://blockworks.co/news/crypto-crime-legislation-hacks">Crypto crime is too easy</a>



What’s the problem with that? Well, if you asked a landscaper to plant some azaleas and they showed up with a backhoe, you&#8217;d have some questions (especially if a minor slip maimed the neighbor’s dog). And if the landscaper replied with a jargon mad-lib, you probably wouldn’t interpret your confusion as a sign of the landscaper’s deep azalea wizardry. The same is true in Web3. When the sales pitch is just technobabble conveying little more than &#8220;we have the heaviest cryptography on the block,&#8221; ask yourself: Has the team made it clear that they need the big guns, specifically, that nothing simpler could solve this problem? Usually, the answer is no.



So we’ll say it again: Don’t roll your own crypto! Maybe start checking the “About Us” page before trusting a project with your — or worse, your users’ — cryptographic secrets.&nbsp;



And if the answers to your security questions have a low signal-to-buzzword ratio — or if the team acts like their product is too advanced for mere mortals to understand — consider looking somewhere else.



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



Riad is co-founder and CEO of key management infrastructure provider Cubist and an Assistant Professor at Carnegie Mellon University. He is an applied cryptographer and leading academic researcher on zero-knowledge proofs and their applications. He is a co-inventor of proof systems including Lasso, Hyrax, and Brakedown, and he has co-authored cryptographic specifications including RFC9380 and the BLS signatures standard used by Ethereum, Avalanche and many other blockchains. Riad received his SB and MEng in Electrical Engineering and Computer Science from MIT, and his PhD in Computer Science from Stanford.



Fraser is co-founder and CTO of Cubist and an Assistant Professor at Carnegie Mellon University. She is an expert in software correctness: her research focuses on systems security, automated bug finding and formal verification, from verifying (parts of) production systems like browser JITs, to finding exploitable bugs in real codebases. Her tools have found many zero-day bountied bugs and CVEs in the Chrome and Firefox browsers and multiple operating systems. Fraser received her BA in English and her MS and PhD in Computer Science from Stanford.



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You’re still rolling your own crypto. You need to stop.

<h2 class="wp-block-heading">Grab your popcorn</h2>



Custodia’s court battle isn’t over yet.



The firm’s fight against the Federal Reserve entered a new phase after it filed a notice of appeal on Friday. Last month, US District Court Judge Scott Skavdahl sided with the Kansas City Fed in a summary judgment.



The crypto-focused bank, in its initial complaint filed in 2021, alleged that it would be reduced to being a “second-class citizen” by not being authorized for a Master Account with the Fed. That account would allow Custodia to directly access the Fed’s banking system rather than going through an intermediary bank.



The suit was filed after the Fed dragged its feet and delayed Custodia’s application, and has been ongoing ever since. The Fed officially denied the master account bid in January 2023, two years after the initial filing.



Judge Skavdahl, in his judgment last month, wrote that the Fed maintains the “discretion to grant or deny master account requests” and that the Fed didn’t “owe” Custodia master account approval.&nbsp;



Read more: <a href="https://blockworks.co/news/custodia-bank-will-continue-fed-battle">Why Custodia’s loss isn’t the end of its Fed fight</a>



So Custodia took the most obvious next step (other than just accepting that judgment) and submitted its appeal notice to the Tenth Circuit Court of Appeals.&nbsp;



If Custodia is able to successfully win its bid for an appeal and goes on to receive a successful judgment, then the Fed will have no choice but to seriously consider its bid. After its initial denial, Custodia alleged that the <a href="https://blockworks.co/tag/federal-reserve">Fed</a>’s decision was “arbitrary” — a word that crypto became very familiar with after an Appeals Court <a href="https://blockworks.co/news/grayscale-sec-decision-bitcoin-etf">sided with Grayscale</a> in its lawsuit against the <a href="https://blockworks.co/tag/sec">SEC</a> last year.&nbsp;



However, if the judge’s original decision is upheld, then not only does Custodia have to allow an intermediary bank to access the Fed’s system on its behalf, but also set a potentially exclusionary precedent.



Custodia’s case is the latest in an array of crypto-centric cases that may set the tone for how the industry interacts with regulators and the US government going forward.



Additionally, Custodia also said “no thanks” to a bill of costs filed by the Kansas City Fed, which is trying to get the crypto bank to pony up $25,758.



Custodia argues that paying the sum could risk “chilling” potential future lawsuits focused on how the government and its agencies interact “in an area of law that is of critical importance.”



There are still a lot of unknowns in this case. But one thing’s for certain: Crypto isn’t backing down. Sometimes, it’s worth it to take a page out of <a href="https://blockworks.co/news/sec-2023-crypto-enforcement-actions">Gary Gensler’s book</a> and take it to the courts.&nbsp;&nbsp;



— Katherine Ross



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



<ul>
<li>Top <a href="https://blockworks.co/tag/stablecoins">stablecoins</a> USDT, DAI and USDC altogether processed $1.369 trillion in the past 30 days — higher than Visa’s 2023 monthly average, Nansen found.&nbsp;</li>



<li>Arbitrum saw more DEX <a href="https://defillama.com/dexs/chains">volume</a> than Binance Smart Chain over the past day: $481 million to $424 million. BSC is often second behind Ethereum for daily volume.</li>



<li>Onchain hedge fund Ethena has <a href="https://defillama.com/protocol/ethena?denomination=ETH">shed</a> 10% of its ETH-denominated stake over the past two weeks, while the price of ETH has risen only 2.5%.</li>



<li>Blast flipped Arbitrum to lead in daily derivatives <a href="https://defillama.com/derivatives/chains">volume</a>, $1.77 billion to $1.39 billion.</li>



<li>Solana AMM Raydium has generated more fees than PancakeSwap in the past week: $8.99 million to $7.23 million, per DeFiLlama. Raydium is now fourth for weekly DeFi fees behind Uniswap, Lido and Ethereum.</li>
</ul>



<h2 class="wp-block-heading">Can’t outrun degeneracy</h2>



<a href="https://blockworks.co/tag/eigenlayer">EigenLayer</a> is tipped as the largest airdrop in crypto history — even though it doesn’t really exist.



EigenLabs, the Seattle-headquartered firm behind the Ethereum restaking protocol, is yet to formally declare a token airdrop. Still, rumors of impending confirmation flew around Twitter over the weekend, coinciding with a 5% rally in the price of ETH and <a href="https://twitter.com/chamathsintern/status/1784614895322812908?s=46&amp;t=yjAdM2ddX0KgGQimu7jcDQ">worries</a> about insider trading.



Everyone expects an EigenLayer <a href="https://blockworks.co/tag/airdrop">airdrop</a> because of its points program. The protocol distributes one point for every ETH staked for one hour — measuring participation in “ETH hours.”&nbsp;&nbsp;



Read more: <a href="https://blockworks.co/news/defi-points-farming-crypto-investments">DeFi ‘points’ farming has reshaped the crypto investment landscape</a>



EigenLayer aims to allow Ethereum stakers to use their ETH in consensus for sidechains and other services in return for yield. While yield <a href="https://www.coindesk.com/tech/2024/04/10/eigenlayer-cryptos-biggest-project-launch-this-year-is-still-missing-crucial-functionality/">functionality</a> isn’t quite there yet, there’s now almost $16 billion ETH and liquid staking tokens already tied up in the platform waiting to be deployed.



So far, EigenLayer has sent 4.63 billion <a href="https://dune.com/hahahash/eigenlayer">points</a> to users across about 116,000 unique addresses, including those tinkering with the mess of DeFi apps that interact with the protocol, like Ether.fi, Gearbox, Pendle and Renzo.



Those apps, plus about a half-dozen others, stake ETH tokens with EigenLayer, which means they also earn points on behalf of their users. The apps then pass those points down along the chain, in many cases along with a separate set of points earned via programs for the individual apps.&nbsp;



Points on points, on top of yield.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/nsg9VVRHPOw2EYpbso1Y2PDjGPw0IIDcHwRXv9_4RQgwmnkFLbqaQpJ2o-chEGfrTGHdRN1K0Uo52sdY4c5PDwcn9sWCBc99gqgo1rSDAVXK1Jl6kXCyM4MOQjc4dJWXsaVrsJFx9EE5RbIdzXPLiyI" alt=""/><figcaption class="wp-element-caption">There’s now nearly $17 billion TVL in apps that support EigenLayer points farming, up from around $500 million at the start of the year</figcaption></figure>



Dozens of airdrops have used a points system to scale token distributions. But EigenLabs founder Sreeram Kannan has said the network’s points program is just a measure of participation in the ecosystem, a way for services building on EigenLayer to find operators with the most experience with the protocol.&nbsp;



More points should mean lower risk of slashing and other technical hiccups. Kannan says the team hasn’t thought far enough ahead to consider a token. He was <a href="https://youtu.be/16p7YG8S3ec?feature=shared&amp;t=2851">giggling</a> as he said that, in a recent interview with Laura Shin, but the sentiment aligns with messages from an EigenLayer Discord moderator <a href="https://twitter.com/BlurCrypto/status/1767231721286549693">shared</a> last month, who mysteriously said there “was no plan of a token and there won’t be any airdrop.”



Still, Kannan reasoned that points could be used to calculate sway in governance decisions. That would mean EigenLayer points would eventually double as a stand-in for a governance token.&nbsp;



Kannan maintains he doesn’t want to engage in degeneracy. But the points program has already done that for him: EigenLayer points were quickly tokenized, traded and now increasingly used for leverage across the DeFi space, leaving little reason to rug users of an EigenLayer airdrop this far down the line.



Will it really be the biggest airdrop in crypto history? That entirely depends on how EigenLabs aims to distribute the airdrop.&nbsp;



If one point equals one token, the current price of KelpDAO’s tokenized EigenLayer points implies a hypothetical market cap of EigenLayer points of $670 million.



— David Canellis



<h2 class="wp-block-heading">Don your macro hat</h2>



If you’ve been disregarding the macro narrative recently —&nbsp;which, given last week’s inflation and GDP data, is unlikely — it’s time to tune in.&nbsp;



The yen posted a major rebound early this morning. This move fueled speculation that either the government or the Bank of Japan stepped in to support the currency.



Even as markets were closed Monday, the yen posted wild swings. The currency surged more than 2% after earlier losing more than 1.2% to 160.17 per dollar, its lowest point since 1986. These swings may be typical for cryptos or equities, but for the third-largest economy’s currency, this is a huge deal.&nbsp;



Vice minister of finance Masato Kanda declined to comment on whether or not central bankers had stepped in, <a href="https://www.reuters.com/markets/currencies/japans-yen-jumps-against-dollar-suspected-intervention-2024-04-29/">Reuters</a> reported this morning.&nbsp;



Read more: <a href="https://blockworks.co/news/japan-crypto-policy-step-forward">Japan’s crypto policy takes a positive step forward</a>



An intervention matters because it means officials are selling USD to buy yen, potentially increasing USD supply in the market and weakening the value of the dollar. The DYX was down around 0.3% this morning.&nbsp;



But this week is special. A new FOMC meeting is coming up. The Fed is expected to keep interest rates steady (thanks to persistent inflation), which is likely to boost the dollar.&nbsp;



If you’re wondering what all this means for hedges like bitcoin and gold, we’re asking ourselves the same thing.&nbsp;



Bitcoin didn’t seem to respond to this morning’s yen volatility. <a href="https://blockworks.co/price/btc">BTC</a> sat around $62,270, down about 2% over 24 hours around 8 am ET.&nbsp;



The day is young, though — we’ll see whether traders flock to safer skies.&nbsp;



— Casey Wagner



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



<ul>
<li>Australia <a href="https://www.bloomberg.com/news/articles/2024-04-28/bitcoin-btc-etf-bandwagon-heads-to-australia-after-53-billion-haul-in-us">may join</a> the ranks of countries offering spot bitcoin ETFs by the end of 2024, Bloomberg reports.&nbsp;</li>



<li>Japanese company Metaplanet, the so-called Asian MicroStrategy, <a href="https://twitter.com/Metaplanet_JP/status/1782988950816301393">said</a> it bought roughly 97 bitcoin worth $6.25 million.&nbsp;</li>



<li>BlackRock’s bitcoin ETF added Moonpay Chief Legal Officer Linsey Haswell to the fund’s board, according to SEC filings.&nbsp;</li>



<li>Following the charges against the Samourai co-founders, Wasabi Wallet <a href="https://blog.wasabiwallet.io/zksnacks-now-blocking-u-s-residents-and-citizens/">opted</a> to block US citizens.</li>



<li>UK police have <a href="https://www.gov.uk/government/news/new-powers-to-seize-cryptoassets-used-by-criminals-go-live">new powers</a> to seize crypto during criminal investigations, the government said Friday.</li>
</ul>



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



Bump in the road or true sign of the times?



There are a few ways of weighing the layoffs announced on Friday over at Yuga Labs: a reflection of the <a href="https://www.coingecko.com/en/nft/bored-ape-yacht-club">tough</a> market state for blue-chip collections like BAYC, the next step for a company that just changed CEOs, a signal that the effects of the recent bear market are, in some ways, still with us.&nbsp;



I think it’s worth exploring the latter. Some parts of the market —&nbsp;looking at you, <a href="https://blockworks.co/tag/staking">staking</a> —&nbsp;are incredibly buzzy. Other areas, NFTs especially, <a href="https://dune.com/hildobby/NFTs">don’t draw</a> the same crowds they once did. Maybe that cyclicality is healthy, maybe not.



“Crypto is back” is a phrase I see a lot out there these days. Maybe it’s better to say that a new era of crypto is here. A boom without the retail hordes of yesterday.&nbsp;



It’s a weird one, thus far.&nbsp;



— Michael McSweeney



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Empire Newsletter: Custodia keeps its Fed lawsuit alive

Demand for the US spot bitcoin ETFs remains at a standstill following an initial surge of significant investment inflows.



The country’s ETF category, which comprises 11 funds, saw net outflows hit $328 million last week, according to Farside Investors data.&nbsp;



It marked the third straight week of net outflows for the segment, as Grayscale’s bitcoin ETF continues to be the driver of that fate. Net money flowing out of the Grayscale Bitcoin Trust ETF (GBTC) totaled $454 million from April 22 to April 26, the <a href="https://farside.co.uk/?p=997">data</a> shows.&nbsp;



The difference in recent weeks has been the fastest-growing funds in the space seeing demand stop altogether, or going negative, on certain days.&nbsp;



The 71-day net inflow streak for BlackRock’s iShares Bitcoin Trust (IBIT) ended Wednesday before the fund again saw $0 worth of flows on Thursday and Friday.&nbsp;



Read more: <a href="https://blockworks.co/news/blackrock-bitcoin-etf-inflows-streak">BlackRock’s bitcoin ETF inflows halt after 71-day streak, data shows</a>



Fidelity Investments’ Wise Origin Bitcoin Fund (FBTC), which also notched several neutral flow days, saw its first days of net outflows on Thursday and Friday — at $23 million and $3 million, respectively.&nbsp;



Given the slowdown for the <a href="https://blockworks.co/tag/blackrock">BlackRock</a> and Fidelity products, combined net inflows for Grayscale’s competitors fell to $126 million last week — a total unable to fully make up for GBTC’s hemorrhaging.



Many have followed <a href="https://blockworks.co/tag/bitcoin-etf">bitcoin ETF</a> flows in recent months as a sort of barometer for broader sentiment in the space. The pace at which these funds had been buying bitcoin for weeks exceeded that at which new BTC was being issued — contributing to a <a href="https://blockworks.co/news/bitcoin-all-time-high">new all-time high</a> for bitcoin last month.&nbsp;&nbsp;



Last week’s $328 million of US spot bitcoin ETF outflows was <a href="https://blockworks.co/news/bitcoin-etf-outflows-gbtc">a bit more severe than the prior two weeks</a>. Overall, $204 million in assets had left the sector during the week prior to last, while net investor money exiting the funds totaled $83 million from April 8 to April 12.



Trading volumes for crypto exchange-traded products (ETPs) more broadly fell to $11.8 billion last week, according to CoinShares <a href="https://blog.coinshares.com/volume-180-digital-asset-fund-flows-weekly-report-998dde70036b">data</a> — down from about $18 billion during the prior week.



Bitcoin’s price (<a href="https://blockworks.co/price/btc">BTC</a>) stood at about $62,200 on Monday mid-morning ET — down roughly 4% from seven days ago.&nbsp;&nbsp;



Christopher Jensen, director of crypto research at bitcoin ETF issuer Franklin Templeton, <a href="https://blockworks.co/news/franklin-templeton-institutional-bitcoin-etf-allocation">told Blockworks he was unconcerned</a> about the recent bitcoin fund outflows.



“There are lots of platforms, there are lots of institutions that are interested and are doing work,” he said. “So we don’t think the flows for the ETPs are done even though they’ve cooled off in recent weeks.”



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Bitcoin ETF snapshot: A few firsts during another week of outflows

The US Securities and Exchange Commission has been investigating ethereum and its potential status as a security for over a year, new court filings Monday reveal.&nbsp;



Consensys, which filed its lawsuit against the SEC last week, alleges the SEC has been quietly building its case against ether since at least early 2023 in a plan to reverse its previous public assertion that the asset is a commodity.&nbsp;



The crypto firm claims that SEC director of the division of enforcement Gurbir Grewal in March 2023 approved a Formal Order of Investigation into the buying and selling of ether. Formal Orders allow the agency to issue subpoenas and collect witness testimony under oath.



Read more: <a href="https://blockworks.co/news/consensys-files-lawsuit-against-sec">SEC seeks to regulate ETH as a security, Consensys alleges in lawsuit</a>



The timeline, Consensys says, explains why in April 2023 SEC Chairman Gary Gensler refused to answer whether or not ether was a commodity or a security <a href="https://blockworks.co/news/regulatory-clarity-ethereum-gensler">when asked during Congressional testimony</a>.&nbsp;



“He did not want to admit that his SEC had already secretly cemented its power-grab by issuing an order of investigation designating ETH as a security,” Consensys’ team wrote in the unredacted complaint, filed Monday.&nbsp;



<a href="https://blockworks.co/tag/consensys">Consensys</a>’ suit makes two major claims. First, that ether is not a security and the SEC’s investigation is unlawful. Second, Consensys says the SEC has plans to target the company for its MetaMask product, which securities regulators say is a broker-dealer.&nbsp;



Read more: <a href="https://blockworks.co/news/ether-commodity-or-not">Ether is the Schrödinger’s cat of crypto</a>



Consensys <a href="https://blockworks.co/news/consensys-sec-lawsuit-debate">received a Wells notice</a> stating the SEC wanted to pursue an enforcement action against them for alleged securities law violations via its MetaMask Swaps and Staking products, the complaint adds. The Wells notice, according to the complaint, <a href="https://blockworks.co/news/empire-newsletter-consensys-legal-salvo-sec">does not mention any charges </a>against Consensys relating to ETH specifically.



Historically, the SEC has targeted specific tokens by naming them as securities in lawsuits it files against exchanges. In the agency’s June 2023 lawsuits against Coinbase and Binance, more than ten tokens — whose issuers were not named as co-defendants — were listed as securities in each complaint. ETH was not listed in either suit. 



Representatives from the <a href="https://blockworks.co/tag/sec">SEC</a> declined to comment.



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SEC has been investigating ETH for over a year, new court filing shows 

Franklin Templeton&#8217;s crypto-focused research director remains optimistic about the future of the space despite recent outflows from bitcoin ETFs.



In an interview with Blockworks, Christopher Jensen highlighted the emergence of new buyer types as a positive indicator for long-term growth.



Jensen also said the recent Bitcoin halving exposed gaps in clients&#8217; understanding of cryptocurrency. He emphasized Franklin Templeton’s commitment to bridging these educational shortfalls, aiming to increase client knowledge and engagement in Web3.



This need for education comes at what could prove a critical time for the US bitcoin ETF market. The US boasts 11 spot bitcoin ETF funds, which allow participants to gain bitcoin exposure via traditional investment vehicles without buying and holding the crypto asset themselves.



Despite seeing $12 billion of net inflows to date, these funds have collectively endured <a href="https://blockworks.co/news/bitcoin-etf-outflows-gbtc">net outflows across three straight weeks</a> for the first time since launching in January. The ETFs bled $328 million in assets from April 22 to April 26, according to <a href="https://farside.co.uk/?p=997">data</a> from Farside Investors.



Read more: <a href="https://blockworks.co/news/blackrock-bitcoin-etf-inflows-streak">BlackRock’s bitcoin ETF inflows halt after 71-day streak, data shows</a>



Jensen noted that increased geopolitical concerns and the belief that interest rates could stay higher for longer are likely contributors to the demand halt.&nbsp;



But the journey of understanding digital assets is an educational process that takes time, he added.&nbsp;



“There are lots of platforms, there are lots of institutions that are interested and are doing work,” Jensen explained. “So we don’t think the flows for the ETPs are done even though they’ve cooled off in recent weeks.”



<a href="https://blockworks.co/tag/franklin-templeton">Franklin Templeton</a> — a fund group with roughly $1.5 trillion in assets under management — has not gathered assets for its BTC fund as well as most of its competitors. The Franklin Bitcoin ETF (EZBC) had $330 million in assets under management, well behind inflow leaders BlackRock and Fidelity — which have bitcoin ETFs managing roughly $17.7 billion and $10.2 billion, respectively.&nbsp;



The Grayscale Bitcoin Trust ETF (<a href="https://blockworks.co/tag/gbtc">GBTC</a>) leads the segment with $19.4 billion in assets despite seeing net outflows on every trading day since hitting the market.&nbsp;



“Because it’s onboarding platforms one at a time, you’re in the kind of whale-hunting business rather than just opening it up and letting lots of small fish come in,” Jensen said.



Wealth management firm Cetera Financial Group last month <a href="https://blockworks.co/news/wealth-manager-bitcoin-etfs-allocators">started allowing its advisers to allocate</a> to four spot bitcoin ETFs, including EZBC.



Industry watchers have said they expect a new wave of bitcoin ETF inflows <a href="https://blockworks.co/news/wealth-managers-feel-pressure-bitcoin-etfs#">as more investment firms and platforms greenlight</a> the use of such products for clients.&nbsp;



Read more: <a href="https://blockworks.co/news/wealth-managers-feel-pressure-bitcoin-etfs#">Restricting access to growing bitcoin ETFs becoming ‘hard to justify’</a>



The mix of buyers is also important, Jensen said — with more institutional buyers starting to allocate to bitcoin via the ETF. Such investors tend to be okay buying the dip as they diversify into the new asset class, he added.



“I think with that traditional ETF wrapper it’s really now perceived as this is part of [their] investment portfolio,” Jensen said. “This isn’t a short-term trade; [they’re] really thinking about this in terms of [their] long-term investment portfolio.”



Outside of ETFs, Franklin Templeton said this week that institutional investors could now transfer shares of the OnChain US Government Money Fund it launched in 2021 to other shareholders.



The fund was the first US-registered fund to use a public blockchain to process transactions and record share ownership.



Read more: <a href="https://blockworks.co/news/stablecoin-with-yield-franklin-templeton">A stablecoin with yield? Tokenized fund perhaps just the start for fund giant</a>



The new functionality comes as <a href="https://blockworks.co/news/citibank-explores-tokenization-wisdomtree#">the tokenization of funds and real-world assets</a> picks up steam. “I think elsewhere in the industry you find some partnerships and some outsourcing for various pieces of this,” Jensen said. “But for us, this has all been in-house, and so this kind of playbook…you could absolutely envision being done with our other products.”



Keep reading for more excerpts from Blockworks’ interview with Jensen.



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



Blockworks: What do you make of bitcoin reaching <a href="https://blockworks.co/news/bitcoin-all-time-high">a new all-time high price</a> before this year’s Bitcoin halving, which was different from prior cycles?&nbsp;



Jensen: Pulling forward price action — that historically you see after — this time around…have we pulled forward a bulk, or a majority? I think that’s a question that’s been on people’s minds.



Our interpretation of this was it was great to see some price action going into the <a href="https://blockworks.co/tag/bitcoin-halving">halving</a>. This time it wasn’t just excitement around the halving; it was actual fundamentals in terms of new buying demand and new flows coming from the ETP complex.



When you layer that, on the demand side, with now the halving, which is on the supply side, that becomes interesting.



Blockworks: How educated are Franklin Templeton clients when it comes to crypto and the Bitcoin halving that just occurred? 



Jensen: It’s on people’s radar, but I think once you dig into those conversations, there’s a mixture of where people are at in their understanding.



Read more: <a href="https://blockworks.co/news/wealth-managers-bitcoin-etfs">‘Primary market’ for bitcoin ETFs largely hasn’t yet adopted such funds</a>



I think not a lot of people appreciate that already 94% of the bitcoin that will ever be produced is in circulation. This is going to keep happening every four years for over a hundred years more before we get to the full 21 million.



Sometimes there’s confusion of okay we’re on this set, programmatic schedule, but can it change? Can [bitcoin’s hard cap of 21 million coins] become 25 million?&nbsp;



There’s a lack of understanding of just what it means for it to be programmatically determined in the actual open-source code that’s on all these machines around the world. It is fixed, it is finite, it is capped.



Read more: <a href="https://blockworks.co/news/bitcoin-halving-inflation-and-issuance-schedule">Why is 2140 the end of bitcoin inflation?</a>



Blockworks: Based on your conversations, what might remain a concern for those considering an allocation to bitcoin?



Jensen: The fact that the spot ETFs were approved in the US — not only is it important for opening up that door, but that regulatory stamp of approval really means a lot. And so that has certainly helped that part of the conversation.



One consideration that comes up is almost the simplicity of bitcoin and the fact that it is used and valued mostly for its store-of-value characteristics. A lot of times, [an investor will say] ‘with Ethereum, I understand that it generates revenues and has a yield and it looks more like a [traditional finance] asset.’ And so sometimes the hang-up with bitcoin is that simplicity. If it’s just a store of value…why should I get excited about that when I’m not really excited about other store-of-value assets?



Blockworks: What other areas of the crypto and blockchain is Franklin Templeton exploring?



Jensen: You see asset management and payments coming closer together through the use of blockchain technology. I think that’s a theme that will continue.&nbsp;&nbsp;



Another area we really like — because it touches the real world — is this sector of decentralized physical infrastructure networks and using token incentives to bootstrap networks…whether it’s mapping, or data, or <a href="https://blockworks.co/tag/artificial-intelligence">AI</a> or cell phone coverage. So it’s interesting the role that maybe an asset manager might [play]. From an investing standpoint I think that sector’s interesting, and also from a way to crowdsource ideas.



This interview was edited for clarity and brevity.



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New mix of bitcoin buyers bode well for ecosystem: Franklin Templeton exec

Jack Kubinec

Less than seven months after its last round of layoffs, Web3 gaming and NFT company Yuga Labs cut more roles Friday. It was not clear how many staff were affected by the layoffs.&nbsp;



“To put it simply: Yuga lost its way. Getting ourselves centered and on the right path means being a smaller, more agile and cryptonative team,” CEO Greg Solano wrote in a Slack message that he then screenshotted and <a href="https://x.com/CryptoGarga/status/1783890653744677245">posted</a> on X to announce the restructuring.&nbsp;



Read more: <a href="https://blockworks.co/news/yuga-labs-ceo-bayc">Yuga’s Greg Solano resumes role as CEO, pledges stronger ‘cryptonative’ focus</a>



Crypto-nativity was one of Solano’s pledges when he took over as CEO in February. Solano was a <a href="https://blockworks.co/tag/yuga-labs">Yuga Labs</a> co-founder who took back the reins from former Activision Blizzard CEO Daniel Alegre less than a year into Alegre’s tenure.&nbsp;



In the aftermath of Harvard-educated Alegre’s regime, Yuga’s creative spirit has been partially squelched by “labyrinthine corporate processes,” Solano wrote Monday.&nbsp;



The owner of the Bored Apes and CryptoPunks intellectual property last made layoffs in October 2023, saying at the time the company still had over 120 employees.



Read more: <a href="https://blockworks.co/news/yuga-labs-layoffs-otherside-metaverse">Yuga Labs announces US layoffs as part of broader restructuring</a>



In recent months, Yuga has placed increasing emphasis on its Otherside metaverse project, though the execution hasn’t been flawless. <a href="https://blockworks.co/news/yuga-labs-demos-otherside-metaverse">Some users were underwhelmed</a> by a recent play test, with one saying the Otherside felt like a “proof of concept.”



In other hiring news from Yuga Labs, Won Kim <a href="https://x.com/wonk1m/status/1783847675676209229">announced</a> this week he’d left Bored Room Ventures to become the company’s head of brand partnerships.&nbsp;



<h2 class="wp-block-heading">Anchorage, DCG make executive hires</h2>



Two institutionally-focused crypto firms made executive hires this week.



<a href="https://blockworks.co/tag/anchorage-digital">Anchorage Digital</a> made former Coinbase Custody CEO Aaron Schnarch its chief operating officer. In the role, Schnarch will oversee “all business lines including custody, trading, staking, settlement and self-custody, as well as sales, marketing and business development,” Anchorage <a href="https://www.anchorage.com/insights/anchorage-digital-appoints-aaron-schnarch-former-ceo-coinbase-custody-as-chief-operating-officer">said</a> in a statement.



It’s the latest of a few hiring moves Anchorage has made lately. Co-founder and former company president Diogo Mónica transitioned to Executive Chairman of the Board in March and <a href="https://blockworks.co/news/anchorage-digital-cofounder-joins-vc-firm">joined</a> Haun Ventures as a general partner. A week prior, <a href="https://blockworks.co/news/zac-prince-leaves-crypto-new-blackrock-etf-strategist">Anchorage made</a> SEC veteran TuongVy Le its general counsel.



Also this week, Digital Currency Group <a href="https://x.com/DCGco/status/1783503086306140212">made</a> Aimee Killeen its chief legal officer. Killeen was most recently in the same role at fintech firm Billtrust.&nbsp;



Likely near the top of Killeen’s to-do list will be dealing with <a href="https://blockworks.co/tag/dcg">DCG</a>’s ongoing legal battle with New York Attorney General Letitia James.



Read more: <a href="https://blockworks.co/news/dcg-barry-silbert-motion-to-dismiss">DCG, Barry Silbert file motions to dismiss NYAG suit</a>



<h2 class="wp-block-heading">Other notable hiring news</h2>



<ul>
<li>Polygon’s chief operating officer is stepping down, and the company will be cutting the role entirely, DL News <a href="https://www.dlnews.com/articles/people-culture/matic-polygon-labs-coo-michael-blank-steps-down/">reported</a>. Lead developer relations engineer Tony Olendo <a href="https://x.com/tonyolendo/status/1782416989492801751">left</a> Polygon this week. On the other side of things, Will Macfie <a href="https://www.linkedin.com/feed/update/urn:li:activity:7188078201930203136?updateEntityUrn=urn%3Ali%3Afs_feedUpdate%3A%28V2%2Curn%3Ali%3Aactivity%3A7188078201930203136%29">became</a> Polygon’s director of growth marketing.</li>



<li>Drew Van der Werff <a href="https://x.com/DrewVdW/status/1783865954490888601">quit</a> Brevan Howard Digital to become an “independent researcher.”</li>



<li>Crypto reporters Lyllah Ledesma of <a href="https://twitter.com/LedesmaLyllah/status/1783837636517568680">CoinDesk</a> and Adam Morgan McCarthy of DL News left their roles. McCarthy is <a href="https://twitter.com/AdMcMarkets/status/1783812005905731936">now</a> an analyst at crypto research firm Kaiko.</li>
</ul>



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