Lovely Inu finance

Casey Wagner

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



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Welcome to the On the Margin Newsletter, brought to you by Casey Wagner. 



We hope our US readers are enjoying a long holiday weekend. Today’s (abbreviated) edition is all about how stocks performed during the first half of the year.&nbsp;



We’ll see you back here Monday for our regularly scheduled programming. 



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<h2 class="wp-block-heading">AI led US equities to the top during H1, but can they continue?&nbsp;</h2>



If you recall, our Wednesday edition focused on how crypto has performed so far this year.&nbsp;



Today we talk about stocks, which also had a pretty spectacular run in the first six months of 2024. And unlike crypto, they don’t seem to be losing steam.&nbsp;



The S&amp;P 500 and Nasdaq Composite indexes gained 14.5% and 18.1%, respectively, during the first two quarters of the year. The Dow Jones Industrial Average lagged behind, posting modest gains of around 4%, but remaining in the green nonetheless.&nbsp;



Typically, a strong first half means the final six months of the year will similarly post returns. But given the outsized returns of a few individual winners (looking at you NVIDIA), it’s hard to know whether the momentum can continue.&nbsp;



NVIDIA’s stock posted a 150% gain during the first half of 2024, accounting for more than a third of the S&amp;P’s total returns. Super Micro Computer Inc. was the top-ranking stock in the S&amp;P for the first two quarters of the year, soaring a whopping 213%.&nbsp;



The question now is whether the AI companies can sustain their rallies. NVIDIA stumbled a bit towards the end of June after becoming the <a href="https://blockworks.co/news/on-the-margin-newsletter-nvda-market-breadth">most valuable company in the world</a>, but shares are still up more than 10% over the past 30 days.&nbsp;



Morningstar analyst Jordan Klein sees more investors moving from semiconductor stocks into software stocks, citing Adobe and Salesforce’s rallies. It’s not a sign semis are in trouble per se, but it’s a trend worth noting, he added.&nbsp;



The other elephant on the trading floor <a href="https://blockworks.co/news/on-the-margin-newsletter-republican-sweep-markets">is, of course, rate cuts</a>. Investors went into 2024 expecting six interest rate slashes. Now, most traders would be happy for just one.&nbsp;



The Federal Reserve has <a href="https://blockworks.co/news/federal-reserve-interest-rates-unchanged">held interest rates steady</a> for almost a year and central bankers continue to insist that additional data is needed before any decisions can be made. Markets are still hopeful for the first cut to come in September, with Fed Fund futures markets calling for a 66% chance, according to data from CME Group.&nbsp;



Powell this week was coy when giving remarks at the ECB event in Portugal, declining, of course, to give any sort of timeline. He did however note that central bankers are aware they are treading a fine line. Cutting rates too quickly threatens to derail the progress already made on bringing down inflation, while waiting too long risks losing economic momentum.&nbsp;



For the first part of the year, though, markets clearly had no issue with the Fed’s policy. We’ll have to see whether traders start to get antsy as we move into the fall.&nbsp;



— Casey Wagner



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the On the Margin newsletter</a>.



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On the Margin Newsletter: Traders rode the AI wave to sky-high returns during H1, but what now?

Jeff Albus

Today, enjoy the Lightspeed newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox.&nbsp;<a href="https://blockworks.co/newsletter/lightspeed" target="_blank" rel="noreferrer noopener">Subscribe to the Lightspeed newsletter</a>.



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Hello earthlings.&nbsp;



It’s finally Friday, and the weekend is our oyster. Similar to an oyster, Worldcoin may have an unsettling exterior, but once you get past the crusty gray shell, you’ve got something nice on the inside. I suppose oysters don’t look that nice on the inside either, but you get the point:



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<h2 class="wp-block-heading">You SHOULD give a damn ‘bout your bad reputation</h2>



Last week, the Worldcoin Foundation <a href="https://worldcoin.org/blog/announcements/meet-worldcoin-wave1-community-grants-recipients">announced</a> that World ID would be coming to Solana, thanks to a grant awarded to the Wormhole interoperability protocol.&nbsp;



<a href="https://x.com/zayn4pf/status/1806355065315496169">While</a> <a href="https://x.com/medythegreat/status/1806359914844983696">some</a> <a href="https://x.com/jito_sol/status/1806443160727650486">cheered</a> the announcement, others expressed <a href="https://x.com/cybttx/status/1806372505948672103">derision</a>, <a href="https://x.com/pmbug/status/1806364833610072343">skepticism</a> and <a href="https://x.com/B57306324/status/1806363190927749310">fear</a>.



The irony is palpable. World ID, an initiative designed to verify unique human identities and prevent Sybil attacks, may be one of the first truly viable solutions for managing online reputation.



However, the project faces its own trust and reputation challenges among members of the very communities it is designed to serve. These stem mostly from its use of <a href="https://blockworks.co/news/worldcoin-eyeballs-scan-brooklyn">biometric data</a> to confirm that each user maintains only a single account within its ecosystem.



Worldcoin’s method requires interested users to seek out one of the company’s scanning kiosks, or Orbs, to <a href="https://worldcoin.org/blog/worldcoin/orb-faqs">conduct</a> a high-resolution scan of their irises. Scans are used to create a unique identifier for each registrant, which can be used across various platforms to confirm individual authenticity and establish local permissions without revealing any personal information.



Among other uses, systems like World ID could help prevent social media scams and rug pulls, aid airdrops with more equitable circulation, fairly distribute UBI, identify wash traders, permanently exorcize bad actors, prevent fake product reviews and ratings, solidify content attribution, improve the fairness of onchain governance, and on and on. It also has the potential to act as a sort of faceless solution to KYC. Imagine: No more need to trust shadowy companies with photos of your driver&#8217;s license, or submit sensitive documents to multiple entities every time you need to verify your identity.



If a user is banned for bad behavior, they cannot simply create a new account, ensuring that negative actions have lasting consequences. Removal could also mean losing the ability to collect rewards within blockchain ecosystems, making social degeneracy a financially expensive gambit.



The Worldcoin Foundation indicated to Blockworks that preserving privacy while maintaining user accountability is growing in importance &#8220;as AI-powered bots are becoming more ubiquitous, increasing in sophistication and undermining trust online.&#8221; However, for some folks in cryptoworld, the idea of scanning and using biometric data in this way taps into some deep-seated concerns over the potential for <a href="https://blockworks.co/news/worldcoin-crypto-mainstream">misuse</a>, <a href="https://blockworks.co/news/worldcoin-kenya-regulators">surveillance</a> and other forms of<a href="https://blockworks.co/news/worldcoin-privacy-concerns"> exploitation</a>.



The Worldcoin Foundation suggests that much is misunderstood in these superficial assessments of its technology. It <a href="https://worldcoin.org/blog/worldcoin/worldcoin-privacy-faqs">insisted</a> to us that &#8220;World ID is a privacy product,&#8221; going on to explain that its whole purpose is to help users “access applications and services without disclosing any personal information or data.” Worldcoin&#8217;s documentation <a href="https://whitepaper.worldcoin.org/">shows</a> that Orb scanners do not actually store images used for biometric assessment, unless requested by the user for personal use. Instead, Orb scanners <a href="https://whitepaper.worldcoin.org/#biometrics-2">generate</a> a cryptographic hash from the scan. This hash is a one-way process, meaning it cannot be reverse-engineered to recreate the original biometric data.&nbsp;



This design guarantees that even if the hash were stolen or shared, it would be effectively useless for unauthorized purposes. The Worldcoin Foundation confirmed to us that &#8220;an Orb-verified World ID does not link to identifiers like name or email. It is deliberately delinked from wallet transaction data and using World ID does not reveal whose World ID is used.&#8221;



In recent months, the Worldcoin Foundation has also <a href="https://worldcoin.org/blog/announcements/worldcoin-implements-personal-custody">implemented</a> personal custody features to certify that all biometric data used during the World ID verification process is stored only on a given user&#8217;s device. Similarly, ID holders have the option to un-verify their World ID and permanently delete their data from its system. The foundation has said publicly that parties interested in verifying these claims are welcome to <a href="https://worldcoin.org/blog/engineering/worldcoin-foundation-open-sources-core-components-orb-software">scrutinize</a> its open source codebase.



There are also alternative proof-of-humanity solutions out there, some of which benefit from greater decentralization and are likely preferable for stalwart cypherpunks. Projects like Bright ID, Privado ID, Idena and Civic offer different approaches to verifying human identities while maintaining user privacy and autonomy. Such projects come with trade-offs in terms of ease of use, however.



Bright ID&#8217;s social verification method <a href="https://brightid.gitbook.io/brightid/verifications/meets-verification">mandates</a> active participation and social interactions with others in its network, which might not be practical at scale. Privado ID uses zk proofs to <a href="https://docs.privado.id/">preserve</a> privacy, but isn&#8217;t an enforced system across all user addresses. Idena requires participants to <a href="https://docs.idena.io/docs/wp/technology">engage</a> in frequent “ceremonies” to validate their identities, which can be demanding and inconvenient for some. Civic offers a more streamlined approach but faces challenges due to the necessity of <a href="https://www.civic.com/blog/a-better-digital-id-system-with-civic-id/">linking</a> multiple personal data sources for a complete identity profile.



We have options, but the challenge for Worldcoin and similar initiatives now lies in demystifying the technology and clearly articulating its incentives.



If the Worldcoin Foundation can successfully ensure that the public understands and trusts the mechanisms behind these technologies, we may find ourselves in a digital environment where reputation is everything. A world where scams and malignant behaviors are prohibitively expensive, both socially and financially. One where treating each other with kindness and respect not only becomes the norm, but also the most rewarding approach on Solana and across Web3.



— Jeffrey Albus



<h2 class="wp-block-heading">One Good DM</h2>



A message from&nbsp;Ben Mills, co-founder of&nbsp;Meso:


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<figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="554" height="784" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-03-at-1.47.26-PM.png" alt="" class="wp-image-88912" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-03-at-1.47.26-PM.png?w=554 554w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-03-at-1.47.26-PM.png?w=212 212w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-03-at-1.47.26-PM.png?w=182 182w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-03-at-1.47.26-PM.png?w=184 184w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-03-at-1.47.26-PM.png?w=155 155w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-03-at-1.47.26-PM.png?w=57 57w" sizes="(max-width: 554px) 100vw, 554px" /></figure></div>


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Lightspeed Newsletter: Worldcoin’s reputation predicament

Macauley Peterson

The July 4th Ethereum All Core Developers (ACD) call was a mellow affair focused on updates around implementation of the next Ethereum upgrade, Pectra.



Although several clients are making headway, the launch of Devnet-1 is being delayed until a greater number of clients are prepared. Client teams, expecting to be short staffed as developers attend the EthCC conference in Brussels, are looking to launch Devnet-1 in one to two weeks.



A theme on the call was hand wringing over Pectra scope creep.



Core developers refined the account abstraction-focused EIP-7702&#8217;s, which was a major topic on <a href="https://blockworks.co/news/ethereum-upgrade-account-abstraction-proposal">the last ACD call</a>. A breakout subcommittee meeting worked out a way forward, to keep Externally Owned Accounts (EOA) more flexible, while addressing outstanding concerns previously raised.



Read more: <a href="https://blockworks.co/news/ethereum-upgrade-account-abstraction-proposal">The jury is still out on Vitalik’s account abstraction proposal</a>



The new modifications are anticipated to be included in Devnet-2, and Devnet-1 will reflect the current specifications of EIP-7702. But the new changes get 7702 very close to a finished specification, according to Ethereum Foundation researcher Ansgar Dietrich.



<h3 class="wp-block-heading">What should Ethereum mainnet be?</h3>



The discussion then turned to EIP-7212, which has garnered support due to its potential to enhance user experience in key and wallet management.



This improvement introduces support for the <a href="https://www.johndcook.com/blog/2018/08/21/a-tale-of-two-elliptic-curves/">r1 curve</a>, a cryptographic algorithm widely used in secure communications and digital signatures.



EIP-7212 aims to simplify key and wallet management for users, reducing complexity and improving ease of use.



Hadrien Croubois, a smart contract engineer at OpenZeppelin pointed to the demand for r1 signatures coming from <a href="https://blockworks.co/tag/account-abstraction">account abstraction</a> work, particularly the desire to use a smartphone as a hardware wallet.



That’s precisely why Daniel Lehrner, developer for the Besu client, said his team is “definitely in favor of including it,” noting that this algorithm is supported by nearly all mobile phones. “So for us, it definitely makes sense to allow them to use that instead of a traditional [hardware wallet].”



Pseudonymous Geth developer Lightclient pushed back on the idea of adding a new precompile to Ethereum’s execution layer, flagging several details yet to be resolved.



“It’s not a difficult thing to implement, but Pectra is already mega, and at some point we need to ship Pectra and stop adding things, and it seems like we’re already way past that point,” Lightclient said on the call.



Danno Ferrin, chief software engineer of Swirlds Labs noted that while it would be better to include the r1 curve at the <a href="https://blockworks.co/tag/evm">EVM</a> level, that would delay it by at least a year and a half. Meanwhile, its support from major tech industry players such as Google Passkeys, should make it worth pushing sooner at the protocol level.



The debate underscored a broader theme at play: the need to balance new EIPs and features against the already extensive scope of Pectra.



Geth’s Marius van der Wijden, who is usually grumpy about <a href="https://en.wikipedia.org/wiki/Scope_creep">scope creep</a>, posited that such a feature may no longer be needed on mainnet at all, because no one is using smart contract wallets due to their operational costs.



“In general I’m in favor of it, it’s just I think there’s an argument to be had,” van der Wijden said, adding, “in my view we should focus on getting functionality onto rollups and focus everyone on blob scalability, and not focus too much on the EVM feature set on L1.”



But Richard Meissner from the Safe smart contract wallet team said they still see plenty of reasons to improve the user experience at the base layer of Ethereum.



“At least in the current state, one is not perceived as ‘we want to move away from L1’. If we as an ecosystem agree on this I think this would be a little bit of a mindset shift,” Meissner said. “A lot of teams are still on L1 and a lot of teams do prefer to have better UX and r1 will enable this.”



Despite the generally positive reception, a formal decision on inclusion of the r1 curve precompile in Pectra has been postponed until the next ACD call in two weeks.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the On the Margin newsletter</a>.



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Ethereum devs weigh mainnet features against rollup push

David Canellis

Bitcoin dipped to its lowest point since February as Mt. Gox’s trustees transferred its first repayments to crypto exchange Bitbank early Friday morning.



Mt. Gox’s transfer of 1,545 BTC ($84.87 million at the time) came after prices had already sunk more than 10% over two days, slipping from $60,330 to $53,950.&nbsp;



The Mt. Gox move comes as the German government continues to direct hundreds of millions of dollars in bitcoin to multiple crypto exchanges.



Germany sent bitcoin as recently as this morning, only one hour after Mt. Gox’s transfer. BTC has since recovered slightly to $55,300 and no other Mt. Gox transfers had hit the chain at time of writing.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1326" height="994" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/recentdumps3.png?w=1024&amp;h=1024" alt="" class="wp-image-88960" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/recentdumps3.png?w=1326 1326w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/recentdumps3.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/recentdumps3.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/recentdumps3.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/recentdumps3.png?w=343 343w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/recentdumps3.png?w=348 348w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/recentdumps3.png?w=292 292w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/recentdumps3.png?w=80 80w" sizes="(max-width: 1326px) 100vw, 1326px" /><figcaption class="wp-element-caption">The bigger and redder the bubble, the more bitcoin was transferred. Any bubble without an arrow is from addresses tied to German authorities.</figcaption></figure>



After subtracting the 3,433 BTC ($190.7 million) that has been sent back to Germany’s wallets from crypto exchanges, the government’s tally over the past few weeks is now at 8,632.44 BTC ($482 million), according to Arkham Intelligence data, which tags and collates blockchain transaction histories.&nbsp;



Addresses tied to the US government otherwise transferred seized crypto totaling 3,940.28 BTC ($217.7 million now, $241.22 million then) to Coinbase late last month.



 Germany&#8217;s addresses still retain 41,226 BTC ($2.33 billion) while the US wallets have 213,297 BTC ($12.04 billion) along with over $400 million in other cryptocurrencies.



Read more: <a href="https://blockworks.co/news/us-german-governments-selling-bitcoin">US, German governments have sent $738M in bitcoin to exchanges over the last 2 weeks</a>



Mt. Gox was one of the earliest crypto exchanges, responsible for 70% of global volume at its peak across 2013 and 2014.&nbsp;



Almost 750,000 BTC belonging to its users, as well as an additional 100,000 BTC owned by the exchange, was <a href="https://web.archive.org/web/20140723220740/http://online.wsj.com/news/article_email/SB10001424052702303801304579410010379087576">stolen</a> over a number of years — the equivalent of 4.3% of the current circulating supply.



The losses were first disclosed in February 2014, which was shortly after one of bitcoin’s first major bull runs. BTC exploded from $15 in January 2013 to over $1,200 by that December.&nbsp;



Only one-sixth of the bitcoin lost by Mt. Gox was successfully retrieved, totaling 143,232 BTC ($7.85 billion) as of earlier this week. Mt. Gox’s transfer this morning represented just 1% of the bitcoin set for in-kind distributions.&nbsp;



Repayments <a href="https://www.mtgox.com/img/pdf/20240624_announcement_en.pdf">overall</a> are set to be wound up over the next 90 days but former CEO Mark Karpeles <a href="https://www.coindesk.com/business/2024/07/05/mt-gox-begins-repayments-in-bitcoin-and-bitcoin-cash/">reportedly</a> described that as the worst-case scenario.&nbsp;



The general worry is that Mt. Gox creditors, who’ve been waiting for a decade to receive their funds back, could opt to sell and drive prices down further, which would explain the recent bitcoin dip.



Alex Thorn, head of firmwide research at Galaxy Research, <a href="https://blockworks.co/news/mt-gox-distributions-bitcoin-market-impact">previously countered that notion</a>, suggesting that creditors may opt to continue holding given how long the wait has been.



In any case, bitcoin’s recent weekly drop of up to 12.6% is about par for the course for this bull market. The blue columns on the chart below show weekly losses on a daily rolling basis.&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1897" height="1425" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-05-at-16.02.31.png?w=1024&amp;h=1024" alt="" class="wp-image-88961" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-05-at-16.02.31.png?w=1897 1897w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-05-at-16.02.31.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-05-at-16.02.31.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-05-at-16.02.31.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-05-at-16.02.31.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-05-at-16.02.31.png?w=342 342w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-05-at-16.02.31.png?w=347 347w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-05-at-16.02.31.png?w=292 292w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-05-at-16.02.31.png?w=80 80w" sizes="(max-width: 1897px) 100vw, 1897px" /><figcaption class="wp-element-caption">Bull markets are shown by the green bands and the dotted lines are major timeline events</figcaption></figure>



While days on which bitcoin had gone down week-on-week became more frequent after the March peak, the size of BTC’s most recent drawdown matches what was seen even during its run from $20,000 to $60,000.



The real question is whether bitcoin will bounce. Although flows have dwindled, and <a href="https://blockworks.co/news/us-bitcoin-etf-seventh-day-outflows">even turned negative</a> at some points, spot bitcoin ETFs could run counter-narrative to the government-and-Gox melange of malaise, considering they’ve helped keep pace since their launch in January.&nbsp;



“Bitcoin ETF flows might see an uptick if market participants believe that economic uncertainty will drive the Fed towards eventual rate cuts, enhancing the appeal of bitcoin as an inflation hedge,” Jag Kooner, Head of Derivatives at Bitfinex, told Blockworks.



“However, significant inflows would depend on broader market sentiment and risk appetite. Currently… we’ve recently seen quite underwhelming flows and a lack of ‘dip-buying.’”



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the On the Margin newsletter</a>.



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

Bitcoin bulls meet their third final boss after US and Germany: Mt. Gox

Katherine Ross

Today, enjoy the Empire newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/empire" target="_blank" rel="noreferrer noopener">Subscribe to the Empire newsletter</a>.



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<h2 class="wp-block-heading">Robot dollars</h2>



Ah, AI.&nbsp;



It sometimes feels like the AI and crypto narratives are fighting each other for mainstream attention.&nbsp;



I’m not saying it’s always the case, and there are clearly use cases for both — even together — but only if you’re familiar with the two spaces.&nbsp;



“It seems trendy to frame crypto vs AI as a zero-sum competition. But we don’t buy it,” Paradigm co-founder Matt Huang <a href="https://x.com/matthuang/status/1673786399252955137">tweeted</a> last year.



Because we’re all crypto nerds here, I want to examine a certain part of what I like to refer to as “AI overload” — when everyone insists AI is about to change every single little thing, including venture capital.&nbsp;



Let me back up for a second. Last week, Forbes <a href="https://www.forbes.com/sites/emilymason/2024/06/27/billionaire-steve-cohens-point72-ventures-lays-off-fintech-team-in-pivot-towards-ai/">reported</a> that Point72 Ventures, the VC arm of Steve Cohen’s Point72 (not the hedge fund, mind you), plans to focus on AI, leading to layoffs on its FinTech team.



A source familiar with the firm confirmed the move to Blockworks, while also confirming that it’ll be pivoting away from crypto.&nbsp;



I’m not trying to focus on Point72 Ventures, though, I’m just using the news as a convenient jumping-off point. Looking at <a href="https://pitchbook.com/news/articles/vc-tech-startup-verticals-winners-losers-2023">Pitchbook data</a> from last year, AI was a pretty hyped-up segment in comparison to crypto, which was left out in the cold.&nbsp;



Galaxy data released earlier this week shows that second-quarter funding rose to $3.2 billion, up from $2.5 billion in the first quarter.



Now that crypto’s starting to warm back up — and see more funding — I wondered what venture capitalists were thinking about the crypto/AI debate. So I turned to Framework Ventures co-founder Michael Anderson for some answers.&nbsp;



Framework, obviously, tends to chat with other crypto VCs.&nbsp;



“Amongst this crowd, there’s a growing understanding that blockchain may play a crucial role in the AI space by offering a means to align financial incentives in the developer community. As it stands, AI faces considerable monopolization risk by major tech corporations, and so we’re looking at projects that leverage blockchain to create financial incentives for developers to build and stay in the open-source space,” Anderson said.



So is this the name of the game for non-crypto native VCs? Are we going to see them move away from crypto?



“One of the big mistakes that non-crypto VCs make is assuming that crypto can be treated as yet another vertical they can enter easily. They typically assign a few people who have a loose understanding of the space, who then face an uphill battle in the investment committee trying to win over peers who have little to no contextual knowledge of the industry,” Anderson told me.



It’s not the first time though, he added. It happened last cycle, and “Silicon-valley giants raised crypto funds and then either deployed into liquid markets at the top, or bought overvalued centralized companies that flopped.”



Anderson continued: “This class of VC firms probably are starting to realize that winning in crypto will require a much bigger commitment than they originally anticipated, so if they’re starting to take their eyes off the ball to chase the new thing, I’m entirely unsurprised.&#8221;



It’s actually not, in Anderson’s opinion, a bad thing for VC funds to chase after trends.&nbsp;



It could even mean that “there will be less dumb money propping up bad ideas or ballooning valuations.” Or the VCs could also look into the AI/crypto crossover space, which is what Framework is paying attention to.



Anderson’s just not sold on AI being the next big payoff for the traditional VC firms.&nbsp;



“In general, we think that AI will be a deadend for most VC investors, as the AI incumbents have both the momentum and resources to crush most competition. Look no further than OpenAI’s recent updates making several Y-Cominator startups obsolete almost overnight,” he said.



Framework, instead, plans to focus — and has focused — its energy on “AI projects that are highly differentiated and/or blockchain adjacent.”



So, no, AI’s not going to steal your lunch money anytime soon, but maybe don’t be surprised if it continues to dominate headlines.&nbsp;



And maybe that’s for the best, so crypto can focus on building without unnecessary distractions.



— Katherine Ross



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Empire Newsletter: Is crypto vs AI a zero-sum game?

Felix Jauvin

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Today’s On the Margin Newsletter is brought to you by the Canadian working on this holiday, Felix Jauvin. Happy Fourth of July!



Today’s shortened edition will dive into the key takeaways from the Federal Open Market Committee’s minutes released yesterday. 



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



<h2 class="wp-block-heading">June’s FOMC scoop&nbsp;</h2>



As usual, the release of last month’s FOMC meeting minutes on Wednesday provided a stale look at how committee members came to the decisions they made in June.&nbsp;



If you rewind the clock, you may remember that the last FOMC day was a weird one as we received the latest CPI readings only a few hours before the actual meeting outcome was announced.&nbsp;



Inflation came in soft and led many to speculate how much of that print was baked into their decision-making process.



So, I dug into the minutiae of the minutes. Here’s some notable things I found interesting:



<h3 class="wp-block-heading">Conflicting inflation prints</h3>



Some participants noted that despite a significant decline in inflation during the second half of 2023, there had been less progress than in early 2024. The <a href="https://blockworks.co/news/on-the-margin-newsletter-may-cpi-analysis">May CPI reading</a> provided some evidence of (modest) further progress, with monthly changes indicating improvement across various price categories, including market-based services.



<h3 class="wp-block-heading">AI productivity gains</h3>



For the first time, the <a href="https://blockworks.co/tag/fomc">FOMC</a> acknowledged the potential for <a href="https://blockworks.co/tag/artificial-intelligence">AI</a> to be a boon to productivity and work as a deflationary force:



“Participants highlighted a variety of factors that were likely to help contribute to continued disinflation in the period ahead… or the prospect of additional supply-side improvements. The latter prospect included the possibility of a boost to productivity associated with businesses’ deployment of artificial intelligence–related technology.”



<h3 class="wp-block-heading">Broken labor surveys</h3>



There’s been a lot of talk about how the establishment survey has been overstating jobs gains compared to the household survey. Historically, the two are much more in line than they have been since 2022:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXdpO0sx9bG2RQHOSq_F6z_N4EFWKHKJxqgXo6i1QAfJ5ppEBaX6sIub57EG4miZN2J_P0Q3yBnNIa1nlSz_KtIR8EkCVQhtoKMj0Yp2akmjdwn866jdoIKkQ6dfNovSjCBanaBmigeihPhslMY5JFqOrxe6?key=TEDcuNgxSuL1yKv9l9cB7A" alt=""/></figure>



Interestingly, FOMC members are beginning to acknowledge that jobs gains might be overstated: “Several participants also suggested that the establishment survey may have overstated actual job gains.”



This is fascinating. It’s very rare to see FOMC members acknowledge that they’ve been looking at data that might be inaccurate. Further, it could mean that they’ve been more hawkish on the labor market than they should have been. This, paired with the dynamic that most job gains have been within part-time jobs whilst the economy keeps losing full-time jobs, could mean that the labor market is a lot colder than they thought.&nbsp;



Overall, these FOMC meeting minutes represent an outdated perspective on the economy that is no longer as relevant. Especially right now when it feels like we’re undergoing a bit of a regime shift in the economy. That said, I still found it generally dovish in terms of what they were looking at and discussing, especially in light of <a href="https://blockworks.co/news/on-the-margin-newsletter-crypto-performance-mid-2024">all the soft economic data</a> we’ve received since.&nbsp;



Have a great long weekend all! We&#8217;ll talk on Monday.



— Felix Jauvin



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On the Margin Newsletter: Reading the FOMC meeting tea leaves

Jack Kubinec

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Howdy!



To all of our US readers: Happy 4th of July, &#8216;Murica, may freedom ring, etc.



And since today is dedicated to celebrating government, it seems apropos to talk a bit about governance:



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



<h2 class="wp-block-heading">Who governs Solana?</h2>



Every blockchain has a means of governance — that is, a way for humans to decide how its software should be upgraded.



Bitcoin has its core developers and Bitcoin Improvement Proposals, and Ethereum has something similar. The means of upgrading Solana are perhaps a bit less widely-known.&nbsp;



When I put out the bat signal for Solana people to explain how governance works on the network, I immediately got ratio’ed by Ore developer Hardhat Chad, who <a href="https://x.com/HardhatChad/status/1807906883212042319">wrote</a>: “Toly proposes stuff and then Trent says no” — referring to Solana co-founder Anatoly Yakovenko and @trent.sol, the self-described “chief curmudgeon” of Anza, which is the developer shop building Solana’s primary client.



When Trent doesn’t say no, the process works something like this: Someone proposes a Solana Improvement <a href="https://github.com/solana-foundation/solana-improvement-documents/blob/main/proposals/0096-reward-collected-priority-fee-in-entirety.md">Document</a> (SIMD), then validators <a href="https://github.com/laine-sa/solgov-distributor/blob/master/votes/simd0096/README.md">vote</a> using voting tokens based on their share of staked solana. If the vote passes, client developers implement and create the change.&nbsp;



(I should add: Multiple people I asked said that <a href="http://v">Yakovenko</a> is not very involved in governance directly, though he does advise core contributors.)



A client is an implementation of a blockchain’s software. <a href="https://blockworks.co/tag/solana">Solana</a>’s main client is currently Agave, Arcium CTO Nicolas Schapeler told me.&nbsp;



Agave is a <a href="https://solana.com/news/solana-labs-anza-fork">fork</a> of the original validator software created by Solana Labs. It is maintained by Anza, which was <a href="https://x.com/anza_xyz/status/1752307820769513568">founded</a> by a group of Solana Labs core developers and executives. Anza was announced in January. Jito also offers its Jito-Solana client, meaning Solana has two widely used clients.



After client developers make changes, validators turn the proposal into reality by upgrading to the new client version. Since this process runs partly through Anza, Agave’s importance to Solana’s development could become a problem if Anza were to go rogue.



“When more clients are live, the guarantee that client devs do exactly as SIMDs say is much higher, as validators will opt to switch to a competing client if they don’t. Even though this hasn’t been a problem so far, it is a good guarantee to have in place — just in case,” Schapeler said in an email. If validators were to dissent from a client upgrade, they could choose to not upgrade the client or to fork the source repository to remove the change, he said.



More clients are expected to go live on Solana in the future — most notably the Jump-created Firedancer.



The strength of Solana’s governance model depends on validators’ ability to opt out of code changes they don’t like, the anonymous professionally-managed validator operator @nodedruid told me in a direct message.&nbsp;



“Validators watch SIMDs and code changes closely, and in the past have intervened with opinions changing the course of Anza’s (previously Labs’) validator client code,” @nodedruid said, adding: “Things will become more formalized around a ‘Solana spec’ when you have multiple teams with live clients; Firedancer, Zig, etc.”



In a governance context, validators can perhaps be thought of as elected representatives (in a proportional representation system, for any Netherlands fans out there): solana stakers can delegate their stake to the validators whom they choose, and those validators’ voting power is based on how much stake they gather.&nbsp;



One Solana participant I spoke to wants to see this change: “In the end state, we at Chainflow feel that validators AND delegators would vote,” Chainflow founder Chris Remus told me, explaining that he wants to see voting include more stakeholders.&nbsp;



This would perhaps be helpful in cases where validators vote on issues that affect themselves — like the recent SIMD-0096, where validators <a href="https://blockworks.co/news/solana-validators-tackle-side-deals">voted to route 100% of priority fees</a> to themselves, rather than burning half, in an effort to cut down on side deals.&nbsp;



“[I]f the core devs didn&#8217;t think SIMD-0096 was workable, they would have loudly advocated against it,” Solana Foundation head of strategy Austin Federa told me, adding that “validator weighted governance has downsides, but so does token holder governance.”



— Jack Kubinec



<h2 class="wp-block-heading">One Good DM</h2>



A message from Rex St. John, developer relations at Anza:


<div class="wp-block-image">
<figure class="aligncenter"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXdHFqCl-_JeRtASyoVGaD6BGuNJ1HAs0NBFaIlmVZ0s0JxYgLW7tPLCi2BM3xFgL0JkhSbSd4dYcXn7GJPK_dxrIFtBCcXpeBwDZTDlowG4dsr5ltmY7o3SSiL_6YVswI-JKylSOSI-UScgZ-VowHQHPAw?key=-6AaKQPhBpyNq_sO02_qZg" alt=""/></figure></div>


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Lightspeed Newsletter: A peek into Solana’s core governance

ZK Sync has a new name but also fresh details about its expanding constellation of connected chains.



What were once known as Hyperchains has, following a trademark collision, been rebranded to the Elastic Chain, in conjunction with the ZKsync 3.0 network upgrade last month.



This network aims to address the challenges of liquidity fragmentation and frustrating user experiences that have plagued multichain ecosystems. ZK rollups built on the <a href="https://blockworks.co/news/custom-hyperchains-ethereum-zk-stack">ZK Stack</a> are set to gain native, trust-minimized, and low-cost interoperability, according to a ZK Sync <a href="https://zksync.mirror.xyz/BqdsMuLluf6AlWBgWOKoa587eQcFZq20zTf7dYblxsU">blog</a> post.



Read more: <a href="https://blockworks.co/news/space-and-time-artificial-intelligence-zksync-hyperchain">zkSync welcomes AI data warehouse as latest addition to hyperchain</a>



The core problem with existing multichain systems lies in their reliance on third-party <a href="https://blockworks.co/tag/bridges">bridges</a>, even the best of which introduce security risks and operational costs.



The Elastic Chain mitigates these problems through an architecture that emphasizes cryptographic security and seamless interoperability.



ZK Sync’s rebrand borrows from the economic concept of elasticity, where supply can expand proportionally to increased demand. To do so, the network of chains relies on recursive ZK proofs, enabling parallel proof generation and constant-time verification. That means the Elastic Chain can verify the validity of a computation in a fixed amount of time, regardless of the size or complexity of the computation.



Read more: <a href="https://blockworks.co/news/mina-mainnet-upgrade-zk-tech-privacy">Mina mainnet upgrade unlocks privacy applications</a>



This property is crucial for the scalability of <a href="https://blockworks.co/tag/zero-knowledge-rollup">zk rollups</a>, as it allows the network to handle a high volume of transactions without increasing the time or cost required for verification. More transactions can, somewhat counterintuitively, <a href="https://blockworks.co/news/zk-rollups-cheaper-with-scale">make the whole system cheaper</a>.



Until a few months ago, posting transaction batches to Ethereum mainnet was the major driver of layer-2 fees, but the new <a href="https://blockworks.co/news/ethereum-broadband-moment">blob storage</a> in EIP-4844, introduced in March and widely adopted by April, has radically changed the picture.&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1462" height="820" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/2024-07-03-L2-fees.jpg?w=1024&amp;h=1024" alt="" class="wp-image-88948" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/2024-07-03-L2-fees.jpg?w=1462 1462w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/2024-07-03-L2-fees.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/2024-07-03-L2-fees.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/2024-07-03-L2-fees.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/2024-07-03-L2-fees.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/2024-07-03-L2-fees.jpg?w=465 465w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/2024-07-03-L2-fees.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/2024-07-03-L2-fees.jpg?w=80 80w" sizes="(max-width: 1462px) 100vw, 1462px" /><figcaption class="wp-element-caption">Source: <a href="https://www.growthepie.xyz/fundamentals/transaction-costs">growthepie.xyz</a></figcaption></figure>



<h3 class="wp-block-heading">Role of the ZK Token</h3>



The Elastic Chain comprises several key components, some of which presumably will make use of the newly launched ZK token, such as the ZK Gateway.



Initially the token’s role is one of governance, with decisions, such as protocol upgrades, validator policies and other critical aspects of the network&#8217;s development being put to a token holder vote. So far, ZK holders can <a href="https://vote.zknation.io/dao">delegate</a> their vote to themselves or others, but actual governance votes are a ways off.



The ZK Gateway would facilitate transaction settlement between connected ZK Stack chains more cheaply than settling directly to Ethereum. The gateway would be managed by a decentralized set of validators, incentivized to maintain the network’s resilience and reliability.



For instance, bridging and state diff data fees — associated with the transmission and storage of the differences (or &#8220;diffs&#8221;) in chain state — could be paid in ZK.



The blog post doesn’t explicitly call for this utility of ZK, but it is implied:



“The participation in this decentralized validation process requires an ERC20 token. ZKsync network governance will designate a token for this purpose (for example, it could be the ZK token),” the post states.



For users, the Elastic Chain network aims to mimic a single blockchain, using the same address and signature by way of modular <a href="https://blockworks.co/tag/account-abstraction">smart accounts</a> with <a href="https://blockworks.co/newsletter/research/issue/post_fa6aab18-b884-4fc2-b39d-8b678ed281f1">passkeys</a>.



<h3 class="wp-block-heading">Bridging the gap</h3>



ZK Sync’s Elastic Chain is most directly comparable to the Polygon CDK and AggLayer, which also natively support a verifiable shared interoperability.



Read more: <a href="https://blockworks.co/news/espresso-polygon-partnership-rollup-interoperability">Espresso partners with Polygon Labs to solve rollup interoperability</a>&nbsp;



But according to tests <a href="https://github.com/bogatyy/rollup-amm-tps-test">published</a> by Matter Labs, the lead ZK Sync’s developer, Elastic Chain will do so at a TPS of 180, compared to Polygon’s 5.



That’s about the difference between a commercial airliner and a bicycle.



Of course none of these solutions are actually live in production, so we’ll have to wait and see how they perform with real usage. But for Web3’s early adopters beset by constant Metamask RPC switching, latency and uncertainty of bridges, a streamlines experience can’t come soon enough.



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ZK Sync Elastic Chain rebrand seeks to carve out scaling niche

It’s a long road ahead to the US election in November, something of which holders of political parody memecoins are likely all too aware.



Tokens like boden, tremp and more recently kama are a genre all to themselves. They caught fire earlier in the year, an extension of the memecoin mania that <a href="https://blockworks.co/news/solana-network-congestion-transaction-volume">largely gripped Solana</a> and Base.



“PolitiFi,” as it&#8217;s come to be known, is a catch-all term for memecoins and social tokens with a political bent. They&#8217;re usually named after a politician or pundit.



A subset of those tokens has its own nomenclature and art style — misspellings of names and rough, MS-Paint-style caricatures of their respective figures.&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=%24BODEN&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$BODEN</a> truck spotted in NYC 👀 <a href="https://t.co/vVyPn933Np">pic.twitter.com/vVyPn933Np</a>&mdash; cashnyc (@cashnyc289) <a href="https://twitter.com/cashnyc289/status/1793737831304880273?ref_src=twsrc%5Etfw">May 23, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">Trucks advertising jeo boden have been spotted in New York City.</figcaption></figure>



Joe Biden isn’t Joe Biden, he’s jeo boden. Donald Trump is doland tremp, and Tucker Carlson is tooker kurlson.



As for which came first, tremp and boden both launched in late February to early March. As a cohort, parody political memecoins hit close to $800 million market cap in about one month. But they’ve been bleeding out ever since, and are now worth less than $100 million overall.



When the first parodies launched, there was about 250 days until the election. Now, there&#8217;s 124 days to go, putting this particular brand of PolitiFi right at the half-way point.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/18620304/embed#?secret=zWGhf4EGsC" data-secret="zWGhf4EGsC" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">150,000 addresses are holding political parody coins, with an estimated 80% sitting on at least 10 units (worth a few dollars at most).</figcaption></figure>



Vice president Kamala Harris’ parody coin, kamala horris, is the latest to pump following Biden’s wobbly debate performance last week.



Read more: <a href="https://blockworks.co/news/biden-presidential-debate-impacts-polymarket-odds">Biden debate performance shakes up Polymarket odds</a>



KAMA was actually launched at the end of March but only recently picked up steam, going from $1.4 million market cap before the debate to $11.4 million — 8x gains.



Still, KAMA makes up only 3% of the parody memecoin space. Boden currently holds 24% market share, down from 60% in May, while tremp has 43%, up from under 10% also in May.



(Interestingly, there doesn’t appear to be much holder overlap between parody coins. After comparing blockchain data for the different tokens, boden and tremp had the highest similarity with 12.6% of addresses holding both. Tooker and tremp’s similarity is 3.6%, while just 1% of kama and boden holders currently have both tokens.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/18621435/embed#?secret=oV4bkLvQN8" data-secret="oV4bkLvQN8" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Democrat parody tokens are in blue, Republican in red</figcaption></figure>



Memecoins are super volatile and there’s no reason to suspect otherwise of these political parodies. They’ll likely go up and down ad nauseam, as is practically intended.



Although, we’re still about four months away from the US election in November. With so much room left to go, holders intent on riding out the campaigns would be wise to strap in for the long haul.



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PolitiFi parodies are half-way to the US election — but it’s uphill from here

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<h2 class="wp-block-heading">Just like us</h2>



US-listed ETFs tend to get a lot of attention. And rightly so — nothing says “crypto is eating finance” more than Wall Street funds scooping up tokens for their shareholders.



But there’s a whole world outside of ETFs and even the US.&nbsp;



For sure, an overwhelming majority of assets under management (AUM) by crypto investment products are tied up in bitcoin and ether.&nbsp;



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1325" height="1159" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-5.png" alt="" class="wp-image-88828" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-5.png?w=1325 1325w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-5.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-5.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-5.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-5.png?w=294 294w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-5.png?w=298 298w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-5.png?w=250 250w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-5.png?w=80 80w" sizes="(max-width: 1325px) 100vw, 1325px" /><figcaption class="wp-element-caption">The circles represent different products holding different cryptocurrencies.</figcaption></figure>



As the US waits for the SEC to formally approve the ether ETF registration statements (and for any decision on the solana ETFs) there are already a number of ETPs, ETNs and ETCs listed in the US and Europe backed by those cryptocurrencies.



There are even more products with direct exposure to 33 additional tokens including celestia, optimism, fantom, uniswap and stacks.



Solana is so far the number-three pick from traditional finance types, with $1.22 billion split between funds from 21Shares, CoinShares, Grayscale, VanEck, WisdomTree, ETC and Virtune.&nbsp;



BNB, ethereum classic and litecoin are next in line, ranging from cumulative AUM of $719.4 million for the former and $142.5 million for the latter.&nbsp;



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1320" height="1473" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-7.png" alt="" class="wp-image-88830" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-7.png?w=1320 1320w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-7.png?w=269 269w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-7.png?w=918 918w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-7.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-7.png?w=230 230w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-7.png?w=234 234w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-7.png?w=196 196w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-7.png?w=72 72w" sizes="(max-width: 1320px) 100vw, 1320px" /><figcaption class="wp-element-caption">Yes, a Grayscale trust still holds hundreds of millions of dollars in ethereum classic, thanks to its closed-ended nature.</figcaption></figure>



Buying all those cryptocurrencies is one thing, but it’s another to hold the right ones.



So far so good for most. Just over half of the tokens held by investment products have beaten the S&amp;P 500 over the past year.



Solana, ton, near, livepeer, maker and celestia have led the pack, all posting more than 200% returns since this time last year as of earlier this week.&nbsp;



Bitcoin and ether were up 102% and 76% respectively.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1515" height="1134" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-4.png" alt="" class="wp-image-88827" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-4.png?w=1515 1515w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-4.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-4.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-4.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-4.png?w=343 343w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-4.png?w=349 349w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-4.png?w=293 293w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-4.png?w=80 80w" sizes="(max-width: 1515px) 100vw, 1515px" /><figcaption class="wp-element-caption">The S&amp;P 500 has meanwhile gained about 23% over the same period.</figcaption></figure>



There are, however, some laggards. One-third of the cryptocurrencies held by the analyzed products are in the red this past year.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1579" height="1136" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-6.png" alt="" class="wp-image-88829" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-6.png?w=1579 1579w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-6.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-6.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-6.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-6.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-6.png?w=357 357w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-6.png?w=363 363w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-6.png?w=304 304w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-6.png?w=80 80w" sizes="(max-width: 1579px) 100vw, 1579px" /><figcaption class="wp-element-caption">Litecoin, arbitrum, cosmos and the sandbox are the worst off, down between 34% and 26%.</figcaption></figure>



So, while it’s heartening to know that some percentage of token supplies might be gobbled up by traditional investment products — it can still go wrong for those buyers.



The products themselves can diverge from the underlying cryptocurrencies, especially with closed-ended funds like Grayscale&#8217;s, but the performance of the tokens alone shows the strike rate isn’t bad at all.



— David Canellis



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Empire Newsletter: There’s a whole wide world outside of US ETFs

Ben Strack

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



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Welcome to the On the Margin Newsletter, brought to you by Ben Strack, Casey Wagner and Felix Jauvin. 



Here’s what you’ll find in today’s edition:



<ul>
<li>We are halfway through the year! Here’s where crypto markets stand. </li>



<li>Initial jobless claims came in higher than analysts expected, a sign the labor market isn’t as strong as the Fed would like. </li>



<li>Soft data got you down? Don’t worry, we also break down the latest economic indicators. </li>
</ul>



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



<h2 class="wp-block-heading">Crypto’s wild year is only half over</h2>



The first half of 2024 is officially in the books, and with a fresh set of tailwinds and hurdles, the next six months should be pretty interesting for the crypto industry.&nbsp;



A potential Federal Reserve rate cut, and of course the US presidential election, are among the catalysts that could move crypto markets later this year.



Not to mention the impact of potential regulatory progress and/or more SEC lawsuits.&nbsp;



But let’s look backward for a moment.&nbsp;



Bitcoin’s price is up 36% year to date despite declining from its <a href="https://blockworks.co/news/bitcoin-all-time-high">$73,000-plus all-time high</a> hit in mid-March.&nbsp;



ETH has similarly risen 40% from the start of 2024 despite a price setback in June that saw it lose 10% over the month.&nbsp;&nbsp;



US spot bitcoin ETFs have seen $14.5 billion of net inflows since launching in January. Their ether counterparts are expected to debut shortly, <a href="https://blockworks.co/news/sizing-up-demand-for-us-eth-etfs">bringing more investors</a> into another segment of the space via traditional vehicles.&nbsp;&nbsp;



Then there were the <a href="https://blockworks.co/news/lightspeed-newsletter-spot-solana-etf-filing">filings for spot Solana ETFs</a> (by <a href="https://blockworks.co/news/vaneck-files-for-solana-etf">VanEck</a> and then 21Shares) last week.&nbsp;



VanEck’s crypto research head <a href="https://x.com/matthew_sigel/status/1807775290396942559">confirmed</a> in an X post that the firm’s plans are essentially a bet on Donald Trump (a potential <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-bitcoin-mining-meeting">pro-crypto candidate</a>) winning the presidency.&nbsp;&nbsp;



The reality of soon having two crypto assets with their <a href="https://blockworks.co/news/on-the-margin-newsletter-crypto-etf-filing-frenzy">own US spot ETFs</a> (and a potential third in SOL, even if <a href="https://blockworks.co/news/us-spot-crypto-etf-approvals-outlook">unlikely to gain approval</a> for now) highlights the growing interest/adoption by TradFi service providers and investors, noted Fineqia International analyst Matteo Greco.&nbsp;



“This trend projects a positive outlook for the digital assets market in the mid- to long-term, with increased establishment in financial markets accompanied by rising inflows, liquidity and transparency,” he added.



It appears TradFi service businesses are not just eyeing investments into crypto assets (or the ETFs holding them) — with industry watchers expecting such firms to buy into the sector via M&amp;A.&nbsp;



“[They] continue to be inhibited by regulatory uncertainty,” Architect Partners managing partner Eric Risley told Blockworks. “However, Robinhood’s <a href="https://blockworks.co/news/robinhood-bitstamp-institutional-clients">acquisition of Bitstamp</a> is evidence of ‘bridge transactions’ on the horizon.”



As TradFi and crypto get more tangled, <a href="https://blockworks.co/news/macro-headwinds-bitcoin-summer">macroeconomic forces</a> — and how they impact the sector — will be key.



Fed funds futures data suggests the market is still expecting and pricing in two rate cuts in 2024, according to Bitfinex derivatives head Jag Kooner.



“The Fed&#8217;s statements and a possible continuation of a more hawkish stance are important factors to watch,” he added.



We also shouldn’t forget the historical price peaks that can come as far as 12 to 18 months after a halving (the last of which occurred on April 19).&nbsp;



Price uptrend in crypto bull markets typically resumes within 10 to 12 weeks from the event, Kooner said. That timeline colliding with potential US spot ETH ETF launches could offer an additional catalyst.



Aside from all that, regulation continues to weigh on the space — in both good ways and bad. While crypto lawmaking <a href="https://blockworks.co/news/on-the-margin-newsletter-capitol-hill-mining-stocks">efforts have lulled</a> after <a href="https://blockworks.co/news/senate-passes-resolution-to-overturn-sab121">bipartisan progress</a>, post-election efforts could prove pivotal.&nbsp;&nbsp;



Then, there’s seeing who the SEC might choose to sue next following its recent actions against <a href="https://blockworks.co/news/sec-lawsuit-against-consensys-securities">Consensys</a> and <a href="https://blockworks.co/news/sec-sues-silvergate-bank-for-misleading-public">Silvergate Bank</a>, launched just days apart. The agency’s progress in greenlighting crypto funds has not exactly lightened them up on the enforcement side.&nbsp;



A lot is uncertain, but that’s part of the fun. I guess it was a good time to start this newsletter.&nbsp;



— Ben Strack



<h2 class="wp-block-heading">$3.2 billion&nbsp;</h2>



The amount of capital venture investors put into crypto companies during the second quarter of the year, according to a new report from Galaxy Digital Research. This is an increase from the first quarter, when VCs allocated $2.5 billion to the sector.&nbsp;



Deal count decreased slightly in the second quarter, dropping from 603 to 577.&nbsp;



<h2 class="wp-block-heading">Disappointing report shows labor market is slowing&nbsp;</h2>



US initial jobless claims came in higher than expected last week, the latest <a href="https://www.dol.gov/ui/data.pdf">report</a> from the Labor Department shows.



First time unemployment applications hit 238,000 last week, up from 234,000 the week prior. The print marks the ninth straight week of increases in initial claims.&nbsp;



Continuing jobless claims increased to 1.86 million in the week ended June 22, the highest recorded figure since November 2021. An increase in recurring applications shows labor demand easing as the economy slows.&nbsp;



The report comes a day after Fed Chair Jerome Powell said he’s hopeful the economy is headed in a “disinflationary” direction. He noted that additional data is needed before central bankers can commit to a rate cutting schedule.&nbsp;



The Fed finds itself in a difficult position, he added.&nbsp;



“We’re well aware that if we go too soon, we could undo the good work we’ve done in bringing down inflation, and if we go too late, we could unnecessarily undermine the recovery and the expansion… we’re aware that we have two-sided risks now, more so than we did a year ago,” Powell said Tuesday.&nbsp;



On Friday we’ll get the monthly employment report from June, which analysts expect will show an increase of 190,000 nonfarm payrolls. The economy added 272,000 jobs in May, Labor Department data shows.&nbsp;



Stocks rose and bond yields fell on the report. The S&amp;P 500 and Nasdaq Composite indexes posted gains of around 0.2% each at the open. Markets closed early Wednesday ahead of the July 4 holiday, and trading will resume Thursday.&nbsp;



Bitcoin and ether slipped following the release of the report, losing 3% and 2.7%, respectively, according to Coinbase.&nbsp;



— Casey Wagner&nbsp;



<h2 class="wp-block-heading">How do we deal with conflicting soft data?</h2>



ISM Services printed a 48.8 today, much lower than the expected 52.5.



At the same time, however, we received data from S&amp;P Global US Services PMI, which rose to 55.3 from 54.8.&nbsp;



These two data points attempt to do the same thing: provide a leading forecast of economic activity in the services sector. As a quick reminder, the remainder of inflation is largely driven by services. Goods have been deflationary on a month-over-month basis for several months now.



So while one print is screaming that this economic slowdown is about to accelerate and lead to further services disinflation, the other is screaming that we have a resilient economy and people should continue to spend on services like crazy.&nbsp;



If your head is spinning trying to figure out which way is up based on what economists call “soft data” (survey-based data points that are inferred, not observed directly from the economy), I don’t blame you. So is mine. We’ve been in a weird business cycle ever since coming out of COVID, which has led to weird soft data like we’re seeing today.&nbsp;



I generally believe that markets are somewhat efficient, so to understand which way these prints are leaning, I’m deferring to the bond market to tell me what to make of things. With the US 10 year yield lower by 8.5 basis points, it’s clear that the ISM Services print wins today.



— Felix Jauvin



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



<ul>
<li>Odds that President Joe Biden <a href="https://blockworks.co/news/biden-presidential-debate-impacts-polymarket-odds">drops out</a> of the presidential race increased to 75% on <a href="https://polymarket.com/event/will-biden-drop-out-of-presidential-race?tid=1720018635701">Polymarket</a> Wednesday after the New York Times reported that Biden was weighing whether to continue. Betters have wagered $9.9 million on Polymarket so far. </li>



<li>A federal judge has <a href="https://x.com/BillHughesDC/status/1808141882762891747">agreed</a> to consider the “merit” of the <a href="https://blockworks.co/news/sec-has-it-in-for-consensys">SEC’s case against Consensys</a>. The question on the table is whether the agency has Congressional authority to regulate MetaMask as a securities broker and issuer. </li>



<li>We hope our US readers enjoy the July 4 holiday tomorrow! We’ll still be sending out our newsletter on Thursday and Friday, so keep an eye on your inboxes. In the meantime, catch up on the latest On the Margin Podcast episodes on <a href="https://www.youtube.com/playlist?list=PLvER9nHSRN3xVs_p-dl7L7K_ZgL6lSudu">YouTube</a>, or wherever you get your podcasts.</li>
</ul>



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the On the Margin newsletter</a>.



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

On the Margin Newsletter: A look at crypto’s performance halfway through 2024

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



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Howdy!&nbsp;



We’re currently in the worst sports month of the year — especially with the USA knocked out of Copa America — and the situation got so dire that I started watching the Tour de France. Congrats to Mark Cavendish for breaking some kind of record. I should really go touch some grass.



Now for the story of someone who bought Solana at $0.04 per token:



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



<h2 class="wp-block-heading">Q&amp;A: The true confessions of Solana’s first VC</h2>



Edith Yeung was investing in early stage companies at 500 Startups when she met Anatoly Yakovenko, who pitched her on the idea for a fast and cheap blockchain that would become Solana. She saw Solana’s early days unfold — and made an incredibly lucrative venture investment in the process. Read on for an excerpt from my conversation with Edith.



Comments have been edited for brevity and clarity.



Jack: How did you first meet Anatoly?



Edith: Anatoly and I actually met through a friend. His name is David. I can&#8217;t even make this shit up — David played water polo with Anatoly. I can barely swim, so the fact that somebody can play polo underwater, I think, is insane. David knew that I was very into crypto, so he said, “hey, you should meet this guy Anatoly.”&nbsp;



When he pitched me about Solana, first off, it wasn&#8217;t even called Solana. It was called Loom. He basically said proof-of-work doesn&#8217;t really work. It can never be fast. You cannot make a horse go as fast as a car. You just need to build it from scratch and I just felt like his thoughts and ideas were pretty refreshing. But at the same time, he really had nothing, not even a whitepaper. So it was purely founder trust and belief when we invested.



[After launching, the Solana team] grew from one to four to a whole bunch of people to the point that our office manager basically said: “You guys have way too many people. We need to kick you out now.”&nbsp;



[Solana co-founder Raj Gokal] basically said we need a new space. I found them the space on One Hawthorne Lane. It&#8217;s walking distance from where I am. It&#8217;s right next to the Gold Club, which is a strip club across the street. They stayed there until Covid basically, and now they are on a better street.



Jack: How did people in San Francisco think of Solana in the early days?



Edith: &nbsp;A lot of investors just sort of dismissed it, and in fact, mid-2018 to early 2019 was a bear market, so if I remember correctly, the valuation of the Solana was $15 million to $20 million. That&#8217;s it. And most people didn&#8217;t want to invest in it.&nbsp;



There are people that actually pulled out [of the first round] because it was such a bad market and they didn&#8217;t want to get involved — and that’s a lot of the people who even are active in the crypto space. They just didn’t see, “there&#8217;s going to be another Ethereum.”



Jack: What was your initial investment in Solana?



Edith: It was $250,000 at $0.04 [per SOL token], and that was the seed round. My fund was very small, it was a $10 million fund, so when the $0.04 got to $14.25, it already 7x’ed my fund.



But having said that, we waited about two years to get to the point where the token actually launched, which is common, same thing even for equity IPO-type companies. Then it started trading, and so my LPs who supported me were like, what is this thing? Because most people who supported me had no idea what crypto is.



I distributed tokens to my LPs in early 2021 and I I basically told them, “look, you may not understand what it is, but please trust me and keep it as long as you can and please don&#8217;t sell.”



After that, Solana went up to, I think, $260. Some of the LPs were like, “what the hell?” And I was just sort of like “you&#8217;re welcome.” And that was that.



Jack: A big thing that people point to with the early Solana days was when FTX came in and launched the decentralized exchange Serum. What was FTX&#8217;s involvement like in Solana pre-collapse?



Edith: Sam [Bankman-Fried] really was the one that picked Solana as the one he wanted to build Serum on. What they were looking for is, “can we find an alternative to Ethereum [for traders]?”&nbsp;



When Serum launched, it was super popular because FTX was obviously pushing it, but more importantly it was an amazing showcase for Solana to show off the fact that [it is] fast enough for DEXes. [&#8230;] The FTX team was very supportive of Solana and really put them on the map in the DeFi ecosystem early on, but of course that didn’t really last for that long.



Jack: Are you still holding onto those original tokens?



Edith: Yes, of course, and I’m very thankful.



I love investing in people, and they are really the investment of a lifetime for me.



— Jack Kubinec



<h2 class="wp-block-heading">Zero In</h2>



Magic Eden’s Solana NFT market share keeps inching higher:



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1398" height="896" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-11.png" alt="" class="wp-image-88881" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-11.png?w=1398 1398w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-11.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-11.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-11.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-11.png?w=401 401w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-11.png?w=407 407w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-11.png?w=342 342w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-11.png?w=80 80w" sizes="(max-width: 1398px) 100vw, 1398px" /></figure>



According to a Dune dashboard from 21co, Magic Eden has held between 90-95% of the combined trading volume between itself and rival Tensor for much of the past month. Tensor saw more than 75% of the combined volume briefly in January, but since then, Magic Eden took the lead and solidified it.



— Jack Kubinec



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



Helium recently <a href="https://x.com/helium/status/1807812910468776300">announced</a> it is expanding beyond its decentralized wireless mission to create a larger decentralized physical infrastructure network (DePIN). Traditionally, high cost centralized networks have dominated the infrastructure landscape. According to Helium, these traditional players have hampered scalability and innovation for years, especially in segments like asset tracking, cellular solutions, disaster detection, and other wireless-enabled solutions.



Helium <a href="https://blog.helium.com/network-of-networks-24c58012d2e9">outlined</a> its intention to create a more efficient and scalable infrastructure through its Network of Networks initiative. The protocol intends to leverage its global footprint and community to support new decentralized networks for compute, storage, mobility, and more.



On X, community member @hansaFL <a href="https://x.com/hansaFL/status/1807888541138977158">speculated</a> that Helium might introduce a Proof of Location (PoL) network. He highlights how Helium hotspots could <a href="https://x.com/hansaFL/status/1807888550756770178">verify</a> device locations, enhancing trust and utility in the DePIN space. <a href="https://x.com/hansaFL/status/1807888548277686624">According</a> to Hans, &#8220;Before Helium, there was no way to prove location &#8211; GPS was too easy to game.&#8221;



Community members responded with various predictions. @Sunbasher <a href="https://x.com/Sunbasher/status/1807985850351079674">suggested</a> possibilities like bandwidth or compute, while @BloodReaver <a href="https://x.com/BloodReaver/status/1807981202470850836">guessed</a> it might involve WiFi. @ke6jjj <a href="https://x.com/ke6jjj/status/1807969431362195722">clarified</a> that any new network would require community voting, emphasizing the collaborative nature of Helium&#8217;s expansion.



— Jeffrey Albus



<h2 class="wp-block-heading">One Good DM</h2>



A message from Edith Yeung, an early investor in Solana:



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="554" height="964" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-12.png" alt="" class="wp-image-88882" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-12.png?w=554 554w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-12.png?w=172 172w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-12.png?w=148 148w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-12.png?w=150 150w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-12.png?w=126 126w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-12.png?w=46 46w" sizes="(max-width: 554px) 100vw, 554px" /></figure>



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Lightspeed Newsletter: A conversation with Solana’s first VC

In the arena of zero-knowledge proofs, STARKs are the OG and the Iron Man suit: foundational and cutting-edge.



Most major zk provers in production are STARK-based: zkSync’s Boojum, Polygon’s zkProver, Aleo’s Varuna​, Aztec Protocol and RISC Zero’s Zeth all employ STARKs (Scalable Transparent ARguments of Knowledge) underneath.



Recent research by StarkWare and Polygon has significantly advanced the scalability of STARKs. StarkWare is preparing to implement the research in a new prover, called Stwo — short for STARK Two — increasing proving capacity by 100 times. 



Scalability, when it comes to provers, means generating and verifying proofs quickly and cheaply. The “Transparent” part of STARKs <a href="https://blockworks.co/news/addresses-helping-ethereum-scale">eliminates the need for trusted setups</a> required by many SNARK-based provers.



Read more: <a href="https://blockworks.co/news/a16z-zkrollup-proof-system">Zero-knowledge proof systems have room for improvement, say cryptography researchers</a>



Stwo, which will be available in 2025, will eventually replace the current prover, Stone — for “STARK One.”



The secret to Stwo’s speed and efficiency lies in its use of the eighth <a href="https://en.wikipedia.org/wiki/Mersenne_prime">Mersenne prime</a> (or M31) for computations, which fits well with modern computer architectures to significantly speed up operations compared to Stone.



A Mersenne prime is a prime number that is one less than a power of two. These primes are named after the French monk Marin Mersenne, who studied them in the early 17th century. Specifically, a Mersenne prime can be expressed in the form Mn​=2n−1, where n itself is an integer. Not all numbers of this form are prime, but those that are have significant properties and applications in number theory and computer science.



They fit naturally with the way data is handled in modern computers, which often use fixed-size binary word lengths such as 32-bit or 64-bit integers. Operations involving M31 can therefore be efficiently implemented using standard binary arithmetic.



Without getting too far into the weeds, the breakthrough in this new research is the use of something every child learns about at an early age: the Circle.



Circle STARKs — a collaboration between <a href="https://blockworks.co/tag/starkware">StarkWare</a> and Polygon Labs — use a clever geometric method to make cryptographic proofs faster, and the M31 field makes these operations even more efficient. Together, they enable the Stark Two prover to generate proofs quickly and with less computational power.



<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">Our new prover Stwo just blew our mind 🔥 Here&#39;s a demo by <a href="https://twitter.com/PapiniShahar?ref_src=twsrc%5Etfw">@PapiniShahar</a> and <a href="https://twitter.com/EliBenSasson?ref_src=twsrc%5Etfw">@EliBenSasson</a> of our next-gen prover, Stwo, and its groundbreaking performance: proving 620,000 hashes per second using an M3 laptop! This is x1000 better than our current prover, Stone, and is the… <a href="https://t.co/FJ0fF2zcra">pic.twitter.com/FJ0fF2zcra</a>&mdash; StarkWare 🐺🐱 (@StarkWareLtd) <a href="https://twitter.com/StarkWareLtd/status/1807776563188162562?ref_src=twsrc%5Etfw">July 1, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The research won’t only benefit Starknet, but many other proving systems, according to Ventali Tan, co-founder of Lita, which is building the Valida zk-Virtual Machine.



“Stwo gives another confirmation of the speed and power of the FRI polynomial commitment scheme, which is the main cryptographic ingredient in STARKs,” Tan told Blockworks. “This is the same scheme used as the basis of several of the most performant proof systems of recent generations, such as Plonky2 and Plonky3 — Valida, as well as Succinct’s SP1, is built on Plonky3.”



Tan notes that support for the circle STARK protocol and the M31 field are already on the roadmap for Plonky3, being developed by <a href="https://blockworks.co/tag/polygon">Polygon Labs</a>.



StarkWare’s Eli Ben-Sasson told Blockworks all VMs will eventually benefit from this improved speed. “However, ZK-friendly VMs such as Cairo are designed to maximize STARK-proving efficiency and this added efficiency will likely remain,” he said.



Other provers may benefit less directly, suggests Ian Miers, a research scientist at Aleo.



“Aleo uses a different proof system, Varuna, built on different techniques than StarkWare’s work,” Miers told Blockworks. “Many SNARKs, of which STARKs are a sub-variety, are optimized for <a href="https://blockworks.co/tag/rollups">rollups</a>, where a server sees everyone&#8217;s transactions and compresses as many as possible to save gas fees.”



Privacy-preserving blockchains like Aleo are aiming to give users more control over their own data by cutting the rollup operator out of the middle.



“There are trade-offs here, and excelling in one area may not mean excelling in another,” Miers said.



Read more: <a href="https://blockworks.co/news/privacy-zk-tech-data">Privacy is paramount, and zero-knowledge cryptography is the way</a>



In the fast moving world of zero-knowledge cryptography, there’s only one thing for certain, Miers added.



“There will always be a newer, better zk proof system, and you will eventually need to upgrade,” he said.



Updated July 3, 2024 at 2:59 pm ET: Clarifying the collaboration between StarkWare and Polygon Labs was limited to the circle STARK research. Added comment from Eli Ben-Sasson.



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A STARK breakthrough: Next-gen provers may be at least 100x faster

Germany and the US are seemingly competing for who can spook bitcoin markets more.



Addresses linked to German and US governments have recently sent $737.6 million in bitcoin to exchanges including Coinbase, Bitstamp and Kraken, as well as some to OTC desk operator-slash-market maker Flow Traders.



Germany makes up about three-quarters of that total, with its deposits spread across 30 different transactions — usually in the morning around 9 am local time.&nbsp;



While it’s unclear whether all the bitcoin was actually sold (a portion has since been returned to the original addresses), Germany’s transfers to exchanges are believed to be the first ever, at least going by Arkham Intelligence data.&nbsp;



Local authorities had previously seized bitcoin via various criminal cases, including <a href="https://blockworks.co/news/german-police-bitcoin-seizure">pirate portal Movie2k</a>.&nbsp;



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1512" height="1130" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-8.png" alt="" class="wp-image-88862" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-8.png?w=1512 1512w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-8.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-8.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-8.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-8.png?w=344 344w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-8.png?w=349 349w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-8.png?w=293 293w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-8.png?w=80 80w" sizes="(max-width: 1512px) 100vw, 1512px" /><figcaption class="wp-element-caption">Bitcoin transfers to exchanges from governments have ramped up significantly.</figcaption></figure>



Over the past two weeks, Germany has sent 7,828 BTC in transfers that appear to be part of liquidation efforts.&nbsp;



That bitcoin was altogether valued at $496.4 million at the respective transaction times, implying an average price of $63,400. Bitcoin currently trades for $60,200, although a direct causal link between Germany’s transfers and falling prices is tough to draw.



As for the US, the Feds used to sell bitcoin at auction. Now, it <a href="https://blockworks.co/news/doj-bitcoin-silk-road-mempool">sells on Coinbase</a>.&nbsp;



The US sent a single 3,940 BTC deposit to Coinbase Prime at 11 am ET on June 26. The bitcoin, which once <a href="https://www.justice.gov/opa/pr/dark-web-vendor-sentenced-distributing-narcotics-and-ordered-forfeit-150m">belonged</a> to drug dealer Banmeet Singh, was worth $241.22 million at the time, while the same haul would fetch $237.35 million right now.&nbsp;



Aside from the bitcoin sold at <a href="https://jlopp.github.io/us-marshals-bitcoin-auctions/">auction</a> in years prior, putting an exact value on how much the US government has offloaded over the years is difficult.&nbsp;



Some transactions are obvious, like the Coinbase deposits. Others only end up on exchanges after being sent through multiple single-use addresses. (For the sake of this analysis, crypto that was first sent to an in-between address before being forwarded to an exchange also counted towards the totals.)



After combing through the chain for exchange deposits, and other transfers that have all the hallmarks of sales, it looks like the US government may have now either liquidated or moved to liquidate almost $590 million in bitcoin since November 2020 (valued at the time of transfer). Which is about 20% more than Germany’s recent moves.



<figure class="wp-block-image is-resized"><img loading="lazy" decoding="async" width="1520" height="1134" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-9.png" alt="" class="wp-image-88863" style="width:642px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-9.png?w=1520 1520w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-9.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-9.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-9.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-9.png?w=344 344w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-9.png?w=350 350w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-9.png?w=294 294w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-9.png?w=80 80w" sizes="(max-width: 1520px) 100vw, 1520px" /><figcaption class="wp-element-caption">It’s hard to say whether these transfers have moved markets. Although, bitcoin definitely hasn’t gone up.</figcaption></figure>



The data suggests that:



<ul>
<li>The US sold 15,903 BTC for approximately $37,000 on average since 2020.</li>



<li>Had the US held all that bitcoin until now, it could’ve netted $958.7 million.&nbsp;</li>



<li>The US missed out on an estimated $370 million by selling too soon, and that’s not counting the billions missed by selling at auction over the last decade.</li>
</ul>



World governments moving around their bitcoin tend to make a lot of noise. But the onchain data indicates that the US has been selling seized ETH for as long as BTC.&nbsp;



Split between Coinbase and Kraken, addresses tagged as the US government have sent $49.1 million in ETH to trading platforms since September 2020. An additional $2.6 million in DAI and a small amount of USDC was also sent to an address that forwarded it onto Kraken.



All up, using the same analysis as the bitcoin exercise above, the US government appears to have liquidated 108,673 ETH for an average price of $452 (current price: $3,300). Had it held all that and sold today, it would’ve scored over $358 million — missing out on nearly $310 million.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1513" height="1132" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-10.png" alt="" class="wp-image-88864" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-10.png?w=1513 1513w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-10.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-10.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-10.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-10.png?w=343 343w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-10.png?w=349 349w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-10.png?w=293 293w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-10.png?w=80 80w" sizes="(max-width: 1513px) 100vw, 1513px" /><figcaption class="wp-element-caption">The plus symbols represent ETH deposits to exchanges and other apparent sales, while the diamond is for DAI and USDC.</figcaption></figure>



The ETH came from wallets designated to seizures from cases involving defunct crypto debit card ploy Centra Tech and Gary Harmon, who, ironically, <a href="https://www.justice.gov/opa/pr/man-sentenced-stealing-over-712-bitcoin-subject-forfeiture">stole</a> bitcoin seized by the US government, among others.



Combining it altogether shows the US and Germany have directed close to $1.14 billion in seized bitcoin, ether and stablecoins to exchanges and other trading platforms over the past four years.



The US is still sitting on about $13.3 billion in crypto, mostly bitcoin, as well as a combined $300 million in ether and tether. Germany otherwise continues to hold 43,549 BTC ($2.6 billion).



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US, German governments have sent $738M in bitcoin to exchanges over the last 2 weeks

Jason Allegrante

The European Union’s “Markets in Crypto Assets Regulation” (MiCA) marks a major milestone for the crypto industry.



With MiCA set to enter into phased implementation this summer, the EU is inviting crypto market participants into the regulatory perimeter for the first time. And while there are still uncertainties and challenges ahead, there is hope that MiCA will prove to be an important step towards long-term stability for crypto markets, enhanced protections for users and a more attractive investment environment for entrepreneurs.



The drafters of MiCA got a number of things right. One of them was to acknowledge that certain aspects of the crypto ecosystem (like decentralized smart contracts and NFTs) do not map neatly onto existing European concepts for financial system regulation (i.e., the MiFIDs). These activities were rightly left out of MiCA, with an understanding that they would become subject to further rulemaking at a later date.&nbsp;&nbsp;



But would it have been better for stablecoins or “e-money” tokens to have received the same treatment?&nbsp;



As it stands under MiCA, certain USD-referenced “e-money” tokens — including USDT, USDC and BUSD — are subject to caps on issuance and transactions. Per EU rules, caps for these instruments (as well as certain others) are 1 million transactions by volume, or 200 million euros by notional value.&nbsp;&nbsp;



Not only are the caps — as adopted — far too small to support current levels of activity, but their enforcement is likely to result in major disruptions to the proper functioning of the crypto ecosystem.&nbsp;&nbsp;



Globally, the total market capitalization for stablecoins sits at a staggering <a href="https://defillama.com/stablecoins">$162 billion</a>. USDT, USDC and BUSD collectively comprise roughly 75% of that amount. The European share of these figures is already orders of magnitude beyond the present limits, ensuring an almost immediate need to take action to curtail its use when MiCA is implemented.



The fundamental reason this all matters is because stablecoins have become integral to enabling a number of critical use cases — particularly non-speculative use cases.&nbsp;



Read more from our opinion section: <a href="https://blockworks.co/news/stablecoin-regulation-necessary-now-us">The time for US stablecoin regulation is now&nbsp;</a>



Importantly, stablecoins serve as the bridge between the fiat-based world of traditional finance and digital assets. As a reliable store of value for investors, they are a safe haven from more volatile assets — the opposite of the “crypto casino” that has come to be regarded so skeptically.&nbsp;



Stablecoins have proven essential in cross-border payments, not least because they can protect those in countries facing hyperinflation or other local currency debasing risks. Stablecoins are also frequently used to interact with smart contracts, and therefore form a central component of the lending and yield generating ecosystem.&nbsp;



By restricting such a thriving and growing area of the digital assets ecosystem, MiCA runs the risk of undermining one of its primary goals: fostering a vibrant and innovative industry within the region.&nbsp;



The e-money limitations could also put Europe on the backfoot compared to other jurisdictions that do not impose such measures. While these restrictions are likely intended to protect the euro and mitigate the potential systemic risks posed by large-scale stablecoin usage, overly restrictive limits will stifle the growth and adoption of stablecoins and create significant disadvantages for EU-based stablecoin issuers and users.&nbsp;



For the foregoing reasons, it is imperative that the competent European authorities must revisit e-money restrictions.



As the European Securities and Markets Authority, the European Banking Authority and other European authorities engage in secondary rulemaking and technical standard-setting, there is still hope that such revisions can be accomplished without waiting for a MiCA II. For example, authorities could adopt a more nuanced, tiered system that instead scales limits based on the size and maturity of the issuer.&nbsp;



Whatever the method, it should be possible to strike a better balance of competing interests and concerns than what we have in MiCA today.



As I have argued in other contexts, stablecoins are one of a group of “weapons of mass adoption” at play for the digital asset industry. These products and services, like ETFs and stablecoins, are capable of entering the lives of consumers and giving them a positive experience of blockchain technology with an extremely low bar to entry. Stablecoins fit that definition across multiple factors. As a product offered by regulated institutions, they serve as a point of entry for banks and other financial issuers. In being used by consumers, they are the perfect instrument to enable Web3 commerce and smart contract interaction — in many cases seamlessly as part of gaming or other internet environments.&nbsp;&nbsp;



For all their consumer benefits, stablecoins also touch on questions of monetary policy, sovereign debt issuance and competition for the export of global soft power. European regulators are right to proceed cautiously — but not at the expense of a lynchpin technology for the entire crypto ecosystem. Ultimately, if digital asset markets are to thrive in Europe under MiCA, stablecoins must be given the conditions to thrive too.&nbsp;



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


<div class="wp-block-post-author-biography">Jason Allegrante is the Chief Legal and Compliance Officer at Fireblocks. He is an experienced Counsel with a demonstrated history of working in the financial services industry with both large, traditional financial institutions as well as early stage fintech startups.

</div>


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MiCA can bring clarity – but stablecoin restrictions must be revisited

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<h2 class="wp-block-heading">Are we there yet?</h2>



Ether ETFs are on the way. They could even launch later this month.&nbsp;



Obviously, the bitcoin ETFs were a success at launch, and since then we&#8217;ve seen a big appetite for the funds.&nbsp;



Last quarter, we <a href="https://blockworks.co/news/13f-filings-institutional-appetite-bitcoin-etfs">discussed</a> the adoption of bitcoin ETFs by asset managers (as disclosed in their 13Fs). We’ll do a check-in later on when the next round of SEC filings drops, but it’s reasonable to expect more disclosures from firms buying up the ETFs.



But the question on my mind is: How successful will the ETH ETFs be?



There’s no defined answer, and success may be a moving target, since it’s unclear if we can expect the same welcome received by the bitcoin ETFs.



Matt Hougan, Bitwise’s chief investment officer, <a href="https://experts.bitwiseinvestments.com/cio-memos/the-tech-play-why-ethereum-etps-could-be-more-successful-than-you-think?utm_medium=email&amp;_hsenc=p2ANqtz--J_0eAtdi-Fo2E1lUEOlh6_jCDuf2X46S1UGyUa67TtAfRdCXSQtit7leTMJGFp5udj5GL3hOK0Gi3dJa8lklblMdCWA&amp;_hsmi=314110377&amp;utm_content=314110377&amp;utm_source=hs_email">thinks</a> they could “surprise to the upside.”



Take tech stocks for example. There’s clearly demand for them. And, if investors understand ETH, then Hougan says it’s reasonable for some to lighten their tech holdings and diversify into an ether ETF.&nbsp;



Hougan says he expects the ether ETFs to have roughly $15 billion in assets around 18 months from launch.&nbsp;



Keep in mind, though, that Grayscale’s following a similar path to its ether ETF and plans to convert its closed-ended Trust into a redeemable spot fund. There could be outflows like we saw with its Bitcoin Trust, but perhaps not on the same level.



The fee war has also yet to play out, which will also <a href="https://blockworks.co/news/latest-eth-etf-filings-outlook">set the scene</a> for what funds seem the most competitive. Franklin Templeton’s planned fee of 0.19% for its proposed fund is the lowest one so far.



A few months ago, when the SEC suddenly engaged with issuers and all of the language around staking <a href="https://blockworks.co/news/proposed-ether-etfs-not-staking-eth">disappeared</a> from their filings, there were some questions about the success of these products without staking.&nbsp;



“You could argue that Ethereum ETPs will underperform my estimate because they will not stake assets, which will lower demand. I don’t think this is true — staking income is a rounding error on ETH’s average annual return, and I think ETP investors will be happy simply having exposure. But it is a valid critique,” Hougan wrote in a memo last week around staking.



While Hougan’s sticking to $15 billion in the next 18 months, he also thinks the products could even outperform his expectations.&nbsp;



Numbers-wise, they’ll still underperform bitcoin ETFs but they are two different products. An optimist may even note that bitcoin could be carving the path for the ETH ETFs.



“Bitcoin ETPs have already pulled in $14 billion in net flows after less than six months on the market. I expect that number to swell to north of $50 billion by the end of 2025, as bitcoin ETPs are approved on large platforms like Morgan Stanley and Merrill Lynch,” Hougan wrote.



But Hougan brings up a valid point: Investors — outside of crypto — are pretty familiar with bitcoin and its use cases. How familiar are they with ETH? If we stick to the tech comparison, then the appetite could grow so long as investors do their due diligence and focus on the differences between ether and bitcoin.



As it stands, the next six or so months are going to be fascinating.&nbsp;



— Katherine Ross



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



<ul>
<li>The Ethereum validator <a href="https://www.validatorqueue.com/">queue</a> is at its emptiest since the end of May, with 327 currently waiting. One month ago, there were 6,500 validators waiting to join the chain.</li>



<li>ETH supply is at its highest <a href="https://ultrasound.money/">point</a> since mid-December after <a href="https://blockworks.co/news/ethereum-longest-inflationary-period-since-merge">reversing months of deflation</a>.</li>



<li>Solana users <a href="https://tokenterminal.com/terminal/projects/solana">paid</a> $52.9 million to use the network last month, up from $46.8 million in May.</li>



<li>The entire top-end of crypto is down today, with ENS, TAO and LDO all falling more than 12.5%. ENS is still up 12% over the past week.</li>



<li>BTC and ETH have both slipped 4% to $60,300 and $3,300 each.</li>
</ul>



<h2 class="wp-block-heading">Uncle Paperhands</h2>



A riddle for you: Is it a top or bottom signal when world governments dump hundreds of millions of dollars in bitcoin?



As it turns out, Germany and the US are seemingly competing for who can spook bitcoin markets more.



Since June, addresses linked to German and US governments have sent $737.6 million in bitcoin to exchanges including Coinbase, Bitstamp and Kraken, as well as some to OTC desk operator-slash-market maker Flow Traders.



Germany makes up about three-quarters of that total, with its deposits spread across 30 different transactions — usually in the morning around 9 am local time.&nbsp;



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1512" height="1130" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-2.png" alt="" class="wp-image-88819" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-2.png?w=1512 1512w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-2.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-2.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-2.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-2.png?w=344 344w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-2.png?w=349 349w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-2.png?w=293 293w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-2.png?w=80 80w" sizes="(max-width: 1512px) 100vw, 1512px" /><figcaption class="wp-element-caption">Bitcoin transfers to exchanges from governments have ramped up significantly.</figcaption></figure>



While it’s unclear whether all the bitcoin was actually sold (a small portion has since been returned to the original address), Germany’s transfers to exchanges are believed to be the first ever, at least going by Arkham Intelligence data.&nbsp;



Local authorities had previously seized bitcoin via various criminal cases, including <a href="https://blockworks.co/news/german-police-bitcoin-seizure">pirate portal Movie2k</a>.



As for the US, the Feds used to sell bitcoin at auction. Now, it <a href="https://blockworks.co/news/doj-bitcoin-silk-road-mempool">sells on Coinbase</a>.&nbsp;



The US sent a single 3,940 BTC deposit to Coinbase Prime at 11 am ET on June 26. The bitcoin, which once <a href="https://www.justice.gov/opa/pr/dark-web-vendor-sentenced-distributing-narcotics-and-ordered-forfeit-150m">belonged</a> to drug dealer Banmeet Singh, was worth $241.22 million at the time, while the same haul would fetch $237.35 million right now.&nbsp;



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1516" height="1136" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-3.png" alt="" class="wp-image-88820" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-3.png?w=1516 1516w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-3.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-3.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-3.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-3.png?w=343 343w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-3.png?w=348 348w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-3.png?w=292 292w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/image-3.png?w=80 80w" sizes="(max-width: 1516px) 100vw, 1516px" /><figcaption class="wp-element-caption">It’s hard to say whether these transfers have moved markets — but bitcoin definitely hasn’t gone up.</figcaption></figure>



Aside from the bitcoin sold at <a href="https://jlopp.github.io/us-marshals-bitcoin-auctions/">auction</a> in years prior, putting an exact value on how much the US government has offloaded over the years is difficult.&nbsp;



Some transactions are obvious, like the Coinbase deposits. Others only end up on exchanges after being sent through multiple single-use addresses.



But after combing through the onchain data for exchange deposits, and other transfers that have all the hallmarks of sales, it looks like the US government may have now either liquidated or moved to liquidate almost $590 million in bitcoin since November 2020. Which is about 20% more than Germany’s recent moves.



The US is still sitting on about $13.3 billion in crypto, mostly bitcoin, as well as a combined $300 million in ether and tether.



Germany otherwise continues to hold 43,549 BTC ($2.6 billion).&nbsp;



— David Canellis



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



<ul>
<li>Kraken is mulling the use of nuclear energy as a source of power, CoinDesk <a href="https://www.coindesk.com/tech/2024/07/02/crypto-exchange-kraken-is-considering-going-nuclear/?_gl=1*1dxdtoh*_up*MQ..*_ga*NDcyMjE4MDAuMTcyMDAwNzkzMA..*_ga_VM3STRYVN8*MTcyMDAwNzkyOS4xLjEuMTcyMDAwODE2MS4wLjAuMjAxNTg5Njk3OA..">reported</a>.</li>



<li>Fidelity International and Sygnum <a href="https://www.sygnum.com/news/sygnum-and-fidelity-international-partner-with-chainlink-to-provide-fund-nav-data-onchain/">partnered</a> with Chainlink to provide NAV data onchain.</li>



<li>Crypto futures may be coming to Robinhood following its Bitstamp acquisition, Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-07-02/robinhood-said-to-consider-offering-crypto-futures-in-us-europe">reported</a>.</li>



<li>CoinDCX, an Indian crypto exchange, <a href="https://x.com/CoinDCX/status/1808463199924347367">bought</a> BitOasis.</li>



<li>Genesis Digital Assets is weighing a US IPO, Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-07-02/alameda-backed-miner-genesis-digital-assets-said-to-weigh-us-ipo?embedded-checkout=true">reported</a>.</li>
</ul>



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



Q: Is major marketing spend cringe in crypto?



I think it is…at least in this cycle. The marketing push we saw pre-FTX collapse is decently fresh in people’s minds. I still get questions from family and friends about crypto companies when they pop up at sports arenas or on jerseys.&nbsp;



I’m not saying marketing isn’t important, or that this kind of spending shouldn’t happen in a healthy environment. Just that it’s an uphill battle to get folks to forget the former FTX Arena down in Miami.&nbsp;



Crypto’s recovered, and it’s different than it was, but we don’t need back-to-back ads during prime sportsball games to convince the non-crypto folks that this time is different. Let them come to us.



— Katherine Ross



It’s not so much the major marketing spend. It’s the undisclosed paid partnerships and hidden payments to influencers.



Big flashy promos, crossover branding deals and silly Superbowl ads can mostly be forgiven. You gotta spend cash on something.&nbsp;



But there’s something so tacky about encouraging crypto to celebrate major partnerships with household brand names, and other cultural moments that appear organic, only to find out it was all bought and paid for.



There’s fake it until you make it, and then there’s just faking it. Better to avoid the latter.



— David Canellis



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