Merit Circle is a decentralized autonomous organization (DAO) focused on increasing accessibility and participation in the play-to-earn gaming industry by providing educational opportunities and  'scholarships' (in-game assets on loan) to people from around the world. In addition to profit-sharing with 'scholars', Merit Circle grows its treasury by holding various assets (i.e., game-related NFTs) and early-stage financial investments in Play-to-Earn games. Merit Circle's token ($MC) is used to govern the Merit Circle DAO and serve as an index for the Play-to-Earn industry.

Merit Circle

Byron Gilliam

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



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



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“The value of a business is the present value of its cash flows from today to judgement day, discounted at a proper discount rate. Period.”



— Warren Buffett
</blockquote>



The world&#8217;s first publicly traded company tried to rug its shareholders.



When the Dutch East India Company sold shares to investors in 1602, it promised to liquidate the entire concern and return all capital to shareholders in 1612.



That was standard practice at the time: Shareholders invested for a set amount of time, after which they expected to have their capital returned, plus some additional yield.



By 1609, however, it was clear that the company — known locally by its Dutch initials, VOC — had no intention of returning investors’ money, mostly because they didn’t have it.



In addition to trading in spices, the company acted as a de facto navy for the Dutch Republic, tasked with projecting power in the Far East.



But building forts and projecting naval power abroad required long-term investments; so rather than return investors’ money as promised, the company simply kept it.



Shareholders, accustomed to financing single ships for a single voyage, were understandably unhappy.



Protests against the decision to unilaterally convert temporary capital into permanent capital were led by Isaac Le Maire, a former director of the VOC, who publicly campaigned against company management and petitioned the government to force the company’s liquidation in 1612, as scheduled.



It was a long shot: The government was never likely to compel the company building its navy to liquidate.&nbsp;



But the company recognized that Le Maire’s campaign would impede its ability to raise capital in the future.



To placate investors, it offered dividends.



This was not easily done, because while the VOC was doing a brisk trade in spices, its high investment needs meant that it was chronically short of cash.



So it paid the dividends in spices instead.



Between 1610 and 1612, the VOC awarded dividends totaling 163% of equity, according to <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2116137">one study</a>, but mostly in spices like mace and nutmeg.



Shareholders were skeptical.&nbsp;



Many refused these in-kind dividends, holding out for cash instead — spices were hard to sell and impossible to sell at anything like what the company said they were worth.



But, if nothing else, it was a gesture to reassure shareholders that they had a claim on the company’s earnings.



It was a long while before shareholders were convinced.



In 1616, some of the company’s unpaid dividends were converted into interest-bearing loans.&nbsp;



In 1620, the company was flush enough to pay a 37.5% dividend in cash.



But in 1623, short of money again, the company paid a 25% dividend in cloves.



Dividends continued to be paid partly in spices until at least 1643, after which they were paid in cash and, when the company was short of cash, bonds.



Shareholders continued to grumble, but it did work out for them in the long run: One historian <a href="https://www.businessinsider.com/rise-and-fall-of-united-east-india-2013-11">estimates</a> that the VOC’s annual dividends averaged out to 18% of its paid-in capital over 200 years.



200 years!&nbsp;



VOC’s original investors did not value the shares as a function of 200-year cash flows; they thought they’d have their money back in 10 years.



But the company’s early dividends — paid while it was still a money-losing venture — helped convince investors that shares can have value even if the paid-in capital is never intended to be paid back.



On this point, crypto still has some convincing to do.



<h2 class="wp-block-heading">Spicy buybacks</h2>



In the debate over what percentage of revenue, if any, crypto projects should pay out to token holders, Tom Towbridge, co-founder of <a href="https://www.fluence.network">Fluence</a>, takes an extreme view: 100%.



Towbridge <a href="https://youtu.be/6hRqrJjePRo?si=85XBcsvpC4lrmfL3">reasons</a> that the portion of revenue used for buybacks is a measure of a team’s trust and alignment with token holders, so a team that pays out 100% of revenue is perfectly aligned and presumably trustworthy. 



80% of revenue is still pretty good: “Not a lot of misalignment, but there might be some.”&nbsp;



But when a team pays only, say, 20% of revenue to token holders, “now trust and alignment is very different because management is taking 80% of revenue to do something else with it.”



By that logic, there should be a lot of distrust and misalignment between the owners of pump.fun and the owners of its new token, PUMP.&nbsp;



Unlike in equities, these two groups are not the same because PUMP holders have no legal claim on pump.fun’s earnings or assets.



Still, investors value the token at $4 billion, presumably because pump.fun’s owners have <a href="https://blockworks.co/news/pump-ico-dex-blockworks-research">promised</a> to use 25% of the platform’s revenue to buy PUMP.



It’s possible, of course, that the 75% of revenue retained by pump.fun’s owners will be invested in a manner that ultimately benefits token holders.&nbsp;



But it might also be invested in a new business line that the owners decide is unrelated to the PUMP token. Or in houses and yachts for the management team.&nbsp;



There’s no telling.&nbsp;



It’s therefore probably best to value the PUMP as a multiple of its current cash return — much like the VOC’s pioneering investors did.



From the VOC in 1602 until about US Steel in 1901, investors tended to value stocks only by the dividends they received, assigning no value to a company’s retained earnings.



Ignoring retained earnings made sense because before US Steel set a new standard of disclosure by releasing full financial statements; investors had no idea what companies were doing with them.



Today, token investors are not much better informed, so it similarly makes sense to value many tokens by the rate of their current buybacks and nothing else.



That’s not exactly what people are doing.&nbsp;



Based on revenue for the month of June, PUMP is trading at 40x its annualized buyback.



That equates to a 2.5% yield at the current token price — not crazy by crypto standards, but also seemingly pricing in something more than the current rate of cash return.



By contrast, VOC’s early shareholders effectively demanded all of the company’s cash flow, because they were rightly suspicious of what management was using them for (self-dealing and empire-building, as it turned out).&nbsp;



Even in those early, money-losing years, the company paid as much as it could possibly manage (albeit in mace, nutmeg and cloves), because it had to prove that VOC shares had value.



It’s since been established that shareholders have a claim on earnings, so valuation is easy: Every stock is worth the discounted value of its future cash flows.



Until that’s established in crypto as well, token holders should probably demand bigger buybacks.



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The Breakdown Newsletter

Should token holders demand all the revenue?

Ben Strack

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



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



It seems like just about every day we get an update on a company buying bitcoin, ETH or another altcoin — establishing a crypto reserve for the first time, or adding to its pile.&nbsp;



But firms forming and getting these assets on their balance sheet is just phase one, Galaxy asset management head Steve Kurz told me last week.&nbsp;



“To the extent that companies are able to use capital-markets tooling to achieve escape velocity, they’re going to be able to build potential operating businesses and ecosystems around the networks they’re supposed to back,” he said.&nbsp;



Foundations pushing various decentralized systems are generally not exploring the systems’ use cases in the same pointed (and commercial) way, Kurz noted.&nbsp; He added: “So what will be interesting in determining how many are successful is: To what degree do those ecosystems become more vibrant, and where is the synergy between that and the business model of these companies that will have success?”



The original (and behemoth) in this space, Strategy, now holds 607,770 BTC (acquired for ~$43.6 billion) after its latest 6,220 BTC buy. Trump Media said this morning it has accumulated $2 billion of bitcoin and has another $300 million earmarked for an options-acquisition strategy for BTC-related securities.



Also revealed this morning was the creation of The Ether Machine via the combination of The Ether Reserve and Nasdaq-listed Dynamix Corporation. Labeling its aim of “enabling public market investors to access Ethereum yield,” the public vehicle expects to launch with ~400,000 ETH (worth more than $1.5 billion).&nbsp;



We saw Bitcoin Standard Treasury Company say last week it plans to launch with holdings of 30,021 BTC after merging with SPAC Cantor Equity Partners.



And a week before that, ReserveOne said it planned to list on the Nasdaq after combining with (yes, you guessed it) another SPAC — this one called M3-Brigade Acquisition V Corp. The company looks to offer investors access to “a diversified digital asset portfolio inspired by the proposed US Strategic Bitcoin Reserve and Digital Asset Stockpile.”



ReserveOne lists Galaxy Digital as a strategic partner. Galaxy also agreed to help oversee <a href="https://blockworks.co/news/bitcoin-treasury-strategies-sharplink-eth">SharpLink Gaming’s ETH treasury strategy</a>, led by board chair Joseph Lubin.&nbsp;



That brings us back to my convo with Kurz, who noted Galaxy has done business with 15 or so companies who have raised $4 billion to buy crypto. That includes offering execution, custody and risk management services, as well as yield-generation infrastructure.



“The bigger picture is crypto intersecting with public markets in the US [being] the story of 2025,” he said.



By Bitwise’s count, 125 public companies held bitcoin at the end of Q2.&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">Companies are buying bitcoin, Q2 2025 edition <a href="https://t.co/0UxrlIZQvb">pic.twitter.com/0UxrlIZQvb</a>&mdash; Bitwise (@BitwiseInvest) <a href="https://twitter.com/BitwiseInvest/status/1943029893153067193?ref_src=twsrc%5Etfw">July 9, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Kraken CFO Stephanie Lemmerman predicted in April that we could see <a href="https://blockworks.co/news/corporate-bitcoin-adoption-boom-inevitable-kraken">more than 10,000 </a>public companies holding BTC a few years from now. Swan Bitcoin CIO Ben Werkman told me in May that corporations could one day hold between 25% and 35% <a href="https://blockworks.co/news/companies-building-btc-treasuries-corporate-reserves">of all bitcoin</a>.



Kurz isn’t so sure about those projections but notes the likelihood of many companies owning at least a little bit of BTC (even if not raising a ton to keep accumulating) — given its scarcity, de-dollarization, etc.&nbsp;



A Keyrock <a href="https://keyrock.com/btc-treasuries-uncovered/">report</a> found bitcoin treasury companies were trading at, on aggregate, a 73% premium to their BTC holdings. Not all will trade at a premium forever — particularly those “being the 10th in line to do the same thing,” Kurz explained.&nbsp;&nbsp;&nbsp;



“If there’s 100 right now and 10 of them achieve scale, what does phase two look like for those that achieve the scale?” the Galaxy exec posed. “And are they able to do more in DeFi to generate yield and stay ahead of the ETFs on performance and hire a great team to build out a broader investment program?”



How these companies’ business models evolve over time is unknowable right now. 



“This is capital-markets-meets-crypto-innovation all at once,” Kurz said. “Some of it will be great, and some of it won’t be great.”



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corporate reserves

Galaxy exec: Companies holding crypto is only Phase One

Kate Irwin

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



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Are we ever going to see NFTs boom again? Luca Netz thinks so.



The Pudgy Penguins have become one of the most recognizable brands in crypto since Luca “Netz” Schnetzler took the helm in early 2022, ultimately becoming the CEO of Igloo Inc. and, later, the co-inventor of the Ethereum L2 Abstract.



“I think you&#8217;ll see mania again,” Netz told me in an interview. “I think you&#8217;ll see a version of 2020, 2021, happen. I think you’ll see that again.”



Netz also has the hot take that gaming is even more likely to pop in a big way. “I&#8217;m even more certain about gaming than I am NFTs,” he said.&nbsp;



While the Penguins began as an NFT collection, they’ve since expanded well beyond that with games, meme-inspired social videos, children’s books, and plush toys.&nbsp;



Believe it or not, they’re not trying to make a toy brand. It’s a bigger IP play Netz sees as competing with memes like Doge and Pepe in the short-term — and giants like Pokémon or Hello Kitty in years to come.&nbsp;



Part of the appeal from a brand standpoint is that physical toys can capture a different part of someone’s life and maintain a brand presence when all screens are off. They can also be intergenerational, and hold meaning for adults and kids.



“It&#8217;s not even a great revenue business, to be fair. It makes a lot of top-line revenue, but it&#8217;s not, you know, I didn&#8217;t buy Pudgy Penguins to build a toy business,” he said. “If I made no money on the toys, I&#8217;d be okay with it. If I lost money on the toys, to a certain extent, I&#8217;d be okay with it. Now we make money on the toys, and so it&#8217;s great.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">It&#39;s officially full house for Pengu x HATA mansion. <a href="https://t.co/e4HVFOa3wv">pic.twitter.com/e4HVFOa3wv</a>&mdash; Pudgy Penguins Malaysia 🇲🇾 (@pudgymalaysia) <a href="https://twitter.com/pudgymalaysia/status/1947277619415650726?ref_src=twsrc%5Etfw">July 21, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Netz bought the Penguins brand three years ago for 750 ETH, or about $2.5 million, at the time ($2.9 million today).



Chatting with Netz, there’s a determination and a confidence that suggests he’s not going to stop until “everybody in crypto” owns some piece of Pudgy Penguin IP and some PENGU, the brand’s affiliated memecoin.&nbsp;



Tapping into the existing crypto-native audience and their families remains one jumping-off point, while expanding beyond into broader consumer markets is another prong of the plan.



Igloo Inc., which owns Pudgy Penguins, Abstract, and the Overpass NFT licensing platform, is “on track” to make $50 million in revenue this year.



“I think the opportunity in the open ocean in crypto today is consumer. I&#8217;ve been saying this for a long time,” Netz said. “The metrics and the data doesn&#8217;t read the same, but I think you take a billion dollars in revenue in consumer and a billion dollars in revenue in DeFi, and I think the consumer founder’s making five times more money.”



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Pudgy Penguins CEO predicts NFT mania, crypto gaming comeback

Macauley Peterson

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



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DeFi just secured its biggest US policy win yet.



President Trump on Friday <a href="https://blockworks.co/news/genius-act-passes-house">signed the GENIUS Act</a> into law, establishing the first federal framework for stablecoin regulation. The law defines clear standards for reserve backing, consumer protection and AML compliance, while carving pathways for both state and federally chartered issuers. DeFi Education Fund (DEF) <a href="https://defieducationfund.substack.com/p/the-defi-debrief-a62">called it</a> a “landmark” moment for onchain finance.



Importantly, GENIUS trains federal oversight on identifiable, custodial stablecoin issuers while leaving self-custodied wallets and other non-issuer onchain activity largely outside its scope. That makes way for broader market-structure rules (CLARITY) that aim to distinguish decentralized protocols from centralized intermediaries.



Meanwhile, the House <a href="https://blockworks.co/news/us-house-passes-clarity-act">passed the CLARITY Act</a> with key amendments that reversed last-minute language changes that had <a href="https://decrypt.co/330251/crypto-market-structure-clarity-act-defi-us-industry">sparked outcry</a> among DeFi builders and policy experts. The manager’s amendment from HFSC Chair French Hill (R-AR) and Attorney General Chair GT Thompson (R-PA) restored and clarified the DeFi carve-outs in both the securities (§309) and commodities (§409) titles of the bill.



The final House text now explicitly excludes activities like publishing code, operating frontends, running validator nodes or providing wallets from registration requirements, so long as they don’t involve custody or control of user assets. The Commodity Exchange Act&#8217;s DeFi exclusion is once again broad enough to cover most non-custodial spot-market activity.



On the House floor, Rep. Hill <a href="https://x.com/fund_defi/status/1945845318005715352">stated</a>: “DeFi developers do not take custody of user assets, nor do they control user assets. Therefore, we should not treat them in the same way we treat centralized actors.”



Rep. Thompson <a href="https://x.com/fund_defi/status/1945853841070522395">added</a>: “Congress is making an unambiguous statement that DeFi is different.”



These are important articulations of Congress’ intent.



Still, two gaps remain. First, the carve-outs do not extend to derivatives, leaving DeFi derivatives protocols in legal limbo.&nbsp;



Second, the CLARITY Act lacks federal pre-emption, meaning state regulators could still impose conflicting requirements.



However, the Hill-Thompson fix moves CLARITY away from being a potential threat and into the category of a qualified win for DeFi.



DeFi tokens have rallied, institutional interest is robust and the total crypto market cap crossed $4 trillion.&nbsp;



“This regulatory milestone establishes the US as a key jurisdiction for digital assets,” said Fabian Dori, CIO at Sygnum Bank, in comments to Blockworks. “Clear rules on stablecoins and token classification unlock institutional participation at scale.”



Washington is no longer just watching onchain finance — it’s actively protecting it.



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0xResearch Newsletter

DC embraces DeFi with GENIUS, CLARITY Act amendments

David Canellis

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Today’s topic is a touchy subject for anyone who’s been in Bitcoin for the past decade.



Eight years ago exactly, a key voting threshold was met that would lead to the official adoption of Segregated Witness (<a href="https://en.bitcoin.it/wiki/Segregated_Witness">SegWit</a>), a backwards-compatible scaling upgrade that had been in the pipeline since late 2015.



SegWit would make it technically possible to fit up to 4MB of transaction data within Bitcoin blocks by separating out related witness data into a different construct. A neat workaround to spiritually stretch the block-size limit beyond the Satoshi-imposed 1MB.



Miners had been required to signal their support for SegWit adoption following its original proposal, BIP141, in November 2016. Voting “yes” on the initial proposal meant mining “bit 1” blocks — blocks that had a special variable in their headers.&nbsp;



But after around 18 months, less than 40% of blocks were signaling support. In May 2017, Bitcoin Core contributor James Hilliard submitted a supplementary proposal, BIP91, which added an element of time pressure.&nbsp;



Miners had to signal their support for BIP91 above the threshold by midnight Nov. 15, 2017, or else SegWit would be dropped for good. BIP91 reduced the mark for miner support from 95% to 80% over a period of around 2.33 days (269 blocks out of a 336-block epoch).



On July 21, 2017, enough pro-SegWit blocks had been mined to kickstart the soft fork, to be fully activated by Aug. 24, about a month after the threshold was met.&nbsp;



And this is where things get <a href="https://bitcoincore.org/en/2017/08/18/btc1-misleading-statements/">messy</a>. On a technical level, support for SegWit was cut and dry. Miners either supported it or they didn’t.&nbsp;



It was much muddier at the social layer. The infamous New York Agreement <a href="https://blog.bitmex.com/the-segwit2x-hardfork-part-1-the-supporters-and-opponents/">signatories</a> — which included most mining pools, Coinbase, Circle, ShapeShift and a large portion of Digital Currency Group portfolio companies — pushed for an additional hard fork if BIP91 would activate.&nbsp;



The hard fork, SegWit2x, would effectively double the impact of SegWit, allowing for up to 8MB of transaction data to fit in each block rather than 4MB. SegWit2x was ultimately cancelled months after the launch of Bitcoin Cash which features 8MB blocks.



There have been literal <a href="https://blog.bitmex.com/the-blocksize-war/">books</a> written about the Blocksize War, so I’ll leave it to you to pick those up for more detail about what happened in between the acceptance of BIP91 and the failure of SegWit2x.



Whatever your view of the matter, it’s clear that the definition of Bitcoin for many operators shifted around this time. A notable contingency sought to explore Bitcoin’s “money” properties on a separate chain in Bitcoin Cash, which never really took off.



Did that make Bitcoin — the one with persistent consensus — less “money” as a result?&nbsp;



Obviously not, but considering how the ever-rising price has put a dampener on that particular use case, it’s sometimes hard to tell.



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Bitcoin

Bitcoin is still money, 8 years on from the Blocksize War

Katherine Ross

Polymarket announced that it acquired derivatives exchange QCEX for $112 million on Monday.&nbsp;



The deal allows Polymarket to re-enter the US market, which it left after <a href="https://blockworks.co/news/cftc-fines-crypto-betting-service-polymarket-1-4-million-orders-shutdown">settling with the CFTC </a>in 2022. The regulator fined the prediction market $1.4 million at the time.&nbsp;



“The transaction marks a significant step toward expanding access to Polymarket&#8217;s category-defining platform in the United States, enabling more users than ever to trade prediction market contracts with regulatory clarity and confidence,” a press release announcing the acquisition said.&nbsp;



&#8220;Now, with the acquisition of QCEX, we are laying the foundation to bring Polymarket home — re-entering the US as a fully regulated and compliant platform that will allow Americans to trade their opinions,” CEO Shayne Coplan said.&nbsp;



Read more: <a href="https://blockworks.co/news/kalshi-2b-valuation-prediction-markets">Why Kalshi’s new $2B valuation makes sense</a>



The acquisition announcement comes after QC Exchange <a href="https://www.cftc.gov/sites/default/files/filings/documents/2025/orgdcmqcexorderofd250709.pdf">filed</a> with the CFTC to be designated as a contract market.&nbsp;



Prediction markets, in recent years, have picked up in popularity. Just last year, the CFTC <a href="https://blockworks.co/news/kalshi-election-markets-cftc">lost a court case</a> to ban election markets in the US, which allowed Polymarket competitor Kalshi to launch such markets.&nbsp;



&#8220;When we began the process to obtain our DCM &amp; DCO licenses over 4 years ago, the prediction market was in its infancy. But we have long believed in its potential to change the way people access and understand information and express their views on that information,&#8221; QCEX founder Sergei Dobrovolskii said.



Earlier this summer, Bloomberg reported that Polymarket was looking to raise funding at a $1 billion valuation. Bloomberg was also the first to report the acquisition.



This is a developing story.



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gambling

Polymarket acquires QCEX for $112M

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



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Crypto Week, in the end, was a roaring success.&nbsp;



President Donald Trump signed the GENIUS bill at the end of last week, which not only means that he signed the first stablecoin-focused legislation into law, but it’s also quite a significant crypto milestone.&nbsp;



But it’s not the end. There are still two other pieces of legislation making their way through the DC process currently: the CLARITY Act and the anti-CBDC bill.&nbsp;



Paradigm’s Alexander Grieve explained on the <a href="https://blockworks.co/podcast/empire/2a53fff4-640a-11f0-9bd8-7b8a5d8b3495">Empire podcast this morning</a> that he thinks GENIUS was “a baseline” for Congress, and was pretty easy for legislators to understand.&nbsp;



Sidenote: a fun anecdote from Grieve is that “one of the unsung heroes of the GENIUS lobbying fight was a very plucky group of KFC franchisees who blanketed the Hill and talked about how stablecoins can drive down the cost of payments and interchange.”



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/EZn6kDKMI9M?si=oORJIDkbFl6RmECX" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







One of the recurring topics that comes up in my conversations with folks, and a sentiment I know I’ve expressed multiple times, is how GENIUS is one of the key puzzle pieces that institutions have been waiting for to make their own moves.



Bank of America, which first expressed its <a href="https://www.reuters.com/business/finance/bank-america-expects-launch-stablecoins-morgan-stanley-weighs-use-2025-07-16/#:~:text=BofA%20CEO%20Brian%20Moynihan%20said,it%2C%20without%20giving%20a%20timeline.">desire</a> for a stablecoin a few months ago, reiterated its position in an earnings call last week. Then we also had Charles Schwab’s CEO <a href="https://decrypt.co/330848/schwab-offer-stablecoin-expanding-crypto-services-push-ceo">talking</a> about stablecoins on its earnings call.&nbsp;



But the thing about GENIUS is that it doesn’t just open the door for anyone to issue a stablecoin.&nbsp;



For example, we probably won’t see the likes of Libra, the project <a href="https://blockworks.co/news/facebook-led-crypto-project-diem-to-be-sold-off-for-200m-report">announced</a> by Facebook before it pivoted to Meta and all that jazz.&nbsp;



Basically, Grieve explained, if “financial services isn’t core to your business, then you cannot be an issuer,” according to the new legislation.&nbsp;



“ If those types of companies want to do anything in this space, they&#8217;re going to leverage stuff that others have already built. And so you&#8217;ll still have that kind of segregation between the customer and the issuer themselves.”



That’s not to say we won’t see non-financial firms looking for — and probably finding — workarounds to this in what both Grieve and Jito Labs CLO Rebecca Rettig noted as “creative lawyering,” but it at least sets a bar.&nbsp;



At the end of the day, GENIUS sets the momentum for the other two pieces of legislation, and Rettig noted that she’s interested in seeing what happens with the CLARITY bill in the “next month or so.”



We’re so back.&nbsp;



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Empire Newsletter

How KFC franchisees pushed the GENIUS bill forward

Jack Kubinec

Jito is bringing a major upgrade to the way blocks get built on Solana, Lightspeed has learned exclusively.



Jito — whose validator client accounts for 87% of all Solana stake — will begin routing transactions through a piece of infrastructure it’s calling the block assembly marketplace, or BAM. Jito says BAM will limit toxic MEV, make Solana more suitable for perps exchanges and CLOBs, and let apps share revenue with users.



When a user transacts on Solana, chances are that the transaction will go through the Jito block engine, which is essentially an off-chain blockspace auction. The product is a cash cow: Blockworks Research <a href="https://app.blockworksresearch.com/analytics/solana/?dashboard=15">data</a> estimates Jito Labs made roughly $25 million in Q4 of 2024 just from its commission on fees paid via the block engine.



When Jito started out, it didn’t quite expect the block engine to get as big as it did, Jito Labs CEO Lucas Bruder told me. Having become a core part of Solana’s supply chain, the project began wondering what its next move should be. After reasoning that Solana’s market structure is too opaque and seeing the success other chains were having in giving apps better control over transactions, Jito settled on building BAM.



BAM comprises a network of nodes who order transactions and send them to validators running Jito’s soon-to-be-upgraded client. The nodes will run within Trusted Execution Environments (TEEs), so the transaction flow is kept private until execution. Jito believes this privacy can help mitigate some negative MEV strategies like sandwich attacks. The correct order of transactions is provable through onchain attestations, creating an audit trail.&nbsp;



BAM nodes will initially be operated by Jito Labs, but it plans to add more nodes with an end goal of 50-100, Bruder said. Jito also wants to open-source the BAM software later in 2025, Bruder said. Notably, Jito’s current block engine is closed-source.



BAM will also introduce Plugins that let apps and traders create custom sequencing logic. With Plugins, a Solana perps DEX could implement taker speed bumps, for instance, a feature that has been important in Hyperliquid’s success. Apps will also be able to charge fees for Plugin functionality within BAM, and some portion of that revenue could also be shared with validators and the Jito DAO, Bruder said.&nbsp;



Bruder added that he hopes participating apps will send some of this new revenue back to token holders, creating a “big DeFi repricing of tokens on Solana.”



BAM represents likely the largest-ever upgrade to Jito, a protocol that has become very central to Solana.



“BAM is basically decentralizing ourselves,” Bruder said, adding that Jito is taking its learnings from running a core Solana infrastructure project and using it to “create a ton of value for not only Solana as a network, but all the apps on top of it.”



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blockchain

Jito unveils major upgrade to block-building architecture

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



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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“What the market expects is almost never what happens.”



— Jamie Dimon
</blockquote>



US equities hit all-time highs again this week, and it’s hard to know what that means.



Consider that this is also the week that the president of the United States <a href="https://truthsocial.com/@realDonaldTrump/114873827864802531">called</a> the chair of the Federal Reserve a “numbskull.”



Worse than name-calling, the president went on to say that the FOMC should lower interest rates to 1%, expressly so the government could save “One Trillion Dollars a year in Interest Costs.”



That is the definition of “fiscal dominance”: When a central bank keeps interest rates artificially low to accommodate a government’s deficit spending, with unthinkable consequences presumably to follow.



Fortunately, we’re not quite there yet.



Chair Powell still has 10 months on the job and the president hasn’t figured out how to fire him, although he appears to still be trying.



(We live in a bizarre timeline where the <a href="https://x.com/NickTimiraos/status/1946241807563592044">amount of marble</a> included in the facade of the Federal Reserve building is relevant to monetary policy.)



But the leading candidate to take Powell’s place, Kevin Warsh, is openly offering to subjugate the Fed to the White House in return for the appointment — a Faustian bargain for which we would all pay the price.



This seems like something that markets would worry about: Economists have long warned that fiscal dominance is guaranteed to undermine faith in the dollar, government debt and the entire US economy.



But US stocks continue to levitate and Treasury bonds seem generally unperturbed.



The legendary hedge fund manager Stanley Druckenmiller once said that the best economist he knew was the stock market, so maybe that means we can rest easy?



Can we take the market’s sanguine price action as an endorsement of steep tariffs and Fed bullying? Or is it a prediction that he won’t do what he says he’ll do?



Alternatively, could the market have conceded that tariff and monetary policy are currently too volatile to bother predicting?&nbsp;



Or is it a sign that policy doesn’t matter as much as we thought?



I’m probably overthinking it.



Fed Governor Christopher Waller, who doesn’t seem to be campaigning to be Powell’s replacement, said this week that &#8220;with inflation near target and the upside risks to inflation limited, we should not wait until the labor market deteriorates before we cut the policy rate.&#8221;



The market loves rate cuts, so maybe that’s all that matters.



Or could it be that none of this matters because AI is on the verge of changing everything anyway?



This week, Mark Zuckerberg <a href="https://x.com/TheTranscript_/status/1945528949867794624">said</a> that Meta is “starting to see early glimpses of self-improvement with [AI] models” and that “superintelligence is now in sight.”



Specifically, he thinks we could be as little as two or three years away from artificial intelligence surpassing human intelligence — not just in coding or newsletter writing, but in all fields.&nbsp;



If a world of superintelligent AIs with the capacity to self-improve is less than three years away, should we care whether Fed funds is 1% or 5%? Or whether tariffs are 0% or 50%?



That will be a whole new world, presumably, and the best economist Stanley Druckenmiller knows seems to think it will be a good one.



Let’s hope it’s right. 



Imports are inflating:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfbzl-dhBz2dBBL6yFcGb0TMvr7_-JL7thN8Jr9sFnJBGFJ8Z2N7N15EtSjOvk4aJKhkMgMvTGRNIJ7EUD_7nD7kQaef0qiA9tR4K9wYzfPGjUiX7HVbW58oCtwlvvBiF8QksYI3Q?key=IIs-8ktBLMjMZqvCmeXjXQ" alt=""/></figure>



An academic <a href="https://www.pricinglab.org/files/TrackingTariffs_Cavallo_Llamas_Vazquez.pdf">study</a> finds that tariffs have caused the price of imports to rise faster than the price of domestic goods. It hasn’t affected the US economy much as of yet, but Ben Cassleman <a href="https://x.com/bencasselman/status/1945472944534151660?t=m9WO7HaG2grZwkEoLWzmjw&amp;s=19">explains</a> why that doesn’t mean it won’t. <a href="https://pca.st/episode/3a6399a4-8292-4064-8e25-e0509d6df36e">Analysts at Morgan Stanley</a> think the economy should start showing the negative impact of tariffs in the third quarter (which is now).



For now, things are pretty good:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfspY14iokgTv64CipDBb6NQeKPUjvsAJatCVwhS071KsibdZZFmyNirzcEJiAfuo5STYs5ZKKpHBPgmgPjdYhQafAQy7jFIpDQhALcV5Wn3NswpongE1T3bAKkJM9clcHp_zdBdw?key=IIs-8ktBLMjMZqvCmeXjXQ" alt=""/></figure>



Ed Yardeni highlights that the “misery index” — the sum of the unemployment and inflation rates — remains well below the long-term average.



Economists have been too worried lately:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfy464vL48HPvEwD8p1q9X5yga3h_5mxUlb_Z1PnzLl0ge5AwXir7tXyyxQjb6C4ufRTFj9C2CAOVh_IU2lEM9SZ-UbcjbaB5bR8_NEQ_HjIZ7jiXAsLYLCbZyqSpiP63a005YdBw?key=IIs-8ktBLMjMZqvCmeXjXQ" alt=""/></figure>



<a href="https://x.com/AnnaEconomist">Anna Wong</a> notes that US growth and inflation data have both been better than consensus expectations recently.



It’s been worse than expected for male college grads:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcrZvH3GbEp8fgK8Myb2ipL8ZwLM4dS3iGdUcc9ynmZuFWMx33BN97N68YRKvCzK3PGvdMQ-wJu7WYlsiuVz1wreYN7GBtewV-2g1Sqw_WnH5kZRCPQZrGQIuIXaSk3JjONdfXr4w?key=IIs-8ktBLMjMZqvCmeXjXQ" alt=""/></figure>



The FT columnist John Burn-Murdoch <a href="https://x.com/jburnmurdoch/status/1946220407725384136">notes</a> that young men with college degrees are just as likely to be unemployed as young men without degrees. Women college graduates continue to fare better, probably because they&#8217;re more likely to work in health care.&nbsp;



Don’t blame comp sci:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdA4a-gJvvtMqF3ar8kcI4m-Df9Ve4fFiXEX8BBC-Gtylrwe6Y0PTriHKx5lB0vIai41yMwCKN0rCnzfv8Xw2vvVaCaS0qvlfBqNRtFPWf-mrCvx3ddiv4-WXitdv4ms897OWX08w?key=IIs-8ktBLMjMZqvCmeXjXQ" alt=""/></figure>



Contrary to popular belief, Burn-Murdoch notes as well that “relative to the pre-generative AI era, recent grads have secured coding jobs at the same rate as they’ve found any job, if not slightly higher.”&nbsp;



US companies are still the best:&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe7uilBti9UtrLXhe6bkUsaKHim9-b0e0gYiIsEAZvn0cdO0ePSX2ncnFOV1Nrn33CILEhcLKryrNOB7Ze-rDf257XozO6uOjZsbh_oAsL-BS_4dF6vQspyfBWprFqxZalTley9RQ?key=IIs-8ktBLMjMZqvCmeXjXQ" alt=""/></figure>



Goldman Sachs reminds us that big US companies are far more profitable than companies in the rest of the world. They might get even more so: Amazon and Microsoft were both said to be reducing their payrolls by thousands of employees this week, reportedly because they believe they can ask AI to do more of the work.



On the other hand…



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdlLYeoaQ8Zb9YMghhUF8itsTm5v-vmqVS2zc0IiE5z4HgFDOvwUAV9N-NvflGVAmXPeIrr6VNA2AW2WWKWqUGfyFMLLKonBfcyii0mOrMaEW_0U5xURrLBtI8VWRUdkqCmNu1EXA?key=IIs-8ktBLMjMZqvCmeXjXQ" alt=""/></figure>



By <a href="https://x.com/avtarsehra/status/1941530489363275957?t=uxKm0hWf7HqBW3lJrIU6IQ&amp;s=19">multiple measures</a>, China has pulled ahead of the US in scientific research. Maybe US mega tech companies will make up the difference. But if we’re in a two-country race to superintelligence, now seems like a bad time for the government to be cutting research grants.



New highs are normal:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeERm154AGQwFF8DeSwyRa575XX0FIuqYC_8rxRksJ2q32kyEdAidpwxCMIfyQBV_vPai-5iVAjsUieZzSy088FG2qBxoBfzpko_3yL44K4vV1MSNa7DQIXe9SFt4BDqUTzwYX6Bg?key=IIs-8ktBLMjMZqvCmeXjXQ" alt=""/></figure>



This graphic from @ryandetrick is a reminder that making new highs is the norm for US equities. This year’s total of nine is still pretty modest.



Zimbabwe stocks made a lot of new highs, too:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe74H2ba8WCkzQiH5sqnUVSQa02Yh0-17qyS8g5Wq_tLVB7KzaT8nmMahnlJetP6HhYO9MJj2FCd1OXXgpeLeHUsu0s_WiSYwEFFDZnkZvLY4X5MnkAr82mcah7aTXzqoMc08lg?key=IIs-8ktBLMjMZqvCmeXjXQ" alt=""/></figure>



Zimbabwean stock prices boomed during the bout of hyperinflation that started in 2019 — simply because stocks are denominated in the local currency. When the currency was revalued in March, stocks were revalued, too.



Not Zimbabwe yet:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfqKO-ffZwElxlYWuHOJ2_sZukQ3NWHJuW6DloJPHfFqhnS-D3LxJ3G_GIikOzpNox6KGRbAHTkZhqpQ5HbQxl37_G1EpqjX85tYc5g-2gumW0DsmdhLrQFKNjIfIMdUuxlUwtl?key=IIs-8ktBLMjMZqvCmeXjXQ" alt=""/></figure>



Despite the rising risk of fiscal dominance, the market for forward inflation expectations implies that US inflation will be just 2.3% in five years’ time — which would be great news for the world.&nbsp;



If the market is keeping its faith in the Fed, shouldn’t we all? Jamie Dimon would tell you that’s not how it works, but let’s hope he’s wrong.



Have a great weekend, predictive readers.



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



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Friday charts: Fiscal dominance and super intelligence

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



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



The Solana liquid-staking startup Sanctum has acquired Ironforge in an all-cash deal, Lightspeed has learned exclusively.&nbsp;



Sanctum did not disclose the deal terms. Ironforge’s team, founded by Italo Casas, will join Sanctum, according to a blog post.



Ironforge builds Solana infrastructure, including for landing transactions on the network. With the acquisition, Sanctum plans to add transaction infrastructure as a business vertical.



Sanctum emerged in mid-2024 as a buzzy new Solana startup after going through Solana’s startup incubator. Until now, the project has focused on liquid staking tokens, which are tokenized representations of staked SOL. Its flagship product is INF, a liquid staking token that holds a basket of Solana LSTs.&nbsp;



After a much-talked-about points program gave way to a <a href="https://blockworks.co/news/lightspeed-newsletter-sanctum-airdrop-backlash">somewhat-controversial</a> airdrop, Sanctum has added a couple new business lines. One was <a href="https://blockworks.co/news/solana-liquid-staking-startup-trial">creator coins</a>, LSTs which share rewards with creators. Another was what are essentially <a href="https://blockworks.co/news/sanctum-adding-binance-bitget-bybit-as-partners">white-label LSTs</a>, starting with Binance, Bitget and Bybit. 



It was while working with these partners that Sanctum realized how difficult it can be to land transactions on Solana. The onchain pain became particularly acute during Donald Trump’s <a href="https://blockworks.co/news/trump-more-than-a-memecoin">memecoin launch</a>, which left Solana very congested.&nbsp;



“Solving that problem meant either building a solution from scratch ourselves or teaming up with the best developers already working in that niche,” Sanctum said in a blog post, adding: “Ironforge was that team.”



And so, Sanctum has struck out on a non-LST business vertical for the first time.



“[There are] a profusion of transaction landing solutions on Solana and no good way to observe and adjudicate their performance. [We] aggregate and make observability a first class citizen giving developers full control and observability,” Sanctum co-founder FP Lee said.



Ironforge did not immediately return a request for comment.



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Lightspeed Newsletter

Sanctum acquires Ironforge, plots transaction infrastructure vertical

The GENIUS Act is now law.&nbsp;



President Donald Trump on Friday signed the legislation, which provides a first-of-its-kind regulatory framework for US dollar-backed stablecoins.



Growing adoption of stablecoins — tokens pegged to fiat currencies that hold a market capitalization of roughly $250 billion — will have “a profound effect” on dollar dominance and demand for US debt, a senior US Treasury official said on a Friday press call.&nbsp;



More than a crypto bill, the law marks a milestone for payments innovation, the person added — as the federal government is essentially giving an unprecedented vote of confidence to permissionless blockchains.



Read more: <a href="https://blockworks.co/news/stablecon-execs-bullish-stablecoins-financial-revolution">Digesting Stablecon: Execs bullish on imminent financial infrastructure revolution</a>



Trump’s signing of the bill comes a day after the House of Representatives <a href="https://blockworks.co/news/genius-act-passes-house">passed the GENIUS Act</a> in a 307-122 vote. The Senate had advanced the bill last month, when 18 Democrats joined Republicans as part of a 68-30 vote.&nbsp;



The <a href="https://www.congress.gov/bill/119th-congress/senate-bill/1582/text?q=%7B%22search%22%3A%22genius+act%22%7D">bill</a> gives the Office of the Comptroller of the Currency (OCC) substantial oversight over prospective and approved stablecoin issuers. It requires such entities to keep fully-backed liquid reserves — such as cash and short-term Treasury securities — and ensures that those with more than $50 billion in issued tokens undergo annual audits.&nbsp;



The GENIUS Act also essentially requires state regulators to maintain frameworks that are “substantially similar” to those at the federal level. It offers an alternative to the previous “patchwork of state regulatory frameworks” that stablecoin issuers previously had to rely on, the senior Treasury official noted.&nbsp;



On Thursday, the House also <a href="https://blockworks.co/news/us-house-passes-clarity-act">passed the CLARITY Act</a>. That bill, which establishes a definition for “digital commodities” and divides crypto oversight between the CFTC and the SEC, now heads to the Senate.&nbsp;



Steve Kurz, Global Head of Asset Management at Galaxy, told Blockworks that these bills represent a huge unlock for not just crypto-native companies but for the larger financial institutions that Galaxy interacts with.&nbsp;



“It really takes what had been a business plan, a [crypto] working group or a check-the-box exercise and it puts it immediately into ‘Wait a minute, this is here, this is now, this is legal, we have to be doing it [because] our competitors are doing it,’” Kurz explained.&nbsp;



“I think this catch-up moment around digital infrastructure within large institutions is going to surprise a lot of people,” he added.



Read more: <a href="https://blockworks.co/news/franklin-templeton-products-onchain-exec-says">All Franklin Templeton products will one day be onchain, exec says</a>



The bill signing comes as bitcoin has hit a number of new all-time highs this month, peaking around $123,000 this week. 



<a href="https://blockworks.co/news/circle-shares-nyse-day-one">Shares of Circle</a> — the second-largest stablecoin issuer behind Tether — were trading around $225, as of 2 p.m. ET — up 13% from a month ago.



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congress

President Trump signs GENIUS Act into law

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



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The pump.fun ICO was a roaring success, <a href="https://blockworks.co/news/pump-fun-500m-ico-twitch">raising $500 million onchain</a> at a $4 billion fully-diluted value (FDV). Another $100 million was raised via CEXs.



More than 10,000 addresses took part in the Saturday sale conducted on Solana. In total, 12.5% of the entire supply was sold in 12 minutes — 125 billion PUMP for $0.004 each.&nbsp;



Within two days, PUMP had reached as high as 70% above that initial mark and has since retraced to be 14% ahead with a $4.6 billion FDV.



Such a rapid sale made availability a primary concern for anyone trying to get in — and as it turned out, it was much easier to scoop up tokens on decentralized exchanges than on standard trading platforms.



Blockworks Research analyst Boccaccio told the 0xResearch podcast:



“I  have a very medium, luke-warm take, and it&#8217;s that this is the first time that I can think of [for a sale like this].



“Historically, if anybody gave you the option — either do this [token sale] on a centralized exchange versus on like decentralized rails — you would always do it on a centralized exchange, because it&#8217;s typically more performant; it&#8217;s more stable.



“I think this is the only example that I can think of where, like, you got fucked if you tried to do it on a centralized exchange. And if you did it on a decentralized [exchange] — like on Solana itself — you actually managed to get in. I think the average check size is like 500 as well. So, like, you didn&#8217;t have to be particularly sophisticated to get in.”



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/R8h6ucZm_2c?si=uP0dDx4hAY_ErJk_&amp;start=140" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







Ryan Connor, Blockworks Research’s head of research, sees this as something of a fork in the road for token sales moving forward.&nbsp;



Boccaccio agreed: “It dispels the myth that Solana is unstable and you can&#8217;t do anything on it. At least, what a lot of .eth’s have said historically is that you can&#8217;t do anything, you can&#8217;t trust Solana, necessarily, because it used to have outages.



“We saw that it [Solana] outperformed CEXs, and I think it also speaks to Hyperliquid in that it&#8217;s able to capture some volume.”



Catch the full episode on <a href="https://www.youtube.com/@0xresearchPodcast">Youtube</a>, <a href="https://open.spotify.com/show/0rGocvZ7oZR6vuy0UHKAON">Spotify</a>, <a href="https://podcasts.apple.com/us/podcast/0xresearch/id1651683074">Apple Podcasts</a> and <a href="https://x.com/0xresearch?lang=en">X</a>.



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DEXs

PUMP post-mortem: Breaking down the pump.fun ICO

Donovan Choy

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



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It has often been said that most crypto startups are guilty of making “blockchains in search of a problem.”



Perhaps one segment that defies that stereotype is crypto casinos.&nbsp;The Financial Times pegs this niche market to be <a href="https://www.ft.com/content/66f879c6-e51c-4e9d-91ba-b15eecac45c1?utm_source=chatgpt.com">roughly</a> at $81 billion in 2024.



Consider Shuffle.



Incubated by Fisher8 Capital and co-founded by former Alameda trader Noah Dummett, Shuffle is a casino and lottery platform boasting at least $100 million in annualized “net gaming revenues” — meaning all revenues after VIP rebates and cashbacks.



The SHFL token’s current FDV of $232 million is about a cheap 2.3x multiple, compared to the range of 10-40x revenue multiples for most other top DeFi tokens. Those revenue numbers would place Shuffle on a list of the top 20 revenue-generating Web3 businesses, yet the project remains largely absent from the so-called “<a href="https://x.com/simononchain/status/1942460321525911857">revenue meta</a>” conversation on Crypto Twitter.



<h2 class="wp-block-heading">Shuffle’s architecture</h2>



Despite being frequently referred to as a “crypto casino,” Shuffle executes the majority of its gameplay mechanics offchain — largely due to the fact that posting every bet on a public chain would overwhelm even the fast L2 networks.



Additionally, most of Shuffle’s gambling games are outsourced to iGaming content studios like Evolution, Hacksaw Gaming, Pragmatic Play, etc. So while Shuffle provides players with a frontend and bankroll, iGaming studios generates the outcomes on the backend.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeGUlAzRa_bCzwfxYawpZZl9A4SG4e2dqCwTCzhBWIveIFKkDuhnpY6waH-K_MFr14xeTzmxrZjU9blRUfPScu8-Nqb8SIRNatrsfoqeSs5SOjY2JZFQm6MB0EhmHrq0KeVdRrfGw?key=75US7HV7Q6NZkZ3cXZidqA" alt=""/><figcaption class="wp-element-caption">Source: Shuffle.com</figcaption></figure>



This separation limits Shuffle’s tampering risk but also means revenue cannot be verified onchain.&nbsp;



Yet in a highly commoditized sector like gambling, this may be a conscious decision, where revealing wager volumes would expose strategic information about a casino’s balance sheet, runway, and its ability to take large bets to competitors.



<h2 class="wp-block-heading">How blockchains come in</h2>



Traditional casino businesses rely on card networks and bank wires that typically treat gambling as a high-risk “sin” vertical. This means that players face various forms of friction such as extremely high fees, frequent declines, chargeback complications, and blocked cross-border deposits.



These problems that plague traditional gaming businesses introduce a lucrative entrepreneurial opportunity for crypto casinos like Shuffle to tackle using blockchains, through which crypto assets can settle globally in seconds without chargeback risks.



This on- and off-ramping of assets is the decisive key selling point for crypto casinos like Shuffle, Stake, Roobet and more.



But then there is also, of course, the SHFL token, an ERC-20 token on Ethereum. This is where Shuffle gets interesting and stands out from its crypto competitors.



While Shuffle originally used a buyback and burn value accrual mechanism, last year it introduced a weekly lottery that pays out USDC rewards to staked SHFL token holders.



15% of Shuffle’s weekly revenues (something like $200k-$300k) are returned through this lottery, which closes at a fixed time every Friday. In APR terms, the team told me that’s about a 48% annual return.



(A new onchain lottery is soon to be <a href="https://shfl.shuffle.com/the-shfl-lottery-the-internets-lotto">launched</a>.)



A further 30% of gaming revenues earned in SHFL continues to be burned, creating a deflationary sink for the token.



To date, Shuffle has burned about 5% of its total circulating supply.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeCUF69cjnV-Msh5xyDGcpoWAGHikpGMcb9yP_LuEaZQ-7CXcFKfuXZ0RuqbAGDgHdtkNzc7nl1W9qK9-wlc13jaYcwJF8rTprnHfdA95NhZccny9YNhb-GklWbhDcRUipSqgzj?key=75US7HV7Q6NZkZ3cXZidqA" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://shuffle.com/token">Shuffle</a></figcaption></figure>



This decision was largely motivated by strategic customer retention reasons — because buyback and burns were perceived as an intangible value accrual mechanism, Fisher8 Capital investment analyst Lai Yuen told me.



Because all token movements occur onchain, anyone can track lottery prize funding, draws and burns in real time — levels of transparency that are almost unheard of in traditional gambling.



On Crypto Twitter, gambling businesses seem to be largely left out of the conversation, perhaps for ethical reasons. Other sources I’ve spoken to have also mentioned that some liquid funds generally have a mandate to avoid sin verticals.



But there’s no denying that GambleFi offers a unique insight into the kind of technological innovation that blockchains bring.



Companies like Shuffle have traction precisely because they solve an acute payments-and-access problem for a global customer base that wants to gamble, and is willing to accept regulatory risk in exchange for instant deposits and fast withdrawals.



That regulatory-payments arbitrage is the wedge that lets crypto casino businesses carve out an annual $80 billion gray-market industry despite outright bans or geoblocks in most major jurisdictions.



Shuffle recently announced plans to channel that model into a compliant US offering (ShuffleUSA), signaling growth expansion on the horizon.



<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 new era of play is about to land 🇺🇸<a href="https://t.co/Gj7KpvH5Fn">https://t.co/Gj7KpvH5Fn</a> <a href="https://t.co/SJNPR8UHWS">pic.twitter.com/SJNPR8UHWS</a>&mdash; Shuffle.us (@ShuffleUSA) <a href="https://twitter.com/ShuffleUSA/status/1941165106626216397?ref_src=twsrc%5Etfw">July 4, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



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How blockchains are changing the traditional casino business

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



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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Arise, you have nothing to lose but your barbed wire fences!”



— Timothy May, 1988
</blockquote>



<a href="https://nakamotoinstitute.org/library/crypto-anarchist-manifesto/">The Crypto Anarchist Manifesto</a>



What would Timothy May think of “Crypto Week”?



If the OG cypherpunk and author of The Crypto Anarchist Manifesto were here to read the <a href="https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=410793">statement</a> from the House of Representatives — itself a kind of manifesto — declaring this to be Crypto Week, I expect he’d have mixed feelings about it.



He’d certainly object to the idea of a “Crypto Czar,” appointed by the president of the very government whose authority he hoped to undermine.



(“Cryptologic methods,” he believed, would undermine “government interference in economic transactions.”)



On the other hand, he’d be pleasantly surprised, if not shocked, to learn that the US government is banning itself from issuing a central bank digital currency.



But he’d be most surprised to learn that the US government’s stated aim is to accelerate the adoption of cryptocurrency.



“The State will of course try to slow or halt the spread of this technology,” he wrote in the manifesto.



I guess not!



He’d have reservations, sure.&nbsp;



Markets, he thought, should self-police via mathematics, not laws, and that’s not what’s being promoted this week.



The CLARITY Act, for example, applies the Bank Secrecy Act (public enemy No. 1 for financial cypherpunks) and other KYC/AML rules to most intermediaries.



But “intermediaries” is the key word there: The Act also preserves the right to hold and use digital assets in personal wallets.&nbsp;



May’s vision was that “two persons may exchange messages, conduct business, and negotiate electronic contracts without ever knowing the True Name, or legal identity, of the other.”&nbsp;



Insert an intermediary, though, and even May might think the government is right to regulate.



What might shock him most, though, is some of the rhetoric.



“Ensuring the future of the digital economy,” Representative Tom Emmer says in the official House statement, “reflects our values of privacy, individual sovereignty and free-market competitiveness.”&nbsp;



Privacy and individual sovereignty are cryptoanarchist values, too.



In that sense, Crypto Week feels like a surprising vindication for May and the community of cypherpunks he inspired (Bitcoiners included).



He would, however, take note of the multiple mentions of “protecting consumers” in the House statement and see that as evidence that the State is not surrendering its surveillance powers anytime soon.&nbsp;



May ends his manifesto with a vivid image: governments fencing in citizens like livestock on a barbed-wire ranch.



Even after Crypto Week, I’m sure he’d say the fences remain up.



<a href="https://www.elliptic.co/resources/the-state-of-cross-chain-crime-2025">Crypto remains popular with criminals</a>



In its latest report on crypto crime, onchain analytics firm Elliptic reports that the crypto ecosystem is “increasingly being exploited by illicit actors.”



Specifically, it estimates that the all-time total of “cross-chain criminal and high-risk” crypto transactions has risen to $21.8 billion, including over $2.17 billion in the first half of 2025.



Elliptic attributes 12% of the total to North Korean hackers (which, I imagine, is how Kim Jong Un paid for his new <a href="https://www.npr.org/2025/07/05/g-s1-75663/north-korea-beach-resort-wonsan-tourism">beach resort</a>).



Blockchains remain transparent, but the report suggests that following crypto money trails may be getting harder: 20% of money laundering actions, it notes, move crypto across more than 10 blockchains.



The result is that crypto continues to play its role in the disturbing rise of “industrial-scale fraud.”



The most recent example came this week, when the DEA <a href="https://www.cbsnews.com/news/u-s-drug-raids-net-10-million-in-crypto-linked-to-notorious-mexican-sinaloa-cartel-officials-say/">announced</a> that it had seized more than $10 million in cryptocurrency from Mexico&#8217;s Sinaloa cartel, in raids that also netted massive quantities of fentanyl.



(Tariffs on fentanyl still aren’t high enough, I guess.)



Timothy May would be unperturbed. “Various criminal and foreign elements will be active users of CryptoNet,” he wrote. “But this will not halt the spread of crypto anarchy.”



But the crypto industry still needs to do more to police itself.



After researching the ByBit hack in March, the onchain sleuth <a href="https://x.com/zachxbt">ZachXBT</a> wrote in his Telegram channel that the industry “is unbelievably cooked when it comes to exploits/hacks.”



Attempting to retrieve funds from the ByBit hack was “eye-opening,” he wrote, noting that “several ‘decentralized’ protocols have recently had nearly 100% of their monthly volume/fees derived from [North Korea] and refuse to take any accountability.”&nbsp;&nbsp;



Centralized exchanges, he added, are even worse because they take “multiple hours” to respond to his inquiries, which is far too slow: “It only takes minutes to launder.”&nbsp;&nbsp;



The industry, he warned, is so negligent in policing itself that it risks inviting much tighter government regulation.



Maybe not this week, though.



<a href="https://x.com/leereiners/status/1944528985712394729">Stablecoins won’t save the US dollar</a>



<a href="https://x.com/leereiners">Lee Reiners</a> takes exception to all of the “techno-utopian soundbites” DC politicians have been using to promote stablecoins recently.



The idea that stablecoins will extend the reign of the US dollar as the world’s reserve currency has been repeated so often that it’s become received wisdom both in and out of crypto circles.



But Reiners takes the opposite view, arguing that stablecoins will have “no impact on the dollar’s status as a global reserve currency.”



“By imposing stricter requirements,” he argues, the GENIUS Act “could actually diminish dollar dominance if it drives stablecoin users and issuers toward non-USD alternatives that remain unregulated or offshore.”



In other words, he thinks stablecoins will lose their appeal for “bad actors” once they’ve been regulated.



(I doubt it, though. They’ll still be dollars that are not subject to KYC checks.)



But even if dollar-pegged stablecoins are used more frequently, he continues, “that growth would likely cannibalize existing dollar instruments…rather than expand the overall footprint of the dollar.”



I still think stablecoins could help at the margin by encouraging more international transactions to be done in dollars, basically.



But if the US government so debases the dollar that people question its value, stablecoins won’t be nearly enough to save it.



<a href="https://x.com/TheOneandOmsy/status/1945280399946420527?t=70HVVyNl5C_s6YE993EFdQ&amp;s=19">Citi stablecoin plans</a>



The one thing that Citi is truly good at is global payments: Its Trade and Treasury Services business, which moves money around for large customers, is the world’s biggest.



So I think it’s telling that Citi has advanced plans to issue a stablecoin and integrate it into its global payments offering.



CEO Jane Fraser noted that only 6% of stablecoin volume is related to payments, which she attributes to the high cost of on- and off-ramping them into and out of fiat — costs that add up to 7%, she says.



Citi expects to change all that, offering to move stablecoins across borders and in and out of fiat at near-zero cost, she implied (“without incurring that transaction cost”).



She also suggested, however, that it&#8217;s more likely to use tokenized deposits than stablecoins.



Tokenized deposits might prove difficult for the crypto industry to compete with.



The GENIUS Act, Fraser added, levels the playing field for banks to get involved in digital assets and Citi is enthusiastic about it.



Of that, I’m certain Timothy May would not approve.



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Anarchy, crime and stablecoins

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



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As issues with Solana’s code have been ironed out over the years, block times — or how long it takes the network to produce a new block of transactions — have <a href="https://x.com/steviez_sol/status/1894482387406319962">declined</a>, even dipping under Solana’s putative level of 400ms.



But over the past month, an interesting trend has emerged: Median block times spiked, and Solana was adding new transactions to the blockchain slower than before. At fault was a new meta among Solana validators that showed it can be lucrative to produce blocks slowly. Anza, Jito and Marinade appear to be weighing fixes to the problem, Blockworks has learned.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfXqJmWLpKAEI12nVQH6IfRYyMVCgZ4a9Gpvb_kpRMHc10X0VBFPnOWpvhcCSsgN4dn6rbbqyyn4MCWd8cfDabSdgWa3EKtteNsHr3oCZTKlBNj_oYFUxj7-r07SrX3tQveb7pAPA?key=LFAZsqUetGzUNwFhKYUlxQ" alt=""/><figcaption class="wp-element-caption">Solana epoch lengths spiked in June. Source: <a href="https://risk.kamino.finance/Epoch_Slot_Durations">Kamino</a></figcaption></figure>



Every Solana block has a validator who serves as leader — meaning they collect transactions, create a block and broadcast it to the network. Leaders collect transaction fees from the blocks they create. More order flow means more fee opportunities, so it can be more lucrative for validators to see and process 500ms worth of transactions as opposed to 300ms, for instance.&nbsp;



At a basic level, some Solana validators appear to be waiting as long as possible to pack blocks with transactions in hopes of maximizing their yield, which has caused Solana’s epoch lengths to increase.&nbsp;



This isn’t ideal for a network focused on being <a href="https://blockworks.co/news/nasdaq-on-solana-opening-bell-sol-strategies">as fast as the Nasdaq</a>. Plus, fewer epochs per year means fewer opportunities for staking rewards to compound for stakers, Sol Strategies chief technology officer Max Kaplan noted.



Solana offers something called “grace ticks,” which is a late period wherein leaders can still successfully submit blocks. This prevents validators in far-flung locations from being unfairly penalized, but it also opens the door for validators to be late on purpose.&nbsp;



The alternative Solana client Frankendancer also recently released a revenue-maximizing scheduler, and validators running the client appear to be packing their blocks a bit more slowly than normal, Kaplan said.&nbsp;



Kaplan added that the Frankendancer delay is minimal compared to more egregious delayers, and that he wouldn’t portray it as a “bad thing.” Plus, block delaying isn’t a new concept on proof-of-stake blockchains. Firedancer’s upgrade may have brought this strategy to light on Solana, however. Jump did not immediately return a request for comment.



Interestingly, Firedancer software engineer Michael McGee described the phenomenon on this week’s <a href="https://www.youtube.com/watch?v=RbY0vLjQO9A">Lightspeed podcast episode</a>.



“One of the things we&#8217;ve seen with our current validator…[is that validators] can often make a more profitable block by delaying execution of transactions,” McGee noted.



Solana validators who are more noticeably delaying blocks tend to be running modified versions of the Agave-Jito client, Blockworks Research analyst Victor Pham noted.&nbsp;



For example, during epoch 802 in mid-June, Galaxy and Kiln’s median block time was higher than 570ms each. A number of unlabeled validators were also slow, and Temporal’s validators had 475ms median block times, according to Solana Compass <a href="https://solanacompass.com/statistics/block-times?epoch=802">data</a>.



Kiln co-founder Ernest Oppetit admitted the validator — Solana’s sixth-largest by stake — had been delaying slots “for a period” but said it has stopped doing so.



“At Kiln we pride ourselves in offering the top staking APY in the market without compromising on security. We have been doing R&amp;D on different parts of the stack, including timing games, and are in constant discussions with our customers, client teams and the foundation on this. At this point we are following the spec and not delaying blocks, but many actors are still doing so. We believe the incentive issue (fast block production leads to lower rewards) ultimately needs to be addressed at the protocol level,” Oppetit said.



“I will say that we are not the reason that people know about this,” Temporal engineering director Ben Coverston said when reached for comment about the validator’s <a href="https://solanacompass.com/validators/Haz7b47sZBpxh9SwggGndN3fAyNQ1S949BPdxWXS3ab6">apparent</a> participation in the slow block trend.



“We, as a service provider, support validator configurations that prioritize maximizing staking rewards for our clients. On Solana, that may mean proposing slightly slower blocks to ensure higher reward capture. Galaxy also remains responsive to community feedback and have since increased block times to within an agreeable threshold,” a Galaxy spokesperson said.



The Solana validator community doesn’t find slowing the network down to be kosher, and slow validators are now facing <a href="https://blockworks.co/news/solana-underperforming-validators">public backlash</a>.



They may soon face more material punishments. Blockworks has learned that Jito plans to blacklist slow validators from its stake pool, which is Solana’s largest.



Jito Foundation president Brian Smith said the organization is “drafting a governance proposal that empowers a committee to remove laggards from the JitoSOL delegation set. This should be available for community discussion within a few days.”



Michael Repetny, co-founder of the third-largest stake pool in Marinade, said the pool provider is “[considering] putting it to a governance proposal to discuss pros and cons of introducing [slow validators] as a hard rule/offense of the delegation strategy.”



Help is on the way at the protocol level, too. Anza’s GitHub repository <a href="https://github.com/anza-xyz/agave/pull/6982">shows</a> a new proposal to shrink Solana’s grace tick period by half. Plus, Solana’s proposed consensus overhaul should fix things.



“Alpenglow will solve this by enabling skip votes,” Anza vice president of core engineering Brennan Watt said.



Watt said on a recent <a href="https://www.youtube.com/watch?v=KN5Novxjybs">Lightspeed podcast episode</a> that Anza hopes to have Alpenglow live on mainnet by Solana’s Breakpoint conference in December. 



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Behind the scenes of Solana’s slow validator problem

Felix Jauvin

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



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



With a flurry of economic data out today, it’s evident that the US economy is in pretty good shape, churning away despite the ever-unfolding stop-start tariff saga.



Let’s recap the data and what it all tells us.&nbsp;



<h2 class="wp-block-heading">Retail sales</h2>



Retail sales came out the gate swinging today, beating most expectations:



<ul class="wp-block-list">
<li>Retail sales month over month: Actual: 0.6%; expected: 0.1%</li>



<li>Retail sales control group MoM: Actual: 0.5%, expected: 0.3%</li>



<li>Retail sales (ex autos) MoM: Actual: 0.5%, expected: 0.3%</li>
</ul>



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeAO1hOv56DocuBWKYPddPFHhZbqqQ4g7ngfS4G_DQt13DJAIiUlNJTaKQBELAI-BVFug2xhGq_PchZqa8hDKN7_nyFuHsWYxHSjTxs6AzS4LREmPSOPYC243kr0_ncb9hH_8H4?key=0jMFv4_hiMBO-rq2BjHb_g" alt=""/></figure>



It’s important to remember that retail sales are a nominal metric and therefore include inflation. In an era of persistently above-target inflation, this becomes increasingly pertinent.&nbsp;



Despite the nominal good news, you can see how consumers’ purchasing power continues to decline in real terms. For example, this chart from economist Parker Ross:&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcq7_Lftb25B6X9Bmmb_XEMk0bV9gJxt3kBG5W3e5l7ljUy8len08LNPhKAL5jmKBnkZQB92_B1rFdYX6tv742_r75qru_xkPayMp1CbQlxL0AGD984kbtIqcR9me34A9hKNrUu?key=0jMFv4_hiMBO-rq2BjHb_g" alt=""/></figure>



This vignette shows why significant recession is so difficult to trigger in a regime of higher inflation.&nbsp;



A recession could occur on a “real” basis —&nbsp;whilst nominal GDP continues to churn higher — in which the net effect is a decrease in purchasing power, as opposed to a nominal decrease in spending and incomes across the economy.&nbsp;



<h2 class="wp-block-heading">Philly Fed survey</h2>



Setting aside the hard data, we received updates to the Philly Fed survey, which has been exceptionally accurate in recent years.



This soft data shows clear signs of an economy rebounding from Liberation Day uncertainty and adapting to where tariffs stand today.&nbsp;



Across the board, every metric continued higher:



<ul class="wp-block-list">
<li>Philly Fed CAPEX index: Actual 17.10, previous: 14.50</li>



<li>Philly Fed employment: Actual: 10.3, previous: -9.8</li>



<li>Philly Fed new orders: Actual: 18.4, previous: 2.3</li>



<li>Philly Fed prices paid: Actual: 58.80, previous: 41.40</li>
</ul>



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXernSbjHBLUvPqmx-QcxvXydt0O1FPcnI3tayR8Zy6EIfR5VoY_CSlswk9UCHlcWfzjIiC9Th5gSZIyqkY5zOhfTd3LueDR3sT4BL77-vQimU-ilnqmQ_pHqpVvxmmdTPrU0Rxu?key=0jMFv4_hiMBO-rq2BjHb_g" alt=""/></figure>



<h2 class="wp-block-heading">Jobless claims</h2>



We see further validation of a surprisingly strong economy in the weekly jobless claims data.



Initial claims surprised to the downside and continued their decline:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdUoUtebtTOeaTBrBG9sVpOUVsMuVb4SaALKZPVZRVgm7PkdxEYh1WRGfZBGn5QEQBsTXZ_hivvgF9rVNORotGhEBjRcDjd0Y4yR3Qax0HFp7bdnI8BkT8o4a-ARZoQu6DhN6uStw?key=0jMFv4_hiMBO-rq2BjHb_g" alt=""/></figure>



Continuing jobless claims also surprised to the downside, showing signs that the recent surge over the last month has stalled:&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdHcwsC9PHpZeM9VSCtGPC_hWPeidlphxAHXZLA5SWQPGJFmLmPigiWFOC-H0ZnWfWeB6GrEQTtRlijcB9EYAqNEKaBYR67kSEwA-tKIBbLo1wksBZ3o3U0NatVOmC5uS0IE9MQPw?key=0jMFv4_hiMBO-rq2BjHb_g" alt=""/></figure>



This contrast between initial and continuing claims is crucial for understanding the state of the labor market. The economy is solid enough to avoid triggering a meaningful layoff cycle, but weak enough so that those who do become unemployed are having a hard time finding a new job and thus remaining on continuing claims for longer.&nbsp;



Putting this all together, it’s clear the soft and hard data are beginning to rebound and improve.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdJK23Q5iQxmxLKhLgi0gO4oK5W35-L0DuoqSCEV14jMK-mdl47aMo4HYubx6RyqJND3ztmKT3EGPVL4HTqgTovbTjQLNChvgFy3wq-Ci-x2KmoPrhSDGQiDEZ-n332OAUjDVCcmQ?key=0jMFv4_hiMBO-rq2BjHb_g" alt=""/></figure>



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