NFTX is a community owned and led protocol for NFT index funds on Ethereum. NFTX index funds are ERC20 tokens that are backed by NFT collectibles. The protocol is ultimately governed by NFTX token holders.



NFTX

Bessie Liu

Vitalik Buterin, the co-founder of Ethereum, has released a new blog post discussing a new cryptographic proving system that can make zero-knowledge proofs more efficient.



The proving system, called Binius, is designed to operate directly over binary code on computers. Binary code is a language understood by computers, and it is used to store information and represents data using the symbols zero and one, otherwise known as bits. 



Although there are some similarities between STARKs and Binius, Buterin explains that the mathematical tricks that enable these different proving systems are very different.&nbsp;



Generally speaking, STARKs is a technology that has enabled complicated statements to be easily cryptographically verified. It is designed in a way that can easily compute numbers when they are of small value, when there are large values, STARKs generate extra values, which can lead to inefficiency.&nbsp;



Unlike STARKs that “arithmetize” a statement into a polynomial equation — a mathematical expression which model a relationship between variables in a block — Binius treats data as a hypercube and grid, and uses multilinear polynomials to perform cryptographic proofs.



<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">BInius: highly efficient proofs over binary fields<a href="https://t.co/lHAGXbgI9r">https://t.co/lHAGXbgI9r</a> <a href="https://t.co/3Xx4zIAm1b">pic.twitter.com/3Xx4zIAm1b</a>&mdash; vitalik.eth (@VitalikButerin) <a href="https://twitter.com/VitalikButerin/status/1784912087098999263?ref_src=twsrc%5Etfw">April 29, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Binius converts individual values into bits and places them in a hypercube and a square. This hypercube is then converted into a grid and computations are performed in order to receive an output matrix.&nbsp;



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1021" height="637" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image.png" alt="" class="wp-image-85182" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image.png?w=1021 1021w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image.png?w=412 412w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image.png?w=418 418w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image.png?w=351 351w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image.png?w=80 80w" sizes="(max-width: 1021px) 100vw, 1021px" /></figure>



A verifier will then perform its own computational calculations to ensure that the information itself matches and ensure that the compute columns returns a value claimed by the prover.



“I highly encourage people to understand and explore! Lots of innovations have been happening in ZK-proving recently. And I expect lots more to come soon,” Buterin wrote in an <a href="https://twitter.com/VitalikButerin/status/1784912152655974533">X post</a>.



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Vitalik Buterin talks ways to make zk proofs more efficient

Casey Wagner

In a highly anticipated move, the Federal Reserve chose to hold interest rates at their existing level on Wednesday following the Federal Open Market Committee two-day policy meeting.&nbsp;



The rate hike pause marks the central bank’s sixth since consecutively raising interest rates from March 2022 to July 2023. Persistent inflation and a healthy labor market contributed to central bankers’ decision to hold rates, they said.&nbsp;



“In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks,” Wednesday’s <a href="https://www.federalreserve.gov/monetarypolicy/files/monetary20240501a1.pdf">statement</a> read. “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.” 



Central bankers will need to see more evidence that inflation is easing before cutting rates, Fed Chairman Jerome Powell said Wednesday during a press conference.



“The path forward is uncertain,” <a href="https://blockworks.co/tag/jerome-powell">Powell</a> said.&nbsp;



“Although some measures of short-term inflation expectations have increased in recent months, longer-term inflation expectations appear to remain well anchored as reflected in a broad range of surveys of households, businesses and forecasters, as well as measures from financial markets,” he added.



Stocks and cryptocurrencies were little changed on the news. Bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) traded sideways in the moments after the <a href="https://blockworks.co/tag/federal-reserve">Fed</a> released its statement at 2 pm ET, sitting around $57,786 at time of publication, per Coinbase. The largest cryptocurrency is down about 4% over the past 24 hours.&nbsp;



Ether (<a href="https://blockworks.co/price/eth">ETH</a>) similarly traded flat, hovering around $2,900 at time of publication – about 1% lower over 24 hours.&nbsp;



The Nasdaq Composite and S&amp;P 500 indexes inched marginally higher on the news, managing to move just barely into the green after an otherwise disappointing trading session.&nbsp;



Bitcoin has hovered below $60,000 since early Wednesday, a downward trend analysts say is poised to continue.&nbsp;



“A break to the downside through $59,200 in BTC has led to an accelerated selloff and, barring an unforeseen catalyst, there seems little in the way of this market testing the [$53,000] area before a meaningful turnaround,” Mike Tauckus, head of trading and structuring at BitOoda, said.&nbsp;



Markets on Wednesday expected about a 9% chance a rate cut will come in June, according to <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">data</a> from CME Group.



Updated May 1, 2024 at 2:37 pm ET: Added statement from Fed Chair Jerome Powell. 



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Fed holds interest rates, markets hardly react 

Molly Jane Zuckerman

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="256" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=1024&amp;h=1024" alt="" class="wp-image-60166" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=80 80w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>



This isn’t going to be another op-ed about how silly it is for celebrities to do cryptocurrency ads. We all know that they don’t age well.



Instead, what I’d like to opine on is why a cryptocurrency ad with Marshall Mathers, aka Eminem, falls flat in particular. If you’re going to put a celebrity in your crypto ad, you need to go all out with creativity, humor or just overall entertainment value. Eminem’s new crypto ad does none of that —&nbsp;it has almost nothing to do with the rapper, or crypto at all.



The rapper’s voiceover on an <a href="http://crypto.com">advertisement for Crypto.com</a> aired during the Lakers NBA play-off game last week. The ad itself, just a minute long, shows a nameless, faceless boxer getting ready to face-off in a match at the Crypto.com Arena. You can hear Eminem’s voice saying empty platitudes of encouragement in the background, telling the audience to enjoy the moment, before the screen shows the somewhat infamous slogan, “Fortune favors the brave.”



I say infamous, because Matt Damon’s 2022 Crypto.com SuperBowl commercial —&nbsp;where the Oscar-nominated actor was actually pictured on screen saying that catchphrase out loud — just looked so silly in the wake of the FTX crash. Damon later gave an <a href="https://gizmodo.com/matt-damon-crypto-com-crypto-bitcoin-1850282413">awkward, pause-filled red carpet interview</a>, noting that he only did the commercial to support his water non-profit in a down year.



Some are <a href="https://www.stereogum.com/2261473/eminem-is-crypto-coms-new-spokesman-teases-new-album-the-death-of-slim-shady/news/">already speculating</a> that Eminem’s main motivation to lend his voice to Crypto.com’s latest ad is part of a marketing push for his upcoming album. But his motivations for being crypto’s latest celebrity spokesperson aren’t important. What’s important is how soulless that advertisement is. Watching the commercial for the first time as a longtime Eminem stan, I lamented all of the missed opportunities staring me in the face.



Read more from our opinion section: <a href="https://blockworks.co/news/cryptos-best-use-case-buying-goats-twitter">Crypto’s best use case? Buying goats on Twitter</a>



For one, this is far from Eminem’s first foray into crypto —&nbsp;he had his own, pretty cringey Bored Ape phase at the peak of the NFT boom, culminating in a <a href="https://www.youtube.com/watch?v=RjrA-slMoZ4">half-animated BAYT music video</a> with none other than Snoop Dogg. That was terrible, and also funny: and Crypto.com’s pretty basic ad could have benefitted from any sort of creative reference to Eminem’s actual crypto interests.&nbsp;



Granted, Crypto.com is not an NFT platform. That doesn’t mean that you aren’t allowed to have a sense of humor — especially when creating a likely very expensive advertisement with a very famous, previously NFT-obsessed rapper.



Which brings me to my second point —&nbsp;there’s no rap. Paying Eminem to remain faceless and read a short, only slightly rhyming text over a black-and-white boxing video feels like paying <a href="https://www.thecut.com/2019/07/i-think-about-bob-dylans-victorias-secret-ad-a-lot.html">Bob Dylan to promote Victoria’s Secret</a>.



Eminem’s crypto ad isn’t the first since the unfortunate crypto Super Bowl. Both Coinbase and Greyscale also <a href="https://blockworks.co/news/nba-nhl-bitcoin-halving-ads">put out slightly more entertaining ads</a> in the lead up to the Bitcoin halving, albeit celebrity-less ones.&nbsp;



As I said at the top, my point here isn’t to convince the world that celebrities in crypto ads are setting themselves up for <a href="https://blockworks.co/news/celebrities-erase-ftx-ties">future embarrassment</a>, <a href="https://blockworks.co/news/what-do-tom-brady-steph-curry-and-naomi-osaka-have-in-common-an-ftx-lawsuit">loss of money</a> and even potentially <a href="https://www.sec.gov/news/press-release/2022-183">SEC fines</a>. We already know that. And I also know that no one will stop crypto companies, especially during a bull market, from paying celebrities tons of money to promote their brands anyway. Sam Bankman-Fried set that precedent, and even with him in jail, it really shows no signs of abating.



Instead, I’d like to propose that if we are going to keep having celeb-studded crypto ads —&nbsp;make them really sparkle. Pay Eminem to write an entire song about trading on Crypto.com and release it alongside his new album, with a specially crypto-themed music video (he already has the experience). Get JoJo Siwa to <a href="https://www.tiktok.com/@itsjojosiwa/video/7352686405887331630">wrap another car</a> with whatever memecoin logo, or Brooklyn Beckham to tattoo Dogecoin eyes next to his <a href="https://pagesix.com/article/brooklyn-beckham-tattoos-for-nicola-peltz/">tattoo of his wife’s eyes</a>.



Celebrity crypto ads, in my opinion, should only exist if they do something really creative or really silly: In other words, make them match the whimsy and creativity of this burgeoning financial tech industry. I’m not sure that any SEC lawyers would agree with me. Good thing I don’t work for the SEC.



Otherwise, make celebrity crypto endorsements illegal for all of the obvious reasons (high potential for securities fraud and misleading investors to start). In a nutshell — go silly or go home.



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I don’t care much about tech, I don’t care a whole lot about finance, either. I care about writing stories and watching weird things unfold. And that’s why I’ve ended up in crypto. But because I’m missing that passion for what crypto and blockchain are all about — finance, tech, privacy, yadda yadda — I’m going to write instead about what I am actually interested in. Everything about crypto that has very little to do with crypto. That’s what this column will be about. All the tangential stories that come out of the blockchain and crypto space, what I think about them, and how I navigate it all as a skeptical former Russian literature major. It’s precisely my perch as an outsider that lets me do what I do: Opine on all sides of any crypto issue, no strings attached, no skin in the game. If you want to talk crypto with me, let’s go off topic.



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Eminem’s new crypto ad fails to capture the moment, lets it slip

Ben Strack

Stablecoin issuer Tether has notched a record quarterly net profit at a time during which the company is broadening its scope.&nbsp;



Tether tallied an all-time high net profit of $4.52 billion in the first quarter, according to a Wednesday attestation report by auditing firm BDO.&nbsp;



Tether’s first quarter net operating profits of $1 billion were driven by its US Treasury holdings, the company added. Other profits stemmed from mark-to-market gains in its bitcoin and gold positions.



Bitcoin’s price hit a new peak of about $73,000 in mid-March before trending downward in April.



The $4.52 billion total obliterates the former record of $2.85 billion in net profit gathered during the last three months of 2023.



Read more: <a href="https://blockworks.co/news/tether-monthly-profit-q4">Tether made nearly $1B in monthly profit during Q4</a>



Tether’s token, <a href="https://blockworks.co/tag/usdt">USDT</a>, is intended to maintain a value of $1 and can be redeemed for US dollars at any time.&nbsp;&nbsp;



As of March 31, <a href="https://blockworks.co/tag/tether">Tether</a>’s reserves were nearly $6.3 billion higher than the liabilities of the companies issuing USDT.&nbsp;&nbsp;



USDT’s market capitalization was roughly $110 billion at 10 am ET, behind only bitcoin and ether among crypto assets. That figure is more than triple the $33 billion market cap of competing stablecoin USDC.&nbsp;



The latest disclosure comes as Tether seeks to build out its business beyond just <a href="https://blockworks.co/tag/stablecoins">stablecoins</a>.



Read more: <a href="https://blockworks.co/news/tether-hiring-ai-division-jobs">Tether looks to ‘build the next generation of open AI models’ with new data division</a>



It recently launched a data initiative focused on developing and investing in new technology, for example. Other new divisions include a unit focused on blockchain-based financial infrastructure and one involved in the <a href="https://blockworks.co/tag/mining">mining</a> and energy sectors.&nbsp;



“With this evolution beyond our traditional stablecoin offerings, we are ready to build and support the invention and implementation of cutting-edge technology that removes the limitations of what’s possible in this world,” CEO Paolo Ardoino said in a statement last month.



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Tether just obliterated its former net profit record for a single quarter 

The world’s largest asset manager appears poised to move deeper into the tokenization space after injecting capital into a tokenization firm it has worked with before.



BlackRock led a $47 million funding round for Securitize, a company focused on bringing physical and traditional financial assets onto the blockchain, the firms said Wednesday.&nbsp;



Fintech companies and <a href="https://blockworks.co/news/citibank-explores-tokenization-wisdomtree">traditional finance giants have increasingly been testing out tokenization</a>, noting that blockchain rails can help reduce costs and improve transparency. BlackRock Larry Fink has called tokenized securities “the next generation for markets.”&nbsp;



To that end, <a href="https://blockworks.co/tag/blackrock">BlackRock</a> and Securitize are not strangers.&nbsp;



BlackRock launched its first tokenized fund — the BlackRock USD Institutional Digital Liquidity Fund — in March, offering a different way to earn US dollar yields. Qualified investors can subscribe to that fund through Securitize Markets.



Read more: <a href="https://blockworks.co/news/blackrock-tokenized-fund-trading-circle-usdc">Circle debuts way to trade BlackRock tokenized fund shares for USDC</a>



&#8220;We believe that <a href="https://blockworks.co/tag/tokenization">tokenization</a> has the potential to drive a significant transformation in capital markets infrastructure,” Joseph Chalom, BlackRock&#8217;s global head of strategic ecosystem partnerships, said in a statement. “Our investment in Securitize is another step in the evolution of our digital assets strategy.&#8221;&nbsp;&nbsp;



Chalom is now a member of Securitize’s board of directors.



Other investors in the $47 million funding round include Hamilton Lane, ParaFi Capital and Tradeweb Markets.&nbsp;



Private markets investment firm Hamilton Lane in January 2023 made <a href="https://securitize.io/learn/press/hamilton-lane-fund-securitize-polygon">available</a> one of its equity funds through a Securitize feeder fund tokenized on Polygon.&nbsp;



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BlackRock doubles down on tokenization via investment in Securitize

David Canellis

Katherine Ross

Michael McSweeney

<h2 class="wp-block-heading">CZ is no SBF&nbsp;</h2>



CZ was sentenced yesterday to four months in prison for violating the Bank Secrecy Act.&nbsp;



It’s not what the government wanted and it’s not what CZ wanted. But all things considered, we say he got a pretty damn good deal. I wonder what SBF is thinking.&nbsp;



Zhao pleaded guilty last November for failing to maintain an effective anti-money laundering program at Binance. He had to resign as CEO and hand over $50 million in fines, but his ownership of the exchange is intact and his net worth is still in the tens of billions (Forbes estimates $33 billion while Bloomberg says it’s closer to $36 billion, either way, $50 million is pocket change).&nbsp;



The prosecution asked the judge for three years. CZ’s team made a valiant attempt for house arrest or probation.&nbsp;



Read more: <a href="https://blockworks.co/news/changpeng-zhao-sentencing-verdict">Former Binance CEO Changpeng Zhao sentenced to 4 months in prison</a>



In the end, judge Richard Jones settled in the middle, citing the moving letters CZ’s supporters wrote to the court and the indifference the Binance founder displayed while breaking the law. After all, CZ’s apparent catch phrase was “ask for forgiveness not permission.”&nbsp;



Even if it wasn’t exactly what they wanted, <a href="https://blockworks.co/tag/changpeng-zhao">CZ</a>’s team seems pretty content. The New York Times <a href="https://www.nytimes.com/2024/04/30/technology/binance-founder-changpeng-zhao-sentenced.html">reported</a> that CZ’s son, a college student in the US, attended the hearing and “silently pumped his fist” when the judge said he would be ignoring the government’s request.&nbsp;



CZ’s co-founder seemed to be taking a victory lap on X hours after the sentencing was announced.&nbsp;&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">Got it. <a href="https://t.co/qctXcY0b0r">https://t.co/qctXcY0b0r</a>&mdash; Yi He (@heyibinance) <a href="https://twitter.com/heyibinance/status/1785411272156061958?ref_src=twsrc%5Etfw">April 30, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The sentencing comes roughly a month after <a href="https://blockworks.co/tag/ftx">FTX</a>’s founder SBF was sentenced to 25 years in prison. It’s a large discrepancy, but it should come as no surprise.&nbsp;



Read more: <a href="https://blockworks.co/news/sbf-shows-no-remorse-sentencing-reaction">25 years for Sam Bankman-Fried — A fair sentence, or no?</a>



SBF<a href="https://blockworks.co/news/sbf-blew-it-final-defense-trial"> famously avoided accepting responsibility</a> for his actions, a point the judge held against him. It also didn’t help that SBF lied on the stand. CZ, on the other hand, pleaded guilty. He cooperated and took responsibility.&nbsp;



And then, of course, there is the difference in the type of crimes. The SEC does claim in its civil suit that Binance <a href="https://blockworks.co/news/binance-pushes-back-sec-lawsuit">was commingling funds</a>, but no one ever made any allegations of theft. Plus, the very nature of the crimes CZ admitted to make Binance an asset to the US government — the exchange itself is essentially a tool for tracking down money launderers and illicit actors.&nbsp;



They may both be exchange founders, and they both may be in prison for an overlapping 120 days, but the similarities stop there.&nbsp;&nbsp;



— Casey Wagner



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



<ul>
<li>Daily net flows into <a href="https://blockworks.co/tag/binance">Binance</a> have mostly kept an even <a href="https://dune.com/21co/binance-proof-of-reserve">keel</a> over the past month leading up to Zhao’s sentencing, ranging from -$613 million to $1.9 billion.</li>



<li>Ethereum is working through the <a href="https://www.validatorqueue.com/">validator</a> queue, with 11,780 currently waiting, down from 22,300 earlier last month.</li>



<li>Arbitrum and Base are neck-and-neck for daily active addresses. The former has <a href="https://app.artemis.xyz/chains">taken</a> the lead with 373,500 to 369,600.</li>



<li>Futures traders have been <a href="https://www.coinglass.com/LiquidationData">liquidated</a> for $420 million on centralized exchanges over the past day — more than 80% of it longs.</li>



<li>Tether’s <a href="https://www.coingecko.com/en/coins/tether">supply</a> is steady at about $110.5 million, currently on its longest sideways streak since January.</li>
</ul>



<h2 class="wp-block-heading">BTC memecoins take a breather</h2>



Runes are tipped to eventually replace the more experimental BRC-20 tokens. Let’s see how that process is going.



Ordinals creator Casey Rodarmor launched the Runes protocol at the same block height as the Bitcoin halving, now nearly two weeks ago.&nbsp;



Read more: <a href="https://blockworks.co/news/runes-bitcoin-token-standard-ordinals">A look into Runes, a new Bitcoin token standard for issuing fungible tokens</a>



Technically, Runes (and BRC-20 tokens) can be issued for purposes other than memecoins, but practically every one of the hundreds of thousands onchain are memecoins with silly names, like DOG•GO•TO•THE•MOON and ANARCHO•CATBUS.&nbsp;



Putting a dollar value on BRC-20 and Runes markets isn’t exactly feasible. Their markets are mostly illiquid and spread across multiple platforms with large price variations.



Still, the top 15 or so most liquid and widely held BRC-20 tokens are currently altogether worth around $2 billion, going by the most simple calculations, while the entire Runes market is currently valued at under $800 million, according to a GeniiData <a href="https://geniidata.com/user/poshi/runes-market-overview">dashboard</a>.



The most prominent BRC-20s have, however, been shedding market value ever since the halving, although it could be said they were trending downwards all year.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/xdCcrxLRVcROCqZNhLoWvjI129lW_52G1JbPnQA0KFdYP7lnrGguvOVBJNukTmkUCabHHPb_u935BansBfcR-qEPub8x9HWMg5ldIIp1G5yh2GBtjepl0XRnJFgzChCWJdeAsfK271OmKQrmHZucfUE" alt=""/></figure>



We’re still a ways away from Runes flipping BRC-20s for total market cap, but they’re making progress



Overall, Runes represented about 20% of all Bitcoin <a href="https://dune.com/cryptokoryo/runes">transactions</a> over the past two days, with BTC transfers comprising the rest. Before the halving, BRC-20s often made up one third of Bitcoin activity.&nbsp;



Meanwhile, BRC-20 <a href="https://geniidata.com/user/poshi/ordinals-brc20">activity</a> dried up almost immediately after the halving and has now dropped by upwards of 90%. It was common to see more than 100,000 BRC-20 mints and over 10,000 transfers per day in the weeks leading up to the halving — yesterday, there were only 825 mints and 6,300 transfers.



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



Runes traders are also taking a breather. Bitcoin processed more than 400,000 Runes <a href="https://geniidata.com/user/poshi/runes-market-overview">transactions</a> per day in the three days following the <a href="https://blockworks.co/tag/bitcoin-halving">halving</a>. Tuesday saw only about a quarter of that number.&nbsp;



Daily volumes for Runes are now looking to rebound and find equilibrium around $15 million per day, after notching almost $30 million daily in the beginning.



It could be that some of the biggest BRC-20s keep some staying power due to the Lindy effect, even if Runes continue to grow.&nbsp;



But considering how many new Runes debut and are minted each day, it seems like only a matter of time until capital flight really hits.



— David Canellis



<h2 class="wp-block-heading">Take a deep breath&nbsp;</h2>



Well, this week is certainly a lesson in patience.&nbsp;



With bitcoin under $60,000 and US <a href="https://blockworks.co/tag/bitcoin-etf">bitcoin ETF</a> inflows down to a trickle, it’s tempting to expect good news.&nbsp;



Unfortunately, you’re not going to find such news with the Hong Kong spot bitcoin and ether ETFs. At least, not with the expectations that many have thanks to the incredibly successful launch of their US cousins.&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-etf-outflows-persist-third-straight-week">Bitcoin ETF snapshot: A few firsts during another week of outflows</a>



Bloomberg’s Eric Balchunas and James Seyffart have warned that the Hong Kong market <a href="https://blockworks.co/news/hong-kong-crypto-etf-predicted-inflows">won’t replicate the US demand</a>, and they were right. Trading day volumes, according to K33 Research, came in around $12.4 million. That’s a bit shy from the launch day volume of $4.5 billion seen by the US products.



“Initial indications showed expected inflows to total close to $300 million, while real combined volumes amounted to little more than $11 million,” &nbsp;BitOoda wrote. The firm noted that the “disappointing” numbers led to the “dramatic selloff” that we saw Tuesday.



But the thing is: the two markets are not at all comparable.&nbsp;



“By market size, it’s more reasonable to compare the Hong Kong ETF market to the Brazilian and Australian ETF markets, which saw BTC ETF launch day volumes of $3.3 million and $1.1 million, respectively. The HK ETF launch is thus decent when assessed through more sober comparisons,” K33 said in its note.



Read more: <a href="https://blockworks.co/news/crypto-etf-regulation-in-asia">After crypto ETF movement in Hong Kong, other Asia regulators could act&nbsp;</a>



The funds, in the next few months, could see 23,000 to 28,000 of bitcoin inflows as the segment matures in the <a href="https://blockworks.co/tag/hong-kong">Hong Kong</a> market. Again, this will surely disappoint those looking for flashy numbers —- that figure represents about two days worth of inflows from <a href="https://blockworks.co/tag/blackrock">BlackRock</a>’s bitcoin ETF IBIT back in February.&nbsp;



All of this is to say that there should be a “check yourself before you wreck yourself” realignment of expectations when it comes to the Hong Kong ETFs.



It’s —&nbsp;quite literally — the earliest of days for the products, and there is still time for them to show impressive numbers. Traders just need to put aside their comparisons for a while.&nbsp;



— Katherine Ross



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



<ul>
<li>Rep. Patrick McHenry <a href="https://twitter.com/PatrickMcHenry/status/1785317163110130028">accused</a> SEC Chair Gary Gensler of misrepresenting the regulator’s position on ETH.&nbsp;</li>



<li>BlackRock’s BUIDL hit $375 million in deposits, CoinDesk <a href="https://www.coindesk.com/markets/2024/04/30/blackrocks-buidl-becomes-largest-tokenized-treasury-fund-hitting-375m-toppling-franklin-templetons/">reports</a>.</li>



<li>Coinbase <a href="https://www.coinbase.com/blog/coinbase-integrates-bitcoins-lightning-network-in-partnership-with">integrated</a> Bitcoin’s Lightning Network.</li>



<li>Standard Chartered warned that bitcoin could fall to $50,000, The Block <a href="https://www.theblock.co/post/291908/standard-chartered-bitcoin-price-fall-50000">reports</a>.</li>



<li>Tether notched a net profit of $4.5 billion, <a href="https://tether.io/news/tether-releases-q1-2024-attestation-reports-record-breaking-4-52-billion-profit-highest-treasury-bill-ownership-percentage-ever-total-group-equity-of-11-37-billion/">according</a> to its latest attestation report.&nbsp;</li>
</ul>



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



There are no crypto coincidences.



That fact surely includes yesterday’s indictment of longtime Bitcoin investor Roger Ver just as ex-Binance boss CZ was handed a meme-length prison sentence.



Ver, <a href="https://blockworks.co/news/roger-ver-tax-fraud-charges">accused of tax fraud</a>, is almost a picture-perfect “send a message” target for the US government’s crypto investigators.&nbsp;



Pile on last week’s <a href="https://blockworks.co/news/doj-arrests-founders-samourai">arrests of the Samourai Wallet</a> co-founders, and you’ve got a pretty convincing picture of a regulatory apparatus that wants to put the <a href="https://blockworks.co/news/samourai-wallet-matters-memecoins-privacy">crypto industry on notice</a>.&nbsp;



Maybe I’m being conspiratorial. Then again, it feels like crypto kind of snuck up on the US government. One day, it&#8217;s weird internet money, the next it’s a major driver of Wall Street activity and there’s billions of dollars worth of BTC on Uncle Sam’s balance sheet.



It’s easy to write of Ver’s indictment. But if you’ll pardon the tin-foil hat I’m sporting these days, I think things are just getting started.&nbsp;



4 indeed.&nbsp;



— Michael McSweeney



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Empire Newsletter: Why CZ and SBF’s sentencings were so different

Anchorage Digital is now custodying shares of a tokenized Treasury fund via a partnership with Arca Labs meant to advance institutional participation in the segment.&nbsp;



The link-up comes as the tokenization of real-world assets is set to continue as a “defining trend” for institutional crypto in 2024, Anchorage CEO Nathan McCauley told Blockworks.



The innovation unit of crypto investment firm Arca first issued shares of its US Treasury Fund as digital asset securities, known as ArCoin, in 2021. The company has argued that ArCoin can replace US Treasurys in enterprise workflows while reducing costs and improving transparency.



The company has now turned to <a href="https://blockworks.co/tag/anchorage-digital">Anchorage</a> — a crypto-focused bank chartered by the US Office of the Comptroller of the Currency (OCC) — to custody the shares.


<div class="wp-block-image">
<figure class="alignright size-large is-resized"><img loading="lazy" decoding="async" width="5763" height="3842" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=1024&amp;h=1024" alt="" class="wp-image-85120" style="width:467px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=5763 5763w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=386 386w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=392 392w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=329 329w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Anchorage-Digital-Co-Founders-Nathan-McCauley-and-Diogo-Monica-3.png?w=80 80w" sizes="(max-width: 5763px) 100vw, 5763px" /><figcaption class="wp-element-caption">Anchorage Digital Co-Founders Nathan McCauley and Diogo Mónica</figcaption></figure></div>


The alliance allows Anchorage clients to keep ArCoin in custody at the bank. Institutions can now access the tokenized shares from the Anchorage platform as it would for the hundreds of assets the company supports.&nbsp;



Read more: <a href="https://blockworks.co/news/federally-chartered-bank-intros-settlement-network">Crypto-focused federal chartered bank intros settlement network</a>



McCauley has said Anchorage meets the Securities and Exchange Commission’s definition of a “qualified custodian.” The term was included in the regulator’s February 2023 <a href="https://www.sec.gov/news/press-release/2023-30">proposal</a> that would “entrust safekeeping of client assets” to such entities.



“Now that institutions have validated the benefits of blockchain technology, companies are seeking the most secure and seamless digital assets solutions that meet US regulatory standards,” Arca Labs president Jerald David said in a statement.



The Anchorage platform uses hardware security modules, which keeps assets offline in segregated, on-chain vaults while keeping them accessible. The model serves as a “major unlock” for institutional participation in <a href="https://blockworks.co/tag/tokenization">tokenization</a>, McCauley argued.



Tokenizing assets — from real estate to funds — has made headlines in recent years as some of the biggest fintech companies and traditional finance players delve deeper into blockchain-related experiments. Read more: <a href="https://blockworks.co/news/citibank-explores-tokenization-wisdomtree">Citi the latest TradFi player to test out asset tokenization</a>



The world’s largest asset manager, <a href="https://blockworks.co/tag/blackrock">BlackRock</a>, launched the USD Institutional Digital Liquidity Fund in March, marking the firm’s first tokenized offering.&nbsp;



Fellow fund behemoth Franklin Templeton, which debuted its OnChain US Government Money Fund in 2021, started allowing institutional investors to transfer shares of the fund — represented by BENJI tokens — to other shareholders last week.



Roger Bayston, Franklin Templeton’s head of digital assets, previously told Blockworks that BENJI essentially acts as a stablecoin while also generating income.&nbsp;



“Looking ahead, we will continue to expand our custody support for tokenization projects to advance institutional participation in the ecosystem for the long term,” McCauley said.



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Anchorage, Arca Labs link up in bid to advance tokenization adoption

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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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

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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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

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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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Former Binance CEO Changpeng Zhao sentenced to 4 months in prison

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



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



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



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



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



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



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



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



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



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DOJ charges Roger Ver with tax fraud

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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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


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


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Samourai Wallet matters more than your memecoins

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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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

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



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



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



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



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



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



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



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



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



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



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



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Cryptocurrencies, stocks slide ahead of Fed rate decision 

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



Don’t call it an airdrop.



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



— David Canellis



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



— Casey Wagner



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



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



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



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



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



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



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



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



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



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



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



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



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



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



— Katherine Ross



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



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



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



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



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



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



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



One foot in, one foot out.



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



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



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



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



— Michael McSweeney



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

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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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