On-Chain Dynamics

Jeff Albus

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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Earlier this week, we wrote that Solayer was about to begin its token unlocks.



We <a href="https://blockworks.co/news/solana-bug-patch-zero-knowledge-proofs">noted</a> that this would mark the first real loosening of grip over Solayer’s tightly controlled float, and observed that while the token had surged 87% in a month, traders appeared to be bracing for volatility.



Well, SURPRISE! That volatility came early.



In the 48 hours that followed, $LAYER <a href="https://app.blockworksresearch.com/assets/layer">collapsed more than 55%</a> from its all-time high, wiping out over $350 million in market cap. The selloff was sharp, disorderly and possibly — in the eyes of some — deliberate.



Back in March, onchain researcher Andrew 10 GWEI <a href="https://x.com/Andrey_10gwei/status/1919829616115540303">flagged</a> a series of Solayer team-linked wallets that <a href="https://x.com/Andrey_10gwei/status/1904213428148826407">received</a> large airdrop allocations, <a href="https://x.com/Andrey_10gwei/status/1904213436877140478">deposited</a> funds to Binance and appeared to sell into the market well ahead of this week’s unlock.&nbsp;



His analysis <a href="https://x.com/Andrey_10gwei/status/1904213441339924484">suggested</a> that only 3.6% of the total token supply — rather than the 12% promised — was actually distributed through the Genesis Drop. He claimed at the time that over $28 million in tokens were routed through wallets tied to the team.



Though Blockworks was unable to directly verify these claims, they have contributed to <a href="https://x.com/onchainquant/status/1919641933796016535">speculation</a> that the <a href="https://x.com/langeriuseth/status/1919855807404863796">downturn</a> was more of a <a href="https://x.com/Colasama/status/1919823238575649249">coordinated</a> exit. But whether orchestrated or not, the crash fed on itself. Thin order books, high leverage and looming dilution made for a classic cascade. The market structure Solayer relied on — thin float, heavy lockups and delayed investor cliffs — is the same playbook that powered dozens of outsized runs this cycle. But this can also be deeply unstable.



When a token trades with a high FDV and low float, <a href="https://www.binance.com/en/square/post/20199723509546">price discovery</a> becomes a function of narrative momentum, not actual demand depth. Early buyers are betting they can rotate out before gravity hits, and any deviation — a perceived exit, a mispriced unlock, a sharp funding flip — sparks the kindling.



Once that kind of volatility begins, there’s usually little structural support to stop it.



Zooming out, while Solayer unraveled, the Solana ecosystem <a href="https://app.blockworksresearch.com/flashnotes/solana-april-2025-update">posted</a> one of its strongest months in a year. DEX volumes and REV bounced back. SOL outperformed both ETH and BTC in April.



Block space rose to 50 million CUs with 60 million on the way. SolFi and ZeroFi, two closed-source “prop AMMs,” now make up 20% of DEX volume. Stablecoin supply hit an all-time high of $12.6 billion. Solana’s price at the time of publication is $146.57.



The chain’s fundamentals continue to accelerate. So why, then, does one of its most high-performing new tokens seem to have imploded?



Maybe because Solayer wasn’t priced on fundamentals — it was priced on narrative. On mechanical scarcity. On the hope that a thin float, institutional heat and Solana tailwinds could suspend gravity. The future of Solana itself may be bright, but its token economy is still wild, still early, and still very much a game of timing.



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investors

Volatility arrives early for Solayer

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>.



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New Hampshire has won the <a href="https://blockworks.co/news/us-states-btc-reserve-proposals">race</a> among US states mulling laws to allow digital assets investments and/or create reserves.



How quickly should we expect a wave of others to follow suit?



Headed to Arizona Gov. Katie Hobbs’ desk, as of yesterday, was a law to establish a state treasurer-run “digital assets strategic reserve fund.”&nbsp;



But Hobbs could veto this, given that she rejected a separate bill last week to allow a state public fund to invest up to 10% in “virtual currency holdings.” She <a href="https://www.azleg.gov/govlettr/57leg/1r/sb1025.pdf">called</a> those “untested investments.”&nbsp;



So if Arizona is not next, who will be? Perhaps North Carolina or Texas, filings compiled <a href="https://bitcoinlaws.io/reserve-race">here</a> indicate.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdG7sUR5W-dDhK0Tl6sGReRcz4ng46eXGsVH4dmgZpuyCTv2-w0AmFXQTEV-73IW7tSq7JCFa_pPmFR_-uA-vPYyDU2oKdVsW9brspe51lPRLlRpmDHA5CBv0G1bDu8Ibu5h-zpqg?key=pQwIpy1cyCnnxyZ6QtSKr6nl" alt=""/></figure>



North Carolina’s Digital Assets Investments Act would authorize the state treasurer to invest up to 5% of any designated funds in “qualifying digital assets.” That passed a second reading in the House (71-44) on April 30 and moved on to the Senate.&nbsp;



That bill would also “examine the feasibility” of allowing state retirement income plan members to make such investments (via crypto ETPs) and study a state reserve to hold seized or forfeited crypto.



Looking at Texas, the state’s <a href="https://capitol.texas.gov/BillLookup/History.aspx?LegSess=89R&amp;Bill=SB21">proposed</a> Strategic Bitcoin Reserve and Investment Act would establish a special fund to invest in crypto assets with a market cap of $500 billion or more (currently only BTC).&nbsp;



Ishmael Green, a partner at law firm Diaz Reus, said he expects half a dozen or so states to follow New Hampshire in the near-to-medium term — “because states are looking to hedge against inflation, in addition to protecting their balance sheets.”



Indeed, the Texas bill text states the following:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfgo-iSyTKee3EEbRELZLoOh9Tnkgr0tFqp-uHpzOGI32WRd6--zwM4taciCIYmZaifGdBpsQ6P26taYo2_9xOTkCRtPmfxFvJxVLM09eXLdKieCD06cHrY_qyAW6eCt9Fzh0UdJA?key=pQwIpy1cyCnnxyZ6QtSKr6nl" alt=""/></figure>



“Long term, these sorts of laws will lead to an upward price pressure and supply shortage, as states and other institutional entities scramble to accumulate more bitcoin,” Green told me.



As for how the North Carolina and Texas governors feel about crypto, if these bills reach their desks? NC Gov. Josh Stein hasn’t said much on the topic, but has <a href="https://www.wfae.org/2025-03-03/nc-invest-cryptocurrency-destin-hall-bill-bitcoin">indicated</a> support for the legislation.



In a November X <a href="https://x.com/GregAbbott_TX/status/1855015903496147225">post</a>, Texas Gov. Greg Abbott wrote: “Texas is already the home of crypto mining. This session Texas should become the crypto capital.”



FalconX research head David Lawant said he too expects at least a few more states to enact these types of laws in the next six to 12 months.&nbsp;



But he’s watching out for a Bitcoin Policy Institute framework (set for release in June) that aims to help states craft effective BTC reserve laws.



“A common issue with many of the current proposals is that they’re not as clearly written or thoughtfully structured as they could be,” Lawant told me.



Suffice it to say, there’s plenty more where this came from.



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Bitcoin

After New Hampshire’s crypto reserve race win, which states are next?

Casey Wagner

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>.



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The Federal Open Market Committee (FOMC) today, as expected, kept interest rates unchanged.&nbsp;



Committee members cited a “stabilized” unemployment rate, “solid” labor market and continued elevated inflation. However, they noted there’s now an increased risk that unemployment and inflation will rise in the coming months.&nbsp;



Stocks were mostly flat on the news. The S&amp;P 500 was up 0.2% on the day, as of 2:30 pm ET. The Nasdaq Composite was trading 0.3% lower.&nbsp;



“If the tariffs that have been announced are sustained, they’re likely to generate a rise in inflation, a slowdown in economic growth and increase in unemployment reflecting a one-time shift in the price level,” Fed Chair Jerome Powell said shortly before publication. 



The Fed’s focus on the unemployment rate in today’s statement suggests that a so-called “Fed put” (the central bank stepping in to lower rates and prevent a sharp market decline) will not come until — or unless — the labor market starts to deteriorate.&nbsp;



In other words, should tariffs spur significant layoffs, we could be looking at an interest rate cut sooner rather than later.&nbsp;



Committee members did not release projection materials this month, so it’s hard to know how they’re thinking about the impact of new and pending tariffs. In March, FOMC members indicated they still expect two cuts in 2025.&nbsp;



It’s been a tumultuous six weeks for markets since the Fed’s last meeting in March. Stocks whipsawed along with President Trump’s tariff policies at the beginning of April — rising and falling as optimism over trade deals fluctuated.&nbsp;



In the past couple of weeks, though, major indexes have erased their “Liberation Day” losses. As of Tuesday’s close, the S&amp;P 500 was up 0.5% from April 2. The Nasdaq Composite gained 2.8% in that period, no doubt benefiting from tech giants’ <a href="https://blockworks.co/news/meta-microsoft-earnings-q1-stocks-higher">positive Q1 earnings</a>.



Investors are, apparently, confident that the <a href="https://blockworks.co/news/us-economy-shrank-q2-fears-tariff-impact">looming trade war</a> won’t be so bad after all. Pushing the start date for most tariffs on foreign imports and granting exemptions for the select tech and <a href="https://blockworks.co/news/gm-stock-earnings-release-auto-tariffs">auto levies</a> helped markets rally.&nbsp;



While fears around tariff impact may be easing, analysts warn that many of the trade policies — and their impact on prices, consumer spending and the labor market — remain to be seen.&nbsp;



In a constantly changing situation, traders must be cautious to give credence to any single statement. Case in point: Trump just after 2 pm ET said he wasn’t open to lowering the 145% tariff rate on China. This comes hours after China said it agreed to meet with the White House.&nbsp;&nbsp;



The decision comes after weeks of President Trump <a href="https://blockworks.co/news/trump-criticizes-fed-chair-powell">urging Powell</a> to cut rates. Trump quelled fears that he’d attempt to remove Powell, but tension between the two remains. 



Since November, Powell has been <a href="https://blockworks.co/news/equities-trade-war-powell-rate-cut">consistent</a> in his stance that he will be waiting and watching the data before making any decisions. So don’t expect committee members to cut rates on headlines.



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Federal Reserve

Fed holds rates, cites increased risk of setbacks in the labor market, inflation

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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Ethereum’s most ambitious upgrade since <a href="https://blockworks.co/tag/ethereum-merge">the Merge</a> is now live.



The Pectra hard fork, which <a href="https://x.com/yeluacaM/status/1920058186997936608">activated smoothly</a> shortly after 6 am ET, delivers a powerful set of upgrades to Ethereum’s execution and consensus layers, affecting everything from validator operations to transaction UX and data availability.



<h2 class="wp-block-heading">What’s changed?</h2>



The upgrade introduces several important features, grouped roughly into three categories:



<h3 class="wp-block-heading">Smart accounts (EIP-7702)</h3>



This upgrade <a href="https://blockworks.co/news/ethereum-upgrade-account-abstraction-proposal">lets EOAs</a> temporarily behave like smart contracts, opening the door to batched transactions, stablecoin and sponsored gas payments — a massive UX unlock, according to Hart Lambur, co-founder of Risk Labs (which built Across and UMA).



For example, “users will be able to sign a single intent that seamlessly triggers actions across chains — no need for native gas, no extra wallet setup and no extra developer work,” Lambur told Blockworks. “It gets us closer to a world where bridging is invisible and cross-chain coordination just happens under the hood.”



<h3 class="wp-block-heading">Data availability scaling (EIP-7691)</h3>



By doubling <a href="https://blockworks.co/news/ethereum-blobs-balancing-act">blobspace</a> capacity from six to 12 blobs per block, Ethereum increases throughput for <a href="https://blockworks.co/tag/rollups">rollups</a> and reduces L2 fees. But as Ansgar Dietrichs <a href="https://x.com/adietrichs/status/1920082921873870859">pointed out</a>, saturation of this new capacity would be good for Ethereum, provided it can continue scaling bandwidth to avoid too much fee pressure as demand grows.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcO_eL5-nOFyGE8bOf11k4-Rkabi35gY7gEchuAOpxf6tC1UHm5-N8FNmzhXR7yPsexGK_euqXpg947WIZDrynrFisoDp_YQVaxnBisClAyjfpYPRW02gXyU7i6PrwxfVkxAGlHRQ?key=50kD8TET5WXoo_sD0HAAfw" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://x.com/hildobby_/status/1920067472960762207">@hildobby</a></figcaption></figure>



<h3 class="wp-block-heading">Validator UX and efficiency</h3>



Pectra raises the maximum effective validator balance from 32 ETH to 2,048 ETH, which <a href="https://blockworks.co/podcast/bellcurve/9fd1a758-a922-11ee-85f0-2bb0374896a4">Alluvial</a> co-founder Matt Leisinger calls “a meaningful unlock for institutions.”



“Institutions can now autocompound rewards natively — no more skimming and aggregating 32 ETH to stay efficient,” Leisinger told Blockworks.



Bohdan Opryshko at Everstake thinks it may be the “most institution-friendly update yet.” He notes EIP-7002 also allows validators to exit using execution-layer controls, reducing trust assumptions for stakers and protocols alike — altogether making “staking at scale with operational clarity” possible for more conservative capital.



<h2 class="wp-block-heading">What happens next?</h2>



Pectra sets the stage for <a href="https://blockworks.co/news/ethereum-consensus-evm-upgrade-fusaka-devs">Fusaka</a>, Ethereum’s next major upgrade — now tentatively pushed to 2026. That fork is expected to introduce PeerDAS, a more efficient data availability sampling scheme for rollups, and continue laying the groundwork for future upgrades like <a href="https://blockworks.co/news/ethereum-developers-consider-evm-upgrade">Verkle trees</a> and full account abstraction.



But in the coming months, attention will shift to ecosystem adoption as teams try to showcase the real-world capabilities of the upgrade.&nbsp;



How will wallets, L2s and dapps move to support <a href="https://blockworks.co/news/vitalik-buterin-eip-account-abstraction">EIP-7702</a>? We can expect features like batched transactions, gas sponsorship and stablecoin fee payments.



According to OP Labs&#8217; Sam McIngvale, “apps drive this adoption curve.”



“Wallets will follow once there&#8217;s clear demand,” McIngvale told Blockworks. “If widely adopted, 7702 could finally make one-click onboarding and abstracted UX the norm.”



Now that rollups can post more data to Ethereum cheaply, how long will it take to saturate that bandwidth? This could have consequences for rollups’ adoption of alternative DA layers such as <a href="https://blockworks.co/news/eigenlayer-restaking-mantle-zksync">EigenDA</a>, <a href="https://blockworks.co/tag/celestia">Celestia</a> and <a href="https://blockworks.co/tag/avail">Avail</a>. If L2 activity fails to match blob supply, scaling momentum could stall. Conversely, if demand rises too quickly, Ethereum may need to accelerate PeerDAS or further blob increases to prevent bottlenecks.



Large operators can collapse thousands of validators into a few, but testnets couldn’t simulate how much that will improve efficiency, so it will be interesting to observe the concrete effects.



Solo stakers may benefit indirectly, according to Preston van Loon, a core developer with <a href="https://blockworks.co/tag/offchain-labs">Offchain Labs</a>. Fewer attestations from consolidated validators means lower network bandwidth requirements. “It really does help everybody,” van Loon told Blockworks. “It&#8217;s hard to say which group has the outsized benefit.”



Dashboards tracking validator set composition, message propagation and slashing rates will become key indicators.



The “unpredictability of network behavior” may be a risk in the future, MIT professor and <a href="https://blockworks.co/news/optimum-ram-web3-protocol-memory-decentralized">Optimum</a> co-founder Muriel Médard warned. “As blob sizes and message throughput increase, Ethereum’s ability to propagate data efficiently and predictably will define how far it can scale,” Médard told Blockworks.



Considering the fork involved more EIPs than any prior upgrade, Pectra’s <a href="https://x.com/elbuenmayini/status/1920082396625375387?s=46&amp;t=yjAdM2ddX0KgGQimu7jcDQ">quiet launch</a> may signal just how much <a href="https://blockworks.co/tag/ethereum">Ethereum</a> has matured as a decentralized protocol. Still, the protocol has a long way to go and faces more competition than ever.



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0xResearch Newsletter

Ethereum quietly flips the switch on Pectra

David Canellis

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



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Bitcoin miners are earning more than $1.2 billion per month to secure the chain.



What are they securing, exactly?



At its core, the collective hash power of honest miners ensures that bad actors can’t suddenly build up and release a second, dubious chain that might usurp the current one’s claim as the longest.



Together with full node operators, miners also protect the chain from non-standard transactions. But miners can only ever select transactions that full nodes (which they generally operate themselves) have already deemed to be valid.



So, how do those nodes decide which transactions are valid? That’s the role of Bitcoin Core’s relay code, which enforces standardness rules that determine whether a transaction ever makes it to a miner’s mempool at all.



Those standardness rules (also referred to as policy rules) secure Bitcoin in a very different way. They effectively define what Bitcoin is and isn’t, and they’re <a href="https://blog.bitmex.com/dapps-or-only-bitcoin-transactions-the-2014-debate/">routinely</a> up for debate.



<h2 class="wp-block-heading">On This Day: Ordinals take Bitcoin</h2>



This time around, discussion has centered on the lifting of a policy rule that capped OP_RETURN outputs at 80 bytes, limiting the amount of arbitrary information that can be posted to the network through individual transactions.



Two years ago to the day, however, Bitcoin was reckoning with the sudden popularity of digital collectibles protocol Ordinals, which utilizes three other opcodes introduced under the Taproot umbrella in 2021.



At the time, 425,000 transactions were sitting in the Bitcoin mempool, as <a href="https://mempool.jhoenicke.de/#BTC,all,count">represented</a> by Jochen Hoenicke’s full node, breaking the previous record of almost 262,000 from peak bull market in December 2017.&nbsp;



Average bitcoin transaction fees spiked to more than $31, up from $2 days earlier.



Through Ordinals, <a href="https://www.coindesk.com/tech/2024/12/09/bitcoin-four-meggers-ordinals-bot-inscribes-largest-ever-file-on-the-og-blockchain">files</a> of close to 4MB (enough to <a href="https://blockworks.co/news/inside-bitcoin-biggest-block">fill an entire block</a>) have been written to Bitcoin including images, videos, audio and video games without relying on OP_RETURN, thereby avoiding its 80-byte limit altogether.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcwOED68Iy271t0R-xzZ5tPnW4-xwvyt9MTSzdM5YVtxaA6qVQX2akNqRPXqCbbXArg3Ney_cg_Ed1SPxNuZZfs7AIls0dsUVpc71AZmrjbo2oPpuOlFqMC4EgXKLlsHGxNRrMU?key=hn2Rv85GBuJrZ8j20Y4AeQ" alt=""/><figcaption class="wp-element-caption">The purple arrow points to May 7, 2023, when Ordinals hype really set in.</figcaption></figure>



All this has made Bitcoin a content storage network, to some degree. Each Ordinal is, essentially, tokenized non-financial data that can be traded peer-to-peer — the type of <s>nonsense</s> utility that had been typically reserved for virtual machine chains like Ethereum and Solana.



These days, Ordinals activity has cooled, but has its moments. Bitcoin Core developers, in lifting the 80-byte policy rule on OP_RETURN data, are hoping to reduce the incentives for further workarounds that might damage the network in unknown ways.



“The change re-affirms that Bitcoin is governed by transparent, minimal rules rather than editorial preference,” Blockstream engineer Gregory Sanders <a href="https://gist.github.com/instagibbs/c436110890ab25aa9997b13c2270d5ce">wrote</a>. “By retiring a deterrent that no longer deters, Bitcoin Core keeps the policy surface lean and lets the fee market arbitrate competing demands.”



Times like these remind us that Bitcoin is not sentient, but it does evolve. For living things, it’s the biological code inside DNA that informs how they grow.&nbsp;



On the other hand, Bitcoin’s “blind watchmaker” is the collective resolve of its active developers, even if they don’t have unanimous support for their proposed changes, as expressed through the willingness of miners, node operators and users to adopt them.



Or, as Sanders put it: “Dissenting parties remain free to modify software, run stricter policy, or propose new resource limits if empirical harm emerges.”



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Bitcoin Core devs want Bitcoin governed by ‘transparent, minimal rules’

Katherine Ross

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



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Unlike memecoins — which Blockworks Research thinks are here to stay — an altcoin szn may not come back…at least not in the way we’re used to, according to K33.



The 2020/2021 cycle may have been the peak, K33’s David Zimmerman wrote in a note.



“Without fresh retail inflows, the math gets tougher for speculative tokens with no revenue, no product, and no roadmap beyond vibes,” he said.



One of the big changes, outside of the overall maturity cycle we see, is that memecoins have really solidified themselves within crypto.&nbsp;



To put it another way: Why play a narrative-driven token when you can make a memecoin play instead?&nbsp;



As I wrote in the Milk Road last week, memecoins represented roughly 25% of the overall volumes in crypto at the peak of Q1.&nbsp;



This means the path forward for altcoins is more likely to be selective. As Zimmerman noted, the overall “altcoin market faces $4.3 billion in token unlocks in May, $2.8 billion in June, and $3.2 billion in July. These unlocks are headwinds that demand a surge in new liquidity to be absorbed.”



“In the absence of any significant surge of demand or new retail inflows, the math is simple: more supply facing static or shrinking demand equals downward pressure.”



Outside of the obvious need for liquidity, times have simply changed. Back in the day, altcoins could get a boost just by being in proximity to a hot narrative. Now, there’s more of a need for fundamentals (I swear <a href="https://blockworks.co/news/crypto-valuations-fundamentals">I’m not trying to keep bringing this up</a>, it’s just what’s happening).



Zimmerman said that bitcoin will remain dominant, but there will be chances to allocate smaller positions to altcoins. While some may outperform, the “windows are limited and increasingly fleeting.”



Tokens may not continue to be the big winners as crypto matures. Take, for example, stablecoins.&nbsp;



“The most bullish crypto asset outside of Bitcoin right now is almost certainly stablecoins. They are making their way into payment infrastructure, relentlessly growing in market cap, and positioning themselves at the center of both retail and institutional use cases,” Zimmerman said.&nbsp;



In a sea of choices, now investors will have to pay attention to metrics before aping into a token (unless you stick with memecoins). For K33, this means understanding the product-market fit, user growth, or revenue of said token.&nbsp;



RIP, face-ripping altcoin rallies. You were fun. But hello to a more — dare I say — serious era of crypto.



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altcoins

Why altcoin seasons may not be coming back

Byron Gilliam

This is a segment from the Blockworks Daily newsletter. To read full editions, <a href="https://blockworks.co/newsletter/daily">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">
“Consciousness may end up being found in very strange places.” — Christof Koch
</blockquote>



The canonical question in the philosophy of consciousness was posed by Thomas Nagel in 1974: “What is it like to be a bat?”



Nagel’s idea was that consciousness is defined simply by what it feels like to be something — the inner, subjective experience of being alive and aware.



“An organism has conscious mental states if and only if there is something that it is like to be that organism,” he explained.



Many have found this subjective answer unsatisfyingly circular: What is this something???



David Chalmers later declared this question “the hard problem of consciousness” because it exposed a gap between subjective experience and objective science.



In 2004, however, Giulio Tononi confronted Chalmer’s hard problem with a paper proposing a mathematical model for consciousness: Integrated Information Theory (IIT).



Consciousness, he argued, is a mathematical property of physical systems — something that can be quantified and measured.



But can a system be conscious?



After interviewing the computational neuroscientist Christof Koch, the co-hosts of the <a href="https://youtu.be/qme8fOs7N8g?si=xZUjUtbDmmNVpKuI&amp;t=665">New Scientist podcast</a> concluded that computers, being systems, could theoretically achieve consciousness if they were able to “integrate” the information they process.



And nearly anything could be a system: Even a rock might register a trace of consciousness if its atoms form the right kind of structure (as proven in the science documentary <a href="https://youtu.be/2X1sOTg-ivg?si=iVUg_SNnwbLK3Yrq">Everything Everywhere All at Once</a>).



Which got me thinking: Ethereum is a world computer, right?



And critics accuse Bitcoin of being a pet rock.



So…if computers and rocks can be conscious, surely blockchains can be, too?



Blockchains do, in fact, tick a lot of IIT’s boxes.



IIT posits, for example, that a system can only be conscious if its current state reflects everything it’s been through — just as your memories shape who you are and each moment builds on the last.



Blockchains like Ethereum work in a similar way: A blockchain’s current “state” is a function of its history and each new block depends entirely on the ones before it.



That history-dependence gives it a kind of memory — and because thousands of nodes agree on a single shared version of reality, it also creates a unified “now” (or “state”) that IIT says is a characteristic of consciousness.



Unfortunately, IIT also says that for a system to be conscious, it has to have “causal autonomy” — which is to say, its parts have to influence each other internally and not just in response to inputs it passively receives from external actors.



Blockchains don’t work like that, of course.&nbsp;



Instead, they rely on external inputs (like users sending transactions and validators adding blocks) to act on and advance — and the nodes that run the network don’t influence each other internally, they just blindly follow the same set of rules.



There’s no spontaneous activity, no internal causation — not even the aimless vibration of molecules you’d get in an inanimate chunk of granite.



So I’m sorry to report that, on the IIT spectrum of consciousness, blockchains rank below even rocks — and that the “pet rock” jab might therefore be a compliment to Bitcoin (or an insult to rocks).



But maybe not for long!



In 2021, the computer scientists (and married couple) Lenore and Manuel Blum co-authored a <a href="https://www.scirp.org/reference/referencespapers?referenceid=3699575">paper</a> describing how to engineer consciousness into machines.



Their framework treats consciousness as a computable property — achievable with AI algorithms designed to produce systems with the “causal autonomy” required for conscious experience.



The AI wouldn’t be conscious itself, in this case, but a system that deploys it could be.



Now imagine an AI-enabled blockchain that doesn’t just run code, but thinks about running code.&nbsp;



Instead of inert ledgers passively waiting for inputs, blockchains could be self-contained, “causally integrated” machines — more like synthetic brains than distributed databases, with the kind of internal autonomy that IIT researchers consider essential for consciousness.



This could be useful!



A system like that might be able to reason about its own security, detect anomalies in real time, and decide when to fork itself (perhaps after a period of soul-searching introspection).



In short, it would do things not because it was told to, but because it understood what was happening — both inside itself and in the outside world.



It’s not impossible.&nbsp;



Today’s blockchains are more like nervous systems without a brain — wiring without will.&nbsp;



But tomorrow? Who knows.&nbsp;



If IIT is right, philosophers might soon be asking, “What’s it like to be a blockchain?” (And also, is it better than being a rock?)



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The Breakdown Newsletter

Will AI make blockchains conscious?

Jack Kubinec

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



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



As Solana continues to cement itself as the most performant layer-1 blockchain by speed and cost, some crypto developers have gained an interest in using the technology underpinning Solana to launch new blockchains of their own.



To wit, there are around two dozen of these Solana Virtual Machine chains — counting layer-1s, layer-2s built on various other blockchains, and application-specific chains. But for simplicity’s sake, here are the layer-1s trying to out-Solana Solana:



<h2 class="wp-block-heading">Fogo</h2>



Fogo is a <a href="https://blockworks.co/news/solana-chain-running-pure-firedancer">forthcoming layer-1</a> that says it wants to push the SVM’s performance to its limits by only running the Firedancer validator client on a permissioned validator set with multi-local consensus.



If that sounds like word salad, just know that Fogo’s bet is that with a fork of Jump’s open-source Firedancer code and a couple tradeoffs around decentralization, Solana’s software can be even more performant.



The layer-1 raised $8 million at a $100 million valuation via the crypto crowdfunding platform Echo.



<h2 class="wp-block-heading">Pythnet</h2>



The popular Solana oracle Pyth runs an SVM app chain where Pyth operators who provide price data run validators, and the protocol aggregates prices.&nbsp;



Pythnet is the oldest on the list: Remarkably, Pyth shipped its SVM chain in August of 2022.



Since it’s a blockchain for data, this chain is less consumer-facing than others, but it’s an interesting decentralized way to stream price data — and the product has been live for nearly three years.&nbsp;



<h2 class="wp-block-heading">Solayer</h2>



Solayer initially fundraised and launched as a Solana restaking protocol, but after Jito entered the <a href="https://blockworks.co/news/jito-releases-code-for-solana-restaking-network">restaking race</a> — and as restaking became less buzzy, to put it bluntly — Solayer pivoted to launching its own layer-1 powered by its InfiniSVM.



Solayer’s documentation and leadership have claimed that it can achieve one million transactions per second at points, although some Solana developers <a href="https://x.com/trentdotsol/status/1917328407878328470">dispute</a> Solayer’s performance figures.



<h2 class="wp-block-heading">JupNet</h2>



The Solana DeFi giant Jupiter began teasing JupNet in January as an “omnichain network that aims to aggregate all of crypto in one single decentralized ledger.”



Little is yet known about JupNet, but Jupiter co-founder meow said in a blog <a href="https://meow.bio/jupnet.html">post</a> that its so-called Jupiter SVM has validators come to agreement on both internal Solana transactions and external transactions from other blockchains.



Jupiter has greatly expanded its business via acquisitions in recent months, but JupNet may be its most ambitious venture yet.



<h2 class="wp-block-heading">Cube</h2>



Cube Exchange is building an SVM L1, co-founder Bartosz Lipinski confirmed to me in a Telegram message.



Lipinski and co. <a href="https://www.youtube.com/watch?v=vo3nhdIra6M">forked the SVM</a> as part of a product they’ve <a href="https://blockworks.co/news/cube-exchange-crypto-mpc">described as</a> a hybrid centralized-decentralized exchange.



<h2 class="wp-block-heading">Thru</h2>



This one barely counts since Thru will be built on a new virtual machine called the ThruVM, but a <a href="https://blockworks.co/news/unto-vc-raise-thru-blockchain-l1">lot of the intrigue</a> around this brand new project comes from the fact that its co-founder, Liam Heeger, was previously a core engineer working on Solana’s Firedancer client.



So with the Firedancer credentials, Thru ekes out a spot on the list.



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Solana’s software underpins these layer-1s

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>.



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A US litecoin ETF — and other altcoin products — will have to wait at least a little longer.&nbsp;



But the chance such products see the light of day still appears quite good — and issuers continue plotting more crypto ETFs.



The SEC decided on Monday to <a href="https://www.sec.gov/files/rules/sro/nasdaq/2025/34-102988.pdf">delay</a> its ruling on Canary Capital’s proposed spot LTC offering. It requested the following:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf8gYwBqo8LMe2Sj8ys9eqWodvuqV0_-TCHXOZBaQhF8PwaMhMnhCWM7sVT_SqFMbXgsbHj67Y_clBzkIBW0H4Maa3g3FzbZru95Kn8gsDo1IrTALIi5gRPim4o0T-1fGdbvIOp?key=RFcg87cpckgMv3djFkBtin71" alt=""/></figure>



We might not get a ruling until the agency’s final deadline in October.&nbsp;



Prior to the Monday delay filing, Bloomberg Intelligence’s James Seyffart held out hope that we could see a different result, writing on <a href="https://x.com/JSeyff/status/1919159854691713334">X</a> that the “SEC went early &amp; delayed a bunch of filings but not this. If any asset has a chance of early approval it&#8217;s Litecoin IMO.”



You might recall that in February, he and colleague Eric Balchunas <a href="https://blockworks.co/news/litecoin-etf-approval-odds-2025">put the odds</a> of a US spot litecoin ETF launching by the end of 2025 at 90%.&nbsp;



The thinking went that LTC was one of the few assets the SEC had not previously labeled as a security. Also, like bitcoin, litecoin uses the proof-of-work consensus mechanism.&nbsp;



Those 90% odds remain intact, Balchunas noted last week.



<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">Would love to hear directly from Atkins, but all good chance of happening. Here’s our latest odds of approval for all the dif spot ETFs via <a href="https://twitter.com/JSeyff?ref_src=twsrc%5Etfw">@JSeyff</a> <a href="https://t.co/nLhYJJmO9U">https://t.co/nLhYJJmO9U</a> <a href="https://t.co/4AcJVwhics">pic.twitter.com/4AcJVwhics</a>&mdash; Eric Balchunas (@EricBalchunas) <a href="https://twitter.com/EricBalchunas/status/1917444433282490606?ref_src=twsrc%5Etfw">April 30, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The Bloomberg pros also give spot solana products a 90% chance of approval by the year’s end. XRP products are next highest, at 85%.&nbsp;



CME Group introduced SOL futures contracts in March. The derivatives marketplace is set to unveil XRP futures on May 19.&nbsp;



There are also products currently holding both BTC and ETH that want to add more assets. Hashdex CIO Samir Kerbage called indexing “the next frontier” in the crypto investing space, <a href="https://blockworks.co/news/trump-media-etf-cryptodotcom">telling me in March</a> that his firm wants to ultimately create “the Nasdaq 100 for crypto.”&nbsp;&nbsp;



With optimism comes more filings.&nbsp;



Canary last week applied for a product that would hold SEI — a token with a market cap of roughly $1 billion (ranking 90th on CoinGecko). It would seek to earn more SEI “through the validation of transactions in the SEI Network’s proof-of-stake process,” the April 30 <a href="https://www.sec.gov/Archives/edgar/data/2066353/000199937125005157/sei-s1_042925.htm">filing</a> notes.&nbsp;



Then on May 2, VanEck <a href="https://www.sec.gov/Archives/edgar/data/2066824/000206682425000002/vaneckbnbetfs-1.htm">proposed</a> an ETF offering exposure to BNB — the native token of the Binance-created BNB Chain. BNB’s market cap of ~$87 billion is fifth-highest among crypto assets — sitting between XRP (~$123 billion) and SOL (~$74 billion).



Kyle DaCruz, VanEck’s director of digital assets product, previously told me the SEC could wait for legislation — noting that following a framework would be easier than evaluating each crypto asset one by one.



Just when you thought you got away from Washington politics.



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Bloomberg Intelligence

Optimism fuels more crypto ETF filings despite LTC fund delay

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>.



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Just months after taking a euphoric victory lap around Washington to celebrate the new administration, it would appear the crypto industry has a Trump problem.&nbsp;



2025 was supposed to be a <a href="https://blockworks.co/news/trump-das-crypto-address">historic year</a> for crypto legislation. With a favorable White House and established <a href="https://blockworks.co/news/crypto-bipartisan-usa-polarization">bipartisan</a> <a href="https://blockworks.co/news/senators-oppose-sec-accounting-standards">support</a> for policy, lawmakers and industry members expected to have new laws passed before midterm elections.&nbsp;



But, as Ben <a href="https://blockworks.co/news/legislative-speed-bumps-genius-act-sec">wrote about yesterday</a>, nine Democrats pulled support for the current version of the stablecoin-focused GENIUS Act. They cited wanting stronger provisions around anti-money laundering and national security, for example.&nbsp;



Then there are concerns over the president’s family’s crypto business endeavors. Thanks to Trump’s <a href="https://blockworks.co/news/trump-more-than-a-memecoin">memecoin launch</a> in mid-January, tensions have been building since before Inauguration Day. In the months since, World Liberty Financial (the <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-family-defi-venture">Trump family’s</a> crypto venture) has floated stablecoin plans and recruited investors.



Many Democrats, like Financial Services Ranking Member Maxine Waters, insist this is a clear conflict of interest, and lawmakers should not be advancing policy that would directly benefit Trump’s <a href="https://blockworks.co/news/crypto-prices-dinner-donald-trump">business initiatives</a>.



“I am deeply concerned that Republicans aren’t just ignoring Trump’s corruption, they are legitimizing Trump and his family’s efforts to enrich themselves on the backs of average Americans,” Waters wrote in a Tuesday statement after she objected to a planned joint House hearing on crypto.&nbsp;



“Through his crypto businesses, Trump has turned the office of the presidency into a personal money-making machine,” she added.&nbsp;



The comments come after members of the House Financial Services and Agriculture committees gathered this morning for a joint hearing on the newly released crypto market structure bill <a href="https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=409719">discussion draft</a>.&nbsp;



The hearing didn’t get very far, though, as Waters objected to the gathering. Because unanimous approval is needed for joint hearings, she was successful in stopping the official proceedings.&nbsp;



Digital Assets Subcommittee Chair Bryan Steil pivoted, and called for a roundtable discussion — a loophole allowing the witnesses to provide testimony and answer lawmakers’ questions. Waters then left the room, asking colleagues to join her for a separate meeting to discuss Trump’s crypto dealings.&nbsp;



Financial Services Committee Chairman French Hill countered Waters, noting the market structure draft and the stablecoin-focused STABLE Act are intended to bring crypto out of regulatory purgatory. The bills, he said, seek to fill <a href="https://blockworks.co/news/washington-dc-blockchain-summit-takeaways">gaps in oversight</a> that even President Biden admitted existed. Up until recently, they had significant bipartisan support.&nbsp;



Crypto lobbying groups and Hill insiders have known for weeks that these legislative efforts would face roadblocks from Democrats.&nbsp;



Groups have even proposed combining the market structure and stablecoin bills into a single piece of legislation. The theory was that it’s extremely unlikely lawmakers will pass two crypto bills, but the problem with one super bill is it gives everyone a lot more to fight over.&nbsp;



The new market structure discussion draft in the House is similar to bills from the last session of Congress: <a href="https://blockworks.co/news/house-passes-act-fit21-with-bipartisan-support">FIT21</a> in the House and <a href="https://blockworks.co/news/bitcoin-ether-to-be-regulated-as-commodities-by-cftc-per-new-senate-bill">DCCPA</a> in the Senate.&nbsp;



Generally speaking, the legislation seeks to clarify the roles of the SEC and CFTC. It also outlines the process for listing tokens, consumer protections and disclosure requirements. A big difference between this draft and FIT21 is that the new version does not include the term “decentralized system.” A <a href="https://blockworks.co/news/fit21-isnt-crypto-win">key criticism</a> of FIT21 was that the focus on “decentralization” was too great, potentially making it more challenging for certain token issuers to be compliant.&nbsp;



The key term here though is really “discussion draft.” The industry can now submit comments on the bill, so we’re still several steps away from a floor vote.



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congress

Rep. Waters blocks joint House crypto hearing, cites Trump conflict of interest

Kate Irwin

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Coinbase is now sponsoring Riot Games for the studio’s League of Legends and Valorant Esports global gaming events.



The deal officially starts next month with two esports events in Canada. The first is the Valorant Masters event in Toronto June 7. Coinbase will also be part of the MSI 2025 esports tournament in Vancouver that runs June 27 until July 12.



David Mulhall, Riot Games’ global head of esports partnerships and business development, called Coinbase a “perfect addition” to its list of brand partners and said the crypto firm can bring “engagement touchpoints and features that our global esports community appreciates.”



Crypto, however, remains a polarizing and controversial topic among gamers, including <a href="https://www.reddit.com/r/leagueoflegends/comments/1h1u11u/lol_community_opinion_on_blockchain_in_esports/">League of Legends fans</a>. Some gamers like it and some are open to it, while others absolutely despise it, as we’ve seen time and time again when non-crypto video games toy with the idea of crypto integrations or add NFTs to their titles.



Coinbase is planning event activations, promotions, awards and other perks in the Riot deal, but the financial terms have not been disclosed.&nbsp;



We do know that both parties are heavy hitters in their respective industries: Coinbase made $6.6 billion in revenue last year, while Riot made over $376 million in 2024.



Coinbase has sponsored the NBA since 2021. The US exchange also <a href="https://teamliquid.com/race-to-world-first">sponsored</a> esports organization Team Liquid (which itself struck a deal with Sui).



Other crypto firms have sponsored sports or esports, like Kraken with Williams Racing. Bybit struck a deal with the Brazilian esports organization Made in Brazil (MIBR) in 2022, and Crypto.com signed a five-year partnership with Fnatic in a <a href="https://www.sportspro.com/news/crypto-fnatic-esports-gaming-cryptocurrency-nft-partnership/">$15 million deal</a> in 2021, to name a few. 



But some deals have seen much bigger numbers. FTX struck a $210 million deal with the esports org TSM, but that fell apart in 2022 when the exchange collapsed.



The esports industry more broadly has <a href="https://decrypt.co/205565/inside-esports-industry-war-survival-investigation">struggled</a> in recent years, spurring an increasing reliance on brand sponsorships and corporate investment to generate revenue.



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Coinbase

Coinbase sponsors Riot Games’ League of Legends, Valorant esports

Donovan Choy

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We call this industry the “blockchain” industry. But people are fed up with too many chains.



If you’re launching a new chain in 2025, expect plenty of skepticism on Twitter. It’s what all the L1 blockchain raises in the last week had to confront.



<ul class="wp-block-list">
<li><a href="https://x.com/campnetworkxyz/status/1917227468458443116">Camp Network</a>, an intellectual property-focused L1, raised $30 million at a valuation of $400 million.</li>



<li><a href="https://blockworks.co/news/unto-vc-raise-thru-blockchain-l1">Unto</a>, an SVM-based L1, raised $14.4 million at a valuation of $140 million.</li>



<li><a href="https://x.com/0xMiden/status/1917202501910098321">Miden</a>, a zk rollup, raised $25 million (undisclosed valuation).</li>
</ul>



“Another chain, why?”



The easiest explanation is “greed.” It&#8217;s the fabled L1 premium!



Look at SUI’s price performance lately — what explains a $6.8 billion-market-cap token almost doubling in half a month?



We can all agree that it’s not based on fundamentals. Fees generated on Sui are at paltry lows compared to its highs last December.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeSyUs7NQcpRz3N6u0THgnme2_QFYBGECH_RZmZrs1yvW8AV4QEQ6I8LEJqXqmakL2Xj_Jw6ZE2Y4VadW_rO1MCH8hqBNbL2iM9_WgUqsOtUspa_JPvT6bRaLAs8Vh4pH5hTmMV-w?key=t1odmGaVblT5NpC6JTUK0g" alt=""/></figure>



Maybe I’m cherry-picking, and SUI is an anomaly. Maybe the L1 premium is dying, but it’s not quite dead yet.



Until then, the incentives to launch new L1s still exist.



The second (and charitable) explanation is simply that founders launching chains have competing visions of how a chain should be optimized.



How should the execution environment be designed? How is MEV captured? What data availability layer to use? Should there be a standardized oracle or gas token?



These things aren’t trivial. They determine where application developers go to build, and make or break the long-term success of a chain.



Expecting protocol builders to agree is like getting a hundred people to agree on a buffet’s menu.



It’s not all technical, either — there are social layer considerations. Take for example <a href="https://x.com/fede_intern/status/1846035499799978475">Rogue</a>, @fede_intern’s upcoming zk rollup that wants to have zero VCs, insider allocation, and a completely fair launch like Bitcoin did.



Builders have different opinions. They launch their own chains. It’s as simple as that. That’s economic freedom. We should celebrate it.



<h2 class="wp-block-heading">A solution?</h2>



Yet, there may be some consolation in the fact that L1 valuations are already compressing.



One of the highest profile L1 raises last year <a href="https://blockworks.co/news/evm-compatible-layer-1-blockchain-vc-interest">was Monad</a>. Valuations were undisclosed, but it was rumored to be at unicorn status <a href="https://pitchbook.com/news/articles/monad-labs-225m-paradigm-series-a-unicorn">according to</a> Pitchbook, so that puts Monad in the range of a billion.



Or consider <a href="https://blockworks.co/news/initia-mainnet-launch-appchain-l1">the Initia L1</a>, which was <a href="https://x.com/Xangle_official/status/1839198484152635649">valued</a> at $350 million last year.



These raises are nothing like what was seen in the last cycle.&nbsp;



Contrast this to when Avalanche reportedly <a href="https://coincheckup.com/blog/avalanche-developer-ava-labs-to-raise-350m-at-5-25b-valuation/?utm_source=chatgpt.com">raised</a> at a valuation of $5.25 billion in 2022. Or Flow, which <a href="https://www.coindesk.com/business/2021/09/22/dapper-labs-said-to-reach-76b-valuation-in-250m-funding-round">raised</a> at a valuation of $7.6 billion.



These numbers are dramatically down for L1s.



Public markets have responded to the distaste for more chains, and private markets are correcting overtime. The free market is <a href="https://x.com/MikeIppolito_/status/1919053350990934323">working</a>.



The data checks out when we zoom out. The below chart shows a downward trajectory for total funding raised for blockchains.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeFnfCgcQw9HlPAeqXDU-PXFk44jC1ULXaEmdYe3ZDQPoRBM6GbJv0aI7WX4j0t6FwdY8tKv38SdMv-9wdwXKIY1lqcrvrq9ObWIQiZEQ3HX2A8wdSCLYcxWijGXSUpDC7lt0Zg?key=t1odmGaVblT5NpC6JTUK0g" alt=""/></figure>



For those frustrated with “too many chains” who would like to see none at all, it’s probably not a satisfying answer.



Tied to that frustration is also an underlying desire to see more applications.



Fun fact: Consumer apps ironically received the lion’s share of venture funding vs. infrastructure back in 2013-2017 (Joel Monegro’s <a href="https://www.usv.com/writing/2016/08/fat-protocols/">Fat Protocol thesis</a> was written in 2016).&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdE_6rt6n3rOD8TrPoX_FvhrPeX-ygfofNuFVExWc0VmU5W77YyAXvI5QzKHCJ9_onfFw47g2x7rxK3jitq7jObQFm4cOnX4cnX5HSAr4pIvmfz9umAYam81ZpLU5n9uC9TYrsTIQ?key=t1odmGaVblT5NpC6JTUK0g" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://cheekyrolo.substack.com/p/web3-fundraising-in-focus-the-truth">Outlier Ventures</a></figcaption></figure>



That has, of course, flipped today. Is there some reason why application funding has fallen out of favor with VCs?



Take it from 1kx, which <a href="https://x.com/pet3rpan_/status/1917288546324697325">claims</a> to be one of the most active investors in consumer apps.



1kx partner Peter Pan told me: “Applications live and die by their traction and follow through — it’s an immediate feedback loop. Whereas with infrastructure, you can continue to find funding in a pre-launch state based off existing market comps, and push reality further and further out.”



Pudgy Penguins, Axie Infinity, Off The Grid, Rodeo and Layer3 are some examples of apps that have surmounted that feedback loop, Peter said.



Application revenues are also collectively outpacing the underlying protocol’s revenue (measured by REV) on most chains today.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc6FqIKnaLBnQV1HMDRg0dbAyerrBZ8vugrzGtTyJgQDFGU2xUoK1lX3zL5OAd8_KDCRzsr9mXkVrMJMqhVi9Quu-eEt6s2kY7cDD9j0UK5Pxq0GHemhb4SpsPj4Bp0ROzKKEC2?key=t1odmGaVblT5NpC6JTUK0g" alt=""/></figure>



If free markets worked to correct L1 overvaluations, maybe the reverse can happen for application funding, too.



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Does the blockchain industry have too many blockchains?

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Adidas is dressing up in-game characters with a collection of NFT skins for Xociety, an upcoming third-person crypto shooter game with RPG elements.



2,600 <a href="https://adidas.xociety.io/">Adidas</a> mystery box NFTs can be opened to reveal in-game skins, including black hoodies, neon Adidas tracksuits, and other looks emblazoned with the Adidas logo.&nbsp;



Like Xociety itself, these NFTs will use the Sui L1 chain. Each box consists of a specific number of full clothing sets.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcfqjWsP6ca5Ld8FoDrVO5aXcSrQh-1UTz42KlZjeW_fckyWDnc1JwWFDIN5zc57RGTDQ7YGqRrxZOnsljfN2hewgYm_x12XppBua5ksVQ0spjNzzc6XhL9EFEzh2kriE8wZTYq?key=UWHqtG8Z0vxHNZSW5p9TP6_S" alt=""/></figure>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="720" height="405" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/05/image.png?w=1024&amp;h=1024" alt="" class="wp-image-101598" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/05/image.png?w=720 720w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/image.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/image.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/image.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/image.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/image.png?w=80 80w" sizes="auto, (max-width: 720px) 100vw, 720px" /></figure>



Each box will offer one of four rarity tiers: Uncommon, Rare, Epic and First. Uncommon will have three sets, Rare will have four, and Epic and First will come with eight sets of apparel. The boxes will mint on Tradeport on May 16 at 9 am ET.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="636" height="342" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/05/image-1.png?w=1024&amp;h=1024" alt="" class="wp-image-101599" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/05/image-1.png?w=636 636w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/image-1.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/image-1.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/image-1.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/image-1.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/image-1.png?w=80 80w" sizes="auto, (max-width: 636px) 100vw, 636px" /><figcaption class="wp-element-caption">To me, these avatars look a lot like Nike’s RTFKT CloneX NFTs.</figcaption></figure>



Xociety’s deal with Adidas is a revenue share deal through which players will receive rewards “for spend by other players,” the team said, calling it a powerful way to “access real rewards across the life of Xociety.”



Xociety’s audience is primarily in Asia, with South America and Europe also making up large contingents of its playerbase. So far, the game is playable via limited-time playtests. Xociety said more than 12,000 players competed in their most recent playtest across 64 different countries.



The team has plans to “deliver more into the North American market” soon. Xociety will be available to play on the SuiPlay 0x1 handheld, too. 



Adidas has launched <a href="https://nftpricefloor.com/brands/adidas-nft">over a dozen</a> different NFT collections since its first foray into the space in 2021. Its first collection, a metaverse drop with the Bored Ape Yacht Club and others, generated $23 million in revenue. But Adidas may have only kept about <a href="https://www.ledgerinsights.com/adidas-keeps-little-from-its-23m-nft-launch-faces-complications/">$6.2 million</a> because of the other partners in the deal, research firm Ledger Insights reported.



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Adidas

Exclusive: Apparel giant Adidas launches Sui NFTs

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Painters paint, sculptors sculpt and cryptographers code.



For millennia, creators have fought to express themselves through their chosen media.&nbsp;



Around the year 430 BC, Greek sculptor <a href="https://www.britannica.com/biography/Phidias">Phidias</a> is famously said to have died in prison after being charged with impiety due to his art (with a side of treacherous politics).



Phidias had sculpted himself and statesman Pericles onto the shield of Athena on the Athena Parthenos, an unforgivable act of hubris in front of the gods.



Nearly two and a half thousand years later, cryptographer Daniel Bernstein fought the US government over his constitutional right to express himself through code — and won.



<h2 class="wp-block-heading">On This Day: Code Is Speech</h2>



Twenty-six years ago today, Judge Marilyn Patel <a href="https://archive.epic.org/crypto/export_controls/bernstein_decision_9_cir.html">ruled</a> that computer code should be considered speech and thus protected under the First Amendment, even if that code represented powerful encryption technology.



Bernstein had sued the US State Department and subsequently the Department of Commerce in what Judge Patel later described as “part political expression.”



As we touched on in a <a href="https://blockworks.co/news/cypherpunk-movement-history-wired-1993">retrospective last week</a>, the US government at the time classed cryptographic tools with a key size larger than 40 bits as weapons.



This meant anyone seeking to publish or otherwise make cryptography software available outside the US had to register as an arms dealer — including doctoral candidates studying mathematics at UC Berkeley, like Bernstein.



So, when Bernstein approached the State Department about publishing the source code, instructions and academic paper describing a new encryption method called Snuffle, authorities labeled the work a “munition” under the International Traffic in Arms Regulations.&nbsp;



But the imposition of any licensing regime on code — the medium through which cryptographers express their ideas, thoughts and theories — was unconstitutional, in Bernstein’s view. The Electronic Frontier Foundation (EFF) then <a href="https://www.eff.org/deeplinks/2015/04/remembering-case-established-code-speech">sponsored</a> his lawsuit, in what was its second major case after the <a href="https://www.eff.org/effector/5/4">Steve Jackson Games</a> in the early ‘90s.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdEfRWs76iqy8ikvy0drJ2gaNsmJaKCwO15FQDC24JYlwm6MtKEdAREb3BiXzeBSEObADH4Mt3xloq2GxfURrkvHRzp11ZSdw4jBylwQfjWjWyDavRlCsWfTPhMxMtxAawm1-kd?key=c9U2HACTQaLeKA_MOWlaORni" alt=""/><figcaption class="wp-element-caption">Long before Bitcoin, Adam Back <a href="http://www.cypherspace.org/adam/rsa/uk-shirt.html">protested</a> the US government’s classification of RSA encryption as munition with this cool shirt.</figcaption></figure>



Courts sided with Bernstein and the EFF in a landmark decision about a year later, ruling that the government must protect cryptographers’ freedom to code. It’s their language. 



The case paved the way for strong encryption to be readily applied to e-commerce and all manner of private enterprise, thanks in no small part to the forward-thinking Judge Patel.&nbsp;



Patel wrote: “By utilizing source code, a cryptographer can express algorithmic ideas with precision and methodological rigor that is otherwise difficult to achieve… The need for precisely articulated hypotheses and formal empirical testing, of course, is not unique to the science of cryptography; it appears, however, that in this field, source code is the preferred means to these ends.”



It’s clear that without the Bernstein ruling, the development and release of Bitcoin might have been seriously slowed. After all, Satoshi (if they were in the US) would’ve needed to acquire a license to share Bitcoin source code, immediately doxxing them with the government. How convenient!



Luckily, Bernstein chose to fight.



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Cybersecurity

Code is speech: How computer source code secured First Amendment rights

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M&amp;A szn’s still going strong — and this morning’s announcement that Trident and IntoTheBlock are merging is yet another sign of the consolidation we’re seeing.



If you’re not familiar with the two, IntoTheBlock is a financial services platform designed for institutional DeFi investors, and Trident Digital offers services from lending to advisory.&nbsp;



The firms will now become Sentora, and the goal of the new joint entity is to cater to funds, treasuries, and other institutional investors in DeFi. Basically, they want to create an ecosystem focused on the needs of institutions to push into DeFi.&nbsp;



Trident’s Anthony DeMartino will take the helm of Sentora. (If he sounds familiar to you, he was also former head of risk strategies at Coinbase.)



“Through our strategic partnerships with industry leaders, we are developing a suite of products that address the key blockers preventing institutional adoption of DeFi,” DeMartino said.&nbsp;



“The future of finance is decentralized — but not disorganized,” he added. And, honestly, what a fun way to put it.



Meanwhile, IntoTheBlock’s CEO Jesús Rodríguez will take the helm as CTO.&nbsp;



But the merger isn’t the only news they announced. They also raised $25 million in a Series A funding round led by New Form Capital, with Joint Effects and Tribe Capital. Ripple was noted as a strategic ecosystem investor.&nbsp;



&#8220;Institutional capital won’t move into DeFi without strong risk management and compliance frameworks. Sentora provides both — without sacrificing performance,&#8221; New Form’s Alex Marinier noted.



So let’s zoom out.



We’re seeing a rise in these types of M&amp;A deals, in which crypto firms are looking to create a platform that can cater to multiple needs for clients, like institutional investors. We’re also just plain seeing an uptick in M&amp;A activity. That’s a trend I wouldn’t expect to go away anytime soon.



Let’s take a look at some (<a href="https://x.com/blockworksres/status/1919481758183260325">brand-spanking-new</a>) data from Blockworks Research, shall we?



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfwy0RBOW-brdt4fgSNttwVC-m9rUnbQBJdxJVO6LRGBKoXIOtGQpywSmcg0DoI6XI8uOlC4X2HG11Z3Pq5MxFbdJWPa8WD1RPPQYImVh22yJ6jJ6A0HBJISxwdb6XwwFGl0pHG?key=7zUD8Y_viE1QdBy1hh8N1dFR" alt=""/><figcaption class="wp-element-caption">No, literally. This is fresh out the oven as of yesterday afternoon. Yay.</figcaption></figure>



You can see above that finance is one of the top sectors to consolidate. This makes sense because we’re going to see a lot more competition as this space heats up and institutional investors look to find a platform that can meet most of their needs.&nbsp;



Who wants to have multiple platforms when you can find one that fulfills your needs, right? It simplifies it, and projects will cater to what the market’s looking for (see the deal above).&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdMqwDaV-JckDFHj01fpyyQxWJXr41l7D6DVKukfdZJa7Dsb-Wuq0_GzUlIwwoT1cGKobjExxHXFzxLZIadja2rHngqq2iuuaXBCtXyiNwoRrxx70GsTM4GLmp86UHRi0wyVxN6Vw?key=7zUD8Y_viE1QdBy1hh8N1dFR" alt=""/></figure>



As you can see, crypto deal activity is starting to pick up. Just remember: we’re likely going to stay a ways off from those crazy 2021 levels for a while.&nbsp;



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Empire Newsletter

IntoTheBlock and Trident announce merger, raise $25M for new firm

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



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
&#8220;There are three creativities: creativity in technology, in product planning, and in marketing. To have any one of these without the others is self-defeating in business.&#8221;



— Akio Morita
</blockquote>
</blockquote>
</blockquote>



The TR-55 transistor radio, the first product sold under the Sony brand, was a technical success — released in 1955, it marked a leap in miniaturization, solid-state design and made-in-Japan innovation.



It wasn’t much of a seller, however, and Sony’s co-founder, Akio Morita, knew why. It needed a better marketing pitch.&nbsp;



So for its next product, Morita demanded that Sony’s engineers develop a gadget that he was sure would get people’s attention: a “pocketable” transistor radio.



By 1957, Sony had developed the world’s smallest radio, the TR-63 — a miracle of miniaturized components and clever engineering.



But it was a little too big to fit in a shirt pocket, which was Morita’s goal: “We liked the idea of a salesman being able to demonstrate how simple it would be to drop it into a shirt pocket,” he explained in his autobiography, <a href="https://www.amazon.com/Made-Japan-Akio-Morita/dp/0002177609/ref=sr_1_1?crid=4ZF0Q2S3B4TG&amp;dib=eyJ2IjoiMSJ9.0zcUUQcaQpbtKX_x1xOCuJKoRNc2MamfeyKAlF0zly4wWkHCkxmSqnMH50M34tzQ.bRsiaT1afnYAOO4qYvQLY3sWKopRwRbjGGTTosCLLJ8&amp;dib_tag=se&amp;keywords=made+in+japan+akia+morita&amp;qid=1746404065&amp;sprefix=made+in+japan+akia+morita%2Caps%2C122&amp;sr=8-1">Made in Japan</a>.&nbsp;



Instead of sending the engineers back to the drawing board, however, Morita solved his design problem with a marketing trick: “We had some shirts made for our salesmen with slightly larger than normal pockets, just big enough to slip the radio into.”



It worked better than even Morita could have imagined.&nbsp;



Not only did the TR-63 become an international hit that made Sony synonymous with innovation and high-quality products — it also kickstarted a revolution in global consumer electronics that would change the world’s perception of Japan.



Morita would go on to become — in the assessment of John Nathan, author of <a href="https://www.amazon.com/Sony-Private-Life-John-Nathan/dp/0618126945/ref=asc_df_0618126945?mcid=72054532ed0a3c389805f0c0816b3e3d&amp;tag=hyprod-20&amp;linkCode=df0&amp;hvadid=693310352361&amp;hvpos=&amp;hvnetw=g&amp;hvrand=17722954159000540309&amp;hvpone=&amp;hvptwo=&amp;hvqmt=&amp;hvdev=c&amp;hvdvcmdl=&amp;hvlocint=&amp;hvlocphy=9009671&amp;hvtargid=pla-568202304859&amp;psc=1">Sony: A Private Life</a> — “probably the greatest marketer of the 20th century, right up there with Steve Jobs.”



If that sounds like hyperbole, consider that Sony — a Japanese company — was rated <a href="https://www.yahoo.com/news/2006-07-13-sony-is-still-the-1-brand-seven-years-in-a-row.html">the number one brand</a> in America from 1999 to 2006.



It was such a significant accomplishment that when Morita died in 1999 at the age of 78, he was hailed as “the engine that pulled the Japanese economy.”



He wasn&#8217;t born a marketer, however — he started out as a kid who liked to tinker with electronics. He went on to become a physicist working for the Navy, and then co-founded Sony as an engineer.&nbsp;



Neither he nor his co-founder Masaru Ibuka had any notion of “merchandising or salesmanship” when they started Sony.&nbsp;



“It never occurred to Ibuka or me that there was any need for this,” Morita explained in his autobiography. “Ibuka believed strongly that all we had to do was make good products and the orders would come. So did I. We both had a lesson to learn.”



Both founders assumed that “in making a unique product, we would surely make a fortune.”



But when they made their first unique product — a ground-breaking, magnetic-tape recording device — they didn’t even make their investment back: “Everybody liked it, but nobody wanted to buy it.”



That’s when Morita learned the value of marketing: “Having unique technology and being able to make unique products are not enough to keep a business going,” he realized. “You have to sell the products” too.&nbsp;



He also realized he’d have to do the selling himself: “I was struck with the realization that I was going to have to be the merchandiser of our small company.”



This may be a universal truth of business: Every product, no matter how good, needs to be sold.



Blockchains, included.



<h2 class="wp-block-heading">Aim high</h2>



In his latest blog post, <a href="https://vitalik.eth.limo/general/2025/05/03/simplel1.html">Simplifying the L1</a>, Vitalik explains what Ethereum is aiming for — “to be the world ledger: the platform that stores civilization&#8217;s assets and records, the base layer for finance, governance, high-value data authentication, and more” — and how to achieve it: “This requires two things: scalability and resilience.”



Well, three things, probably: Morita would tell him that simplifying Ethereum requires marketing, too.



Ethereum’s decentralized and unofficial messaging has done a poor job of explaining what the world’s first smart-contract blockchain is, why it matters, or why anyone might want to use it.



Fortunately, Vitalik may have inadvertently fixed Ethereum’s messaging, too. “World ledger” is an excellent elevator pitch!



Using Bitcoin as a model, Vitalik’s new priority for Ethereum is technical simplicity: “One of the best things about Bitcoin is how beautifully simple the protocol is.”



He’s referring to Bitcoin’s code, which is simple enough that “even a smart high school student is capable of fully wrapping their head around and understanding” it.



(Note: I’ve looked at the code myself and, well…remind me never to match wits with a smart high school student.)



But Vitalik could equally have been referring to Bitcoin’s pitch to investors, which is beautifully simple, too: Everyone can immediately comprehend the appeal of “digital gold.”



“World ledger” may not be quite as intuitive as that, but it’s a major improvement on Ethereum’s previous attempts at branding: “World computer,” “ultra-sound money,” and “the app store of crypto” all required a good deal of explaining.&nbsp;&nbsp;



The explanation of “world ledger,” by contrast, seems far simpler: a decentralized platform “that stores civilization&#8217;s assets and records.”



Being simpler should give it a better chance to stick.



Simplifying any aspect of Ethereum will not be easy, however, as Vitalik warns: “Explicitly valuing simplicity requires some cultural change.”



But that change may already be underway — there’s a growing consensus that Ethereum’s development should be “<a href="https://x.com/sassal0x/status/1917764357641118184">reprioritized</a>” in favor of the base layer (rather than deliberately pushing transactions to layer-2 blockchains).



Just as importantly, there’s a growing recognition that Ethereum’s marketing needs to be reprioritized, too.



For example, Tomasz Stanczak, the newly appointed co-executive director of the Ethereum Foundation, has acknowledged that marketing is part of what’s needed to rebuild Ethereum’s “social layer.”



“On the marketing side, I think we don’t want to create a brand name or advertising style of marketing,” Stanczak told Bankless on a <a href="https://youtu.be/uEzt2ABF80g?si=MmSWYODCBAs5LXBh">podcast</a> this morning, “but better communication and clarity is also part of marketing.”&nbsp;



Better communication and clarity would fit Morita’s definition of marketing, too — marketing, he explained, is about showing people “the real value of what you are selling.”&nbsp;



The good news for Ethereum is that the value it’s selling can be a little aspirational — like Sony’s pocketable radio that didn’t quite fit into a pocket.



Similarly, Ethereum isn’t quite the world’s ledger just yet — but that sounds like a good thing to aspire to.



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