Etherrock #72

Casey Wagner

David Canellis

Katherine Ross

Michael McSweeney

<h2 class="wp-block-heading">Time to pay up. Oh, wait…&nbsp;</h2>



Last August, after suing Digital Licensing Inc. or DEBT Box, SEC attorneys were granted a temporary restraining order (TRO) against the crypto company through the use of what Judge Robert Shelby later described as “misleading” statements to the court.&nbsp;



When threatened with sanctions by the court, the SEC conceded “that its attorneys should have been more forthcoming with the Court,” but maintained “sanctions are not appropriate or necessary to address those issues.”&nbsp;



Shelby disagreed, and he sanctioned the agency for abuse of power in March.&nbsp;



Read more: <a href="https://blockworks.co/news/judge-sec-lied-restraining-order">A federal judge says SEC lawyers lied to freeze a crypto company’s assets</a>



Now, it’s time to talk money. A court-appointed receiver and defendants submitted their legal bills to the court last week. The reimbursements they seek add up to around $1.8 million.&nbsp;



The <a href="https://blockworks.co/tag/sec">SEC</a> is expected to contest the amount, and then it will be up to the judge to determine how much is owed.&nbsp;



Getting to the bottom of what fees can be reasonably <a href="https://blockworks.co/news/sec-sanctions-debt-box">tied directly to the SEC’s TRO</a>, for which they were ultimately sanctioned, is the key. DEBT Box says they have spent nearly $750,000 fighting the SEC’s claims.&nbsp;



When the final number is decided — likely later this spring or early summer — the funds will come from the federal government, probably from the Treasury’s Judgment Fund or the SEC’s own budget.&nbsp;



Read more: <a href="https://blockworks.co/news/sec-erred-in-debt-box-case">DEBT Box defendants say SEC’s deception impacted personal, business endeavors</a>



Two SEC lawyers — Michael Welsh and Joseph Watkins — left the agency in the aftermath of the sanctions. <a href="https://news.bloomberglaw.com/securities-law/two-sec-lawyers-pushed-out-after-agency-censured-in-crypto-case">Reports</a> suggest they were pushed out, and we believe it. This was a major mistake. One attorney we spoke to said that if the SEC was a private firm, we’d be seeing a lot more heads rolling.&nbsp;



It looks like the case is going to be tossed. The question is now whether it will be dismissed with or without prejudice (with prejudice means the case has permanently been dismissed and cannot be brought back to court).&nbsp;



As expected, the SEC is vying for dismissal without prejudice while DEBT Box is hoping the <a href="https://blockworks.co/news/sec-overreach-failure-debt-box">case will be tossed with prejudice</a>.&nbsp;



— Casey Wagner



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



<ul>
<li><a href="https://www.kitco.com/charts/gold">Gold</a>’s price is finally coming down. The precious metal hit its lowest level in two weeks as geopolitical tensions began to ease.&nbsp;</li>



<li>It’s a big week for <a href="https://www.bloomberg.com/markets/economic-calendar">economic</a> data. US GDP is scheduled for Thursday and PCE, the Fed’s inflation measure of choice, is coming Friday.&nbsp;</li>



<li>BlackRock’s bitcoin ETF could become one of the most successful ETFs in history if it hits 70 days of inflows, <a href="https://twitter.com/EricBalchunas/status/1782386163698835663">per</a> Bloomberg’s Eric Balchunas.</li>



<li>Bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) is holding on to $65K after jumping to $67K overnight.&nbsp;</li>



<li>EigenLayer is up 8% over the past day, with roughly $15B in total value locked, <a href="https://defillama.com/">according</a> to DeFiLlama.&nbsp;</li>
</ul>



<h2 class="wp-block-heading">Schrödinger’s stake</h2>



Takes about the risks of staking and restaking protocols are everywhere: Threats to the <a href="https://www.youtube.com/watch?v=LbkxL-xBYYE">moneyness</a> of ether, to <a href="https://blockworks.co/news/eigenlayer-at-risk-of-centralization">capital through slashing</a>, to the very <a href="https://vitalik.eth.limo/general/2023/05/21/dont_overload.html">fabric</a> of Ethereum itself.



The hand-wringing has done little to keep the market away from increasingly experimental staking protocols —&nbsp;it’s all for the points.



About 27% of the ether (<a href="https://blockworks.co/price/eth">ETH</a>) supply is currently staked with mainnet validators (about $101 billion) and more than 42% of that stake is <a href="https://dune.com/21co/fundamentals-liquid-staking-derivatives">kept</a> in liquid <a href="https://blockworks.co/tag/staking">staking</a> protocols like Lido and Rocket Pool.



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



Six months ago, closer to half of the ETH stake was kept with Lido et al. Restaking and liquid restaking platforms like EigenLayer, Karak, Renzo and ether.fi largely didn’t exist.



In the past three months, the total value locked in liquid staking protocols across the market has dropped 25% from a March peak of $61 billion to $46 billion.&nbsp;



<a href="https://blockworks.co/tag/eigenlayer">EigenLayer</a>, meanwhile, has led the TVL of <a href="https://defillama.com/protocols/Liquid%20Restaking">restaking</a> protocols to multiply eight times, from $2 billion to $16 billion.&nbsp;



<img loading="lazy" decoding="async" width="624" height="449" src="https://lh7-us.googleusercontent.com/rwoPrpBvG6T8d-plrubizlFOXfF9yzzWPdbfjST-wu1j-qpVau0hNsMT24N-hTevp6z6hnEkMQUZUJc_8twfj3lRjaSKk29CHEKCJcsLGTHbEXOFqHRanlv0YHC3O2ET3QaJp4rLNhayOfziMBFkwVs">



Liquid restaking protocols like Renzo — which utilize EigenLayer to secure small networks with liquid staking tokens (but <a href="https://www.coindesk.com/tech/2024/04/10/eigenlayer-cryptos-biggest-project-launch-this-year-is-still-missing-crucial-functionality/">not yet</a> in return for yield) — have now attracted $10 billion in their own right. 



The big question is whether all that TVL would exist if there were no promise of a future EigenLayer <a href="https://blockworks.co/tag/airdrop">airdrop</a>.&nbsp;



EigenLayer has kept track of user participation with a points program, but founder Sreeram Kannan has so far <a href="https://open.spotify.com/show/1cJrrfGY1SKBIRn5noKSAf">said</a> there are no plans to distribute a token tied to points, although they could be used for governance somewhere down the line.



But should there really be no airdrop (or lackluster yields from EigenLayer AVS), expect the bulk of the restaking and liquid restaking TVL to go elsewhere —&nbsp;namely, protocols with their own points and airdrops.



— David Canellis



<h2 class="wp-block-heading">Times are a-changin’&nbsp;</h2>



The New York Stock Exchange’s data team sent out a survey about 24/7 trading, and while this is — of course — not indicative of any potential change to the current operating hours of 9:30 am ET to 4 pm ET, it’ll be interesting to see how those surveyed respond.&nbsp;



Crypto, which trades around the clock, modernized the way people look at financial markets. Just last year, <a href="https://blockworks.co/news/robinhood-crypto-24-hours">Robinhood announced 24-hour trading</a> for some assets.&nbsp;



The survey itself isn’t that interesting. It’s not surprising that an exchange like the NYSE would try and gauge interest in such a feature. What is surprising, however, is that the NYSE was the exchange to issue such a survey and not, say, the Nasdaq, which is an electronically-run exchange.&nbsp;



It also wouldn’t be surprising if survey responders were largely against the idea of going 24/7 for a few reasons. The biggest one is liquidity. From weekend missile strikes to exposés, there are a number of ways that the market could take a hit outside of the usual trading hours, and safeguards must be put in place so that the market doesn’t tank at the first mention of volatile headlines.&nbsp;



A former floor trader also told me that any changes will have to be run by the companies listed on the NYSE, which may take some convincing if the exchange were to ever seriously consider switching to 24-hour trading.&nbsp;



But there’s no doubt that crypto markets and new technologies have proven that there’s an appetite for 24-hour trading —&nbsp;and that it can be done safely. Circling back to the point on volatile headlines, bitcoin dropped nearly 5% after Iran launched airstrikes against Israel on April 19, but was able to recover in a few hours.&nbsp;



Don’t get your hopes up for any changes to the current trading hours, though. This kind of change would take years to implement, but maybe crypto’s paved the path forward for the traditional exchanges.&nbsp;



— Katherine Ross



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



<ul>
<li>The infamous “Buy Bitcoin” sign flashed behind Janet Yellen in 2017 is being <a href="https://scarce.city/auctions/buy-bitcoin">auctioned</a> off.</li>



<li>Some <a href="https://www.reddit.com/r/mtgoxinsolvency/comments/1caa0tn/1804_repayment_table_populated_x7/">Redditors</a> on r/MtGoxInsolvency are reporting that the trustee has updated repayment data for their claims.&nbsp;</li>



<li>Outside of running against Elizabeth Warren, pro-crypto lawyer John Deaton <a href="https://www.courtlistener.com/docket/67478179/114/securities-and-exchange-commission-v-coinbase-inc/">filed</a> to appear as counsel for over 4,000 Coinbase customers in the SEC’s case against the exchange.</li>



<li>One professor thinks the passing of the stablecoin bill could be a “disaster,” Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-04-22/stablecoin-bill-spells-huge-disaster-for-consumers-american-s-allen-says">reports</a>.</li>



<li>The current Bitcoin Improvement Proposal editor, Luke Dashjr, could be replaced as Bryan Bishop’s movement gains momentum, Protos <a href="https://protos.com/bitcoiners-seek-to-bypass-luke-dashjr-for-op_cat-soft-fork/">reports</a>.</li>
</ul>



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



If you were waiting for the US presidential election’s galaxy-brained crypto moment, here’s your chance.



Presidential hopeful Robert F. Kennedy, Jr. <a href="https://thehill.com/business/4611426-rfk-jr-im-gonna-put-the-entire-u-s-budget-on-blockchain/">declared</a> at a recent campaign stop that he would “put the entire US budget on blockchain” so that “every American can look at every budget item in the entire budget anytime they want 24 hours a day.”&nbsp;&nbsp;



Kennedy continued: “We’re gonna have 300 million eyeballs on our budget, and if somebody is spending $16,000 for a toilet seat, everybody’s gonna know about it.”



Read more: <a href="https://blockworks.co/news/crypto-super-pacs-election-primaries">Crypto PAC-backed candidates sweep in US election primaries&nbsp;</a>



Okay. Taking the idea at face value —&nbsp;a perilous notion in any election year —&nbsp;I have some questions. Who’d run these blockchain nodes? If they’re all government-run, why should the average taxpayer trust the data they’d see? Aren’t US budgets already public? Where do I sign up for the BudgetCoin airdrop?



Incidentally, blockchains have been explored by US federal agencies for financial management purposes, including a December 2023 project <a href="https://www.fiscal.treasury.gov/fit/blog/treasury-complete-blockchain-collaboration.html">focused</a> on the federal grant process, so Kennedy isn’t exactly firing in the dark.



Who knows, maybe the degens can help the Defense Department <a href="https://www.defensenews.com/pentagon/2023/11/16/pentagon-fails-sixth-audit-with-number-of-passing-grades-stagnant/">actually</a> pass an audit for once.&nbsp;



— Michael McSweeney



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Empire Newsletter: SEC faces big court bill after sanctions

Jack Kubinec

After nine months of deliberation, the developers behind Celo have chosen OP Stack as the infrastructure for the project’s migration to Ethereum.&nbsp;



In a Monday forum post, cLabs, which is the software company behind Celo, said it would be putting the OP Stack migration up for a community vote. If successful, the layer-2 would be set to go to testnet in summer 2024.&nbsp;



CLabs first said it would migrate to a <a href="https://blockworks.co/tag/evm">layer-2</a> in July 2023.



<a href="https://www.coingecko.com/en/coins/celo">Celo</a> and <a href="https://www.coingecko.com/en/coins/optimism">Optimism’s</a> native tokens were both up roughly 5% amid a mostly flat day in crypto markets, according to CoinGecko.



Read more: <a href="https://blockworks.co/news/celo-return-home-ethereum">‘Carbon-negative’ Celo to ‘return home’ to Ethereum as layer-2</a>



Celo’s layer-1 <a href="https://blog.celo.org/its-official-celo-mainnet-is-here-6a3a71763f68">went</a> to mainnet on Earth Day 2020 with a focus on global financial inclusivity and environmental health. CLabs <a href="https://www.crunchbase.com/organization/celo-3846/investor_financials">raised</a> $30 million from a16z and Polychain in 2019 to develop the project. It closed another $20 million round in 2021.



The layer-1 was Ethereum Virtual Machine (<a href="https://blockworks.co/tag/evm">EVM</a>) compatible, meaning Ethereum smart contracts could run on Celo.&nbsp;



Celo implemented EIP-1559 slightly differently than Ethereum implemented the proposal, and the cost of staying compatible with Ethereum ended up being “quite great,” cLabs Chief Technology Officer Marek Olszewski said Monday on an X <a href="https://twitter.com/i/spaces/1YqxoDgOnLjKv">space</a>.&nbsp;



Celo’s GitHub shows users paid a base gas fee and tip for transactions like with Ethereum’s EIP-1559, but small modifications were made. For instance, base fees were paid to Celo’s community fund rather than being <a href="https://ethereum.org/en/developers/docs/gas/">burned</a> like on <a href="https://blockworks.co/tag/ethereum">Ethereum</a>.



“We’ve been really laser-focused on being extremely Ethereum aligned, having learned lessons before,” Olszewski added when discussing why Celo picked the OP Stack.



CLabs hopes that Celo’s layer-2 will aim to preserve certain features of the layer-1 like one-block finality, which <a href="https://blog.celo.org/why-build-on-the-celo-blockchain-9ceab3d11b70">helps</a> transactions settle quickly and prevents chain rollbacks or re-orgs — even if Ethereum itself re-orgs. Some lesser-used features may disappear with the migration, Olszewski said.&nbsp;



Read more: <a href="https://blockworks.co/news/worldcoin-teases-world-chain-layer-2">Worldcoin teases &#8216;World Chain&#8217; layer-2</a>



Besides Optimism, Celo also considered building its layer-2 with tech stacks from Arbitrum, Polygon or zkSync.



Should the migration go through, <a href="https://blockworks.co/tag/optimism">Optimism</a> will add another notable client to its so-called Superchain of layer-2s, which typically pay Optimism 2.5% in revenue sharing. Coinbase used the OP Stack to launch Base, and last week, Sam Altman-backed Worldcoin said its layer-2 would be built with the OP Stack.



The author of cLabs’ proposal <a href="https://forum.celo.org/t/clabs-proposes-migrating-celo-to-an-ethereum-l2-leveraging-the-op-stack/7902">wrote</a> that the OP Stack is “becoming an open standard” for layer-2s, and building in the Superchain could lead to “positive-sum partnerships” with other chains built using the tech stack.



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What’s behind Celo’s pivot to Ethereum?

Adam Efrima

EigenLayer, the biggest proponent and implementer of restaking, is starting to get rid of its training wheels. After briefly <a href="https://www.blog.eigenlayer.xyz/update-on-upcoming-lst-additions-and-restaking-unpause/">removing</a> caps on staking with liquid staking tokens (LST), total value locked soared from $2.1 billion to 11.5 billion in ETH used for “restaking.”



At its core, restaking is about increasing capital efficiency. 



ETH is a tremendously widespread and liquid asset, which makes it ideal for bootstrapping new proof-of-stake (PoS) protocols. The deal is simple: New networks get significant security from day one, while ETH stakers get to earn extra on the same assets they already hold.



Restaking is quickly achieving buzzword status, and it’s largely the cautiousness of the EigenLayer team that is, for now, keeping it relatively tame in terms of total value locked figures. As a relatively new staking mechanism, augmenting existing liquid staking protocols like Lido, Rocket Pool, Frax and others, it promises to unlock billions in additional value in the wider staking industry. But as with any new crypto primitive, there are voices of concern about how restaking might threaten the stability of Ethereum and crypto itself.



Some of these concerns are probably unfounded — for example, concerns about financial stability. Other risks, namely technical, are legitimate but vastly overblown. Critics argue that routing a majority of the ether staked into restaking protocols could lead to an unnecessary and risky stacking of these technical risks. But the truth is, there’s likely more risk in not embracing restaking.



<h2 class="wp-block-heading">How restaking increases the financial stability of Ethereum</h2>



Restaking offers a great way to finally unlock the potential of LSTs, which could increase the security of ETH. It’s important to remember that beyond the convenience, LSTs exist for an important structural reason that directly benefits Ethereum security.&nbsp;



In a nutshell, staking yield on Ethereum competes with DeFi yields. Lending protocols and liquidity pools can offer more significant yield than the approximate 4% of ETH staking. If the average yield for ETH is significantly higher than that figure — which can easily happen in particularly active markets — then only a small amount of ETH supply will be dedicated to staking, making the network that much more fragile.



With LSTs, ETH holders don’t need to choose: They can just earn the baseline ETH staking yield at all times, and beef it up with DeFi yields if they’re adventurous.&nbsp;



Unfortunately, holding LSTs seems to be pretty much the only thing you can do in the current environment. LSTs’ usage in DeFi is mostly limited to enabling easy swaps for regular ETH, while DeFi trading usage is extremely limited — ETH has more than 10x the trading volume of Lido’s wstETH, according to Uniswap <a href="https://info.uniswap.org">analytics</a>.



Restaking comes to the rescue here by giving another potential source of income for ETH holders, which should make staking naturally more competitive with DeFi. The end result is that the network wins, as more ETH is staked.



<h2 class="wp-block-heading">Are there financial risks in restaking?</h2>



It’s important to note that restaking is a strictly technical practice — assets deposited to EigenLayer remain in the system, and are never lent to anyone else. Despite sounding similar to “rehypothecation,” restaking is a completely different mechanism that simply does not offer a financial risk surface. It’s worth noting that, for now, EigenLayer is the only significant player in the Ethereum restaking space and future protocols might offer a different risk profile.



Read more from our opinion section: <a href="https://blockworks.co/news/restaking-ticking-time-bomb-eth">Restaking is a ticking time bomb</a>



EigenLayer is a decentralized protocol, and there is a risk of losing LST value if it were delegated to a faulty EigenLayer operator. The cumulative risks thus also rely on the community of stakeholders doing their own due diligence, similar to the current LST market offering.



There may be confusion coming from Liquid Restaking Tokens (LRT), which are financialized EigenLayer positions — essentially an LST of ETH LSTs deposited to the EigenLayer protocol. The EigenLayer <a href="https://docs.eigenlayer.xyz/eigenlayer/risk/risk-faq">FAQ</a> mentions LRT liquidations, and the explanation might be doing more harm than good in this case.



In practice, it’s important to note that these risks are completely external to the protocol. If a user deposits their LRT into a lending protocol to enter a leveraged position, their liquidation is a fully external event. While there is an incentive for users to deposit their LRT due to the potential of leveraging yields, this risk level is unlikely to reach catastrophic proportions.&nbsp;



Just as nobody worried about Ethereum or Lido security during the <a href="https://blockworks.co/news/signs-of-next-crypto-depegging">stETH de-peg</a> in 2022, nobody should worry about EigenLayer users getting liquidated. In that case, someone else will take control of their assets, and the system will move on. Furthermore, the stETH de-peg occurred before staked ETH was withdrawable, meaning that no significant arbitrage was possible.



<h2 class="wp-block-heading">Are technical risks of restaking significant?</h2>



Technical concerns about restaking are legitimate. After all, a failure in the EigenLayer protocol (or others like it) could result in a significant loss to the community of ETH holders as a whole. Excessive slashing, loss of control over the stake, malicious apps, etc. are all risks that ETH holders are potentially signing up for when restaking.



But it’s important to contextualize the technical risk. New protocol implementations will always have a risk of technical failure, and that is something that the community needs to understand and mitigate. Similar concerns can be voiced about each upgrade to Ethereum — the Merge itself could’ve gone wrong due to subtle bugs in the implementation.



Constant auditing, bug bounties, training wheels and active protocol monitoring are all parts of a defense in-depth security model that works both to prevent losses and minimize them if they were to occur. Plain old redundancy through competitor solutions can also be used to mitigate risks from poor specific implementations of restaking.



Some might argue that restaking is an <a href="https://vitalik.eth.limo/general/2023/05/21/dont_overload.html">unnecessary increase</a> in the complexity of Ethereum’s consensus. That makes sense, but this risk has to be viewed in the context of a general risk of not enough ETH being staked.



Ethereum can be <a href="https://ethereum.org/en/developers/docs/consensus-mechanisms/pos/attack-and-defense/">progressively crippled</a> by controlling certain percentages of active stake. At over 33%, Ethereum is unable to finalize. When attackers control over 50% of the stake, they can cause minor censorship and reorganization, while controlling over 66% of the staking power grants them full control. Again, the percentage is defined in terms of the currently active stake. If there’s only 1% of ETH supply in staking, attackers would need to add just another 1% to control 50% of staking power.



With only 26% of the supply currently in <a href="https://dune.com/hildobby/eth2-staking">staking</a>, it is theoretically possible for an attacker to cripple the network by just acquiring 13% of the ETH total supply to reach 33% of the staked ETH share. That equates to just over $56 billion, which is less than three days’ worth of ETH daily volume. Though there are multiple caveats to this figure — for example, $56 billion of net buying pressure would push ETH price significantly higher — these are surprisingly low numbers for a global and neutral settlement layer.



<h2 class="wp-block-heading">Restaking and DVT could mitigate consensus risks entirely</h2>



The great thing about restaking is that it’s an extremely modular and decentralized architecture. The entirety of the stake is siloed into their respective applications, and part of it is always kept dedicated to only validating Ethereum. It is also quite easy to implement <a href="https://medium.com/@DragonStake/understanding-distributed-validator-technology-dvt-and-its-implications-on-ethereum-staking-2d2afae91595">decentralized validator technology</a> (DVT) for the operator sets involved in each EigenLayer service (which they call AVS).



DVT enables splitting control over a validator across multiple entities in a verifiable and cryptographically-secure mechanism. Since validators are responsible for producing and accepting new blocks, they are the source of “power” in the Ethereum network. An attack requires controlling validators, and while controlling the ETH stake is an important aspect of it, entities that accept other people’s stake have more power over the network than expected.



If the validator sets tied to EigenLayer and the associated stakes are safely distributed and managed through a DVT protocol, then risks of total system failure are significantly reduced. That would also lead to a much lower risk of mass validator downtime resulting in large slashing events.



If restaking adoption results in the majority of ETH supply being staked — while being distributed to an organic and decentralized set of validators — Ethereum could be significantly more secure than now.



Like any new idea, restaking protocols will need a long break-in period to ensure their technical safety, but otherwise they are extremely promising as the next major primitive in Ethereum infrastructure — and perhaps even necessary.



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<div class="wp-block-post-author-biography">Adam Efrima is the SSV Core team Co-founder. He has been active in the crypto industry since 2013. Over eight years living in China working in the financial industry and fintech space, Adam has worked in CITIC Bank covering outbound investments for Chinese SOEs, he was also in charge of setting up the eToro Shanghai operation. Since then, Adam has been deeply involved in Ethereum staking, co-founding top performing staking project Bloxstaking as well as co-founding SSV Network, a decentralized validator infrastructure for ETH staking.</div>


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The risks of restaking are extremely overrated

Bessie Liu

Bitcoin layer-2 solution Stacks initiated the rollout of its Nakamoto upgrade shortly after the halving last Friday. This significant development is designed to enhance transaction throughput and unlock Bitcoin finality for layer-2 transactions.&nbsp;



The Nakamoto upgrade aims to enable faster block processing and ensure all settlements are finalized on the layer-1. This will allow Bitcoin to remain secure while being programmable, similar to Ethereum and Solana Virtual Machines.&nbsp;



Muneeb Ali, the co-founder of Stacks, told Blockworks that the Nakamoto upgrade and the general growth of <a href="https://blockworks.co/tag/bitcoin">Bitcoin</a> layer-2 infrastructure may revive interest in the Bitcoin blockchain itself.



Read more: <a href="https://blockworks.co/news/bitcoin-halving-2024-occurs">Bitcoin’s block reward slashed by 50% following 2024 halving</a>



“Users are finally separating BTC the asset from Bitcoin as the rails,” Ali said. “BTC is the only digital asset that has proved itself as a hedge or store of value. This has created nearly $1 [trillion] in capital just sitting there. I believe the significant advancements made by [layer-2s], like Stacks’ Nakamoto upgrade, are a large contributor to this resurgence.”



<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">🧵1/12 <a href="https://twitter.com/Stacks?ref_src=twsrc%5Etfw">@Stacks</a> 2.5 Activation Thread The first step with the most awaited <a href="https://twitter.com/search?q=%24STX&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$STX</a> Nakamoto upgrade is happening on <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> block 840360. Here&#39;s a MEGA thread on what you need to know.☝️ <a href="https://t.co/d0AHD3DaqS">pic.twitter.com/d0AHD3DaqS</a>&mdash; Louise | CEO @Ryder (@louiseivanvp) <a href="https://twitter.com/louiseivanvp/status/1782321362037510264?ref_src=twsrc%5Etfw">April 22, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



According to the <a href="https://blockworks.co/tag/stacks">Stacks</a> team, the Nakamoto upgrade rollout will continue over the next month, improving block times from the current 10-30 minutes to around five seconds. Ali notes that these improvements will enable Bitcoin <a href="https://blockworks.co/tag/layer-2-2">layer-2s</a> to support the growing DeFi applications that are being built.



“I think the market is awakening to the fact that Bitcoin can be the base layer for our industry. Bitcoin is the apex crypto asset, and [layer-2s] are enabling an economic flywheel around BTC through apps and smart contracts,” he said.



Read more: <a href="https://blockworks.co/news/bitcoin-halving-layer-2-impact-stacks">Q&amp;A: What will the Bitcoin halving mean for Bitcoin L2s?</a>



In addition to improved Bitcoin layer-2 infrastructure, Ali notes that other types of innovations are also gaining significant interest in the Bitcoin blockchain. These include ordinals and BRC-20s, which saw a <a href="https://blockworks.co/news/bitcoin-ordinals-trading-frenzy">spike in interest </a>following Bitcoin’s all-time high last month.



“Experimentation is good for Bitcoin and Bitcoin [layer-2s], so we should encourage more R&amp;D around [layer-2s], Ordinals, Runes and other innovations. I predict that post-halving we will see a [layer-2] summer where the Bitcoin developer ecosystem and competition heats up,” Ali said.



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Stacks Nakamoto upgrade unfolds a new era for the Bitcoin L2

After memecoin mania cycles were speed-run on Solana and Base, this weekend was Bitcoin’s turn, and a new network milestone came along with it.



For the first time ever, bitcoin miners in a single 24-hour period earned more in fees than in block rewards. On Saturday — just after the halving and the launch of token minting protocol Runes — miners raked in $80.74 million in fees and $26.28 million in bitcoin.&nbsp;



That has never happened before, according to Token Terminal data. The day after also came close, with fees making up nearly 80% of all miner revenue.



Prior to this weekend, the closest fees that had come to flipping the block reward was during the peak bull market in December 2017: $21.1 million to $27.3 million. It also almost happened on Monday, May 8, 2023, with fees making up 42.6% of the total miner revenue for the day.&nbsp;



Runes, a new protocol for minting <a href="https://blockworks.co/tag/meme-coins">memecoins</a> from <a href="https://blockworks.co/tag/ordinals">Ordinals</a> creator Casey Rodarmor, was released at the same block height <a href="https://blockworks.co/news/bitcoin-halving-2024-occurs">as last Friday’s halving</a>. Not for any technical reason — just it made for a neat countdown.&nbsp;



A slew of Rune mints immediately came online, and average transaction <a href="https://bitinfocharts.com/comparison/bitcoin-transactionfees.html#3y">fees</a> hit an all-time high of nearly $130, per BitInfoCharts, more than double the previous record from the last bull market.



About 53,000 Runes-related transactions were <a href="https://dune.com/cryptokoryo/runes">recorded</a> in the first two hours, roughly one-third more than the overall network’s usual numbers across February and March.



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



Runes made up more than half of all Bitcoin activity on Saturday and Sunday, which explains why fees went berserk. People were willing to splurge to use the chain, as long as it meant minting the first Runes to hit the network.&nbsp;



Now, Runes are down to about 30% of <a href="https://blockworks.co/tag/bitcoin">Bitcoin</a> transactions and fees have fallen to about $11 for high priority.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/D3V3v4vpBvOETl0emtNn3nZD-skI-OO9inURWRhmd8DVskPb12NfdDSmq-UvFpJnMQi1S6HsYKlEBE6OtqO_A8v7Roy2QLwdxlQgOFOs-9fnF_ECcon21Wfoap_lBOjZfBrb5awygZwtxKKoIKGu8WM" alt=""/><figcaption class="wp-element-caption">The pink columns, representing daily fees paid, are practically off the chart (<a href="https://tokenterminal.com/terminal/projects/bitcoin">Source</a>)</figcaption></figure>



<h2 class="wp-block-heading">Did Satoshi want memecoins on Bitcoin? Who cares</h2>



Runes are fungible memecoins that exist entirely on-chain. With <a href="https://blockworks.co/tag/ordinals">Ordinals</a>, special data (images, sounds, videos, text, browser-compilable code and so on) is written to individual satoshis (sats), imbuing them with non-BTC properties to make them unique and non-fungible.&nbsp;



Those sats become Ordinals, which can then be traded on NFT marketplaces alongside other unique digital collectibles on Ethereum, Solana and other blockchains.&nbsp;



Read more: <a href="https://blockworks.co/news/solana-crosses-200-amid-memecoin-airdrop-interest">Solana breaks $200 as memecoin and airdrop interest continue</a>



Pseudonymous developer Domo riffed on Ordinals to create an experimental token standard for fungible assets, BRC-20.



Instead of images or videos, sats are inscribed with a JSON list of variables, including a ticker and max supply, technically making those Ordinals part of a larger, independent BRC-20 supply with its own market. Domo had effectively hacked Ordinals to create lo-fi memecoins — while Bitcoin’s Taproot upgrade had been hacked to create lo-fi NFTs. A cypherpunk tradition.



By contrast, Rodarmor intends Runes to be more lightweight. Instructions for Runes are attached to UTXOs rather than individual sats, which means Runes (memecoins) can be ported to the Lightning Network or other similar projects in the future.



<a href="https://www.satscreener.com/runes#">SatScreener</a>, a portal tracking the implied market caps of Runes ($4.5 billion), has listed more than 7,000 different memecoins, most of them practically worthless, including:&nbsp;



<ul>
<li>ALL-YOUR-TICKERS-SUCK</li>



<li>WADDLE-WADDLE-PENGU</li>



<li>BITCOIN-NETWORK-CONGESTION</li>



<li>IDK-HOW-TO-SELL-THIS</li>
</ul>



<h2 class="wp-block-heading">Fees really can make up for the halving — this time</h2>



Bitcoin’s $130 transaction fees, even fleeting, are still absurd in crypto’s current age of low-cost prioritization before decentralization, trustlessness and even liveness.&nbsp;



Whether high Bitcoin fees are bad, however, depends largely on one’s vantage point. There are likely few complaints among miners, who as a cohort just took a 50% haircut on the block reward at the halving. On standard 10-minute block times, miners now earn 450 BTC ($29.7 million) per day, down from 900 BTC ($59.4 million).



A hypothetical trader who spent $50 to mint some Runes, which they then sold for much much more down the line largely wouldn’t care, either.



For someone using Bitcoin to protect their net worth from inflation, $100 fees would be infuriating. It’s practically impossible to know how many people fit into that scenario, but in any case, memecoins are surely pricing out those who need bitcoin most — particularly those with low balances.&nbsp;



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



<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">pissing off eth maxis and bitcoin maxis alike <a href="https://t.co/j6exdapXIB">pic.twitter.com/j6exdapXIB</a>&mdash; Eric Wall | OP_😺 (@ercwl) <a href="https://twitter.com/ercwl/status/1782029205770744125?ref_src=twsrc%5Etfw">April 21, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">High fees mean higher mining revenue</figcaption></figure>



And that may always be the reality of Bitcoin. It’s expensive to use. It might have to be to plug lost revenue resulting from the four-year halving schedule unless electricity for whatever reason suddenly becomes much less pricey.



That’s probably okay in a very broad sense; people who want to cheaply move value across borders can send and receive USDT on cheaper networks. And fees might have to rise even higher in future cycles, especially without abundant and low-cost energy.&nbsp;



Ignoring the plight of miners in favor of users, the general consensus is there’s not much anyone can do outside of pushing activity to the Lightning Network, or raising the block size limit, which is still a <a href="https://blog.bitmex.com/the-blocksize-war-chapter-1-first-strike/">touchy</a> <a href="https://blockworks.co/news/roger-ver-right-bitcoin-book">subject</a>.



Bitcoin <a href="https://blockworks.co/tag/layer-2-2">layer-2s</a> could hypothetically help, but it’s largely dependent on the trust profiles of those networks, as well as how users operate in the future. Besides, the current crop of Bitcoin layer-2s are all in preliminary development stages, so any potential benefits are far in the future.



Read more: <a href="https://blockworks.co/news/bitcoin-halving-impact-on-layer-2s">How will the Bitcoin halving impact Bitcoin L2s?</a>



High Bitcoin fees hurt even more with the knowledge that banal stuff like CASEYS-MOM-HAS-GOT-IT-GOING-ON is driving them higher.&nbsp;



But at this point, it just is what it is.



A shortened version of this article was included in today’s <a href="https://blockworks.co/newsletter/empire">Empire newsletter</a>.



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Bitcoin memecoins pushed fees higher than block rewards for first time

Ben Strack

Bitcoin miner Hut 8’s diversified revenue streams could give it an edge over competitors in the long term, according to analysts at Benchmark.



The research firm started covering the stock on Monday, three days after <a href="https://blockworks.co/news/bitcoin-halving-2024-occurs">the Bitcoin halving</a> — when per-block rewards dropped from 6.25 BTC to 3.125 BTC.&nbsp;



Mark Palmer, a senior equity research analyst at Benchmark, gave Hut 8 a buy rating and a price target of $12 — roughly 50% higher than the level it trades at today.



The stock was trading up 5% at $8.49 midday Monday — down 36% year to date but up 16% in the last five days.&nbsp;&nbsp;



Read more: <a href="https://blockworks.co/news/depressed-miner-stocks-bitcoin-halving">How the Bitcoin halving could impact ailing mining stocks</a>



<a href="https://blockworks.co/tag/hut-8">Hut 8</a> has a 2025 enterprise value-to-revenue multiple of 2.6 — compared to the average 3.1 multiple of its competitors, according to Benchmark data. The research included the multiples of Marathon Digital, Riot Blockchain, CleanSpark, Bitfarms, Cipher Mining, Iris Energy, Hive Digital Technologies and TeraWulf when assessing the peer average.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;



The figures are based on consensus 2025 revenue estimates, and the enterprise values include the companies’ net debt balances.



“We expect Hut 8 to close the valuation gap with listed peers that are further along in boosting their self-mining capacity as it executes on the build-out of its platform,” Palmer told Blockworks.&nbsp;



Investors are particularly focused on self-mining right now given expectations that the price of bitcoin will rally aggressively following the latest <a href="https://blockworks.co/tag/bitcoin-halving">halving</a>, he noted.&nbsp;



Hut 8’s self-mining deployed hash rate stood at 5.4 exahash per second (EH/s), well behind some of the space’s largest players in that category. The leader in that category, <a href="https://blockworks.co/tag/marathon-digital">Marathon Digital</a>, had 27.8 EH/s of installed hash rate at that time. 



“At the same time, we believe the diversity of Hut 8’s platform will benefit it over the long-term, as its revenue streams outside of self-mining position it to weather severe downturns in bitcoin’s price better than most of its listed peers, in our view,” Palmer said.



The coverage — and buy rating — comes several months after Hut 8 and US Bitcoin Corp. underwent a “merger of equals” that closed in November.&nbsp;



The combined company — with 25.5 EH/s of hash rate and 884 megawatts (MW) of energy capacity under management — also has business lines focused on managed services, hosting, high-performance computing and AI.



Hut 8 CEO Asher Genoot has said during his <a href="https://blockworks.co/news/hut-8-merger-ceo-switch">two-plus months in the chief executive role</a> that he was looking at every business line to figure out how to <a href="https://blockworks.co/news/hut-8-mining-ceo-strategy">nix inefficiencies and reduce costs</a>.



Read more: <a href="https://blockworks.co/news/hut-8-growth-bitcoin-halving">Hut 8 eyes growth around the Bitcoin halving — but not at all costs</a>



Hut 8 said last week it had energized a third of its 63 MW Salt Creek site in Culberson County, TX. The company had relocated miners to Salt Creek <a href="https://blockworks.co/news/marathon-digital-terminates-competitor-involvement">from its Kearney, NE and Granbury, TX sites</a>.



“With Salt Creek, we gain critical control over our miner fleet and operating costs as we head into the halving,” Genoot said in a statement. “Our outlook on energy prices at the site suggests that the potential for cost savings relative to our cost of mining at Kearney and Granbury is in line with the 30% reduction initially projected.”



Though Hut 8’s mining fleet needs more efficiency upgrades, Palmer said, its holdings of 9,102 BTC — second in the <a href="https://blockworks.co/tag/mining">mining</a> segment to Marathon Digital — give it a solid liquidity cushion and the ability to capture upside during bitcoin price rallies.



He added: “The company’s diversified model and relative strength in bitcoin’s price should support its operating performance until new equipment is purchased and deployed.”



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Hut 8’s business diversity to give it an edge after the halving: Benchmark  

<h2 class="wp-block-heading">Hot ball of memecoin money</h2>



After memecoin mania cycles were speed-run on Solana and Base, this weekend was Bitcoin’s turn.



Runes, a new protocol for minting memecoins from Ordinals creator Casey Rodarmor, was released at the same block height as last Friday’s halving. Not for any technical reason — just it made for a neat countdown.&nbsp;



A slew of Rune mints immediately came online, and average transaction <a href="https://bitinfocharts.com/comparison/bitcoin-transactionfees.html#3y">fees</a> hit an all-time high of nearly $130, more than double the previous record from the last bull market.



Nearly 53,000 Runes-related transactions were <a href="https://dune.com/cryptokoryo/runes">recorded</a> in the first two hours, about one-third more than the overall network’s usual numbers across February and March.



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



Runes made up more than half of all Bitcoin activity on Saturday and Sunday, which explains why fees went berserk. People were willing to splurge to use the chain, as long as it meant minting the first Runes to hit the network.&nbsp;



Now, Runes are down to about 30% of <a href="https://blockworks.co/tag/bitcoin">Bitcoin</a> transactions and fees have fallen to $10.60 for high priority. <a href="https://www.satscreener.com/runes#">SatScreener</a>, a portal tracking the implied market caps of Runes (over $1.7 billion), has listed more than 7,000 different memecoins, most of them practically worthless, including:&nbsp;



<ul>
<li>ALL-YOUR-TICKERS-SUCK</li>



<li>WADDLE-WADDLE-PENGU</li>



<li>BITCOIN-NETWORK-CONGESTION</li>



<li>IDK-HOW-TO-SELL-THIS</li>
</ul>



This is why Bitcoin’s fee problem is back: <a href="https://blockworks.co/tag/meme-coins">memecoins</a> with amusing names.&nbsp;



Runes are fungible memecoins that exist entirely on-chain. With <a href="https://blockworks.co/tag/ordinals">Ordinals</a>, special data (images, sounds, videos, text, browser-compilable code and so on) is written to individual satoshis (sats), imbuing them with non-BTC properties to make them unique and non-fungible.&nbsp;



Those sats become Ordinals, which can then be traded on NFT marketplaces alongside other unique digital collectibles on Ethereum, Solana and other blockchains.&nbsp;



Read more: <a href="https://blockworks.co/news/solana-crosses-200-amid-memecoin-airdrop-interest">Solana breaks $200 as memecoin and airdrop interest continue</a>



Pseudonymous developer Domo riffed on Ordinals to create an experimental token standard for fungible assets, BRC-20. BRC-20s are popular — the biggest has a $1 billion market cap — but they can be clunky and data-intensive at scale.&nbsp;



By contrast, Rodarmor intends Runes to be more lightweight. Instructions for Runes are attached to UTXOs rather than individual sats, which means Runes (memecoins) can be ported to the Lightning Network or other similar projects in the future.



Bitcoin’s $130 transaction fees, even fleeting, are still absurd in crypto’s current age of low-cost prioritization before decentralization, trustlessness and even liveness.&nbsp;



Whether high Bitcoin fees are bad depends largely on one’s vantage point. Miners earned a record $80.7 million in <a href="https://tokenterminal.com/terminal/projects/bitcoin">fees</a> on Saturday, so likely few complaints there. A trader who spent $50 to mint some Runes, which they then sold for much much more down the line largely wouldn’t care, either.



For someone using Bitcoin to protect their net worth from inflation, $100 fees would be infuriating. It’s practically impossible to know how many people fit into that scenario, but in any case, memecoins are surely pricing out those who need bitcoin most, particularly those with low balances.&nbsp;



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



And that may always be the reality of Bitcoin. It’s expensive to use. That’s probably okay in a very broad sense; people who want to cheaply move value across borders can send and receive USDT on cheaper networks.



Outside of raising the block size limit or pushing activity to the Lightning Network, the general consensus is that there’s not much anyone can do, at least in the short term.&nbsp;



Bitcoin <a href="https://blockworks.co/tag/layer-2-2">layer-2s</a> could hypothetically help, but it’s largely dependent on the trust profiles of those networks, as well as how users operate in the future. Besides, Bitcoin layer-2s are all in preliminary development stages, so any potential benefits are far in the future.



Read more: <a href="https://blockworks.co/news/bitcoin-halving-impact-on-layer-2s">How will the Bitcoin halving impact Bitcoin L2s?</a>



High Bitcoin fees hurt even more with the knowledge that pointless stuff like CASEYS-MOM-HAS-GOT-IT-GOING-ON is driving them higher. But at this point, it just is what it is.



— David Canellis



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



<ul>
<li>Fehu, etched in block 840,000, is by far the largest Runes project right now, making up about 70% of the total <a href="https://www.satscreener.com/runes">market</a>.</li>



<li>Ordinals and BRC-20s <a href="https://dune.com/cryptokoryo/runes">contributed</a> less than 1% of all Bitcoin fees on Sunday, compared to Runes’ 34.5%.&nbsp;</li>



<li>Bitcoin NFT volumes are more than double Ethereum’s over the past week: $104 million to $46 million, according to <a href="https://www.cryptoslam.io/blockchains">CryptoSlam</a>.</li>



<li>Ether is no longer only inflationary over the past week, but also over the month: 4,172 ETH ($13.3 million) has been added to the <a href="https://ultrasound.money/">supply</a> in the past 30 days.</li>



<li>Hyperliquid and Blast are gaining ground on DEX derivatives leader Arbitrum, with both above $1 billion <a href="https://defillama.com/derivatives/chains">volume</a> over the past day compared to Arbitrum’s $1.245 billion.</li>
</ul>



<h2 class="wp-block-heading">It’s always tax season</h2>



The IRS on Friday released its new draft form 1099-DA, the form that &#8220;brokers&#8221; —&nbsp;a still-undefined term —&nbsp;are supposed to begin using next year to report transactions.&nbsp;



The form asks for wallet addresses and information about where the transactions in question can be found on the blockchain.&nbsp;



&#8220;Brokers must report proceeds from (and in some cases, basis for) digital asset dispositions to you and the IRS on Form 1099-DA,&#8221; form instructions read. &#8220;You may be required to recognize gain from these dispositions of digital assets.&#8221;



Read more: <a href="https://blockworks.co/news/irs-consensys-exec-compliance-hires">Crypto Hiring: IRS’s latest hires are long-time crypto industry colleagues and friends</a>



It looks like the industry spent the weekend dissecting the form and ruminating on the ways it falls short. But remember, this is only a draft. The rule that mandates the creation of a new 1099 hasn’t even passed yet.&nbsp;



If it feels like we’ve been talking about how the <a href="https://blockworks.co/tag/irs">IRS</a> defines “broker” for months, that’s because we have.&nbsp;



The IRS and Treasury <a href="https://blockworks.co/news/irs-reporting-brokers">released proposed regulations</a> for digital asset brokers last August. The Treasury Department added that its preferred rules are intended to crack down on “tax cheats” and bring players in the digital asset industry under the law.&nbsp;



The agencies suggest defining digital asset “brokers” as “trading platforms, digital asset payment processors, certain digital asset hosted wallet providers, and persons who regularly offer to redeem digital assets that were created or issued by that person.”&nbsp;



Individuals who only engage in distributed ledger validation, including miners and stakers, are exempt from broker requirements, at least under the current iteration of the rule.&nbsp;



Read more: <a href="https://blockworks.co/news/irs-new-crypto-taxes">Clarity or confusion? Crypto tax proposal earns mixed reactions</a>



Friday’s release, however, had interested parties hung up on whether or not the IRS is suggesting that wallet providers — hosted and unhosted — as well as decentralized platforms should be “brokers.”



Jake Chervinsky, chief legal officer at Variant Fund, said despite his best efforts to engage with regulators, they still don’t appear to get it.&nbsp;



“Great news: We really like filing lawsuits,” he added.&nbsp;



The IRS has once again opened the floor for public comment, but they don’t have a set deadline on when the rule and form will be finalized.&nbsp;



— Casey Wagner



<h2 class="wp-block-heading">No end in sight?</h2>



Imagine this: You’re an executive at a crypto exchange focused on compliance. You pack a bag for a couple of days and board a plane to have meetings in a foreign country about ways your company can collaborate to monitor transactions for financial crimes.&nbsp;



Instead, you are detained and held for over a month before a court ships you off to a notorious prison in Africa.



This is what happened to <a href="https://blockworks.co/tag/binance">Binance</a>’s compliance officer Tigran Gambaryan, as well as his colleague Nadeem Anjarwalla.&nbsp;



The story has been stewing over in Nigeria since late February when the two were initially detained. After Anjarwalla was able to escape, the developments took a turn and now Gambaryan is being <a href="https://blockworks.co/news/binance-comments-on-exec-nigeria-detention">held at the Kuje correctional facility.</a> The same prison was attacked by the Islamic State as part of a jailbreak back in 2022.&nbsp;&nbsp;



The scenario is unusual at best, and at worst showcases the danger of working in a space like crypto. Gambaryan, despite Binance repeatedly saying that he has “no decision-making power” in the company, is being charged with tax evasion alongside Anjarwalla and the exchange. All three were charged with money laundering.



Read more: <a href="https://blockworks.co/news/binance-employees-detained-nigeria">Binance says it’s working ‘collaboratively’ with Nigerian authorities&nbsp;</a>



On Friday, the trial was postponed until May 17 because Binance had yet to be served, according to a Reuters <a href="https://www.reuters.com/business/finance/nigerian-court-adjourns-binance-executives-tax-evasion-trial-may-17-2024-04-19/">report</a>. Gambaryan appeared in court but didn’t enter a plea.&nbsp;



Punch <a href="https://punchng.com/kenyan-police-arrest-binance-executive-who-escaped-from-nigeria/">reported</a> early Monday that Anjarwalla, Binance’s regional director in Africa, was arrested by the Kenyan police, and may face extradition to Nigeria as soon as this week.



Earlier this month, a Binance spokesperson told Blockworks that the decision to send Gambaryan to Kuje was “outrageous.”&nbsp;



Binance has a legally checkered past, evident from its multibillion-dollar settlement with the US government last year. Former CEO Changpeng Zhao <a href="https://blockworks.co/news/doj-indictment-binance-changpeng-zhao">pleaded guilty to a similar charge</a> as the exchange, and US officials last year <a href="https://blockworks.co/news/binance-settlement-message-to-crypto-industry">said</a> the settlement was meant to send a “message” to crypto.&nbsp;



— Katherine Ross



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



<ul>
<li>Regulators are stuck on the <a href="https://www.bloomberg.com/news/newsletters/2024-04-16/ghost-of-facebook-s-libra-haunts-stablecoin-rules-five-years-later?srnd=cryptocurrencies-v2">memory</a> of Facebook’s long-defunct stablecoin project, Libra, according to Bloomberg.&nbsp;&nbsp;</li>



<li>Crypto VC vet Kathryn Haun said late Friday that she <a href="https://twitter.com/katie_haun/status/1781516145474023778">plans to step down</a> from Coinbase’s board of directors.</li>



<li>Germany’s central bank has <a href="https://www.bundesbank.de/en/press/speeches/digital-euro-vision-advances-and-challenges-929800">begun working</a> with MIT on CBDC research.&nbsp;&nbsp;</li>



<li>The NYSE seems to be nodding at crypto exchanges and stock apps by <a href="https://www.ft.com/content/31c3a55b-9af9-4158-8a49-4397540571bf">surveying</a> market participants on the merits of 24-hour, around-the-clock stock trading, the FT writes.&nbsp;</li>



<li>AI deep fakes, a long-time crypto scam tactic, are <a href="https://www.reuters.com/world/india/deepfakes-bollywood-stars-spark-worries-ai-meddling-india-election-2024-04-22/">roiling</a> a national election in India, Reuters reports.&nbsp;</li>
</ul>



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



We know bitcoin miners run hot, but this feels a bit on the nose.



CNBC <a href="https://www.cnbc.com/2024/04/20/bitcoin-miner-gridless-backed-by-block-builds-site-at-kenya-volcano.html#:~:text=Gridless%2C%20backed%20by%20Jack%20Dorsey's,5%2C000%20households%20in%20the%20country.">reports</a> that Gridless, a company backed by Jack Dorsey of Block and (formerly) Twitter fame, has set up shop near an extinct volcano in Kenya.



The bitcoin mining sector is no stranger to geothermal power sources; places like Iceland and South America are home to firms that have tapped the earth’s heat to spin turbines and light up ASICs.&nbsp;



Maybe Gridless has cracked the code on powering through the <a href="https://blockworks.co/news/bitcoin-halving-outlook-for-public-miners">tough post-halving reality</a> for bitcoin miners —&nbsp;let’s just hope the volcano doesn’t decide to wake up one day.&nbsp;



— Michael McSweeney



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Empire Newsletter: Bitcoin’s turn for memecoin mania

Though demand for US spot bitcoin ETFs has slowed down, the category snapped a five-day outflow streak on the day of the bitcoin halving.&nbsp;



The 11-fund segment collectively brought in $60 million of assets during Friday’s trading hours, according to Farside Investors <a href="https://farside.co.uk/?p=997">data</a>.&nbsp;



<a href="https://blockworks.co/news/bitcoin-halving-2024-occurs">The bitcoin halving</a> — when per-block rewards paid to miners dropped from 6.25 BTC to 3.125 BTC — occurred at about 8 pm ET that night.&nbsp;&nbsp;&nbsp;



US bitcoin funds had seen $319 million of net outflows over a five-day span prior to Friday.&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-etf-record-outflows">Bitcoin ETF segment sees record-tying fifth straight day of outflows</a>



Overall, US spot bitcoin ETFs endured net outflows for the second straight week, amounting to $204 million from April 15 to April 19.&nbsp;



The driver of last week’s outflows was the Grayscale Bitcoin Trust ETF (<a href="https://blockworks.co/tag/gbtc">GBTC</a>), which hemorrhaged $458 million.&nbsp;



<a href="https://blockworks.co/tag/blackrock">BlackRock</a>’s iShares Bitcoin Trust (IBIT) and the Fidelity Wise Origin Bitcoin Fund (FBTC) were unable to fully offset those GBTC asset losses — tallying net inflows last week of $165 million and $94 million, respectively.&nbsp;&nbsp;



Grayscale <a href="https://www.sec.gov/Archives/edgar/data/1588489/000119312524094896/d807233dprer14c.htm">revealed</a> a planned fee of 0.15% for its Grayscale Bitcoin Mini Trust (BTC) — substantially lower than GBTC’s fee of 1.5%. <a href="https://blockworks.co/news/grayscale-new-mini-fund-btc-ticker">GBTC intends to seed the spin-off fund</a>, and a portion of the bitcoin holdings would be allocated to the new proposed fund.



Trading volumes for crypto exchange-traded products (ETPs) more broadly dipped to $18 billion last week, according to CoinShares head of research James Butterfill.



These volumes represent 28% of total bitcoin volumes, he added in a Monday <a href="https://blog.coinshares.com/volume-179-digital-asset-fund-flows-weekly-report-84f3312ba409">report</a> — a significant drop from 55% a month ago.



“The data suggests appetite from ETP/ETF investors continues to wane, likely off the back of expectations that the Fed is likely to keep interest rates at these high levels for longer than expected,” Butterfill wrote.&nbsp;



BlackRock ended the week with an active daily net inflow streak of 69 days.&nbsp;



Read more: <a href="https://blockworks.co/news/blackrock-extends-bitcoin-etf-inflows">BlackRock extends bitcoin ETF inflows lead as category demand slows</a>



IBIT’s daily inflow run is the 11th-best streak for an ETF, <a href="https://twitter.com/EricBalchunas/status/1780951564200395129?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1780951564200395129%7Ctwgr%5E7be5de38ebd7721595b3aefcbdfb1070fc7572c3%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fblockworks.co%2Fnews%2Fblackrock-extends-bitcoin-etf-inflows">according</a> to Bloomberg Intelligence analyst Eric Balchunas.  



The BlackRock bitcoin fund’s net inflows during the first quarter represented about <a href="https://blockworks.co/news/blackrock-q1-earnings-bitcoin-fund-inflows">20% of the asset management giant’s ETF inflows</a> over that span. 



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Bitcoin ETF snapshot: GBTC drives second straight week of outflows

As NFTs boomed and Meta went all-in on the metaverse in 2021, a bevy of legacy firms started working on Web3-adjacent or metaverse projects. As interest in NFTs and the metaverse stagnated, many of these brands quietly shuttered their Web3 initiatives, with project <a href="https://www.thedrum.com/news/2023/08/22/brands-metaverse-leads-where-are-they-now">leads</a> either leaving or pivoting roles. Starbucks Odyssey was the latest such casualty.



Adidas, however, appears to be keeping one foot in the metaverse.&nbsp;



Move to earn app STEPN <a href="https://x.com/Stepnofficial/status/1779827559208722669">announced</a> a “long-term collaboration” with the global sports brand this week. The partnership so far comprises the launch of 1000 generative Solana-based NFTs of Adidas sneakers.&nbsp;



Read more: <a href="https://blockworks.co/news/starbucks-terminates-nft-program">Web3 Watch: Starbucks shutters its ‘Odyssey’ NFT program</a>



STEPN users must have a sneaker NFT to use the movement app, which pays out rewards in GMT and GST tokens for users’ movement.



The Adidas <a href="https://blockworks.co/tag/nfts">NFTs</a> went on sale this week for 10,000 GMT apiece, worth roughly $2400 at current prices.&nbsp;



“We are ready to step into the future with @Stepnofficial,” ALTS by Adidas <a href="https://twitter.com/altsbyadidas">wrote</a> on X.



Also this month, the Web3 online survival game show Crypto The Game <a href="https://x.com/jessepollak/status/1778477025386508461">let</a> users bid on Adidas-branded tracksuits in an immunity challenge.



Adidas’ global head of Web3 strategy is Evgeniy Medvedev, who previously worked in business development at NFT company Rarible.



<h2 class="wp-block-heading">Justin Sun drops a Hans Zimmer track amid SEC chase</h2>



The prodigious film score composer Hans Zimmer’s catalog includes The Lion King, Dune, Interstellar and now the layer-1 blockchain <a href="https://blockworks.co/tag/tron">TRON</a>.&nbsp;



The three-minute “song for the Web3 generation” is “a groundbreaking collaboration between legendary composer Hans Zimmer and blockchain visionary [<a href="https://blockworks.co/tag/justin-sun">Justin Sun</a>],” according to a YouTube video <a href="https://www.youtube.com/watch?v=4lblmnZfugM">uploaded</a> by TRON. 



Sun founded TRON in 2017 but stepped down from the CEO role in 2021. He has since fallen into legal trouble. This week, the Securities and Exchange Commission filed documents claiming jurisdiction over Sun as it <a href="https://www.sec.gov/news/press-release/2023-59">pursues</a> “fraud and other securities law violations” charges against him.



Read more: <a href="https://blockworks.co/news/sec-ameds-complaint-justin-sun-complaint">SEC amends case against Justin Sun to establish jurisdiction</a>



The TRON anthem was “sparked by a deep conversation between Sun and Zimmer in early 2022,” the project said in a press release.



<h2 class="wp-block-heading">One interesting stat:</h2>



<ul>
<li>The day before the <a href="https://blockworks.co/tag/bitcoin-halving">halving</a>, Bitcoin digital art <a href="https://www.cryptoslam.io/">saw</a> roughly $24 million in sales volume, around triple that of Ethereum, per CryptoSlam.</li>
</ul>



<h2 class="wp-block-heading">Also of note:</h2>



<ul>
<li>NFTs will be <a href="https://www.paypal.com/us/legalhub/upcoming-policies-full?locale.x=en_US&amp;v=1&amp;utm_source=unp&amp;utm_medium=email&amp;utm_campaign=RT002546&amp;utm_unptid=c09814e8-fbef-11ee-b99a-3cecef476576&amp;ppid=RT002546&amp;cnac=US&amp;rsta=en_US%28en-US%29&amp;cust=&amp;unptid=c09814e8-fbef-11ee-b99a-3cecef476576&amp;calc=62d42c0952025&amp;unp_tpcid=online-user-agreement-change-email&amp;page=main%3Aemail%3ART002546&amp;pgrp=main%3Aemail&amp;e=cl&amp;mchn=em&amp;s=ci&amp;mail=sys&amp;appVersion=1.246.0&amp;tenant_name=PayPal&amp;xt=145585%2C104038%2C124817&amp;link_ref=ua_upcoming-policies-full">excluded</a> from PayPal’s Purchase Protection Program, which partly serves to protect buyers from scams, after a policy change goes into effect May 20.</li>



<li>The popular NFT platform Magic Eden has a <a href="https://x.com/MagicEden/status/1781368169442980027">partnership</a> coming with the layer-2 Base on April 25.</li>



<li>Crypto The Game <a href="https://x.com/cryptothegame_/status/1780689234246107210">concluded</a> with one lone survivor taking home 80 ether, though not without <a href="https://x.com/tednotlasso/status/1780687585616306353">controversy</a>.</li>
</ul>



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Web3 Watch: Someone at Adidas likes crypto culture

It was something of an eye of the storm week for crypto funding, as the dust settled on two layer-1 megadeals last week and all of crypto braced for the fourth Bitcoin halving.



The week was nevertheless a standout one for deals in real-world assets, which refers to projects tokenizing off-chain goods like real estate or US Treasurys.&nbsp;



Centrifuge <a href="https://x.com/centrifuge/status/1780538961468825766">raised</a> $15 million for a generalist real-world asset platform. The round was co-led by ParaFi Capital and Greenfield, and follows on $7 million in strategic capital Centrifuge raised throughout 2022.&nbsp;



Read more: <a href="https://blockworks.co/news/tokenized-machine-real-world-assets">Tokenized real-world assets are more than a Web3 Robinhood</a>



Centrifuge facilitates pools of tokenized real-world assets (<a href="https://blockworks.co/tag/real-world-assets">RWAs</a>), including assets <a href="https://app.centrifuge.io/pools">like</a> loans, credit and real estate. These pools are designed specifically to manage RWA liquidity pools, which are assets locked in a smart contract that help facilitate a liquid market. These pools consist of assets locked in a smart contract to support a liquid market for these RWAs.



Centrifuge tokenizes assets by creating <a href="https://blockworks.co/tag/nfts">NFTs</a> that embed links to detailed off-chain data. This method leverages blockchain technology to ensure transparency and accessibility while securing sensitive data off-chain, as outlined in the project&#8217;s <a href="https://docs.centrifuge.io/getting-started/products-and-ecosystem/products/">documentation</a>.



Centrifuge has also explored launching RWA liquidity pools on a variety of other chains, including Arbitrum and Base.&nbsp;



Read more: <a href="https://blockworks.co/news/centrifuge-real-world-assets-tokenization-ethereum">Centrifuge to meet demand for real-world assets with liquidity pools</a>



Centrifuge <a href="https://app.centrifuge.io/pools">says</a> $285 million worth in assets are held in its liquidity pools, a figure that increased quickly after sitting around $80 million at the end of 2022.&nbsp;



With the funding, “[w]e&#8217;ll continue to grow the team, invest in product development and support the broader tokenization ecosystem education and growth,” Centrifuge co-founder Lucas Vogelsang told Blockworks.



Also this week, tokenized real estate platform Homium <a href="https://www.avax.network/blog/homium-issues-first-home-equity-loans-on-avalanche">raised</a> a $10 million Series A to put home equity loans on the <a href="https://blockworks.co/tag/avalanche">Avalanche</a> blockchain. The round was led by University of Utah-linked Sorenson Impact Group and Avalanche’s “Blizzard” ecosystem fund.



Homium offers homeowners “shared appreciation” loans that are pooled with other loans and converted to a tokenized security. The product aims to provide tokenized access to home appreciation at scale. Homium’s loans are currently only available in Colorado.&nbsp;



RWA Inc, which focuses on fractional assets, <a href="https://twitter.com/RWA_Inc_/status/1779842459196940558">announced</a> a $1.175 million private funding round this week.&nbsp;



<h2 class="wp-block-heading">Puffer the latest restaking protocol to close a round</h2>



As EigenLayer <a href="https://blockworks.co/news/eigenlayer-restaking-protocol-on-ethereum">went to a phased mainnet</a>, liquid restaking protocol Puffer <a href="https://medium.com/@puffer.fi/dive-into-the-big-splash-puffer-finance-raises-18m-to-propel-ethereums-decentralization-62738a657019">announced</a> $18 million in Series A funding. The round was co-led by Brevan Howard Digital and Electric Capital.



Coinbase Ventures, Kraken Ventures, Franklin Templeton and Fidelity Investments-linked Avon Ventures were among other participants in the round.&nbsp;



Puffer is rolling out a pufETH liquid restaking token that aims to offer holders exposure to yield from Ethereum staking and EigenLayer restaking. The protocol is not yet in mainnet.&nbsp;



Puffer is the third-largest liquid restaking protocol by total value locked (<a href="https://blockworks.co/tag/tvl">TVL</a>) behind ether.fi and Renzo, <a href="https://defillama.com/protocols/liquid%20restaking">according</a> to DeFiLlama.&nbsp;



Elsewhere in liquid restaking, Aark <a href="https://chainwire.org/2024/04/17/aark-raises-6m-funding-to-accelerate-lrt-liquidity-integration-for-high-leverage-trading/">closed</a> a $6 million seed round for a perpetual futures DEX aiming to leverage liquid restaking tokens.



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



<ul>
<li>Massively multiplayer online game AVALON <a href="https://twitter.com/avalon/status/1779857341317603794">closed</a> a $10 million round led by BITKRAFT Ventures and HASHED.</li>



<li>P2 Ventures <a href="https://x.com/Hadronfc/status/1780560183355212001">committed</a> $50 million via the Hadron Founders Club to support Polygon ecosystem startups.</li>



<li>Thruster, the second-largest protocol on Blast, <a href="https://x.com/ThrusterFi/status/1780946789325033739">raised</a> $7.5 million in seed funding led by Pantera Capital.</li>



<li>Andreessen Horowitz <a href="https://blockworks.co/news/a16z-seven-billion-fundraise">raised a $7.2 billion fund</a>, but not for its crypto arm.</li>



<li>DeFi for content creators startup Matera <a href="https://x.com/MateraProtocol/status/1780935590604689620">raised</a> $3.6 million.</li>



<li>Runes DEX <a href="https://decrypt.co/226954/runes-dex-secures-2-million-in-seed-investment-to-pioneer-amm-on-bitcoin">raised</a> a $2 million seed round for an exchange for the <a href="https://blockworks.co/news/bitcoin-halving-runes-launch">new fungible tokens</a> slated to launch on Bitcoin at the <a href="https://blockworks.co/tag/bitcoin-halving">halving</a>.</li>
</ul>



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Funding Wrap: Centrifuge raises $15M as investors bet on RWAs

Nana Murugesan, who previously served as the vice president of business development, international and listings at Coinbase, has moved on to become the president of Matter Labs. Matter Labs is the software company developing the layer-2 zkSync, an Ethereum layer-2 focused on zero-knowledge proofs.&nbsp;



Murugesan becomes Matter Labs’ first president. Alex Gluchowski, who also founded the company, is CEO. Murugesan will be responsible for “business, marketing, communications, finance, legal and policy, people and operations functions, expanding our team and ramping up operations,” Matter Labs <a href="https://www.linkedin.com/posts/matterlabs_former-coinbase-executive-nana-murugesan-activity-7186721353704595456-ARZz?utm_source=share&amp;utm_medium=member_desktop">said</a> while announcing the hire.&nbsp;



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



“I&#8217;m thrilled to join the Matter Labs team to power mainstream blockchain adoption, enabling practical apps with developers &amp; bringing in the next billion users with @zkSync,” Murugesan <a href="https://x.com/NanaMurugesan/status/1780953583699321296">wrote</a> on X.&nbsp;



While <a href="https://blockworks.co/tag/coinbase">Coinbase</a> will have to replace an executive, the departure is not a sudden one. Murugesan <a href="https://blockworks.co/news/binance-anti-crime-staffers-leave">announced that he would be leaving Coinbase</a> in November of last year.



Ex-Coinbase employees run some of crypto’s most notable firms. Coinbase co-founder Fred Ehrsam co-founded crypto venture fund Paradigm. Early Coinbase hires Olaf Carlson-Wee and Dan Romero went on to start Polychain and Farcaster, respectively.



<h2 class="wp-block-heading">Former Disney gaming exec co-founds Web3 game publisher</h2>



UAE-based Galactic Group is launching a Web3 game publishing arm named Galactic Entertainment, the company said in a press release.&nbsp;



Mark Meyers, the company’s co-founder and chief publishing officer, rose to become the head of Disney’s gaming studios in the late aughts, leaving the company in 2012 to found an Internet of Things startup.



In a press release, Meyers extolled Web3 <a href="https://blockworks.co/tag/gaming">games’</a> ability to let players earn “in-game goods that they actually own.”



Read more: <a href="https://blockworks.co/news/immutable-polygon-web3-gaming-fund">Immutable and Polygon Labs launch Inevitable Games Fund with hopes of raising $100M</a>



The company, Galactic Entertainment Publishing, is pushing PlanetQuest, which the company describes as Star Wars-like, as its first franchise. The game is set for early access release later this year, and Galactic is planning comics and a book trilogy for the franchise as well.&nbsp;



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



<ul>
<li>Longtime senior executives at crypto exchange OKX Tim Byun and Wei Lan left the company for unclear reasons, CoinDesk <a href="https://www.coindesk.com/business/2024/04/16/okx-og-execs-tim-byun-and-wei-lan-leave-crypto-exchange/?utm_medium=referral&amp;utm_source=rss&amp;utm_campaign=headlines">reported</a>.</li>



<li>Franklin Bi <a href="https://x.com/PanteraCapital/status/1778832423364477401">became</a> general partner at Pantera Capital.</li>



<li>Former Coindesk editor and reporter Tracy Wang <a href="https://x.com/0x_tracy/status/1780603968910991442">joined</a> Framework Ventures as head of special projects.</li>



<li>Stephen Levin <a href="https://x.com/smlevin11/status/1778423958301184229">started</a> as head of ops, finance, people and legal at Flashbots.</li>



<li>Natalie Mullins <a href="https://twitter.com/eclecticcapital/status/1780612566017814569">became</a> an associate investor at Bain Capital Crypto.</li>
</ul>



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Crypto Hiring: Coinbase exec departs for zkSync development company

Jonathan Hargreaves

Fiat currencies are evaluated on a variety of factors from usability and integrity to interest rates and demand; ultimately, bitcoin should be assessed on a wider set of criteria.



The price of bitcoin has long been a media obsession.



Every industry milestone appears defined solely by the price of bitcoin the following day: “Bitcoin price falls 15% following launch of ETFs,” <a href="https://www.ft.com/content/99e406f0-c5af-4a67-9937-afb1ea885565">crowed</a> the Financial Times, following the US Securities and Exchange Commission’s bitcoin ETF <a href="https://blockworks.co/news/sec-approves-bitcoin-etf">approval in January</a>. 



This is slightly unfair.&nbsp;



Between July and November last year, the euro fell 7% against the US dollar, and no one questioned the validity of the former as a means of exchange. This is because the euro — even at a 7% depreciated value — remains a useful means of payment; it is universally accepted and requires no training, knowledge or equipment to use.



This is not (yet) the case with bitcoin, but considering “price” as its only measure of value is the same as valuing traditional currencies (only) according to the current exchange rate.&nbsp;



The latter certainly contains valuable information about the opportunity cost of holding other currencies, as well as the monetary and fiscal policies associated with the currency in question. However, there are plenty of other indicators that can define a currency’s value, including interest rates and prevailing inflation. It all depends on one’s perspective.&nbsp;&nbsp;



For instance, if you are a validator, Bitcoin’s value is tied up in gas fees — the commission independent validators receive for maintaining the integrity of the network.&nbsp; Last year’s gas fees for bitcoin reached a <a href="https://archive.ph/iTQ9Z">historical high</a> of $40, reflecting unprecedented demand and transaction volumes.&nbsp;



Read more from our opinion section: <a href="https://blockworks.co/news/bitcoin-is-not-scarce">If you still think bitcoin is scarce, you’re suffering from fiat brain</a>



For corporations considering using bitcoin as a medium of exchange, the idea of value is associated with the levels of security associated with the currency. When examining bitcoin&#8217;s value then, for instance, one could look at the open letter penned by a member of the US Space Force on the <a href="https://www.linkedin.com/posts/jasonplowery_an-open-letter-to-the-defense-innovation-activity-7136779515376087040-Wq3c/?utm_source=share&amp;utm_medium=member_ios">possibility</a> of using Bitcoin’s proof-of-work protocol in underpinning the country’s defense systems.



The security afforded by a currency is also partly measured in the cost of transacting in the same. With bitcoin, that would mean considering gas fees, which represent the cost of independently validating and protecting your transaction.&nbsp; While the correlation is not necessarily entirely linear, higher gas fees indicate greater levels of scrutiny and vigilance associated with a decentralized currency, in addition to demand.&nbsp;



The advent of Bitcoin staking will create yet another measure of Bitcoin’s value; the chance to earn interest (or a return) from the bitcoin tokens under management. While blockchains such as Tezos, Cosmos, Solana, Cardano and, most famously, Ethereum have traditionally enabled dormant tokens to be put to work (verifying transactions and the status of tokens, according to the corresponding smart contracts), this has never previously been possible with Bitcoin.&nbsp;&nbsp;



Bitcoin layer-2 technology will make it possible for unused bitcoin to be staked; in effect, put to work, just as fiat currencies are within a savings account. The more useful people find bitcoin (i.e. the more transactions in terms of volume and frequency), the more confidence people have in the currency. And the more uses they find for Bitcoin-denominated smart contracts, the higher the Bitcoin interest rate will climb. The opposite is also true — a plunge in confidence or sudden availability of a more convenient, safer, cheaper alternative will lead to a reduction in the Bitcoin interest rate.&nbsp;&nbsp;&nbsp;



All of the above represents different measures of Bitcoin’s value beyond its price on a given day, in exactly the same way that fiat currencies are evaluated according to different perspectives and uses.&nbsp;



Ultimately, the true test of any currency is its usefulness; the ease with which goods can be exchanged using it. Bitcoin is making steps towards becoming easier to use, despite — it must be added — unprecedented levels of hostility from <a href="https://www.ecb.europa.eu/press/blog/date/2024/html/ecb.blog20240222~0929f86e23.en.html">legacy actors</a>, including regulators and central banks. All this for a currency that no one is imposing on anyone else, requires no disclosure of personal information to third parties, and is cheaper and more accessible than most fiat-based transactions (particularly those cross- border).



To paraphrase one of traditional finance’s most enduring slogans — Mastercard’s, no less — for all these reasons, the true value of Bitcoin is “priceless.”



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


<div class="wp-block-post-author-biography">Jonathan currently serves as the Global Head of Growth at the Web3 ecosystem, Elastos, overseeing marketing, business development, investment and ecosystem strategies. With a background in corporate communications and technology marketing from roles at Edelman, Weber Shandwick, and Burson-Marsteller, Jonathan has transitioned to focus on Web3 innovation in his recent positions at Elastos and CreDA.</div>


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Don’t let bitcoin be defined by its price

Shortly after 8 pm ET, the network underwent its fourth mining subsidy halving, with per-block rewards falling from 6.25 BTC to 3.125 BTC.&nbsp;



The 840,000th block was a notable <a href="https://mempool.space/block/0000000000000000000320283a032748cef8227873ff4872689bf23f1cda83a5">affair</a> unto itself. It boasted 37.626 BTC in fees —&nbsp;a cool $2.4 million for ViaBTC, the Chinese mining pool that scored the winning block.&nbsp;



According to the block explorer Mempool.space, someone <a href="https://mempool.space/tx/2bb85f4b004be6da54f766c17c1e855187327112c231ef2ff35ebad0ea67c69e">paid</a> roughly nearly $430,000 in fees in an apparent effort to get their transaction in the 840,000th block —&nbsp;a rather expensive way to become part of history, we’d reckon.&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-halving-2024-occurs">Bitcoin’s block reward slashed by 50% following 2024 halving</a>



As expected, Crypto Twitter, the social hub of the ecosystem, saw its share of celebratory posts.&nbsp;



BBQ dinners, livestream chats and countless screenshots of block explorers and countdown timers peppered our streams post-halving. At the bitcoin bar PubKey in New York City, party-goers busted out the tuxedo ties.



Read more: <a href="https://blockworks.co/news/bitcoin-halving-market-response">Bitcoin hovers around $63,600 following the halving</a>



<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">Which one of these things is not like the other…? <a href="https://t.co/96VtMLmmlY">pic.twitter.com/96VtMLmmlY</a>&mdash; PUBKEY (@PubKey_NYC) <a href="https://twitter.com/PubKey_NYC/status/1781469660052889625?ref_src=twsrc%5Etfw">April 19, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



We have to say: Kudos to those who opted the phrase “<a href="https://twitter.com/search?q=bitcoin%20halfing&amp;src=typed_query">Bitcoin halfing</a>,” which is somehow more eyebrow-raising than the (justifiably) oft-maligned “<a href="https://twitter.com/MarathonDH/status/1781475480790565222">Bitcoin halvening</a>.” 



Our toes were tapping here at Blockworks thanks to Jonathan Mann, otherwise known as Song A Day Man, who rang in the halving with a new song.&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">someone has to write a song to celebrate the halving and it may as well be me. <a href="https://t.co/qAw47CZoxR">pic.twitter.com/qAw47CZoxR</a>&mdash; 16 years of song a day (@songadaymann) <a href="https://twitter.com/songadaymann/status/1781441455732543675?ref_src=twsrc%5Etfw">April 19, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The memes started rolling in quickly, too.&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">crypto bros in the club tn: yeah so it depends on the time zone you’re in, but for some people the Bitcoin halving actually happened on 4/20 which is so sick <a href="https://t.co/0SUsd5gssV">pic.twitter.com/0SUsd5gssV</a>&mdash; Jacquelyn Melinek (@jacqmelinek) <a href="https://twitter.com/jacqmelinek/status/1781478077303771164?ref_src=twsrc%5Etfw">April 20, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The analysts were right, at least so far, the halving certainly seems to have been priced in. Those hoping for dramatic price moves were disappointed. It’s back to our regularly scheduled programming.&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">happy halving <a href="https://t.co/aFuNoYfRan">pic.twitter.com/aFuNoYfRan</a>&mdash; Hsaka (@HsakaTrades) <a href="https://twitter.com/HsakaTrades/status/1781477488817766640?ref_src=twsrc%5Etfw">April 20, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Caitlin Long, founder and CEO of Custodia Bank, reminded her followers that what the event really means is that bitcoin’s scarcity has increased.&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">NEVER IN HUMAN HISTORY has a good that people use as money been this scarce. Happy <a href="https://twitter.com/hashtag/bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#bitcoin</a> halving, peeps! <a href="https://t.co/dLigDQj2Vi">pic.twitter.com/dLigDQj2Vi</a>&mdash; Caitlin Long 🔑⚡️🟠 (@CaitlinLong_) <a href="https://twitter.com/CaitlinLong_/status/1781476490661470658?ref_src=twsrc%5Etfw">April 20, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



And really…that’s it. We might be forgiven for saying that this particular halving was, well, normal, for lack of a better phrase. Maybe it’s a little bit of the bitcoin ETF effect.&nbsp;



Anyway, we’ll catch you next time —&nbsp;for those looking to market their calendars for halving #5, Bitcoin’s next one is approximately 1,400 days away.



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Tuxedos, songs and memes mark Bitcoin’s fourth halving

Bitcoin underwent its quadrennial halving at 8:10 pm ET Friday in New York, reducing block rewards from 6.25 BTC to 3.125 BTC.



Immediately following the event, the price of bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) was largely unchanged at around $63,600. It was trading 1.15% higher over 24-hours at time of publication, per Coinbase.&nbsp;



The largest cryptocurrency is now 13% lower than its all-time high of $73,000 set in March. It’s the first time bitcoin has entered a halving event so closely after hitting a new price record.&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-halving-2024-occurs">Bitcoin’s block reward slashed by 50% following 2024 halving</a>



Despite historical precedent of bitcoin reaching new highs in the months following a <a href="https://blockworks.co/tag/bitcoin-halving">halving</a>, analysts warn this time could be different. JPMorgan researchers — along with most teams across the crypto industry — say the halving is already priced in.&nbsp;



In the months following bitcoin’s last halving in 2020, the crypto notched its former all-time high of $69,000. Similarly, in 2016, it hit $20,000.&nbsp;



Read more: <a href="https://blockworks.co/news/history-of-bitcoin-halvings-2">The history of Bitcoin halvings — and why this time might look different</a>



As Iranian-Israeli tensions persist, geopolitical tensions may still be weighing on crypto markets. On Thursday night, Israel carried out a retaliatory attack against Iran. Bitcoin crashed to below $60,000 following reports of the strike. It pared some losses Friday, trading in the mid-$60,000 range for most of the day.&nbsp;



Hashdex Chief Investment Officer Samir Kerbage told Blockworks via email that the firm believes, despite how the halving “plays out,” that “the investment case for bitcoin remains as strong as ever as institutional interest accelerates amidst a favorable macro environment and positive on-chain developments.”



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Bitcoin hovers around $63,600 following the halving

Per-block bitcoin mining rewards officially dropped at 8:10 pm ET Friday in New York, marking the arrival of a rare industry event expected to spur ripple effects.



Known as a Bitcoin halving, such events happen roughly every four years. With the 2024 halving complete, the block reward that miners collect now stands at 3.125 BTC — down from 6.25 BTC.&nbsp;



Bitcoin’s 840,000 block was mined by ViaBTC Friday evening.&nbsp;



The halving has been top of mind for industry participants due in part to the event’s <a href="https://blockworks.co/news/history-of-bitcoin-halvings-2">historical impact on bitcoin price</a>.&nbsp;



Despite the small sample size of such occurrences, <a href="https://blockworks.co/tag/bitcoin-halving">Bitcoin halvings</a> have seemed to catalyze crypto bull markets.



Bitcoin’s price grew nearly 100 times from $12 on Nov. 28, 2012 — the date of the first Bitcoin halving — to $1,164 some 367 days later, Berenberg Capital Markets analysts said in a 2023 report.



After the 2016 halving, it took 524 days for BTC to rise from about $650 to a then-record $19,712, the report added. Bitcoin hit a then-all-time high of more than $69,000 in November 2021, 549 days after the 2020 bitcoin halving.&nbsp;



Read from our opinion section: <a href="https://blockworks.co/news/bitcoin-halving-different-institutions-investors">This Bitcoin halving will be different — the institutions are here</a>



Bitcoin’s price was roughly unchanged immediately following the event. It was trading at $63,783 at time of publication, per Coinbase.&nbsp;



Fineqia research analyst Matteo Greco pointed out in a research note earlier this month that BTC for the first time reached a new price record leading up to the halving — “a departure for previous cycles” that could signal <a href="https://blockworks.co/news/btc-record-monthly-growth-streak-jeopardized">uncertainty about what’s next</a>.



Bitcoin reached its latest all-time high price of more than $73,500 on March 14.&nbsp;



“If historical trends hold true, we might anticipate the peak of this cycle occurring between the fourth quarter of 2024 and the first half of 2025,” Greco previously told Blockworks.



Aside from the halving’s projected impact on <a href="https://blockworks.co/price/btc">bitcoin</a> price, the event is set to affect the mining companies that will now start collecting lower rewards per block.



Players in the industry had been preparing for the halving in a number of ways — from acquiring mining sites and machines to cutting costs and diversifying revenue sources.



Read more: <a href="https://blockworks.co/news/mining-firms-prepare-for-bitcoin-halving">The Bitcoin halving is just weeks away — here’s how miners have prepared</a>



Still, segment observers <a href="https://blockworks.co/news/bitcoin-halving-outlook-for-public-miners">expect pain to hit a number of miners</a> in the coming weeks and months — particularly those with weaker balance sheets and higher energy costs.



Some with more capital at their disposal have signaled they could opt to acquire machines, sites or even companies in the coming months.



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Bitcoin’s block reward slashed by 50% following 2024 halving

<h2 class="wp-block-heading">Four more years!</h2>



Bitcoin Halving Day is here (at least, that&#8217;s what some countdowns are projecting, sometime before midnight ET).&nbsp;



Finally!



By now, you’ve slogged through waves of halving takes from a bevy of venture capitalists, influencers, founders, proponents and, increasingly, Wall Street analysts. Even the Guardian put out an <a href="https://www.theguardian.com/technology/2024/apr/19/what-is-bitcoin-halving-price#:~:text=Halving%20reduces%20the%20supply%20of%20new%20bitcoins%2C%20which%20should%20in,its%20price%20should%20go%20up.">article</a> this morning discussing what the halving could do to bitcoin’s price.



The halving is, after all, a spectacle that only comes round once every four years, as the good folks at Resistance Money <a href="https://blockworks.co/news/bitcoins-halving-major-spectacle-satoshi">pointed</a> out this week.&nbsp;



So, like we would cheer for Olympic trampoliners or canoeists, we might rally behind bitcoin miners who have to actually <a href="https://blockworks.co/news/depressed-miner-stocks-bitcoin-halving">grapple with the consequences of the halving</a>. But when Bitcoin adds its 840,000th block sometime tonight or early tomorrow, nothing will really change for those of us watching the countdown on Twitter from our couches.



Prepare to be underwhelmed in the moment, outside of some price volatility.



Read more: <a href="https://blockworks.co/news/post-bitcoin-halving-price-predictions">With halving just hours away, bitcoin price predictions proliferate&nbsp;</a>



The big secret is that the whole thing just gives us all something to chat about for a while, resulting in a million different ways to say:&nbsp;



“The price has gone up before after halvings but who knows what might happen this time. And if the price of bitcoin drops too far, some miners may switch off their rigs until it’s profitable again. Traders might ‘buy the rumor’ and ‘sell the news.’ Bitcoin will be okay in any case.”&nbsp;



The actual halving itself may not exactly be thrilling. But it does close the chapter on <a href="https://blockworks.co/news/history-of-bitcoin-halvings-2">four years of Bitcoin and crypto history</a>.&nbsp;



<h2 class="wp-block-heading">Seven fun facts and stats from this cycle:</h2>



<ol>
<li>F2Pool mined the last block before our current halving cycle began (block 629,999) and included a message: “NYTimes 09/Apr/2020 With $2.3T Injection, Fed&#8217;s Plan Far Exceeds 2008 Rescue.” It was a nod to Satoshi Nakamoto’s genesis block note.</li>



<li>Antpool mined the following block, the first to include a 6.25 BTC reward (block 630,000). There was no additional message attached.</li>



<li>Bitcoin’s price was $8,730 when the 2020 halving hit ($10,635 adjusted for inflation). It’s up more than 600% since then.</li>



<li>Bitcoin’s hash rate was 137.5713 exahashes per second at the start of the cycle, now 625.05 EH/s (up 350%).</li>



<li>12,634 <a href="https://bitinfocharts.com/bitcoin/">addresses</a> contained $1 million or more bitcoin when Bitcoin last halved. Now there are more than 111,000 — nine times more.</li>



<li>Addresses with more than $1 in bitcoin rose from 22.12 million to 46.54 million.</li>



<li>Active addresses are practically the <a href="https://cryptoquant.com/asset/btc/chart/addresses/active-addresses">same</a> today as they were four years ago, around 878,000 per day. One point in February 2021 saw 1.15 million per day, the highest on record.</li>
</ol>



One more for the haters —&nbsp;some say this halving is more bullish than the others, as bitcoin for the first time hit an all-time high before issuance was cut. But that’s not completely true.



Bitcoin nearly hit $69,000 in November 2021, setting an all-time high that would stand for years. The US dollar is, however, an imperfect benchmark for bitcoin’s value: The total <a href="https://www.calculator.net/inflation-calculator.html?cstartingamount1=68%2C997.75&amp;cinmonth1=11&amp;cinyear1=2021&amp;coutmonth1=3&amp;coutyear1=2024&amp;calctype=1&amp;x=Calculate#uscpi">inflation</a> rate from then until now is 12.37%. Bitcoin’s high was really $77,533 in today’s dollars and that hasn’t been broken.



Bitcoin only reached $73,757 last month — almost 5% short of the inflation-adjusted record.&nbsp;



Here’s to better luck after the halving.



— David Canellis



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



<ul>
<li>When this newsletter hit your inbox, there were fewer than 80 blocks to be mined before the halving.</li>



<li>The block reward will drop from about $1.76 billion BTC per month to $882.8 million after the halving, at current prices.</li>



<li>Bitcoin miners on average earned $91.6 million per month in <a href="https://tokenterminal.com/terminal/projects/bitcoin">fees</a> over the past year.&nbsp;</li>



<li>Bitcoin DeFi has more total value <a href="https://defillama.com/chains">locked</a> than Avalanche, Polygon and Optimism heading into the next halving cycle, with $1.21 billion.</li>



<li>Foundry and Antpool are most likely to mine the halving <a href="https://coin.dance/blocks/today">block</a>, with 29% and 27% odds, followed by F2Pool with 9.7%.</li>
</ul>



<h2 class="wp-block-heading">Try again next year&nbsp;</h2>



Senators Cynthia Lummis and Kristen Gillibrand dropped yet another crypto bill this week. The industry reviews are in: not good.



Critics say the bill is fundamentally flawed — allowing payment stablecoins issuers to bypass paying deposit insurance premiums, for example, would rob the FDIC of essential funding, opposers <a href="https://x.com/ProfHilaryAllen/status/1780953716390039659">argue</a>.&nbsp;



The bipartisan bill proposes banning algorithmic stablecoins (thanks, TerraUSD), mandates one-to-one reserves and brings issuers under existing KYC and anti-money laundering regulations.&nbsp;



At risk of sounding terribly cynical, it doesn’t matter what you think of this bill because it’s not going to pass. It’s probably not even going to make it to committee for markup.&nbsp;



Read more: <a href="https://blockworks.co/news/senators-oppose-sec-accounting-standards">Bipartisan Congressional group tries to repeal controversial SEC crypto custody policy&nbsp;</a>



For a bill to move, the chair and the ranking member of the relevant House and/or Senate committee have to sign off.&nbsp;



For crypto, that means getting the greenlight from Reps. Patrick McHenry (who is favorable toward crypto, but on the way out) and Maxine Waters (who is decidedly not favorable toward crypto) of the House Financial Services Committee.&nbsp;



Over in the <a href="https://blockworks.co/tag/senate">Senate</a> Banking Committee, Sens. Sherrod Brown (also a vocal critic of crypto and up for reelection in a thus-far narrow race) and Tim Scott (who has been supportive of the industry in the past) will have to get on board.&nbsp;



For this latest <a href="https://blockworks.co/tag/cynthia-lummis">Lummis</a> and Gillibrand bill, Sen. Brown is really who they need in their corner.&nbsp;



So far, he’s just not there. Brown this week even mused about looping in stablecoin regulation into a bigger legislative package, one that would focus on allowing marijuana companies access to the banking system and clawback executive salaries from failed lenders.&nbsp;



Either way, Brown has an election to win, so it’s doubtful anything else is taking priority.&nbsp;



— Casey Wagner



<h2 class="wp-block-heading">Who needs institutions anyway?</h2>



Let’s do a little vibe check.&nbsp;



One of the biggest narratives this year has been that the institutions are finally here, thanks, in part, to spot bitcoin ETFs. And there’s no doubt that the institutions have shown interest — but they’re waiting on the sidelines still.&nbsp;



Retail is still the “best thing at this party,” as Taylor Swift would say.&nbsp;



BitGo CEO Mike Belshe <a href="https://blockworks.co/news/bitcoin-halving-interview-bitgo-ceo">told</a> Blockworks that the demand for the bitcoin ETFs is “mostly retail.” It’s a statement backed up by the slew of 13Fs that have been filed so far by institutional managers, which showed small holdings.&nbsp;



Read more: <a href="https://blockworks.co/news/macro-driver-crypto-prices-bitcoin-etfs">ETF adoption set to keep driving bitcoin price: 10T’s Dan Tapiero</a>



Goldman Sachs digital assets head Mathew McDermott, at the <a href="https://blockworks.co/tag/digital-asset-summit">Digital Assets Summit</a> in March, said the crypto price rally has been driven in part by retail. McDermott also noted that institutions “have started to come in.”



No one is saying that the institutions aren’t interested — just that it takes time.&nbsp;



Institutional involvement is going to be a “slow burn,” S&amp;P’s Global Digital Assets Research Lab managing director Andrew O’Neill told Blockworks.



“Because we&#8217;re so early in the adoption curve in general, we&#8217;re naturally also early to institutional adoption,” Thomas Perfumo, Kraken’s head of strategy, said.&nbsp;



Read more: <a href="https://blockworks.co/news/goldman-sachs-future-public-blockchains">Goldman Sachs head of digital assets: The future is on public blockchains&nbsp;</a>



O’Neill believes the momentum has shifted. Teams will start to take notice and will research into the potential innovations and look to get “their various investment committees over the line as well.”&nbsp;



The retail demand, however, “has been growing,” Belshe told Blockworks. In the context of the bitcoin ETFs, some of the retail folks are finally getting access to an asset class that might have been<a href="https://blockworks.co/news/bitcoin-halving-interview-bitgo-ceo"> too difficult to “touch” before</a>, he added.



If the performance we’ve seen — not only in the price action but also in the ferocious appetite for a new type of product — has been any indication, then the institutions are more than welcome, though retail’s ready to rock and roll.&nbsp;



We’re not going to be having the same conversation four years down the line, so soak up what will probably be the last retail-focused halving.



— Katherine Ross



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



<ul>
<li>The New York Times explained what led to the detention of Binance compliance exec <a href="https://www.nytimes.com/2024/04/18/technology/binance-crypto-compliance-officer-nigerian-prison.html">Tigran Gambaryan</a> in Nigeria.&nbsp;</li>



<li>Meta released a <a href="https://www.nytimes.com/2024/04/18/technology/meta-ai-assistant-push.html">new AI assistant</a> on Facebook, Instagram and other social media apps.&nbsp;&nbsp;</li>



<li>Crypto trader Avraham Eisenberg was <a href="https://blockworks.co/news/mango-markets-trader-guilty">convicted</a> yesterday in a landmark crypto trial after a day of jury deliberations.&nbsp;</li>



<li>A recent Federal Reserve paper <a href="https://www.federalreserve.gov/econres/feds/financial-stability-implications-of-cbdc.htm">explored</a> the financial stability implications of different CBDC designs.</li>



<li>JPMorgan and Deutsche Bank believe the <a href="https://www.bloomberg.com/news/articles/2024-04-18/bitcoin-halving-seen-mostly-priced-in-by-jpmorgan-deutsche-bank?embedded-checkout=true">Bitcoin halving</a> is “mostly” priced in, according to Bloomberg.</li>
</ul>



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



Question: Is the halving still exciting? Or is it old hat at this point?



David: The mystique around halvings is way more interesting than the halvings themselves.&nbsp;



A 50% reduction in issuance sounds like a lot, but it’s all relative: The difference between 900 BTC ($58.4 million) per day and 450 BTC ($29.2 million) is minimal for the overall market, which sees more than $52 billion in <a href="https://www.coingecko.com/en/coins/bitcoin">reported</a> BTC trading volume per day right now.&nbsp;



What a few mining outfits with tight operating margins do with less bitcoin doesn’t really matter to anyone.&nbsp;



Still, fewer coins on the market sounds bullish, and that’s really the most interesting thing about halvings: how markets will react to the narrative.



Katherine: The halving’s still exciting, it’s only the fourth one! We can’t be jaded about it yet.



Bitcoin’s only just hit its stride when it comes to mass adoption and, if we’re being honest, mass understanding. There’s also the fact that we’ve seen bitcoin notch new headlines, and the bitcoin ETFs are still fresh out the gate.



In 2020, the halving wasn’t something a lot of people really paid attention to, but the proof is in the pudding: People are intrigued and invested in the halving and what it means not only for the price but for the ETFs and the miners.&nbsp;



Don’t believe me? Just look at the <a href="https://trends.google.com/trends/explore?date=all&amp;q=bitcoin%20halving,halving">Google Trends</a> data.&nbsp;



— Katherine Ross, David Canellis



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