Puffer

Jack Kubinec

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



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



Solana tends to get touchy about scaling. Since day one, the network’s pitch has been a layer-1 blockchain using novel technology to run faster and cheaper than other layer-1s on offer.&nbsp;



So it’s no surprise that when Base announced a new feature called FlashBlocks would bring its “effective block times” down to 200 ms — or half the length it takes Solana to create new blocks — Solana followers were quick to point out the somewhat-faulty logic. FlashBlocks are sub-blocks that allow for early confirmation times, but Base’s full block times will still be two seconds. Solana has a feature called shreds which operates similarly to FlashBlocks, but its full block times are 400 ms.&nbsp;



The whole ordeal is a bit melodramatic, but it highlights something that often doesn’t get across in blockchain scaling conversations, which is that most of this stuff is basically made up anyways.



When Base’s creator Jesse Pollak gets on X to say that Base is about to be “2x faster than” Solana, he reveals nothing about how he’s measuring speed, or why that would matter for Base’s developers and users. Likewise when Firedancer developers say the Solana client can process <a href="https://blockworks.co/news/lightspeed-newsletter-solana-firedancer-testnet">one million transactions per second</a> in a test environment — it’s a nice sounding number that would almost certainly hit snags in the real world.&nbsp;



Even if Firedancer could run that fast, it would be of little import: Solana is currently processing roughly 1,000 user TPS.&nbsp;



<a href="https://www.youtube.com/watch?v=2rK3jWJdDks">On the Lightspeed podcast this week</a>, my co-host Mert Mumtaz got talking with NEAR Protocol co-founder Illia Polosukhin about scaling. Polosukhin and fellow NEAR developer Bowen Wang said the blockchain will soon bring its block times down to 400 ms, and its blockchain shards — part of a scaling technique known as “sharding” — can handle 10,000-20,000 TPS each.&nbsp;



So if NEAR is so scalable, Mumtaz asked, then why is no one talking about it?



“Everybody now comes out and says they&#8217;re scaling, [and] everybody throws a number out from a marketing perspective, [and] as Solana saw, until you actually put real pressure on the system, you don&#8217;t actually know how it&#8217;s going to behave,” Polosukhin said.



The more important question, in Polosukhin’s view: “What are the use cases that people are actually using blockchain for right now?”



200 ms block times sound nice. One million TPS sounds nice. But if blockchains want to be more than intellectually stimulating engineering problems with no underlying value, then use cases are the much more important conversation to be having.



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<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: The newsletter for crypto collectors and traders, covering games, tokens, apps, memes and more.</li>
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Base, Solana spar over scaling numbers

Ben Strack

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



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Solana futures are coming March 17, pending regulatory review.&nbsp;



For real this time.&nbsp;&nbsp;



When CME Group’s announcement came through, I made sure to triple-check its validity.&nbsp;



If you recall last month, a beta page from CME Group’s website surfaced; a header on top read, “Introducing SOL and XRP futures.” That was released “in error,” <a href="https://blockworks.co/news/cme-group-considering-sol-xrp-futures">a spokesperson clarified</a> at the time; no decision had been made on such products.



Now, though, the derivatives marketplace is officially moving ahead with cash-settled SOL futures — to be available via a micro-sized contract (25 SOL), and a larger one (500 SOL).



Why does this matter, exactly?



The thought is this type of product gives sophisticated investors (i.e. institutions and active traders) a better way to manage volatility within a growing market. Those unable to hold SOL directly would be able to gain access via a regulated product.



But beyond that, it extends a tool already available for bitcoin and ether to another asset — possibly setting the stage for US solana ETFs.&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">We&#39;re delighted to play a part in the upcoming launch of <a href="https://twitter.com/CMEGroup?ref_src=twsrc%5Etfw">@CMEGroup</a> SOL Futures, the first CFTC-regulated Solana derivatives. They will settle to our CME CF Solana-Dollar Reference Rate (SOLUSD_RR), paving the way for US-listed SOL ETFs! 🎉Read more 👇<a href="https://t.co/ViITWFguWM">https://t.co/ViITWFguWM</a> <a href="https://t.co/50j5bRtq9D">pic.twitter.com/50j5bRtq9D</a>&mdash; CF Benchmarks (@CFBenchmarks) <a href="https://twitter.com/CFBenchmarks/status/1895495933301018968?ref_src=twsrc%5Etfw">February 28, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



CME Group launched bitcoin futures and ether futures in 2017 and 2021, respectively. These helped institutionalize crypto as an asset class prior to the US spot bitcoin and ether ETF launches last year.



Industry watchers <a href="https://blockworks.co/news/sec-position-new-crypto-etf-proposals">have questioned</a> the timeline around <a href="https://blockworks.co/news/litecoin-etf-approval-odds-2025">further spot crypto ETF approvals</a> by the SEC, pointing out the agency has previously wanted to first see a regulated futures market.&nbsp;



The ETF Store president Nate Geraci <a href="https://x.com/NateGeraci/status/1895482828789625195">wrote</a> this morning on X that the planned solana futures launch “definitely bodes well for SOL ETF prospects.”



As for whether XRP futures are next (given the aforementioned beta page), a CME spokesperson told me today: “We do not comment on our product pipeline.”



In addition to SOL futures, the rep added, the company is focused on growing its existing BTC and ETH derivatives suite.&nbsp;



Year to date, average daily volume for CME’s BTC and ETH futures/options is 202,000 contracts — up 73% from a year ago. Average open interest (243,600 contracts) has jumped 55% year over year.



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



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<li><a href="https://blockworks.co/newsletter/research">0xResearch</a>: Get alpha directly in your inbox — market highlights, charts, degen trade ideas, governance updates, and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana, in your inbox, every day from Jack Kubinec and Jeff Albus.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: The newsletter for crypto collectors and traders, covering games, tokens, apps, memes and more.</li>
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Planned CME solana futures could boost ETF approval odds

Casey Wagner

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



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The Fed’s favorite inflation gauge inched down just slightly in January, but we remain a ways off from its 2% target.&nbsp;



Decreased consumer spending and sharp income growth complicate the central bank’s mandate, and throw a wrench in the works for those hoping it would be a quarter of economic expansion.&nbsp;



Here’s a rundown of the latest personal consumer expenditures print and what it means for interest rates, markets and economic growth.&nbsp;



The <a href="https://www.bea.gov/data/personal-consumption-expenditures-price-index">PCE index</a> rose 2.5% annually in January, down from 2.6% in December. Core PCE, which excludes volatile food and energy costs, saw more of a decline, coming in at 2.6% in January vs. 2.9% in December.&nbsp;



Personal income increased 0.9% month over month, led by private wages and salaries, the Bureau of Economic Analysis said. Personal current transfer receipts, which reflect payments made without the exchange of services, also increased sharply, although this can be attributed to beginning-of-year Social Security payment adjustments.&nbsp;



Consumer spending was down in January, coming in 0.2% lower than the month prior. The biggest sectors that saw a drop in spending were motor vehicles, household furnishings and recreational goods.&nbsp;



This latest data significantly lowered expectations for Q1 GDP outlook. The Atlanta Fed’s <a href="https://www.atlantafed.org/cqer/research/gdpnow#Tab2">GDPNow</a> model was revised today to project the US economy will contract by 1.5% during the first three months of 2025. This would be the first contraction recorded since Q1 2022.&nbsp;



On Feb. 19, the model had called for expansion at a rate of 2.3% during the first quarter of this year.&nbsp;



In terms of market impact, stocks initially rose slightly on the mild decline in headline PCE, although quickly erased any gains as geopolitical tensions took center stage. President Trump’s Friday meeting with Ukrainian President Volodymyr Zelensky did little to assure the world that Russian-Ukrainian negotiations are going well.&nbsp;



Fed funds futures markets are still calling for central bankers to hold interest rates at their next meeting on March 19, pricing in a 94% probability of this outcome.&nbsp;



We’ll have to wait and see how Powell is thinking about the long-term outlook. On the one hand, it’s encouraging to see headline inflation dipping — even if only slightly — but we can’t imagine he’s too satisfied with the current labor market situation.&nbsp;



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The Fed’s job did not just get easier 

Kate Irwin

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



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MetaMask has tweaked its fox logo and is making major changes to its crypto wallet, the team <a href="https://metamask.io/news/metamask-roadmap-2025">announced</a> on Thursday.



I chatted with MetaMask co-founder Dan Finlay to get all the deets on how the classic crypto wallet is changing.&nbsp;



“It almost feels like closing Chapter Two on wallets,” Finlay said.



Ethereum’s Pectra hard fork will let MetaMask change its wallet so that it’s asking you way less often to sign something. That could be a plus for safety, and it’s definitely a plus for more seamless usability.&nbsp;



The current way wallets work can be bad for security too — Finlay said a “blind sign” incident was what enabled the recent <a href="https://blockworks.co/news/bybit-hack-raises-security-questions">Bybit hack</a>.&nbsp;



“They were asked to sign a hash just blindly. And they did it. That’s just so deeply, fundamentally broken,” he tells me.



With this update, you’ll be able to revoke permissions right in your wallet. They’re also going to abstract away networks and gas to make using MetaMask feel easier — no more typing in strange codes to add blockchains to your wallet.



“Users are still signing stuff they don&#8217;t understand. And if we want to make this like the rails of an actual functional economy, people need to actually get what they&#8217;re doing, and it has to be like at the deepest level,” Finlay added.


<div class="wp-block-image">
<figure class="alignright is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcRlfU1S8IdFTmaIqFLbPWHDi99axY1lxPXERxgIWLg4J1_dif8MOLy1DuAZeIQKp_7QTM1tyBNnFg7PM_RbWbOVpF01MoSbPG5fTOXI4B7ykzhVZ_bxx72M-VkYtjkxb0TM3R9Ig?key=Rviz9PDTT75f7M-Sc1wMW4CU" alt="" style="width:519px;height:auto"/><figcaption class="wp-element-caption">Source: MetaMask</figcaption></figure></div>


They’re also enabling gas-included swaps within the wallet itself, so you don’t have to go through the hassle of getting other gas tokens into that wallet to complete the swap. And next month, they’re going to also let MetaMask users pay gas fees in whatever tokens you hold to make transactions even smoother.



Multiple secret recovery phrases will soon be possible, as will be the ability to sync up your MetaMask profile regardless of what web browser or device you’re using.



The wallet’s page that shows all your tokens will now show all of them in one place, like the Coinbase Wallet, regardless of what chain they’re on. It just makes more sense to see all your crypto in one place. Plus, the wallet will filter out spammy tokens and stuff that’s causing clutter from view.



“We&#8217;re in the, like, spam filtering, trying to filter sewage era of blockchain,” Finlay said. “I hope that people are going to notice like, hey, this, this actually works better.”



And then, similar to what Avalanche is doing with the <a href="https://blockworks.co/news/avalanche-visa-card-payments">Avalanche Visa</a> card, MetaMask is launching a Mastercard-powered credit card that lets you connect your self-custody MetaMask wallet and spend that crypto.


<div class="wp-block-image">
<figure class="alignright is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcUFe4gu6bwdGHKYDrRurnXi_yuWtBZ1ZtTDYJQ75GI7BQwZvvqxL3RRPKXFtJGZjluWd_78voExATHnnw9LR4rYnw3-jy2cmyhg61eevJoUjhiIDU1wpN5mxaA1UYbhUvjOKuZ?key=Rviz9PDTT75f7M-Sc1wMW4CU" alt="" style="width:492px;height:auto"/><figcaption class="wp-element-caption">Source: MetaMask</figcaption></figure></div>


Full Bitcoin and Solana support is coming to the MetaMask wallet, too — in a more seamless way than the current third-party enabled option — so your MetaMask can finally feel more like the be-all, end-all crypto wallet of your dreams.&nbsp;



I’ll be honest: I have a MetaMask wallet, a Coinbase wallet, a Phantom wallet, a Ronin wallet, and a Ledger hardware wallet. It’s a lot. It’s too much. I mainly just use my Coinbase wallet because its UX is sleek, and its swaps and automatic network switching just makes more sense. Ease-of-use wins.&nbsp;



But this update could get me to reconsider MetaMask, for sure.



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MetaMask gets an overhaul with better UX, simpler swaps

Donovan Choy

This is a segment from the 0xResearch newsletter. To read full editions, <a href="https://blockworks.co/newsletter/research">subscribe</a>.



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Yesterday was day one of ETHDenver.&nbsp;



The price of ETH was ~$2,300. People here must be depressed, right?&nbsp;



Eh, not really. I must’ve had 20 conversations yesterday and maybe one person mentioned market prices.&nbsp;



With about 18,000 attendees coming into the city, ETHDenver is still the largest free-of-charge Ethereum-centric event next to Devcon.&nbsp;



The event kicked off with the folkiest of folk songs brought to you by <a href="https://blockworks.co/news/empire-newsletter-sec-action-nfts">Jonathan “A Song A Day” Mann</a>. Think “<a href="https://x.com/VitalikButerin/status/1880635379771904423">feminized wef soyboy mentality</a>” vibes that Solana DeFi bronze age spartans would probably cringe at.



<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">Welcome to the ETH Denver Opening Ceremony featuring some awesome music! <a href="https://t.co/k71hYkAoA8">pic.twitter.com/k71hYkAoA8</a>&mdash; ETHDenver 🏔🦬🦄 (@EthereumDenver) <a href="https://twitter.com/EthereumDenver/status/1895153145883566352?ref_src=twsrc%5Etfw">February 27, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Oh, and apparently people are complaining that ETHDenver is not so “Ethereum-aligned” anymore because there are non-Ethereum sponsors?


<div class="wp-block-image">
<figure class="alignright is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdhMWVRaNepCtBygzL9tewB8x_La3q_cl1nJZ7a7yLbsFUDIbKcHDCvakrz2OgOvb-4KQf68S0rLvst596dlqY4Exr1wQRnOCKd24GQgRTBDkisMtmb9u8E9qMDG2e8Fi1mlognIg?key=OLwcemOxY1D9tbe6iEIZ4St_" alt="" style="width:401px;height:auto"/><figcaption class="wp-element-caption">Source: <a href="https://www.youtube.com/watch?v=1WUFpY-ByNA">ETHDenver</a></figcaption></figure></div>


So salient is the criticism that ETHDenver founder John Paller felt the need to address it at the festival’s opening.



“95%+ of our sponsors and 90% of our content is ETH, EVM or ETH aligned 😘😘😘,” his slide deck read.



Step into the main conference hall and you’re greeted with large booths representing Uniswap, Arbitrum and Coinbase.


<div class="wp-block-image">
<figure class="alignright is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXccp329pa1cTFr26ROG6pCteUyAFWgI8NqxBkc9IhDJqw2feSiX5ygkcM-SfQgwKb_gheNLf5wgTtV_N8yBRpzGA2btPJ1Oa9iykShmWMAYIzgIjgn_k8SeJSfvpFjUvHSTpgYp?key=OLwcemOxY1D9tbe6iEIZ4St_" alt="" style="width:601px;height:auto"/><figcaption class="wp-element-caption">Picture taken on day one event closure</figcaption></figure></div>


There’s a markedly more professional vibe to ETHDenver this year, founder of Yap Global and ETHDenver’s official PR partner Samantha Yap told me.



“ETHDenver in its earlier years was more scrappy. This year, booths are spending a lot more money and there’s a greater professionalization of the event. The industry is evolving,” Yap said.



<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">DOGE pulled up to ETHDenver 👀 Much wow <a href="https://twitter.com/DogeOS?ref_src=twsrc%5Etfw">@DogeOS</a> <a href="https://twitter.com/MyDoge?ref_src=twsrc%5Etfw">@MyDoge</a> <a href="https://twitter.com/dogecoin?ref_src=twsrc%5Etfw">@dogecoin</a> <a href="https://twitter.com/elonmusk?ref_src=twsrc%5Etfw">@elonmusk</a> 👀 <a href="https://t.co/WJb0vBx7x6">pic.twitter.com/WJb0vBx7x6</a>&mdash; ETHWomen (@Ethereum_Women) <a href="https://twitter.com/Ethereum_Women/status/1895198203479461907?ref_src=twsrc%5Etfw">February 27, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



There also doesn’t seem to be just one dominant overarching narrative this year.&nbsp;



Unlike <a href="https://blockworks.co/news/eth-denver-2024-unfocused">last year</a>, where EigenLayer and restaking dominated the agenda, there’s pretty much a sprinkle of anything you could think of: DePIN, AI agents, regulation, RWAs, privacy and — of course — interoperability. <a href="https://blockworks.co/news/ethereum-cross-chain-transactions">Ethereum loves interop</a>.



Conferences are often chock-full of panels and fireside chats, speakers armed with their sometimes dreary PR-approved speeches. Standing out on the day one agenda was a spicy debate between Haseeb Qureshi from Dragonfly Capital and Matt O’Connor at Legion, on the topic of ICOs vs. venture capital funding. Legion is an ICO-like fundraising platform.



<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">Debate: ICOs Are Better Than VC Funding by: &#8211;<a href="https://twitter.com/mattyTokenomics?ref_src=twsrc%5Etfw">@mattyTokenomics</a> from <a href="https://twitter.com/legiondotcc?ref_src=twsrc%5Etfw">@legiondotcc</a> &#8211;<a href="https://twitter.com/hosseeb?ref_src=twsrc%5Etfw">@hosseeb</a> from <a href="https://twitter.com/dragonfly_xyz?ref_src=twsrc%5Etfw">@dragonfly_xyz</a> &#8211;<a href="https://twitter.com/AshleyStanhope?ref_src=twsrc%5Etfw">@AshleyStanhope</a> from Hardfork Media Full video below 👇🧵 <a href="https://t.co/QiMLqWpAsm">pic.twitter.com/QiMLqWpAsm</a>&mdash; ETHDenver 🏔🦬🦄 (@EthereumDenver) <a href="https://twitter.com/EthereumDenver/status/1895227229648650689?ref_src=twsrc%5Etfw">February 27, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Matt: “The idea that VCs are catalyzing growth and the product’s purpose to begin with…this gatekeeping and holier-than-thou attitude of VCs knowing which projects to fund leads to less experimentation and variety of what’s backed.”



Haseeb: “It’s rich since Legion raised money from VCs…and how many individual users using Legion own equity in Legion? I’m going to assume the number is zero.”



Anyway, here are some key launches from yesterday:



<ul class="wp-block-list">
<li>MetaMask is <a href="https://x.com/MetaMask/status/1895292999615369660">launching</a> Bitcoin and Solana integrations, gas abstraction, a UX overhaul, smart transactions and a MetaMask card.</li>



<li>14 teams, including NEAR AI, Coinbase Agent Kit and Eliza Labs announced the Open Agents Alliance (OAA), an initiative to provide permissionless and free AI access globally by combining infrastructure.</li>



<li>Uniswap <a href="https://x.com/Uniswap/status/1895123116239503692">announced</a> fiat off-ramping on the Uniswap Wallet powered by Transak, Moonpay and Robinhood.</li>



<li>BitLayer announced the BitVM Bridge, enabling trust-minimized bridging between the Bitcoin network and other chains like Base, Starknet, Arbitrum, Sonic and Plume.</li>



<li>Babylon and digital asset insurance broker Native are developing institutional-grade insurance coverage for bitcoin stakers, enabling bitcoin slashing coverage denominated in BTC.</li>
</ul>



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<ul class="wp-block-list">
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<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Start your day with top crypto insights from David Canellis and Katherine Ross.</li>



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



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<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana, in your inbox, every day from Jack Kubinec and Jeff Albus.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: The newsletter for crypto collectors and traders, covering games, tokens, apps, memes and more.</li>
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Inside day 1 at ETHDenver 2025

Katherine Ross

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



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Need some reassurance after watching bitcoin fall under $80,000 last night?&nbsp;



We managed to climb back above that level this morning, but only slightly — at least at the time I was writing this. I hope I didn’t jinx it. ETH, on the other hand, is holding on to $2,100.&nbsp;



On the Empire roundup this week, co-host Jason Yanowitz <a href="https://blockworks.co/podcast/empire/b63f8e8a-f578-11ef-aa2c-6b38a8299856">explained his thoughts on the current market</a>. For him, there are only three options: The start of the bear, the end of the four-year cycle or a simple pullback.&nbsp;



If you voted for pullback, then you’re right on the money.&nbsp;



“ I feel very convicted that this is not a bear market. So let me just [go] on the record, this is not a bear market,” he said, giving it a 20-30% chance that this marks the end of the four-year cycle and roughly an 80% chance that this is merely a bull market pullback.



Yanowitz gave 2021 as an example, citing the 56% pullback that bitcoin experienced a few years ago.&nbsp;



“ ETH drew down 61%, SOL drew down 67%. And a lot of other things, in the middle of the year — in the middle of what we look back and think [of as the] 2021 peak bull market — drew down like 70 to 80%. I just think people are very quick to forget that,” he said.



If Yanowitz is right — and my reporting this week is in favor of what he’s said — then the harsh truth is that pullbacks are tough and anxiety inducing, but they’re not forever.&nbsp;



I know it’s an utter cliche at this point, but the Brits really nailed this one: Keep calm and carry on.



And now you know.



<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">New Staff Statement from the SEC on memecoins just landed (link in thread). Two observations: 1. It&#39;s refreshing to see the SEC adopt a constrained view of its own power. 2. Fraud is, always has been, and always must be illegal. <a href="https://t.co/Rw7agzjcxa">pic.twitter.com/Rw7agzjcxa</a>&mdash; Katie Biber (@katiebiber) <a href="https://twitter.com/katiebiber/status/1895230270552580609?ref_src=twsrc%5Etfw">February 27, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



A dose of clarity was handed over to the market last night in the form of an SEC statement on memecoins. I think, after spending some time on it, that I’d characterize this as a bit of a mixed bag, though I’m leaning towards optimism.



Let’s start with the good: The <a href="https://www.sec.gov/newsroom/speeches-statements/staff-statement-meme-coins?utm_medium=email&amp;utm_source=govdelivery">SEC actually put the Howey test to work</a> without a lawsuit! Huge. Love this for them. It’s exactly what the industry has wanted to see — and no one had to file a lawsuit or a FOIA for this clarity.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfWmIimWsMdn2Um9zWIBfPMuNbpR4CsHTgyci-jokzWy7cujz-9euv9zyT8Q1CRuybrBjRVO0mwOD2v9lixkv_eysasDxYlbdu6UCBMqQ5fdkgN923tIXlpPXjqu7KfyxYzBnxPAA?key=4y1qKT7jIXjlIuUA4ciMOS8J" alt=""/><figcaption class="wp-element-caption">The SEC’s determination on memecoins based on the Howey test</figcaption></figure>



If the collectible language sounds familiar, it’s because crypto czar David Sacks <a href="https://www.youtube.com/watch?v=_zOqyntqzOI">seems to have paved the way</a> for this statement by saying, back in late January, that memecoins resembled something more akin to collectibles than securities.&nbsp;



SEC commissioner and head of the new crypto task force, Hester Peirce, also <a href="https://www.bloomberg.com/news/videos/2025-02-11/most-memecoins-not-under-sec-jurisdiction-peirce-video">said that memecoins</a> don’t fall under the SEC’s jurisdiction in an interview earlier this month.



Why is the SEC’s new stance a mixed bag? Because it now seems more likely that the industry will have to self-regulate, meaning that it’s still open season for memecoins.



The SEC isn’t totally washing its hands of them, noting that any “fraudulent conduct” in relation to the sale or the offer of memecoins is still subject to enforcement actions and prosecution by federal agencies.&nbsp;



But this statement did come at the perfect time: We’re starting to see memecoins slow down naturally, which could point to a focusing of market momentum elsewhere, potentially leaving memecoin hype behind.&nbsp;



My insight is that I think it’s okay to let them operate in their own bubble. We don’t want memecoins taking up so much space, but — bear with me here — I’m not sure I totally see them as something akin to baseball cards. However, I definitely think they’re like slot machines or something more along the lines of a crappy penny stock with no fundamentals. If people want to put their money there, then let them. The trick is to ensure that folks are well aware of the risks.&nbsp;



Now we only have to hope for a flight to higher quality tokens backed by fundamentals, and bam, we’re cooking again.



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It’s not a bear market, just a bull market pullback: Yanowitz

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



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Yesterday, Bybit CEO Ben Zhou posted on X that the platform’s $1.4 billion hack had been caused by “malicious code originating from Safe{Wallet}’s infrastructure.” Solana CEOs had many words, including “<a href="https://x.com/0xMert_/status/1894778195120894054">nightmare</a> season,” “<a href="https://x.com/Austin_Federa/status/1894773418010034411">holy</a> hell,” and “<a href="https://x.com/buffalu__/status/1894771203480400020">holy</a> shit.”



Preliminary reports indicate Safe’s frontend was exploited to trick Bybit into signing a malicious transaction, and Safe’s actual smart contracts appeared to perform as intended. Still, the foul language likely stemmed from the fact that wallets being exploitable gives hackers access to a whole lot of assets — Safe’s smart accounts <a href="https://blockworks.co/news/bybit-hack-raises-security-questions">secure over $100 billion</a> in digital assets.&nbsp;



In other words, hackers could go further than Bybit.



Squads, a multisig wallet used by a number of prominent Solana teams including Helium, Kamino, Pyth, Helius, Drift, Jupiter and Ellipsis, is “conducting a comprehensive review of our infrastructure to mitigate the possibility of such an attack,” CEO Stepan Simkin told me.&nbsp;



Simkin emphasized that “high value accounts” need purpose-built wallet solutions because sophisticated hackers can “potentially compromise any frontend.”



The Bybit hackers — whom the FBI has now <a href="https://www.reuters.com/technology/cybersecurity/fbi-says-north-korea-was-responsible-15-billion-bybit-hack-2025-02-27/">accused</a> of being linked to North Korea — injected malicious code into Safe’s JavaScript files to alter Bybit’s multisig transactions and send the funds to the attacker’s address, according to a <a href="https://slowmist.medium.com/bybits-1-5-billion-theft-unveiled-safe-wallet-front-end-code-tampered-84b78f0fa9c2">report</a> from blockchain security firm Slowmist. While the crypto industry puts a lot of effort into auditing smart contracts, it focuses less than it should on “conventional infrastructure” — like leaked Amazon Web Services credentials, which was the culprit in this case, Simkin said.&nbsp;



“JavaScript side hacks are the easiest to execute due to lack of audits,” Cube Exchange CEO Bartosz Lipinski said. “Solana is not immune to that.”



Lipinski said Cube chose multi-party computation over multi-signature for wallet security in part because it prevents “blind signing “ — which Bybit <a href="https://x.com/prasincs/status/1893486874091532432">apparently</a> did.



Simkin said Squads is working on a “decentralized frontend” that would allow users to interact with the protocol without having to rely much on its infrastructure.



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Solana multisig provider conducting ‘comprehensive review’ after Safe exploit

David Canellis

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



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Humanity clings to mysteries that border on compulsions at this point.&nbsp;



The moon landing — did we actually go, and if we did, is the footage real? And what about the pyramids — built by laborers and farmers, or were those 80-ton granite blocks actually set in place by ancient alien technology?



Satoshi Nakamoto’s true identity has fast become another cultural oddity that just won’t quit.&nbsp;



Craig Wright was the ringleader of that particular media circus for years, until <a href="https://www.bbc.com/news/articles/c74x0j47gz8o">courts took action against him</a>. Now that <a href="https://blockworks.co/news/craig-wright-is-not-satoshi-nakamoto">Wright is finally proven to be totally wrong</a>, it’s the rest of us that are doomed to be repeatedly punished for the closure.&nbsp;



In the past six months alone, we’ve had multiple fresh attempts at reviving the Nakamoto narrative. First was HBO’s Money Electric: The Bitcoin Mystery, from documentarian Cullen Hoback, and a <a href="https://www.theguardian.com/tv-and-radio/2025/feb/26/seeking-satoshi-the-mystery-bitcoin-creator-review-a-documentary-so-thin-it-features-the-creators-mum">new documentary</a> from the UK’s Channel 4 lacked compelling evidence, let alone a tangible theory.



You can read my <a href="https://blockworks.co/news/satoshi-nakamoto-identity-money-electric">thoughts about HBO&#8217;s take</a>, but ultimately it came to the laughable conclusion that long-time Bitcoin contributor Peter Todd was in fact Satoshi, hiding in plain sight.&nbsp;



In between those releases, we were also subjected to <a href="https://x.com/financeguy74/status/1890850549035110558">threads</a> on X, including <a href="https://x.com/matthew_sigel/status/1891852538376487327">one</a> from Matthew Sigel, head of digital asset research at VanEck, which suggested that tech billionaire Jack Dorsey is the man behind the Nakamoto moniker.



Veteran Bitcoiner Jameson Lopp shared his method of debunking the Dorsey theory during a premiere episode of Supply Shock on Thursday — a <a href="https://blockworks.co/podcast/onthemargin">brand-new Bitcoin brand and podcast hosted by Bitcoin Historian Pete Rizzo</a>.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeRObx87-gaLxmGoX5AcwisQE-O0gTL4GsZHdoFkPk-f_ZYO7GwJxY4Xn6MzCEDjg9YfDyOTPtbJgdaEkMBlZ_Z4sYxWRcRFXbzABjRwN3CiJOlB2C8d-u4NGI1duxV7Tz3ICy_?key=4y1qKT7jIXjlIuUA4ciMOS8J" alt=""/><figcaption class="wp-element-caption">Check out the <a href="https://www.youtube.com/watch?v=sUv2Und8o-s">full episode of Supply Shock on YouTube</a></figcaption></figure>



Lopp had previously <a href="https://blog.lopp.net/hal-finney-was-not-satoshi-nakamoto/">busted</a> an earlier suggestion that Hal Finney was Nakamoto by showing Finney had competed in a 10-mile race in Santa Barbara at the same time Nakamoto was emailing early developer Mike Hearn.&nbsp;



Eventually, Lopp found enough instances, after trawling through Dorsey’s old Twitter posts, where it would have been almost impossible for Dorsey to coordinate a double life as Nakamoto to consider the theory bunk.



“I think a lot of the people who are accused of being Satoshi candidates are Bitcoin legends in their own right,” Lopp told Rizzo.



“Like they don&#8217;t have to be Satoshi — they have contributed in a variety of different ways to being Satoshi in the way that we are all Satoshi, right? It&#8217;s like anyone who contributes to [Bitcoin] is essentially building upon the legacy where Satoshi, you know, left the project open to the world so that anyone who cared could contribute to it.”



If it weren’t obvious by now, here it is: Nobody can ever prove any theory in any case. The only legitimate proof would be to sign a transaction with one of Satoshi’s keys — but even if someone did, we would likely never know for sure how those keys came into their possession — sending us on a never-ending loop of inconclusive proof.



It’s high time we relegate the Satoshi question to the annals of boring normie talking points, like the moon landing and pyramids, and move on.  Speaking of, you won’t see me much around Empire for the foreseeable future. I’m headed on a spirit quest to learn more about this whole Bitcoin thing, I hear it might be a big deal. It’s been a pleasure.



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It’s time to stop theorizing about Satoshi Nakamoto

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



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The Senate Banking Committee’s Digital Asset Subcommittee held its first <a href="https://www.banking.senate.gov/hearings/exploring-bipartisan-legislative-frameworks-for-digital-assets">hearing</a> yesterday and, unsurprisingly, stablecoins took center stage.&nbsp;



Cynthia Lummis, who chairs the <a href="https://blockworks.co/news/cynthia-lummis-gets-promoted">newly minted subcommittee</a>, said that stablecoin legislation is its top priority. A market structure bill, which we started to see movement on last session, will follow.&nbsp;



“We’re on the precipice of finally creating a bipartisan legislative framework for both stablecoins and <a href="https://blockworks.co/news/blockchain-association-consensus-position-on-market-structure-policy">market structure</a>,” she said.&nbsp;



Former CFTC Chair Timothy Massad, a witness during the hearing, advised lawmakers to zero in on stablecoins. Market structure legislation should be punted until fundamental questions are answered.&nbsp;



“Market structure regulation requires resolving some complex regulatory boundaries, including when is a digital asset a security, a commodity, both or neither?” he said. “There is a risk that we will significantly undermine the securities law framework that has served this country so well and has made our securities markets the envy of the world.”&nbsp;



The comments come as the industry continues to speculate on what a stablecoin bill <a href="https://blockworks.co/news/stablecoin-legislation-update">might look like</a>. Lummis’ GENIUS Act, introduced alongside Democratic Senator Kirsten Gillibrand, stipulates that “payment stablecoins” must come from registered issuers and have 1:1 backing from fiat currency “or other secure reserves.”&nbsp;



Generally speaking, the industry and both parties agree on these general terms, but the details are a bit trickier to iron out. Democrat Mark Warner yesterday said he’s seen “a whole bunch of bad stuff” and is advocating for more robust KYC requirements.&nbsp;



Should the GENIUS bill progress, we are likely to see another hearing with the full Senate Banking Committee.&nbsp;



But the timeline on if and when this may happen remains unknown.



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Stablecoin legislation is subcommittee’s first priority, says Lummis

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



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You may have seen one of the biggest crypto asset managers just <a href="https://x.com/BitwiseInvest/status/1894389259752341811">raise $70 million</a> as part of a push to broaden its offerings.



That would be Bitwise, which seeks expansion as more institutions enter the space and the SEC signals increased <a href="https://blockworks.co/news/key-sec-regulatory-expectations">open-mindedness</a>.



I caught up with CEO Hunter Horsley, who said the company expects to boost headcount from about 100 to roughly 130 this year. On the product front, it looks to not only bring more ETFs, but a slate of custom solutions.



Bitwise essentially has three investment buckets that it hopes to grow, Horsley explained. Its “beta” offerings are those most people know about (i.e. its crypto index fund, as well as the bitcoin and ether ETFs).



As part of its onchain solutions bucket, the firm offers non-custodial institutional staking via its acquisition of Attestant in November. And finally, there are Bitwise’s so-called alpha strategies.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;



The latter category involves custom SMAs for large institutional clients, for example.&nbsp; “There’s a growing interest amongst owners of bitcoin to explore if there are ways to make their holdings productive and generate income or yield with that bitcoin,” Horsley explained.&nbsp;



Bitwise and other fund groups have proposals in front of the SEC to launch ETFs that hold assets beyond BTC and ETH. Feel free to refresh yourself <a href="https://blockworks.co/news/litecoin-etf-approval-odds-2025">here</a> and <a href="https://blockworks.co/news/crypto-etf-plans-abound">here</a>.



Horsley said Bitwise successfully <a href="https://bitwiseinvestments.com/newsroom/nyse-arca-files-form-19b-4-to-uplist-bitw-as-an-etf">uplisting</a> its Bitwise 10 Crypto Index Fund (if cleared to do so) would mark one of the biggest developments of the year. That ~$1.2 billion trust became the world’s first crypto index fund in 2017.&nbsp;



“A lot of investors are not going to build a portfolio of seven different single-coin ETFs,” he told me. “I think many, as they continue to explore beyond bitcoin, are interested in an index solution.”



Conversations Bitwise has had with the SEC after Trump’s inauguration are “more constructive,” Horsley said, calling the shift “a night-and-day change.”&nbsp;



He declined to speculate on the agency’s possible timeline in approving crypto ETFs beyond those holding BTC and ETH, but noted the SEC’s clear “openness to a broader set of things.”



Finally, I asked about how client conversations might have shifted since <a href="https://blockworks.co/news/market-rebound-analysis">bitcoin’s latest plummet</a>.&nbsp;



Horsley noted the vibes from some individuals/traders are “somewhat bearish and maybe a little bit fearful” — particularly those with exposure to small- and mid-cap cryptos.



As for mainstream investment pros, he said: “I think there is more interest, including this week, than ever before.” After all, Horsley added: “Bitcoin <a href="https://blockworks.co/news/is-btc-bull-run-over">having volatility</a> is not a new phenomenon.”



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Fundraise, ‘open-minded’ SEC to fuel Bitwise growth

Felix Jauvin

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This week I had the pleasure of speaking with Andy Constan, CEO of Damped Spring.&nbsp;



Andy has had a storied career at the likes of Bridgewater and Brevan Howard. He possesses a deep understanding of monetary plumbing and how it translates into a tangible impact on the economy and markets.&nbsp;



As mentioned in my <a href="https://blockworks.co/news/federal-reserve-quantitative-tightening">piece last week</a>, the FOMC meeting minutes shed light on the future of the Fed’s balance sheet composition and what it wants to see happen next. There’s a ton of complex nuance involved, so I pulled Andy in to break it all down.&nbsp;



Here are a few takeaways from our discussion:



<h2 class="wp-block-heading">1. QT 2.0</h2>



The Fed is trying to plan out what its balance sheet looks like once QT is done. It appears to be rallying around the idea of trying to match the weighted average maturity (WAM) of the Fed’s balance sheet to the WAM of the Treasury’s debt outstanding.&nbsp;



As it stands, the Fed’s balance sheet sits at approximately eight years in duration, whereas the Treasury is at five. Setting aside the complex math that Andy provided, the key takeaway is that QT, in its spirit, is not as done as it may seem on the surface and the market needs to absorb further duration.&nbsp;



I asked Andy why this was important to do, and he mentioned the following:



“Well, let&#8217;s just say there was a crisis. In a crisis, bonds rally a lot on the front. Then, say [the Fed] decides to begin QE and let&#8217;s assume interest rates are zero as it has said pretty clearly they&#8217;re not going to do more QE until interest rates are zero. We&#8217;re back in a position where the Fed is buying one and a half percent coupons which — unless the crisis never resolves, it’s going to be underwater on those things and so it would be better, if you&#8217;re going to be underwater in those things, you&#8217;d rather not have a lot of them going into it.”



<h2 class="wp-block-heading">2. Debt ceiling dynamics</h2>



As the debt ceiling continues on, this has a substantial impact on funding markets due to the associated TGA drawdown that comes with it. The FOMC minutes hinted at the idea of pausing QT to avoid any volatility associated with the debt ceiling drama.&nbsp;



Andy’s explanation: “QT has two aspects: forcing the private sector to take on riskier assets and draining reserves from the financial system. The first didn’t happen as the Fed used runoff and Treasury muted it with bills. The second — reserve drainage — has been the primary driver of QT’s impact.



Pre-QT, the reverse repo (RRP) grew to over $2 trillion, acting similarly to bank reserves. While RRPs provide liquidity, money market funds don’t lend like banks do. Historically, removing reserves tightened lending due to fractional reserve requirements. But today, reserves aren’t necessary for lending.



QT has drained RRPs without yet affecting bank reserves. The key question is whether reserves remain adequate. Treasury spending during a debt ceiling standoff injects reserves, but once resolved, rapid TGA replenishment could drain reserves too fast, risking financial stress.



This volatility is why some suggest pausing QT, though it’s not a consensus view. If debt ceiling issues resolve, QT may continue unchanged. The Fed sees reserves as still abundant, and I estimate it could withdraw another $250-$500 billion, potentially extending QT into 2026. However, my view remains that it’ll stop at ~$3 trillion in reserves.”



<h2 class="wp-block-heading">3. Bessent’s Treasury issuance</h2>



A few weeks ago, I wrote about how <a href="https://blockworks.co/news/bessent-quarterly-refunding-announcement">the first QRA meeting</a> from the Treasury gave us a line of sight into how Scott Bessent is thinking about Treasury issuance in contrast to his predecessor, Janet Yellen.&nbsp;



Many expected him to attempt to walk back the bills-heavy issuance strategy that Yellen had implemented, but in reality he kept things as-is. This shocked many observers. However, when I asked Andy about this hypocrisy, he explained how the actual proportion of bill issuance could shift due to a change in the size of the fiscal deficit:



“If they keep coupons the same and the deficit rises…well, they have to make it up with bills and so there&#8217;s more bills and the same amount of coupons that&#8217;s oversupplying the bills market and undersupplying the coupon market. And so if you&#8217;re going to keep it constant, the deficit will determine whether you&#8217;re going to be extending the debt. Meaning, if the deficit falls and you keep it constant, you extend the duration you&#8217;re terming out the debt. If the deficit rises and you keep coupons constant, you’re relying more on bills.” Overall, this was one of my favorite interviews of the year. Go check out <a href="https://www.youtube.com/watch?v=t9YayzOGfvU">the full interview</a> and don’t forget your notepad — this one’s a Macro 301 interview.



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Lessons in monetary plumbing with Andy Constan

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



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The Avalanche Foundation has unveiled a payment card called the <a href="https://www.avalanchecard.com/">Avalanche Card</a>, which lets you spend your crypto at fiat-only merchants.&nbsp;



Crypto: It’s not just magic internet money anymore!



I chatted with Eric Kang, Ava Labs’ head of DeFi and business development, to get a clear understanding of how exactly this card works. You aren’t paying merchants directly with crypto, so the card can be used anywhere that accepts Visa. But the crypto is ultimately sold using Avalanche’s C-Chain to pay for transactions that have already occurred with fiat.



“It took us a while to get this out,” Kang tells me. He sees it as an easy way for people to sell or use their crypto without having to go through a crypto exchange or DeFi platform.


<div class="wp-block-image">
<figure class="alignright is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXem1d2ML1zCkIfWpvoht9-9KDRZ74zejcNsAwyQsgFEH0VlgAyx-0IsDdN3K8fQU21EppdU03fshAXJtbhxS78NVzE3PmjCi6284x1PG65r7e3oKJRZYTQquv6DJbNjVuRzPmQm?key=HETaDUr2BuqaGKnpcmxq-EWB" alt="" style="width:455px;height:auto"/><figcaption class="wp-element-caption">Source: Avalanche Foundation</figcaption></figure></div>


It’s a bit like a mix between a prepaid card and a traditional credit card. You load it up with crypto — USDC, USDT, and AVAX are accepted, with plans to accept bridged bitcoin and potentially other tokens in the future.&nbsp;



Half the US dollar value of those cryptocurrencies is then considered to be your limit, to ensure padding for crypto price fluctuations. You can then use the card at any Visa-friendly merchant, and those charges are logged like a credit card.



Your crypto isn’t immediately sold when you make a purchase, though. Instead, the crypto is actually sold once a day at the same time (around 9 am ET) based on the past day’s charges before becoming transactions onchain.&nbsp;



Because it’s a credit card, you’ll need to hand over some personal information including your real name, address and social security number or other government ID number to get the card.


<div class="wp-block-image">
<figure class="alignright is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd8PrY_gUl6F-y8j4BATuFTOzpEjlkiOxjQh_HWcF665lkJBUWxEDo5K9IIjVUz2lke0gAhYGMW0JV_m8ciifEeEPOGWe47CeE6q2LY-HdW6syEb0q47-BbS2nzISdtfDYd_EA6?key=HETaDUr2BuqaGKnpcmxq-EWB" alt="" style="width:533px;height:auto"/><figcaption class="wp-element-caption">Source: Avalanche Foundation</figcaption></figure></div>


You can also freeze the card, change your card’s PIN, dispute suspicious transactions and set up spending alerts. But because it’s crypto, your credit balance will fluctuate depending on crypto market prices.&nbsp;



Sorting out your taxes with this card could be a challenge if you’re making a lot of purchases. As of right now, selling crypto (even to make a purchase, except for stablecoins and USDC) is considered a taxable event. That could be a headache for some prospective users looking to spend their tokens like cash.&nbsp;&nbsp;



“We recommend that you speak with a tax professional regarding circumstances with the Avalanche Card,” the card’s site reads. “Spending against other crypto assets may involve selling your assets. Selling crypto assets can be a taxable event.”



If you’ve got a great crypto-savvy accountant, though, maybe that’s not the end of the world.&nbsp;



Tech firm Rain Liquidity is facilitating the card. When you load it up with tokens, your card will effectively be a new hot wallet, with addresses for each asset.



The card is being launched in 35 US states, with the remaining 15 off the list due to regulatory reasons. The card is also available in Latin America and the Caribbean.&nbsp;



If you’re a resident or citizen of any US-sanctioned country, however, you won’t be able to get the card — because it’s powered by Visa.



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Avalanche Foundation launches Visa credit card for IRL payments

Macauley Peterson

This is a segment from the 0xResearch newsletter. To read full editions, <a href="https://blockworks.co/newsletter/research">subscribe</a>.



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The Bybit $1.4 billion exploit triggered a predictable response: an influx of security and infrastructure firms each claiming that their technology could have prevented the attack. The FBI has <a href="https://www.ic3.gov/PSA/2025/PSA250226">confirmed</a> the hack was the work of North Korea’s Lazarus Group, which targeted Bybit’s Safe{Wallet} setup. A key detail <a href="https://x.com/benbybit/status/1894768736084885929">disclosed</a> yesterday is that it was <a href="https://x.com/safe/status/1894768522720350673?s=46">a Safe developer’s machine</a> — and not Bybit’s infrastructure — that was compromised, allowing attackers to inject malicious code into the transaction signing interface.



The deception resulted in Bybit’s signers blindly approving a fraudulent transaction, draining its largest Ethereum wallet.



Security researcher Taylor Monahan emphasized that this attack was entirely predictable given the crypto industry&#8217;s long-standing blind-signing problem. As she <a href="https://x.com/tayvano_/status/1894811510494699843">noted</a>: &#8220;There is NO org in this space that is taking security seriously enough to protect against a dedicated, persistent, motivated adversary like Lazarus.”



Key findings include:



Safe{Wallet}’s UI was compromised — Bybit’s interface showed an expected transaction, but signers unknowingly approved a completely different transaction.



Blind signing on Ledger devices was the final failure — Bybit’s final signer, Ben Zhou, admitted he didn’t verify the transaction fully on his Ledger hardware wallet before approving it.



The attack targeted human oversight — Lazarus didn&#8217;t need to exploit smart contracts or break cryptographic security; it simply took advantage of trust in the UI.



Former Binance CEO CZ <a href="https://blockworks.co/news/bybit-hack-raises-security-questions">criticized Safe’s response</a>, raising critical questions like why did a single developer’s machine have access to Bybit’s transaction process? How did Ledger’s signing process fail to prevent this? And <a href="https://blockworks.co/news/bybit-attack-institutional-grade-security">what security lessons</a> should the industry take away?



These are all <a href="https://x.com/koeppelmann/status/1894792743303479340">good questions</a> which will take some time to fully address.



<h2 class="wp-block-heading">A wave of companies rushes in</h2>



With every high-profile hack, companies flood the space claiming their product would have stopped it. Some address the specific issue — secure transaction verification — while others hijack the narrative for marketing.



<ul class="wp-block-list">
<li>OISY (Dfinity-backed onchain wallet)</li>
</ul>



Claim: Browser extensions and private key management are the weak links. OISY eliminates them by running fully onchain.



Reality: The attack had nothing to do with browser extensions or private key exposure — it was blind signing. OISY’s architecture might be novel, but it doesn’t solve the problem that caused this hack.



<ul class="wp-block-list">
<li>Impossible Cloud Network (decentralized cloud storage)</li>
</ul>



Claim: Centralized cloud services (like AWS) were the root cause of the exploit.



Reality: While decentralized cloud storage can reduce attack surfaces, Bybit wasn’t hacked through AWS. The issue was Safe’s UI manipulation and blind signing — not the particular choice of cloud hosting provider.



<ul class="wp-block-list">
<li>Cubist (hardware-backed signing security)</li>
</ul>



Claim: Enforcing strict signing policies, such as pre-approved addresses, governance delays and multi-factor authentication would have blocked this exploit.



Reality: This is actually relevant. If Bybit had enforced signing restrictions, Lazarus wouldn’t have been able to trick it into blind-signing a malicious transaction.



<ul class="wp-block-list">
<li>Fireblocks (MPC-based security and transaction policy enforcement)</li>
</ul>



Claim: Bybit’s security model was fundamentally flawed — Ledger’s blind-signing requirement combined with Safe’s UI vulnerability left it open to attack. Fireblocks argues that its MPC-based infrastructure, policy engines and real-time transaction verification would have mitigated this risk.



Reality: This claim is one of the more valid responses. Fireblocks’ policy enforcement would have prevented arbitrary approvals, requiring predefined transaction rules that block unexpected transactions — even if signers get tricked.



However, there’s also a risk, as Taylor Monahan <a href="https://x.com/tayvano_/status/1894806140921557445">put it</a> in her characteristically sassy style. “Fancy multisig, semi-custodial, MPC, blah blah blah product…make your attack surface LARGER, not smaller.”&nbsp;



The real lesson is UI trust is the biggest security hole. Bybit’s attack wasn&#8217;t about smart contracts, decentralization or private key security — it was about <a href="https://x.com/tw_tter/status/1894770278267297906?s=46&amp;t=yjAdM2ddX0KgGQimu7jcDQ">blind trust</a> in a compromised UI.



In crypto, don’t trust, verify. Otherwise, you defeat the purpose of using hardware wallets in the first place. Every solution that ignores this reality is missing the point.



For all the noise about decentralized cloud storage, onchain wallets and browserless interfaces, when billions of dollars are at stake, none of this matters if you don’t have:



<ul class="wp-block-list">
<li>Strict transaction signing policies</li>



<li>Mandatory transaction verification on hardware wallets</li>



<li>Governance delays and multi-layer approvals</li>
</ul>



As Lazarus continues evolving, the crypto industry must stop chasing trendy fixes and focus instead on hardening transaction security — because apparently the next $1.4 billion hack is just one blind signature away.



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Profiting from disaster: Firms look to capitalize on Bybit hack

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



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Whether you’re a believer in a V-shaped recovery from here, or you think we’re headed lower before an even bigger bounce back, you’d be forgiven for yearning for change on the other side.



Well, we’re getting a decent glimpse at how green the grass might be.



In the past five days, about $400 billion has been wiped from crypto’s total market cap, sending it from over $3.3 trillion to $2.9 trillion. That’s officially below the November 2021 peak.&nbsp;



Sounds exciting! Could crypto have purged itself of all things toxic about this cycle by sending vapid memes, vaporware ChatGPT wrappers and low-float VC coins on their way to zero?



Too early to say. But for all the noise, we can still see hints at what the market expects to pop during the next potential phase of the bull market.



Of the 77 cryptocurrencies in the top-100 by market cap which aren’t stablecoins, liquid staking tokens or otherwise wrapped assets, all but seven coins have lost value since Sunday following the Bitget hack two days earlier.



Those losses range from nearly 20% in the case of TKX, TRUMP and Bitget’s BGB, to barely negative returns for OP and APT.



Among the worst hit are coins tied to protocols that boast some of the highest levels of economic activity in the space right now, including AAVE, LDO, SOL and ETH. Like Keynes said, “markets can remain irrational longer than you can remain solvent.”&nbsp;



More telling is the small set of coins to go in the opposite direction: BERA and SKY (formerly MKR) are up 10% and 9.5% apiece while TIA is ahead by 3%.&nbsp;



Perhaps there’s not much to read into BERA, considering its mainnet launched only three weeks ago. But this could be a sign that corners of the market are looking for a fresh ecosystem narrative.&nbsp;



As for SKY, it could be benefitting from the increasingly tense air of strict stablecoin regulation in the US — with decentralized offerings set to take up greater mindshare moving forward.



And then there’s the extreme overperformance of IP, which is up 40% over the past five days and by far the strongest top-100 coin.&nbsp;



IP is the native token for a16z-backed PIP Labs’ Story Protocol, which it positions as a chain for tokenizing intellectual property. Its mainnet went live alongside the token less than two weeks ago and its price has only gone up since.&nbsp;



In any case, if I had to bet on the next big narratives for the rest of the cycle, mine would be twofold: fundamentals for sure, and really, really good market makers.



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What the bounce tells us about the next big crypto narratives

Jeff Albus

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



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



I don&#8217;t know, folks. Solana looks pretty cooked. The price has fallen below the 50 day and 200 day moving average, and is currently hovering around $130. It&#8217;s dropped about 35% since Valentine&#8217;s Day and is certainly not alone, with the whole market bleeding red over the same interim.



As such, we now have a lot of people asking: Is the bull run over? And if so, is the recent Bybit hack (or some other news, like <a href="https://blockworks.co/news/libra-will-not-deter-memecoins">the LIBRA memecoin fustercluck</a> or the <a href="https://blockworks.co/news/sol-investors-shrug-off-unlocks">upcoming FTX unlocks</a>) to blame? Conventional wisdom suggests that every cycle, a major hack or scandal shutters the market&#8217;s seemingly unstoppable momentum. But are these events really the cause, or just convenient scapegoats for something inevitable?



Bull runs seem to follow a fairly predictable rhythm, actually. Historically, BTC has peaked a little less than a year after reclaiming the previous cycle&#8217;s all-time high, often in December or January. It then moves briefly sideways, then downwards, and everything else follows the leader. This pattern held true in 2013, 2017 and 2021. In our current cycle, bitcoin reclaimed $69K in March 2024, and may have peaked 10 months later at $108K in January 2025.



Unsurprisingly though, people seem keen to frame <a href="https://blockworks.co/news/bybit-attack-institutional-grade-security">the recent Bybit hack</a> as the cause of a presumptive bearish spiral, rather than accepting that a pullback was simply due. Solana, which rode bitcoin’s momentum to nearly $300, has been caught in the same unwarranted blame game.&nbsp;



We’ve seen this before. Everyone knows that <a href="https://bitcointalk.org/index.php?topic=497289.0">Mt. Gox and its admission of insolvency</a> killed the 2013 bull run. <a href="https://www.cnbc.com/2017/09/11/bitcoin-price-falls-on-reports-that-china-is-closing-local-exchanges.html">China banning Bitcoin</a> halted the truly magnificent ICO run of 2017. <a href="https://ia.acs.org.au/article/2022/death-of-a-cryptocurrency.html">Scandals from Luna</a> and <a href="https://jfin-swufe.springeropen.com/articles/10.1186/s40854-024-00690-8">FTX</a> were, of course, to blame for jettisoning the 2021 moonshot. Except no, actually. None of that is true.



Bitcoin topped above $1,000 in December 2013, roughly 9 months after reclaiming its previous $31 ATH. The Mt. Gox scandal didn&#8217;t break the dam until months later in February 2014. Likewise, China’s Bitcoin ban didn’t end the 2017 bull run. The ban happened when bitcoin was around $4K. The price dipped briefly before rocketing to $18K. When the market finally crashed in January 2018 (10 months after passing the previous cycle&#8217;s all-time high), people went on to say that it was due to <a href="https://www.forbes.com/sites/sarahsu/2018/01/15/chinas-shutdown-of-bitcoin-miners-isnt-just-about-electricity/">China cracking down on bitcoin mining</a> in the wake of the ban.



As for Luna and FTX, both devastated investor confidence, but neither caused the bear market. Crypto prices at large had already been in decline since December 2021, or about a year after surpassing the previous cycle&#8217;s all-time high. The terraUSD collapse happened in May 2022. FTX didn’t implode until November. Solana, which was admittedly affected due to its close association with the latter, was already deep into its downtrend before that event unfolded.



And that&#8217;s to say nothing of all the major hacks that did not conveniently align with market peaks. In 2016, the DAO hack and Bitfinex hack were both massive. If hacks were real bear catalysts, why did the market shrug them off?



Because hacks and scandals do not end bull runs. Markets crash due to overheating, leverage, and exhausted demand — all of which align with natural cycle peaks and troughs. Bad news certainly does increase the likelihood of local dips, but if the market isn&#8217;t in the right position relative to the current cycle, it isn&#8217;t going to crash on a macro scale. The Bybit hack certainly gave traders an excuse to panic. But if it hadn’t been Bybit, it would’ve been something else.



So what now? Well, no one’s yelled out “JENGA!” yet. Maybe another leg up. Whales seem to be <a href="https://x.com/cryptoquant_com/status/1894351621393461479">accumulating</a>, which remains bullish. But given the timing, it&#8217;s also possible that the clock was up in January and this was the top. If that&#8217;s true, it would mark blockchain’s weakest ever market cycle. Either way, history is clear: Hacks don’t end bull runs. Bull runs end, and traders look for something to blame.



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The market isn’t crashing because of scandals and bad news

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



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



At this point, it feels like the SEC is checking its list and dismissing investigations into crypto companies daily.&nbsp;



In some regards, it feels like the industry is finally free but the catch is that there’s yet nothing concrete for founders and projects to fall back on when it comes to rules and regulations.&nbsp;



Though, as Avalon’s Sean Pinnock told me in an X Spaces Wednesday, founders and devs based in the US can still breathe a sigh of relief.



Speaking of that Spaces: Yesterday, The Drop’s Kate Irwin and I hosted our first collaborative chat focused on, well, gaming. If you’re curious about it and weren’t able to join, you can <a href="https://x.com/i/spaces/1jMJgkVQzBjJL/peek">listen to a recap here</a>.&nbsp;



Anyway, Real Agency HQ’s Jonah Blake had some thoughts not only about where we stand but where we go from here. Unfortunately for those who equated friendlier regulation with their bags being pumped, that might not be the case. Something which shouldn’t come as too much of a surprise given how the market’s been acting lately.&nbsp;



What Blake means specifically is that having a regulator who’s not willing to file lawsuits left and right isn’t automatically going to mean that everyone jumps right back into some of the big narratives from last cycle, like gaming.&nbsp;



Abstract’s Phin Totten said that his team noticed a rotation of Solana traders playing Onchain Heroes, an idle RPG, but they didn’t enter past that game. For Totten, that’s a sign that we’re still early and the “time investment to return isn’t there” yet.&nbsp;



Blake compared crypto to a sin economy, like gambling or porn. Before you balk — as I admittedly did — it’s not necessarily a bad thing given the revenue that those types of economies churn out, it’s more about the mindset of those interacting with said economy, and how devs build.&nbsp;



Now, I want to clarify here that I don’t think all of crypto falls into this category. Especially not these days.&nbsp;



So let’s center Blake’s point on memecoins, with its gambling mentality, and how that impacts subsectors like gaming.&nbsp;



“We’ve curated an industry that’s very built around this speed of wealth accrual,” Totten said. “It’s about the path of least resistance to money.”&nbsp;



This is directly impacting the way that games are being developed right now, given the frustrations around the amount of time it took a lot of Web3 games to launch. For now, it’s likely that we’ll see a lot of those types of games being built around the speed mentality for the sake of optimizing for the audience, Totten continued.



Will this always be the case? The optimist — and avid gamer — in me hopes not. But there’s just no point in trying to trot out a game that might not have an audience… yet.&nbsp;



And perhaps that’s going to be the key difference this cycle: Folks are building for the audience.



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