Quant

Ben Strack

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



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The word “bitcoin” appeared once in BlackRock CEO Larry Fink’s 2024 letter to investors.&nbsp;



The asset (and tokenization too) got a bigger shoutout this time around.



Fink’s sole mention of BTC last March came when bringing up BlackRock’s recent bitcoin ETF launch. That was part of a broader effort to “bring better liquidity and price discovery to more opaque markets,” he wrote.



The CEO’s 2025 letter, published today, included seven “bitcoin” references. He again addressed the aforementioned IBIT product, which has notched net inflows of $40 billion to date.



More than half of that demand has been from retail investors, Fink noted, with three-quarters of those investors never owning an iShares product before.



But more interestingly, Fink wrote there’s no guarantee that the dollar will forever serve as the world’s reserve currency.  



“If the US doesn’t get its debt under control, if deficits keep ballooning, America risks losing that position to digital assets like bitcoin,” he explained.



He added: “Decentralized finance is an extraordinary innovation. It makes markets faster, cheaper and more transparent. Yet that same innovation could undermine America&#8217;s economic advantage if investors begin seeing bitcoin as a safer bet than the dollar.”



Fink gives this warning while clarifying that he’s “obviously not anti-digital assets.” He has, after all, called <a href="https://blockworks.co/news/blackrock-tokenization-investment">tokenized securities</a> “the next generation for markets.” And we’ve reported on BlackRock’s tokenized money market fund, which earlier this month <a href="https://blockworks.co/news/tokenized-yield-funds-complement-stablecoins">hit $1 billion in AUM</a>.



Fink reaffirmed this sentiment, arguing that <a href="https://blockworks.co/news/stablecoins-tokenization-blackrock-galaxy-das">tokenizing</a> every stock, bond and fund would “revolutionize” investing.



“Markets wouldn&#8217;t need to close,” Fink wrote. “Transactions that currently take days would clear in seconds. And billions of dollars currently immobilized by settlement delays could be reinvested immediately back into the economy, generating more growth.”



Solving for digital verification will be critical if tokenized funds are to become as familiar to investors as ETFs, he added. A TradFi giant like BlackRock continuing to focus on these categories should no doubt make such a thing possible.&nbsp;



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<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: Built for Solana investors, developers and community members. The latest from one of crypto&#8217;s hottest networks.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: For crypto collectors and traders, covering apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.</li>
</ul>

Could USD lose to BTC? BlackRock’s Fink says it’s possible

Casey Wagner

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



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In a fitting end to a rocky first quarter, US stocks fell back into correction territory Monday.&nbsp;



The S&amp;P 500 was trading 0.2% lower at 2 pm ET, putting it around 4.8% in the red since the start of 2025. The tech-heavy Nasdaq Composite is slated to close out Q1 almost 12% lower.&nbsp;



It’s the worst first quarter performance for the Nasdaq Composite since 2020.&nbsp;



One silver lining in Q1: gold. The precious metal is about to notch its best-performing quarter since 1986. Analysts attribute the rally to the Trump tariff-induced trade war. (More on that later.)&nbsp;



Digital gold, though, is a different story. Bitcoin is slated to close out its worst Q1 since 2018. The narrative of bitcoin as a <a href="https://blockworks.co/news/investors-bitcoin-narrative-confusion">safe-haven asset</a>, apparently, has not taken.



Looking ahead, things could get worse before they get better.&nbsp;



Tariffs are set to remain a dominant market narrative in Q2. President Trump is slated to announce his global tariff plans on Wednesday, which he’s dubbed “Liberation Day.”&nbsp;



To Team Trump, April 2 will mark a turning point for domestic manufacturing. To some analysts, “Liberation Day” could also bring salvation to US equity prices (at least in the short term).&nbsp;



The logic goes: If Trump announces a comprehensive reciprocal tariff regime, investors will gain clarity. Hopefully the daily headlines will slow down and markets can stop wondering whether a levy will be delayed or amended. Concrete answers on the tariff front would leave investors free to focus on impacts of other Trump administration economic policies, like tax cuts.&nbsp;



In the long term, I’m less optimistic. Even Trump’s closest Cabinet members <a href="https://www.politico.com/news/2025/03/29/trump-aides-tariffs-liberation-day-fears-00259081">reportedly</a> aren’t fully up-to-speed on what the president will say on Wednesday, so I’d imagine markets will also be shocked. If the announcements lead to a significant escalation in the trade war, any “clarity” bump will quickly be reversed.



I’d also argue that these reciprocal tariffs are not priced-in, so expect some short-term volatility later in the week as investors digest the announcements from the White House.&nbsp;



OK, I’m putting the crystal ball down now. Keep an eye on your inbox later this week to see how my predictions hold up.



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<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.</li>



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<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.</li>
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Investors hope for clarity on tariffs after Q1 downturns

Kate Irwin

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



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Gunzilla Games’ GUN token — for its Off The Grid game and Avalanche subnet Gunz — is now live.&nbsp;



GUN climbed up 12% since its launch early Monday morning, but has since fallen slightly. As of 11:30 am ET Monday, its price was $0.09. The token had a market cap of roughly $60 million at that time, with 604 million GUN in circulation out of a possible 10 billion.&nbsp;



GUN already has a trading volume of $126 million just a few hours after launch, per CoinGecko data.



The Gunz chain has already seen over 487 million transactions across 14.5 million wallets, according to Avascan <a href="https://testnet.avascan.info/blockchain/gunz/home">data</a> and Gunzilla’s Director of Web3 Theodore Agranat.



“Unlike most Web3 projects, we&#8217;ve spent five years now building everything first and testing it in testnet for over a year,” Agranat said in an interview with Blockworks, noting that the team chose to launch the token on Binance because it’s the biggest crypto exchange.



Agranat says he’s seen crypto exchanges engaging with gaming projects less over the past year — but says those projects that did launch have largely missed the mark.



Off The Grid is free to play on PC and console — and doesn’t require a wallet or any crypto. The game is largely a skill-based shooter, though some characters’ “cyberlimbs” grant special abilities. Items can also be bought and used in the game.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeEE9mf7TDDXNwtDpxGWAaM8DzbkoDP8gzkb1e2W7RrG35rkx26w_ebsyrJltaAU0AH-FujHnIV_FwgGhzc1nryOqcSRwotQyKpazi6FBop8RHhH_0JdUQUA8kMgNpiBX71Tqqx?key=85KaLESEJlio0CfvG8yaPPXA" alt=""/></figure>



Those wishing to pour money into the game can pay for Off The Grid’s Pro membership ($12 a month) to use the game’s marketplace, which uses blockchain on the backend. But even if you’re playing for free, you’ll slowly earn GUN as you go.&nbsp;



If you’ve already been playing the game, though, those GUN token numbers you’re seeing won’t be turned into actual GUN tokens, Gunzilla has confirmed.&nbsp;



“Their main benefits are the rare items that they earned or received with OTG Pro — many of which no one will ever be able to access in the future,” Agranat explained on the benefits for early players in a message.



“Hexes” and other items earned early on will transfer over, though. And though it’s challenging, extracting hexes while playing the game will get you more loot (each hex can be decoded to reveal an item). Agranat noted during our interview that over 380,000 hexes had been extracted in just one day last week.&nbsp;



I’ve sunk some hours into the game so far, and I like both solo mode and trios mode. This game is fast — more like Call of Duty: Warzone than Apex Legends in terms of time-to-kill and overall speed. But even without its crypto elements, Off The Grid brings something unique to the extraction battle royale shooter genre with its cyberlimbs and gritty, futuristic aesthetic.&nbsp;



A little scoop: Tomorrow, on April 1, expect a “very, very fun new skin activation,” Agranat shared. There’ll be a new skin coming out — could it be April Fool’s-themed?



Bigger picture, Off The Grid is just the beginning for Gunzilla.



“It is just the first of many games that we will launch in our ecosystem,” Agranat said.



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Gunzilla Games’ GUN token hits $68M market cap within hours of launch

Macauley Peterson

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



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In the realm of macro risks, this week is stacked with market-moving events — particularly relevant to risk assets.&nbsp;



“Liberation Day” on Wednesday could trigger sweeping tariffs and exacerbate trade war fears, while Friday’s US jobs report will test the resilience of the labor market and offer clues into future Fed policy moves. Throw in Eurozone CPI, Fed Chair Powell’s post-jobs-report remarks, and a Congressional hearing on the future of stablecoins, and you have a volatile mix of economic, political and regulatory items converging at once.



Oh, and don’t overlook Japan, where a new fiscal year on April 1 <a href="https://x.com/acrossthespread/status/1906591368765681835">could trigger</a> large-scale capital redeployment, notwithstanding headline-driven US tariff chatter. I’m tired, boss!



DeFi, on the other hand, has its own set of risks to worry about. Navigating the part of the crypto game where risks are too often opaque and inconsistent leads the degens among us to simply ignore them. Yet, as protocols like Morpho scale into multi-billion dollar platforms, that problem compounds. The risks aren’t just about smart contracts anymore; they span asset types, market design and human factors like governance and custody.



But things are improving. The latest tool in the toolbox is Credora’s <a href="https://x.com/CredoraNetwork/status/1905614429183791337">recent launch</a> of risk ratings for Morpho vaults. These aren’t merely marketing labels — they’re probabilistic, institutional-grade assessments that break down risk at the collateral, market and vault level.



A vault rated A+ should be more than a vibe; it should be a signal derived from a consensus process involving crypto-native and traditional credit experts that simulate real-world defaults and loss probabilities.



This move towards pushing risk transparency forward reminds me of other standout projects:



<ul class="wp-block-list">
<li>Bluechip.org is one <a href="https://blockworks.co/news/liquity-v2-staked-ether">source</a> for stablecoin analysis, providing transparent and curated risk profiles for fiat-backed and decentralized assets alike. Its community-first model prioritizes credibility over hype — though it’s hard to keep up with all the new launches these days.</li>
</ul>



<ul class="wp-block-list">
<li>Serenity Research <a href="https://serenityresearch.substack.com/">brings</a> a similar rigor to stablecoin yield hunters. Its risk-adjusted yield rankings aim to standardize a discount rate for constructing risk-reward profiles.</li>
</ul>



Risk curators like Gauntlet and Chaos Labs have spent years advising protocol governance on risk parameters using agent-based simulations. It’s critical work but advice that often stays inside governance forums or within core teams.



What’s new here is the shift toward user-facing, accessible risk signals. A Credora score is an accessible way to help users understand and trade-offs. That opens the door to something bigger: risk-aware capital flows. Firms can build structured products with embedded risk scores. Wallets can surface safer options by default. Insurance markets can price policies with real inputs.



Risk, in other words, becomes composable. DeFi players have spent years optimizing for yield. The next phase is about risk-adjusted yield — and how to verify it. By translating complexity into standardized, transparent metrics, we can set the stage for more intelligent capital allocation.



The dream isn’t risk-free DeFi. It’s know-your-risk DeFi.



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From vibes to value: DeFi risk gets a new rating system

David Canellis

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



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In this week&#8217;s roundup, David Canellis looks at a 13-year-old job post that transformed crypto, a Kenyan startup combining crypto mining with hydroelectric power, and Gamestop&#8217;s bitcoin buying spree.



<h2 class="wp-block-heading">Opportunity knocks</h2>



The year is 2012. Skrillex’s &#8220;Bangarang&#8221; is playing somewhere in the background, and you’re debating whether to see The Hunger Games or 21 Jump Street at the cinema.



You decide to scroll Hacker News instead. A new <a href="https://www.reddit.com/r/CryptoCurrency/comments/1jka50f/job_post_for_the_role_of_coinbase_cofounder/">post</a> catches your eye — “Apply with me to YC [Y Combinator] in the next 3 days and change the world.”



Brian Armstrong, pre-Coinbase, wrote this 13 years ago. “I’m throwing a hail mary here &#8211; because desperate times call for desperate measures.”



Armstrong had a prototype, “PayPal for bitcoin,” an open-source Android wallet called Bitbank that let users send bitcoin via email addresses. Y Combinator showed interest, Armstrong said, but he’d deferred the meeting until he’d found a ride-or-die co-founder.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdgW-seq22agzzS2DCIZX_InpnCZnHQYgEhFfx5O_f9eo_oRuFepMH4jLvLB_BuWCQJ0sqq2ZI-OPBXUWFBQ9wsgcdTj7tlNOolG-vxN0c7IfjPZ3pCDg_STJLZi8LQkZOwjatKSA?key=bBulffZfSB5fG7bmsTZGRzxR" alt=""/></figure>



“The killer app will be in disrupting transaction fees that are a tax on every transaction in our economy,” Armstrong wrote. “This is going to be super fucking hard, but the payoff is that we have a non-zero chance of really changing the world in big way. This isn&#8217;t another photo-sharing app.”



He wasn’t wrong. While Armstrong didn’t find co-founder Fred Ehrsam until after he’d graduated from Y Combinator, Bitbank did eventually become Coinbase, which is today a $48-billion stock trading on the Nasdaq.&nbsp;



Conviction clearly pays.



<h2 class="wp-block-heading">Remote work</h2>



Legendary Bitcoiners have famously gone to great lengths in pursuit of the network.



Kenya-based startup Gridless is no different: It’s been busy in northwest Zambia, hauling a shipping container full of 120 mining rigs “across bumpy narrow roads 14 hours from the nearest major city,” <a href="https://www.bbc.com/news/articles/cly4xe373p4o">reported</a> the BBC last week.



The goal was to hook those rigs — which are each making around $5 per day — directly to a hydroelectric power plant harnessing the might of the Zambezi river.&nbsp;



Bitcoin mining now makes up about 30% of the plant’s revenue, and a revenue-sharing agreement with the company that built the plant means cheap power for the machines and cheaper electricity for locals. 



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/wfwLy8MWbe4?si=9yt8C9iPCpxX3Z_2" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







Increased revenue for the plant has also led to more reliable power for the people that live there — living proof that proof-of-work can turn stranded energy into real-world progress.



&#8220;Every day we were wasting over half of the energy we could generate, which also meant we [weren’t] earning from that to meet our operating expenses. We needed a major user of power in the area, and that&#8217;s where the game-changing partnership with Gridless came in,&#8221; plant operator Daniel Rea told the BBC.



<h2 class="wp-block-heading">Game-Start</h2>



GameStop gearing up to run the Strategy playbook is a turning point.



Ignore the mixed market reaction. The original meme stock will be the second large-scale firm to attempt an extreme bitcoin buying spree (mirroring Strategy), after Japanese holding company MetaPlanet.



And that includes issuing 0% convertible notes to the tune of $1.3 billion — cash it will use to buy bitcoin — the exact same move that Strategy has perfected over the past five years or so.&nbsp;



All while GameStop will continue closing its physical stores en masse.



<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">An announcement regarding Bitcoin <a href="https://t.co/gG8JRarIok">pic.twitter.com/gG8JRarIok</a>&mdash; GameStop (@gamestop) <a href="https://twitter.com/gamestop/status/1904628096705454308?ref_src=twsrc%5Etfw">March 25, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



GME initially jumped by about 10% after it announced its bitcoin plan, but then dropped 25% on details of the financing.



All noise. The stock might be a very different beast to Strategy and MetaPlanet, but the three will soon share one common denominator.&nbsp;



Forget Denzel — Bitcoin is the real equalizer.



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<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.</li>
</ul>

Bitbank to Coinbase: Brian Armstrong’s $48 billion job post

Katherine Ross

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



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



Remember Mesh’s Bam Azizi from our chat <a href="https://blockworks.co/news/mesh-crypto-payments-fundraise-82m">earlier this month</a>, after his firm raised a whopping $82M?



Azizi and Paradigm’s Charlie Noyes joined Yanowitz on <a href="https://blockworks.co/podcast/empire/46ed96f4-0bf7-11f0-b319-cfe252b998dc">this week’s episode of Empire</a> to chat about the raise and crypto’s killer app — stablecoins (sorry if you’re tired of hearing that).&nbsp;



But the thing is, as Noyes put it: “Stablecoins deserve all of the attention and excitement they’re garnering,” especially when we’re in such an awkward spot market-wise.&nbsp;



Not only does Noyes think that stablecoins offer up a viable and understandable use case on crypto rails (something the industry sometimes struggles with) — there’s also an additional add-on:&nbsp;



The talent pool is much bigger. Because a lot of these projects have FinTech qualities, they can seek out talent that’s not just crypto-native.&nbsp;



And, as the competition grows fiercer and fragmentation starts to occur, Mesh stands to potentially add more value, Azizi added.&nbsp;



While the dream would be for folks to use stablecoins for everyday payments, Azizi thinks that we’re more likely to see stablecoins leveraged for cross-border payments right now. Certain hyperinflation areas like Turkey or Colombia could see more retail stablecoin use cases, given that they don’t have the same access to bank accounts and credit cards as the US does.&nbsp;



Next stop for stablecoins? Getting the Netflixes and Amazons of the world to accept USDC, USDT, etc. That’s when real adoption happens.



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<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.</li>



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<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: Built for Solana investors, developers and community members. The latest from one of crypto&#8217;s hottest networks.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: For crypto collectors and traders, covering apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.</li>
</ul>

Stablecoins ‘deserve all the attention’: Paradigm

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



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



We’re heading into the second quarter of the year, and — <a href="https://blockworks.co/news/grayscale-memecoins-impact-crypto">as I wrote last week</a> — this last quarter was a doozy.&nbsp;



But some folks are feeling kind of good about this next quarter…so far.



<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">Q2 starts tomorrow and it looks like the crypto retirement dreams are on hold You better close twitter and lock in&mdash; Alex (@AlexOnchain) <a href="https://twitter.com/AlexOnchain/status/1906616710372683848?ref_src=twsrc%5Etfw">March 31, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Unfortunately, with fresh tariffs on the US horizon, this morning is not off to a great start for crypto or equities.



Federico Brokate, head of US business at 21Shares, took away a silver lining to last quarter, which is that 21Shares saw “fantastic flows” for the ETFs. For Brokate, that gives an idea of how much client demand exists.



The continued volatility, especially out of Trump’s White House, may continue to spook some of the more risk-on investors. But Brokate remains pretty positive.&nbsp;



“I think we&#8217;re seeing all the right tailwinds. And so, yes, the volatility at a macro level is impacting performance here in this asset class — like every other asset class — but investors are taking this opportunity to come into the market even at a lower cost basis, which I think is the absolute right move,” he said.&nbsp;



None of this, unfortunately, is going to be enough to move us out of the wait-and-see moment we seem stuck in. The big tailwinds are still up in the air: actual regulation, word from the SEC on the slew of crypto ETF filings, and further clarity from the SEC (hopefully from the roundtables they’re hosting).&nbsp;



I know it’s not a surprise to any of you, but it’s where we remain. However, this quarter could get us out of this rut, if folks like Empire co-host and Blockworks co-founder Jason Yanowitz are right and we have <a href="https://blockworks.co/news/roadblocks-stablecoin-adoption-foresight">stablecoin legislation in the next few months</a>.&nbsp;



Funnily enough, though, Brokate thinks we’re actually going to become more narrative-driven as institutions continue to pile in. That’s not to say fundamentals won’t play a huge part, but he thinks that investing itself is narrative-driven, and the more crypto aligns with macro, the more important headlines and news events will be.&nbsp;



“I think the constant capital [that’s] trickling into the industry is certainly changing the way that prices react to different news. But at the end of the day, all investing, especially when it&#8217;s so regulatory and geopolitical — [given that] crypto is a global asset — so all these things are very narrative-driven,” he said.



Guess we’ll always have a narrative to fall back on.



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Crypto’s seeing the ‘right tailwinds’: 21Shares

Jack Kubinec

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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In 2023 and 2024, a number of Solana startups <a href="https://blockworks.co/news/jito-airdrop-value">generated native tokens</a> to reward users and let investors and early contributors book returns.



Much of the attention surrounding these tokens went to how lucrative they were for recipients of so-called airdrops — and actual utility took a backseat, especially with a US regulatory regime eager to classify tokens as securities. Now with a <a href="https://blockworks.co/news/washington-dc-blockchain-summit-takeaways">friendlier regulatory outlook</a> and the airdrop flow being stemmed, some are looking to how these new native tokens can become valuable assets.&nbsp;



One such example is early Solana investor Multicoin Capital, which recently published an asset report for JTO, the native token of its portfolio company Jito. Multicoin’s forward-looking base case priced JTO at $6.80, roughly three times its current price. I had the report’s author, Multicoin investment partner Shayon Sengupta, as a guest on the Lightspeed podcast this week to discuss his valuation further.



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“If you assume Solana <a href="https://app.blockworksresearch.com/analytics/solana">REV</a> is going to increase and you assume that demand for priority blockspace is going to increase, Jito is going to be the direct beneficiary of that,” Sengupta said.



That’s likely true. 93% of the Solana network’s stake runs on the Jito-Solana client, which offers off-chain blockspace auctions that maximize economic returns for validators and makes it easier for users to land transactions. Jito tips from these auctions made up around 56% of Solana’s total REV in February. That’s not to mention Jito offering Solana’s largest LST in JitoSOL — a product it seems to be angling to have included in Solana staking ETFs.



What I’m less convinced of is the concept that Jito’s success as a company will trickle down to the JTO token. JTO’s price-to-earnings ratio swung wildly this year when Jito’s revenue greatly increased and its token price stayed roughly the same. That’s probably because there is currently no direct connection between Jito revenue and the JTO token.&nbsp;



The Jito Foundation — which oversees Jito’s stake pool as well as JTO — takes in revenue, but if the foundation were to do things like distribute its revenue to token holders, JTO might start to look uncomfortably like a security. That’s likely part of why the Uniswap Foundation is still yet to distribute fee revenue to UNI holders. Sengupta hinted to me that this may change.



“Our general framing is that as capital markets mature, you end up in a stage where revenues are going to matter,” Sengupta said, vaguely citing “changing policy dynamics” as one potential reason why.



Donald Trump’s presidency has brought previously unheard of legal possibilities to the crypto industry. Can it make native tokens great again?



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Multicoin estimates a 3x for Jito’s token

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



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The Fed’s preferred inflation gauge ticked higher in February while consumer spending continued to disappoint, painting an uncertain picture for future monetary policy moves.&nbsp;



Annual core Personal Consumption Expenditures Index (PCE) came in at 2.8%, a far cry from central bankers’ 2% target. Economists had projected a 12-month reading of 2.7%. Month over month, core PCE increased 0.4% — again higher than estimates, which were 0.3%. 



Inflation-adjusted consumer spending increased only 0.1% last month, coming in on the lower end of estimates. Analysts had hoped that warmer weather would jumpstart spending after a severe winter across most of the country.&nbsp;



Spending came in below expectations, even as personal income increased 0.8%, compared with projections of a 0.4% increase.&nbsp;



Expectations for longer-term inflation were also on the rise. The University of Michigan’s one-year projection for inflation is now 5%. It’s the third-straight month the index has increased.&nbsp;



Fed funds futures markets are now pricing in a 13% chance the Fed opts to lower interest rates in May.&nbsp;



Stocks, unsurprisingly, did not take the inflation news well. The S&amp;P 500 lost as much as 1.5% in the first few hours of Friday’s session. The index is poised to end Q1 with its worst quarterly performance since 2023. The Nasdaq Composite slid almost 2% in the first half of the trading day.&nbsp;&nbsp;



The doom and gloom may not last too long, though, eToro analyst Bret Kenwell said.



“Historically speaking, the S&amp;P 500 tends to perform pretty well in mild inflationary environments where annual core PCE is between 2% and 4%,” he explained. “But investors don’t seem to care about historical statistics right now.”



You can say that again. Have a good weekend, everyone; here’s to hoping for a better performance next week.



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Inflation, consumer spending misses push US stocks lower 

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



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Felix noted he came out of the Digital Asset Summit <a href="https://blockworks.co/news/forward-guidance-stablecoins-bullish-institutional-das">“incredibly bullish”</a> on stablecoins. He’s not the only one expecting big things around that sector and the broader tokenization category.



After Galaxy CEO Mike Novogratz addressed the firm’s <a href="https://blockworks.co/news/galaxy-terra-luna-200m">$200 million settlement</a> with the New York Attorney General during this morning’s earnings call, he answered a question on where the firm would focus most of its resources in 2025.



“The first obvious answer is stablecoins, both here and abroad,” he said — for payments, cross-border transactions and beyond.



Stablecoins are “the first real-world asset that’s been tokenized,” he added. And the tokenization of mortgages, collectibles, equities, etc. is coming. “I keep saying it’s going to be like bankruptcy — it happens real slow, then real fast,” Novogratz said. “It hasn’t happened real fast, but every single TradFi participant is gearing up for that [tokenization stage], and I think the crypto world is working on that.”



The promise of crypto boosting efficiency and transparency has been held back by a lack of regulatory clarity. That’s changing.



Galaxy said it’s “close” to the euro-denominated stablecoin it <a href="https://blockworks.co/news/euro-denominated-ethereum-stablecoin-launch">plotted to bring</a> with DWS and Flow Traders. Galaxy’s <a href="https://blockworks.co/news/galaxy-eyes-custody-platform-buy-from-bankrupt-celsius">investment in GK8</a> is a way for the firm to serve as “an infrastructure technology provider” in this category as adoption picks up, firm executives added.&nbsp;



Those comments came after NYSE parent Intercontinental Exchange said it plans to explore using Circle’s stablecoin (and Hashnote’s tokenized money fund USYC) within its derivatives exchanges, clearinghouses and data services.



“We believe Circle’s stablecoins and tokenized digital currencies can play a larger role in capital markets as digital currencies become more trusted by market participants as an acceptable equivalent to the US dollar,” NYSE president Lynn Martin said in a statement.



Fidelity is reportedly exploring a stablecoin launch. And we won’t rehash <a href="https://blockworks.co/news/bitgo-to-custody-wlfi-usd1">World Liberty Financial’s USD1</a> here, but the point is there’ve been ample developments with US stablecoin legislation expected as soon as this summer.



<h2 class="wp-block-heading">A focus at DAS</h2>



There was plenty of talk around stablecoins and RWAs at DAS, too.



I was on stage with Securitize chief operating officer Michael Sonnenshein last week. It happened to be the one-year anniversary of BlackRock (with help from Securitize) launching its tokenized money market fund, BUIDL. 



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/D_e0UHWm_qI?si=88O5k333U7A5g1mh&amp;start=7925" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







BUIDL recently hit the $1 billion AUM mark and, this week, launched a new share class on Solana. While stablecoins have “made the crypto system go ’round,” Sonnenshein said, you now have assets onchain that offer a stable value and are yield-bearing. People are waking up to that. “That conversation, I think, is well underway, and you’re starting to see OTC desks, market makers, and all kinds of participants in crypto beginning to think about these assets in a new way — in many cases the same way they historically relied on stablecoins,” Sonnenshein said.&nbsp;



Ondo Finance’s Ian De Bode noted that BUIDL and Ondo’s OUSG display the benefits of onchain assets — i.e. 24/7 movement, programmability —&nbsp; to legacy institutions who may want to follow suit with their own offerings.



Rather than believing tokenized MMFs/Treasurys (a roughly ~$5 billion market) will replace stablecoins (with a market cap of nearly $230 billion), industry execs have noted the <a href="https://blockworks.co/news/tokenized-yield-funds-complement-stablecoins">powerful combo</a> of the two. Circle alluded to the demand for moving between <a href="https://blockworks.co/news/circle-hashnote-deal-tokenized-money">yield-bearing collateral and cash</a> when acquiring Hashnote in January.



“Tokenization cannot exist without stablecoins,” Alogrand Foundation CEO Staci Warden told me on the DAS main stage. “Because if you have tokenized the asset side but you haven’t tokenized the money side, it just doesn’t work.”



Combining yield with quick transferability is “incredibly potent,” she added. And every TradFi player “will no longer tolerate that their money is just sitting there doing nothing.”



After talking about less-liquid tokenization segments (like real estate rental income or <a href="https://blockworks.co/news/nft-airline-tickets-revolutionize-travel">airline tickets</a>), she reverted to money market funds when imagining future transactions.&nbsp;



Perhaps a decade from now, she envisioned, one could buy a coffee with a tokenized MMF sliver. The person being paid then starts earning the yield tied to that fund.



“Cash is an asset, [an] apartment building’s an asset, they’re all assets,” Warden said. “This continuum will get just completely blurred and more liquid.”



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Talk around stablecoins, tokenization picking up

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



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Just last week at the Game Developers Conference, I caught up with two key members of the Arbitrum Gaming Catalyst Program (GCP): Daniel Peng, founding partner, and Rick Johanson, founding partner and VP.&nbsp;



During the interview, they shared a glowing vision for a gaming-focused future on Arbitrum. They said they were talking to <a href="https://blockworks.co/news/blockchain-gaming-reckoning-gdc">100 different gaming projects</a> to see which ones might build on their chain.&nbsp;



“I think where we are in the life cycle of gaming and Web3, is trying to figure out what the biggest value adds that we can provide with our resources…in order to ensure there’s some successes in our industry, right?” Peng told me.&nbsp;



“[It’s] still very much early. At the same time, I think we provide a pretty mature toolkit compared to a lot of other networks,” he added.



Arbitrum also had the largest (and therefore priciest) crypto booth at the gaming conference, featuring about a half-dozen different titles using Arbitrum in various stages of development and a challenge where you could play those games to earn Arbitrum merch.



But this week, things have gone cold. The Arbitrum DAO, which greenlit the GCP in the first place, is now considering a proposal that would claw back all unused ARB tokens allotted to fund the GCP’s ambitions. The program had previously been <a href="https://forum.arbitrum.foundation/t/catalyze-gaming-ecosystem-growth-on-arbitrum/22368">granted 200 million</a> ARB tokens last year, which was worth about $215 million at the time.&nbsp;



ARB’s now down over 76% in the past year.&nbsp;&nbsp;



“The GCP has repeatedly shown a reluctance to adequately document its activities and performance. Instead of embracing transparency, the program has recently sought to increase contributor compensation and lower its own reporting requirements,” part of the <a href="https://forum.arbitrum.foundation/t/non-constitutional-gcp-clawback/28809">proposal</a> reads.&nbsp;



“Given these failures, the risks associated with a lump-sum allocation of funds, and the mounting concerns raised by the community, it is time to cut our losses.”



Arbitrum DAO member Nathan van der Heyden co-published the proposal to kill GCP funding.&nbsp;



“The GCP was created in overly optimistic times. With key backers now gone, it’s clear the program isn’t delivering on its promises,” Heyden <a href="https://x.com/NathanVDH0x/status/1904164040261415183">argued</a>.



“The GCP was a failure,” wrote DAO participant Argonaut in agreement with the proposal.



“I fully agree with this clawback,” another participant wrote. “For the amount allocated, what has it gotten us? Arbitrum gaming will grow, but this amount of ARB was always outrageous when DeFi is what has gotten this L2 where it is.”



While some DAO participants agreed with the proposal, others — like GCP councilmember and Offchain Labs Head of Gaming and Consumer Partnerships David Bolger — <a href="https://forum.arbitrum.foundation/t/non-constitutional-gcp-clawback/28809/18">believe</a> the program is worth saving.



“No chain can remain competitive without allocating financial resources to attract and support builders,” Bolger <a href="https://forum.arbitrum.foundation/t/non-constitutional-gcp-clawback/28809/18">wrote</a>. “The industry is fiercely competitive, with rival chains routinely offering grants ranging from $5M to $100M.”



He’s not wrong about that, for sure — I’ve recently heard rumblings that other gaming-focused chains are paying game developers anywhere from $10 million to $30 million just to “partner” with them to build a game in their ecosystem.



“To date, over 50 deals have been put forward to the GCP, yet fewer than 5% have reached the final stages — demonstrating a clear commitment to due diligence,” Bolger added.



After the clawback was proposed, the GCP hired Castle Labs as its “DAO Relations partner” to see if more communication could change hearts and minds.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfqoH9PJMS6XbVzWcKOiGr6NBt3SbL5IYbrVJWEqdNL5PHUHocQVaimAfv1Wxay75I15SIVo2hUjU6GBcxMM79ABlIp1aXFWgt2lX028sLZxk3KcovUPbRKwjz9aze5Sau21q4q7Q?key=kaLfTTzvcXuvmsuUhwhA5Yyn" alt=""/></figure>



On the Arbitrum Foundation forums, Johanson said the team is taking action to improve communications between the GCP and the DAO — hiring Castle being one of those actions.&nbsp;



I reached out to Peng and Johanson for their thoughts on this proposal.&nbsp;



Johanson said: “We currently don’t have anything to share on this topic, but if that changes, we’ll be sure to update you.”&nbsp;



Overall, I’m not sure that the juice is worth the squeeze for every chain that decides it wants a gaming ecosystem.&nbsp;



Arbitrum is also an open, permissionless ecosystem, so devs don’t need the GCP’s permission — or anyone’s — to just launch a game there without getting paid.&nbsp;



Is it worth spending a hundred million just to convince some devs to make crypto games that are more likely to flop than not, some of which may ultimately leave the chain or never even launch?&nbsp;



Maybe it would be a better idea to narrow that scope to reduce risk and start small but focused — instead of trying to be the biggest player at the poker table.



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Arbitrum Gaming Catalyst hires DAO relations rep after token clawback proposal

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



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On Thursday’s ACD call, Ethereum core developers reaffirmed their intent to ship Full EOF (EVM object format) with the Fusaka fork alongside the PeerDAS main driver. (Ipsilon wrote up a <a href="https://notes.ethereum.org/@ipsilon/eof_fusaka_options">thorough review</a> of the options, with Full EOF referred to as “Option A.”)



EOF is a major overhaul of the EVM that aims for long-term optimization, safety and modularity of Ethereum’s execution engine.



Its scope has <a href="https://blockworks-research.beehiiv.com/p/ethereum-s-pectra-split">stirred controversy</a>. Felix (from the Geth team) backed the more moderate Option D, putting him slightly at odds with fellow Geth college Lightclients.



From outside the client teams, Pascal Caversaccio voiced strong opposition, following up on his <a href="https://hackmd.io/@pcaversaccio/eof-when-complexity-outweighs-necessity">published critique</a>: “EOF: When Complexity Outweighs Necessity.” His main claim: No application developers are asking for EOF, and its rollout risks alienating the broader dev community.



Despite this, EF staff —&nbsp; including Piper Merriam and Ansgar Dietrichs, as well as client teams like Besu and Erigon — stood behind Full EOF. Their reasoning: It’s a clean structural reset, demanded by compiler authors, and backward-compatible for developers preferring the legacy EVM.



Tim Beiko acknowledged the complexity, but noted it emerged from years of iterative work. “We can’t decide not to do something just because it’s complex,” he told participants on the call.



“Long live Full EOF,” cheered Merriam.



So EOF is coming. For developers, the negotiation phase seems over, and the upgrade’s next chapter will focus on implementation and testing.



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EOF moves forward despite dev friction

Paul Atkins, President Donald Trump’s pick to lead the US Securities and Exchange Commission, on Thursday faced questions from lawmakers on his past regulatory stances and business dealings.&nbsp;



Democrats on the Senate Banking Committee were especially interested in hearing about how Atkins, who served as a commissioner at the SEC under former President Bush, felt securities regulators handled market risks before the 2008 financial crisis.&nbsp;



Atkins has historically maintained that the 2008 crash had “many causes,” but “deregulation,” as top Committee Democrat Elizabeth Warren suggested, was not one.&nbsp;



Read more: <a href="https://blockworks.co/news/sec-chair-nominee-crypto-past">What SEC chair nominee Paul Atkins has previously said about crypto</a>



“What really troubles me is that Congress still has yet to address the real root cause, and that was the subprime mortgage crisis,” Atkins added.&nbsp;



Some senators mentioned digital assets, and Atkins himself even took a moment to acknowledge the industry in his prepared remarks at the start of the hearing. He did not however face any specific inquiries about his plans for regulating the asset class.&nbsp;



Atkins hopes to provide “clear rules of the road” for crypto companies, he said. Committee Chair Sen. Tim Scott said he hopes Atkins and Comptroller of the Currency nominee Jonathan Gould work to address unfair discrimination against cryptocurrency firms, particularly when it comes to banking.&nbsp;



Sen. Elizabeth Warren in her opening statement accused Atkins of “helping billionaire CEOs like Sam Bankman-Fried.” She added that his personal business dealings present conflicts of interest she feels he has not adequately addressed.&nbsp;



Atkins, who founded consulting firm Patomak Global Partners after his first stint at the SEC, has a net worth of at least $327 million, according to filings with the Office of Government Ethics. Atkins has said he will sell his stake in the company should he be confirmed, but he did not confirm if he would publicly reveal the details of such a deal.&nbsp;



“No, you&#8217;re not going to tell us how much money you get — to people who will have business in front of the SEC?” Warren wondered in relation to these potential buyers. “You know, some people might call that a pre-bribe.”



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Trump’s SEC pick grilled on past agency actions, conflicts of interest 

Donovan Choy

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



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After about 16 months from when the team first <a href="https://blockworks.co/news/privacy-ethereum-layer-2">announced</a> its roadmap and more than two years of R&amp;D later, COTI launched v2 of its mainnet yesterday.



COTI’s v2 mainnet marks a shift from its DAG (directed acyclic graph)-based protocol L1, launched in 2018, to a new EVM-compatible and privacy-focused L2 chain.



The goal is to gradually migrate user activity from the L1 to the L2 and eventually sunset the L1, COTI CEO Shahaf Bar-Geffen told Blockworks.



The cornerstone of COTI’s new privacy tech on its L2 chain is the use of “garbled circuits,” a kind of cryptography commonly used in multi-party computation (MPC).



Developed in partnership with Soda Labs, garbled circuits allow parties to compute functions over private data inputs that are garbled, i.e., encrypted. This works without revealing the underlying data, similar to zero-knowledge proofs.&nbsp;



“The technology was impractical to implement on the existing L1 due to its lack of smart contracts and DAG structure,” Bar-Geffen said. He explained the team’s shift in focus to an EVM L2, also citing the fact that most users are also on EVM chains.



COTI’s choice not to use zero-knowledge technology may seem like an unusual one, given the prominence of zk usage in the industry for privacy use cases.



But Bar-Geffen believes garbled circuits as a technology are far more efficient than incumbent solutions.&nbsp;



“Garbled circuits are multi-party-computing, whereas zero-knowledge is limited to a 1-to-1 relationship. You cannot build sophisticated applications with multiple users like, for instance, a DEX with zero-knowledge.”



With its privacy tech stack, COTI also plans to target enterprises and institutions with a need for regulatory compliance, what COTI touts as “privacy-on-demand.”



This points to the crypto industry’s desire to bring trillions of real-world assets onchain.



Today, most tokenized RWAs are walled off from the composability of public blockchains.&nbsp;



For instance, BlackRock’s USD Institutional Digital Liquidity (BUIDL) Fund uses a KYC whitelist enforced by its tokenization partner Securitize, though it exists as an ERC-20 token on a public chain like Ethereum. Only qualified investors with pre-approved wallets can hold BUIDL tokens.



Privacy chains like COTI could potentially solve this compliance pain point by allowing institutions to easily build smart contracts on top of its tokenized RWAs, and then choosing how the information around these assets are revealed.



“When transactions are 100% anonymous, that is illegal. But 100% transparency is also not in compliance. What COTI’s technology offers is the selective disclosure that allows institutions to reveal or not reveal exactly what they want, and [which] decides who gets to see what,” Bar-Geffen explained.



COTI’s v2 mainnet is going live with support from ecosystem partners integrating into its chain. Partners include Bancor, Carbon DeFi, Band Protocol, MyEtherWallet and PriveX.



According to COTI’s official <a href="https://cotinetwork.medium.com/coti-mainnet-launch-wrap-up-2f00d0b89f2e">blog</a>, about 15,000 wallets were airdropped COTI tokens to celebrate the launch.



COTI is not the only chain with a privacy focus.&nbsp;



Other similar privacy-focused chains, like the Aztec Network L2 and Aleo L1, are building toward a similar niche within privacy, though both have opted to use zero-knowledge tech rather than garbled circuits.



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COTI launches V2 mainnet: A new era of privacy-focused L2 solutions

Pete Rizzo

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



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Greetings, and <a href="https://x.com/pete_rizzo_/status/1905199552266649871">happy 41st birthday</a> to Ross Ulbricht!



By now, rehashing the Silk Road timeline — from a secret psychedelics lab in an off-the-grid Texas cabin to a global clandestine operation with half a dozen employees — doesn’t seem totally useful.



Besides, long-time Bitcoin History readers have already walked through the events that led to Ulbricht’s dramatic 2013 arrest in a San Francisco public library.



Anyone who missed our email from last year can <a href="https://bitcoinhistorynl.beehiiv.com/p/paid-price-200000-btc?utm_source=bitcoinhistorynl.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=he-paid-the-price-200-000-btc">find it in our archives</a> — it’s definitely still worth the read!



Keep in mind, though: That telling of the story misses its happy ending. It was written before President Trump <a href="https://www.newyorker.com/news/the-lede/why-trump-freed-ross-ulbricht-the-silk-roads-dread-pirate-roberts">pardoned</a> Ulbricht earlier this year, releasing him from a double-life prison sentence after serving nearly a decade.



To celebrate Ulbricht’s first birthday since his release, let’s instead pay homage to the way he integrated bitcoin payments into Silk Road, for reasons that have been largely lost on modern-day crypto.



<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">First birthday in freedom today. Beautiful day grilling by the pool. I&#39;ve been given a new life. It&#39;s like being born again.&mdash; Ross Ulbricht (@RealRossU) <a href="https://twitter.com/RealRossU/status/1905404620878590447?ref_src=twsrc%5Etfw">March 27, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Onto this week’s Bitcoin Legend.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdY_VBTwQDI8dZGPhvQqbQns7ZO-IpZKxOxpWS4bgm8C-M7Qn_X5JOQh70u7NjT_GbB6Cb9rkEYhG7FZ6RzGyltQVe2JbGSnG1ssgThmqLI6K2oCSDfCoP_C7A316Hzu_fYw-v81g?key=v4uBzLAEjvmSTiGzzRF8icXB" alt=""/><figcaption class="wp-element-caption">Silk Road founder Ross Ulbricht | Freeross.org modified by Blockworks</figcaption></figure>



<h2 class="wp-block-heading">No turning back</h2>



Bitcoin was the obvious fit for Silk Road. It uniquely separates global payments from both governmental and corporate control, imbuing the user with financial self-sovereignty that goes beyond real-world cash.&nbsp;



“Every single transaction that takes place outside the nexus of state control is a victory for those individuals taking part in the transaction,” Ulbricht <a href="https://www.forbes.com/sites/andygreenberg/2013/04/29/collected-quotations-of-the-dread-pirate-roberts-founder-of-the-drug-site-silk-road-and-radical-libertarian/">wrote</a> in 2012.



It was bitcoin’s uncontrollable nature that matched his vision: a worthy complement to Silk Road’s hidden existence through Tor.&nbsp;



Ulbricht fully understood that bitcoin transfers are immutable. This property, combined with its pseudonymity, forms the basis for what makes bitcoin so interesting as the currency for underground activity: autonomy.



Applied in the right way — with stringent opsec in mind — bitcoin would enable true freedom of commerce on Silk Road.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc3NOKb1sfJDVeEKdcZQhf3OoTWE43EdMwy16Z35HP_5TUhJYdtilCI-O0vw-_7CyR1d_5q0hMhktvL_uxEAH2PQVGPHyZHrwdinr4VPCgED0qgkaedi51Ch3477qqTubGfTGyAKQ?key=v4uBzLAEjvmSTiGzzRF8icXB" alt=""/><figcaption class="wp-element-caption">Silk Road was active during one of bitcoin’s first great bull runs, but was taken down just before it hit $1,000 for the first time. (Onchain volume = total onchain volume, not just on Silk Road.)</figcaption></figure>



Ulbricht intended the platform “to be about giving people the freedom to make their own choices, to pursue their own happiness, however they individually saw fit,” and not the “convenient way for people to satisfy their drug addictions” it had partly become, as he <a href="https://bitcoinmagazine.com/culture/the-long-and-winding-story-of-silk-road-bitcoins-earliest-major-application">once</a> put it.



Silk Road needed guardrails if it was to solely accept bitcoin for payment. Quality control was crowdsourced via a public review system, and to protect users from fraud, Ulbricht positioned Silk Road as mediator for all transactions on the platform.



That meant escrow. In an automated system, any time a purchase was made, the buyer’s bitcoin payment was temporarily held in a wallet controlled by Silk Road admins, including Ulbricht.



Silk Road then notified the seller that payment was received, and the seller could then proceed with shipment. Once the package arrived on the other side, the buyer would lodge a confirmation on the Silk Road site, after which the bitcoin was released to the seller, who could then withdraw the coins to their own wallets.



Moderators manually handled disputes on a case-by-case basis via a ticker system, similar to how Amazon, eBay and Airbnb operate today.



There’s no question that these processes were riddled with trust assumptions. Both buyers and sellers were required to trust that Silk Road wouldn’t simply vanish with all their bitcoin, and that Silk Road was well equipped to safeguard user funds at all.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcVfTQZJbeeZarnXH4pkN5Zgf-PqRarafAZBsIz84WxnU_-hOG5MTTZMLsKHif57mcJ_LE0FVSpKT0iZ7EXpMWbVPnAt3zkDs66bHRMfe_RqpezValUaTkTDmOHw46h0yM11uz5ag?key=v4uBzLAEjvmSTiGzzRF8icXB" alt=""/><figcaption class="wp-element-caption">This Silk Road payment flowchart was Exhibit 113 A during Ulbricht’s trial</figcaption></figure>



Users also had to believe that moderators would manage disputes appropriately. At times, mods required users to submit potentially-incriminating photographic evidence, including shipping labels and tracking information, which would also need to be protected against leaks and theft.



Regardless, the system worked. By the time the Feds shuttered Silk Road, it had processed 9.5 million BTC in sales — 80% of bitcoin’s circulating supply at the time — and earned 600,000 BTC in commissions, which in September 2013 was <a href="https://web.archive.org/web/20140220003018/https://www.cs.columbia.edu/~smb/UlbrichtCriminalComplaint.pdf">equivalent</a> to $1.2 billion and $80 million, respectively.



Still, Silk Road largely integrated bitcoin in all the right ways. The platform automatically generated a new bitcoin address for every transaction — making them harder to trace. All transactions also took place over Tor, which, when used correctly, can keep IP addresses hidden.



If Silk Road had been built today, maybe it might’ve held escrowed coins in a multisig wallet. At least that would spread some of the trust around. Bitcoin multisigs wouldn’t be <a href="https://en.bitcoin.it/wiki/Pay_to_script_hash#:%7E:text=342ftSRCvFHfCeFFBuz4xwbeqnDw6BGUey%20is%20a%20Bitcoin%20address,good%20example%20to%20understand%20P2SH.">enabled</a> until April 2012 — more than a year after Silk Road first launched.



<h2 class="wp-block-heading">Fit for purpose</h2>



Setting aside those concerns, bitcoin and only bitcoin could do what Ulbricht needed.&nbsp;



This is especially true, considering there were only a <a href="https://coinmarketcap.com/historical/20130428/">handful</a> of alternative cryptocurrencies in Silk Road’s heyday, including Litecoin, Peercoin and Namecoin, all of which had a tiny fraction of bitcoin’s market cap and liquidity.



Let’s say Silk Road was launched on Ethereum in 2025. Perhaps for faster payments, more flexible escrow functionality, or stablecoin support (Silk Road actually allowed users to lock the dollar value of their bitcoin at time of purchase to minimize the impact of price volatility).



If that was the case, hypothetically, <a href="https://blockworks.co/news/ethereum-is-not-under-attack-understanding-mev-boost-relays">one OFAC sanction</a> on Silk Road’s contracts would immediately make it somewhat harder for its transactions to be processed — 31% of all Ethereum blocks right now are <a href="https://www.mevwatch.info/">configured</a> to uphold OFAC directives through censorship. In November, that figure was over 70%.



Not to mention, practically all major stablecoins have in-built functionality that allows their issuers to freeze and confiscate tokens at will, which they regularly do upon request from law enforcement.&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"><a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> price: $12.20 <a href="https://t.co/w3yalprfg6">pic.twitter.com/w3yalprfg6</a>&mdash; The Bitcoin Historian (@pete_rizzo_) <a href="https://twitter.com/pete_rizzo_/status/1862866887899541947?ref_src=twsrc%5Etfw">November 30, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Such features clearly clash with the notion of an independent, libertarian marketplace, regardless of the power held by Ulbricht and the rest of the Silk Road team on the platform.&nbsp;



Silk Road’s legacy is then this: For all the philosophical distance separating “bitcoin” from “crypto” today, the idealistic platform that Ulbricht built was the divergence catalyst. It was a schism point that cracked open the massive fault line now dividing the space.&nbsp;



Through bitcoin, Silk Road undermined the traditional financial system and, even more critically, the entire social order. Ulbricht acted as a freedom maximalist building freedom tech, with none of the cosplay.&nbsp;



It’s a goal far removed from the compliant commerce that stablecoins and their smart contract platforms — which emerged in the wake of Silk Road’s demise — aspire to serve.&nbsp;



Those systems have grown to augment legacy finance rather than free us from it in the ways Ulbricht had hoped.



<h2 class="wp-block-heading">Unexpected results</h2>



Of course, even Bitcoin’s robust censorship resistance was not enough to protect Ulbricht from the US government. The same goes for other Silk Road operators and power users.



In total, more than 144,000 BTC ($26 million then, $12.6 billion today) was seized from wallets initially controlled by Ulbricht, plus an additional 120,000 BTC from two hackers who’d separately stolen bitcoin from Silk Road while it was active.



It’s likely that tens of thousands more coins were seized from Silk Road users in less high-profile cases over the years.



Therein lies the rub. Bitcoin is clearly resistant in digital space, and Ulbricht was brilliant enough to understand that Silk Road could be the very first killer crypto app. In many ways, there’s been no second-best to this day.



The same can’t be said in our physical meatspace. Ulbricht’s coins were literally taken from him by force and <a href="https://jlopp.github.io/us-marshals-bitcoin-auctions/">sold for relative pennies</a> on their current dollar value.



<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">There were no stars in prison. The overhead floodlights drowned them out completely. It was like a 5th wall above, cutting me off from the world. I went far from all the lights last night, laid down on a boulder, and looked up at the stars. No more walls. <a href="https://t.co/9StRTIjt77">pic.twitter.com/9StRTIjt77</a>&mdash; Ross Ulbricht (@RealRossU) <a href="https://twitter.com/RealRossU/status/1902450286469509275?ref_src=twsrc%5Etfw">March 19, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



In turn, the US government response to the Silk Road case has formed the playbook for what’s become the Feds’ strategic bitcoin reserve.&nbsp;



Seized coins may never be sold again, and at this stage, the only way the reserve can get any bigger is for authorities to seize even more coins from even more sovereign individuals, no doubt landing some in prison for a sentence comparable to the time Ulbricht served.



And those coins are only valuable, in part, due to the implicit promise that they can’t be tampered with under normal circumstances.&nbsp;



Nothing can square that irony in any way that’s satisfactory, and when bitcoin does indeed become a boon to the Treasury Department, then it will awkwardly have Ulbricht and Silk Road to thank.



Luckily for Ulbricht, he’s just received a gift far greater than any bitcoin stash — freedom — leading to what I can only imagine is the happiest of 41st birthdays.



To Ross. Bitcoin could never be what it is today without him.



— David



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



<h2 class="wp-block-heading">Rizzo’s take, from the Bitcoin Historian</h2>



“What did you get done this week?” Such was the subject line for Elon Musk’s now infamous emails to the US government, but as David points out above, that same email could be sent to the crypto industry today.



Or I’d imagine that might be Ross Ulbricht’s reaction to his realization this week that <a href="https://x.com/RealRossU/status/1904577765434941886">eBay is slow on verifying his identity</a>, a fact that is momentarily keeping him from auctioning his belongings. Is it real user friction? An elaborate troll? On today’s hyper commercialized internet, where Snoop Dogg might “<a href="https://www.liebertpub.com/doi/10.1089/can.2024.0003#:~:text=On%20November%2016%2C%202023%2C%20the,what%20seemed%20like%20a%20decision">give up smoke</a>” and then sell you a grill, perhaps you can forgive the incredulity. Ross, I would hope, has skipped the web’s descent into a maze of ref-links.



Still, one can’t help but think that Ross might be wondering what bitcoin and crypto have accomplished in his absence, perhaps now more than ever. As the eBay example shows, online commerce frictions remain substantial, despite bitcoin’s initial promise to quell them.



Indeed, there were a host of social commentators who suggested as such, proposing that Ross should relaunch the Silk Road or something like it.



Certainly if there’s someone who could help us chart a course forward, it would be Ross. Far-fetched? Maybe. Then again, so was the idea that any president would pardon him in the first place. If there’s anything I’ve learned in bitcoin, it’s to expect the improbable.&nbsp;



— Rizzo



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<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.</li>
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How Silk Road carved the fault line that separates ‘bitcoin’ and ‘crypto’

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



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Two weeks ago, Solana validators <a href="https://blockworks.co/news/what-simd-0228-failing-means-for-solana">voted down SIMD-0228</a>, a proposal that would have significantly cut network inflation. Still, core Solana stakeholders seem interested in cutting inflation at some point, a prospect that would hurt the bottom line for validators.



Validators run Solana’s software to help add blocks to the blockchain, and they’re paid for the labor partly via inflation. Validators can be pretty much anyone with some pricey hardware and internet access, but in a world of lower SOL inflation, it may become less worthwhile to run a Solana validator for financial reasons. Instead, startups building businesses on Solana can reap unique benefits from running a validator, and some have already taken the leap.



“[We] have seen a big push over the past six months,” InfStones head of global sales Parker Poor said when I asked about Solana-native teams wanting to spin up validators.



The Solana payments business Sphere is one such <a href="https://x.com/0xdirichlet/status/1902359663842058379">example</a>, although it runs its validator nodes itself rather than through a staking provider.



“[SOL] issuance getting cut is probably inevitable,” Sphere CEO Arnold Lee said, but he added that running a validator “would probably still be worth it for distribution and alignment,” even if it failed to turn a profit.&nbsp;



Solana’s <a href="https://blockworks.co/news/lightspeed-newsletter-solana-core-governance">process for protocol governance</a> involves validators voting on proposals based on their share of delegated staked SOL. Solana startups need to run validators if they want a direct say in the future direction of the network.



“[C]ontested votes like [SIMD-228] underscore the strategic importance of having a seat at the table to make these decisions,” Bernat Fages, co-founder of the node operator firm Firstset, said in a text.



Beyond the rare contested vote, running a validator can confer “soft power” on startup teams as well, Lee said. Users who like the startup’s product might delegate some stake, Lee added. Or it could be even simpler than that: “Toly [Solana’s co-founder] will probably want to retweet you if you’re really active in governance.”



A Solana validator’s financial prospects mainly revolve around the validator’s ability to attract stakers. Solana startups with significant distribution can effectively monetize that mindshare with a validator.&nbsp;



The RPC provider Helius is a popular example of this: The company’s CEO (and Lightspeed podcast co-host) Mert Mumtaz is big on Crypto Twitter, which partly helped Helius to become the largest Solana validator based on publicly available <a href="https://solanabeach.io/validators">records</a>. Solana prioritizes network traffic based on stake, so Helius has an incentive to gather more stake to make its RPCs more effective.&nbsp;



Down the line, there are other ways Solana startups could make use of validator operations. Lee offered an interesting thought: Apps could give users perks like lower fees in exchange for staking with the app’s validator, kind of like a Solana-native customer loyalty program.



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<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.</li>
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QuantQNT

Quant Stats

What is the market cap of Quant?

What is the current trading activity of Quant?

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