Ribbit Meme

Katherine Ross

David Canellis

Today, enjoy the Empire newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



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



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



Major exchange listings are milestones for cryptocurrencies: More exposure means more potential liquidity — which should convert to higher prices.



And many times that’s the case. I spent the morning going over new listings on Binance and Coinbase so far this year, and I found that out of the 42 non-stablecoin tokens to hit either platform:



<ul class="wp-block-list">
<li>About 80% rose more than 10% at some point since their announcements. </li>



<li>Nearly half surged by more than 50%.</li>



<li>Almost 30% more than doubled.</li>
</ul>



Granted, not all of the tokens newly supported by Binance and Coinbase this year were already trading elsewhere. Around 35% — 15 tokens — were either listed or announced to be listed on the same day as their initial launches. Whatever effect listings had on those particular tokens is harder to gauge.



Tracking each freshly-listed tokens from their initial support until today however shows that it’s quite tough for debutants to hold onto bumps associated with Coinbase and Binance listings.



Only 12 out of the 42 (~29%) have gained value since they reached either exchange — but three of those are memecoins NEIRO, TURBO and BABYDOGE, which Binance listed today, triggering pumps of between 15% and 60%.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcNFH_sG7Snqs3oPIiGGZJgpDI9Dc26CzDbO1LwfQqzKUEC-hNJCazb2YJQq-4tvCegLuLK8f0HjToJR_BGo2VIFukSAlwqqgs7r9yRyXiaddFi-z6AFMn0Hdc_FHhBx_Bk-CEgDG3ZiDYriL_9bEghf1Q5?key=ug-FmIx4Khb-dkSwXae9aw" alt=""/><figcaption class="wp-element-caption">Two outliers were removed: AERO and BOME rallied 4,500% and 1,060%, respectively, and would dwarf the others. They’ve since come down to 1,330% and 250%.</figcaption></figure>



The chart above shows how this year’s Binance and Coinbase listings have trended.&nbsp;



The green dots indicate the peak returns for each token following their support by either exchange — how much each crypto rallied at some point after the announcement — while the purple dot shows its return as of this morning.



Notice how many purple dots are in the red area representing negative returns since their listings were first announced. Around 38%, or 16, of the new listings have seen their prices collapse by more than half.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeyFUUIDn2xgA-d6uO7v07LGkquQbx4637ZrrqKs4gH3TG_w09JGaXJeACvR8MkSbLHKKhl1MKk_oVe1knJ1OQlrNJXI17baqImTl_vsnFCpHZHdTuPcnEoIWwoPg7EwGxcUWgU-dj5i97GDb0ZNwr6zl1Z?key=ug-FmIx4Khb-dkSwXae9aw" alt=""/><figcaption class="wp-element-caption">Again not shown: AERO</figcaption></figure>



Of course, there are successes. RWA-focused Ondo Finance has seen its token explode by up to 560% following its Coinbase listing in January, and it’s still up 180% after a correction.&nbsp;



AMM Velodrome also popped by over 500% before retracing to be 240% ahead since its listing that month.



Still, the results suggest major listings are a double-edged sword, especially at times when it’s not so clear whether bitcoin and the rest of crypto is really in a bull market.



Binance and Coinbase could be good for a short-term price bump, but sticking the landing is rare.



— David Canellis



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



<ul class="wp-block-list">
<li>BTC and ETH have slipped 2% and 4% apiece over the past day. ($BTC: $58,760; ETH: $2,310.)</li>



<li>Only two <a href="https://www.coingecko.com/">top-100</a> tokens are up more than 1%: FTM (2.7%) and TRX (1.6%).</li>



<li>HNT, NOT and BTT are retracing the hardest this week, down between 12% and 6.7%.</li>



<li>TON’s total value <a href="https://defillama.com/chain/TON?currency=TON">locked</a> has bounced 25% since Telegram CEO Durov’s release on bail, from 57.4 million TON ($315.7 million) to 71.71 million TON ($394.35 million).</li>



<li>Solana and Bitcoin are neck-and-neck for fees generated in the past 30 days: $19.363 million to $19.265 million, per <a href="https://tokenterminal.com/terminal/metrics/fees?v=YjNmNTA3YTZmZjc3YWU4NjhkZWRjYWEx">Token Terminal</a>.</li>
</ul>



<h2 class="wp-block-heading">HODLing patterns</h2>



Prediction markets continue to notch some wins. Polymarket, as of this morning, is looking poised to potentially hit a $1 billion market for its US election outcome.&nbsp;



Right now, the <a href="https://polymarket.com/event/presidential-election-winner-2024?tid=1726485021891">market sits at $920</a> million, so we’re still $80 million shy of the big B. Though, at this rate, it wouldn’t be surprising if that milestone is crossed ahead of the election.&nbsp;



While FBI investigations are ongoing, folks are digesting the <a href="https://www.washingtonpost.com/politics/2024/09/16/trump-potential-assassination-attempt-fbi-news-updates/">apparent assassination attempt</a> on former President Donald Trump — which would be the second in a matter of months — and it’s driving a deluge of comments on Polymarket early Monday.



Per the market, Vice President Kamala Harris is in the lead with a very slim margin, 50% to Trump’s 49%.&nbsp;



But as Polymarket sees more adoption, the rest of crypto is struggling. After the bounce last week, bitcoin once again fell over the weekend, from $60,200 to as low as $58,300 this morning.



Total liquidations, per CoinGlass, topped $178 million over the past day — 85% of them coming from long positions.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXen2B-s9MWNvzAoxIyi2IntW5elZCba04JT60WqBK7lPzzSOdItnRrPGRu1mkmhBsjBEVdVPG-i96nlXh_l5RM-KLqd9hd7WxGJ7EIdCzXZY_EJ0OiUSNFrkm9bWppUZ4ErAgeXxYn7cl5-8sISxXACOp3T?key=ug-FmIx4Khb-dkSwXae9aw" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://www.coinglass.com/LiquidationData">CoinGlass</a></figcaption></figure>



“I think the entire market is holding its breath and waiting for November to see which way it&#8217;ll go. We really have no idea…It looks like a coin toss right now. So I think that&#8217;s why crypto has been trading sideways for months, and I think nothing will change until November,” Nic Carter of Castle Island Ventures told me last week.



“If Trump wins, you&#8217;ll see Bitcoin into the $80,000 [to $100,000] range. If Harris wins, [it’s] basically unchanged. It really also depends how the Senate goes. It&#8217;s very hard to talk about crypto, even in any aspect of crypto, whether it&#8217;s Bitcoin, early-stage startups, or DeFi [because] it all hinges on the election, which is unfortunate. I wish it was not that way, but that&#8217;s very much the case.”



ETC Group noted this morning that its Cryptoasset Sentiment Index continued to be slightly bearish, though there were some outperformers last week.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd21aV5SJ6ETGYwUcUfUbNBfnuo3qScsFWAHqi82GfHoIK9gm6-Yjv0HdGBMTReoqYyvwDcZu4D14drng2NZa9Qz3w1ezbq12mVWG7e7RrVgoro8rStd7r0RJokXRhBm0TR3930fLef5yhHhyCfuX8Awhg?key=ug-FmIx4Khb-dkSwXae9aw" alt=""/><figcaption class="wp-element-caption">Source: ETC Group</figcaption></figure>



But back to bitcoin: here are some levels to watch this week.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcH4_fAglF-42S3RpIFP9CdSrOdYn6jSZxEtzGlkSlTDQPl-hmzeQ4kyXYOiNuFB8mEVFtahJ8HwRtJzP_017Le-ng71gTzPvlY0flME6byDFGa8LKjg3qQU6u1acnsF-Duwjhi_0KiVPGH4v91ti3XyTs?key=ug-FmIx4Khb-dkSwXae9aw" alt=""/><figcaption class="wp-element-caption">Source: Ledn</figcaption></figure>



“We remain within the flag pattern (blue lines) which is defining wave (4) (yellow line) of larger Wave III (orange line). The longer this flag pattern continues the greater the potential that this becomes a ‘failed flag’ and bitcoin prices fall through the bottom of the channel,” Ledn’s John Glover noted. $49,000 continues to be the level to be wary of.&nbsp;



So, we continue to hold in the ‘wait and see’ pattern, which has paralyzed parts of crypto. Let’s just hope we see a bit more action before November.&nbsp;



— Katherine Ross



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



<ul class="wp-block-list">
<li>A looming rate cut cycle could revitalize DeFi lending markets, <a href="https://www.theblock.co/post/316552/defi-yields-us-rate-cuts-bernstein?utm_source=rss&amp;utm_medium=rss">according</a> to Bernstein. </li>



<li>Wall Street companies continue to eye the custody sector, Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-09-14/guarding-crypto-is-a-lucrative-business-and-wall-street-wants-in">reported</a>.</li>



<li>MicroStrategy made a $1.1 billion bitcoin <a href="https://www.bloomberg.com/news/articles/2024-09-13/microstrategy-buys-about-1-11-billion-more-in-bitcoin">purchase</a> between August and September. </li>



<li>A private key hack drained DeltaPrime of $6 million, CoinDesk <a href="https://www.coindesk.com/markets/2024/09/16/crypto-broker-deltaprime-drained-of-over-6m-amid-apparent-private-key-leak/?utm_medium=referral&amp;utm_source=rss&amp;utm_campaign=headlines">reported</a>. </li>



<li>The Donald Trump-linked project World Liberty Financial is <a href="https://www.nytimes.com/2024/09/13/technology/donald-trump-cryptocurrency-business.html">set</a> for a debut today.</li>
</ul>



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



Q: &#8220;Is all adoption good adoption&#8221;?



Now this is something that will divide folks.&nbsp;



I can see arguments for and against, honestly so perhaps I fall somewhere in the middle.&nbsp;



I think most adoption is good, given that it increases the eyes and usability of this space. But with that comes bad actors and folks who just don’t get crypto, and that’s where it gets tricky.&nbsp;



It’s a fine line to strike a delicate balance. But those who understand crypto and push adoption for the good of many — instead of the pockets of few — are the ones that encompass “good” adoption.&nbsp;



Or, to put it simply, those who get it, get it. And, honestly, we should celebrate the ones that do.



— Katherine Ross



There are obvious edge cases where adoption is probably a net negative.&nbsp;



Pig-butcherers choosing tether as their currency of choice is likely pure bad. Exit scammers peddling DeFi vaporware are too.&nbsp;



In some instances, it’s not so clear. Ransomware hackers demanding bitcoin and only bitcoin is bad publicity for the space for sure.



But that ransomware hackers adopted bitcoin so widely and readily in turn says something about the asset itself. Cybercriminals on the world stage trusted that the bitcoin milked from their targets could not be clawed back — giving validity to its primary value prop of censorship resistance.&nbsp;



Those major ransomware incidents could be seen as advertisements for bitcoin, albeit unsavory.&nbsp;



All adoption might not be good adoption, but it can still prove a point. Donald Trump and his team can launch a DeFi project because nobody can really stop him — which is why we’re all here, to some degree.



— David Canellis



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Major exchange listings may not be so bullish after all

If it feels like Andreessen Horowitz (a16z) has been dominating crypto venture funding recently, there&#8217;s a reason.



This week, a16z announced the latest cohort for its Crypto Startup Accelerator (CSX), featuring 21 startups from around the world. The projects focus on everything from AI to layer-1 solutions, and are all set to converge in New York.



<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">I’m excited to announce the 21 startups we’ve selected to join our Crypto Startup Accelerator (CSX) Fall 2024 cohort, which starts this week. Over the next 8 weeks, they’ll get firsthand lessons from top crypto founders, receive guidance and support from <a href="https://twitter.com/a16zcrypto?ref_src=twsrc%5Etfw">@a16zcrypto</a>’s investing… <a href="https://t.co/KEwcgo93o6">pic.twitter.com/KEwcgo93o6</a>&mdash; Jason Rosenthal (@jasonrosenthal) <a href="https://twitter.com/jasonrosenthal/status/1833180707721453906?ref_src=twsrc%5Etfw">September 9, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



I want to talk about just two of the 21 this weekend. I’m highlighting PIN AI, which also announced a $10 million pre-seed round. The project plans to launch an open platform for personal AI.&nbsp;



Read more: <a href="https://blockworks.co/news/a16z-backs-storys-80m-raise">Funding Roundup: a16z backs Story’s $80M raise</a>



“PIN AI converges AI and crypto in meaningful ways, offering a privacy-focused, on-device <a href="https://blockworks.co/tag/artificial-intelligence">AI</a> assistant that democratizes on-device intelligence for all of us,” the project’s post said.



A16z, of course, took part in the round. Hack VC, Foresight Ventures and Nomad Capital were among other investors.&nbsp;&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">We are excited to announce that PIN AI has raised $10M in pre-seed funding to launch the world&#39;s first Open Platform for Personal AI. PIN AI converges AI and Crypto in meaningful ways, offering a privacy-focused, on-device AI assistant that democratizes on-device intelligence… <a href="https://t.co/zaqgizisKc">pic.twitter.com/zaqgizisKc</a>&mdash; PIN AI (@PINAI_IO) <a href="https://twitter.com/PINAI_IO/status/1833176031714541651?ref_src=twsrc%5Etfw">September 9, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Another one on Startup Accelerator’s list is Blocksense, which announced a $4 million raise.



The project’s goal is “redefining decentralized data infrastructure.”



Permutation led the round, with Tykhe Block Ventures and others participating in the pre-seed round.&nbsp;



“Blocksense’s approach to oracle solutions is poised to dismantle the monopolistic structures currently dominating the industry. By leveraging cutting-edge zero-knowledge cryptography, Blocksense offers an unmatched combination of cost efficiency, scalability and security,” Blocksense said in a press release.



<h2 class="wp-block-heading">Other notable rounds:</h2>



<ul class="wp-block-list">
<li>DRiP <a href="https://blockworks.co/news/lightspeed-newsletter-drip-seed-raise-nfts">said it raised $8 million</a> in seed funding. NFX led the round, with participation from Coinbase Ventures and Progression.</li>



<li>IN1, a fintech startup which focuses on both fiat and crypto, said it raised $6 million in a seed round. Brainstorm was disclosed as one of the investors in the round.</li>



<li>Fountain <a href="https://fountainplatform.substack.com/p/fountain-announces-35m-seed-round">announced</a> a $3.5 million seed round. Foundation Capital, Primal Capital and Druid Ventures all took part in the round.</li>



<li>Real-world asset tokenization platform OpenEden <a href="https://medium.com/@openeden/binance-labs-invests-in-openeden-e39b1cfbc1e4">announced</a> it received an investment from Binance Labs. The amount wasn’t disclosed.</li>
</ul>



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



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Funding Roundup: a16z announces Crypto Startup Accelerator participants

Ben Strack

Hadley Stern, the former founding president of Fidelity Digital Assets, has joined Marinade, a staking marketplace protocol built on Solana, as its chief commercial officer.



Stern&#8217;s career spans key roles, including leading Amazon Web Services&#8217; innovation lab and serving as global head of digital asset custody at BNY Mellon. The hire comes as Marinade — serving roughly 100,000 users with more than 10 million SOL — is partnering with custodians Copper and Zodia Custody to bring security and regulatory compliance.&nbsp;



“Marinade&#8217;s unique <a href="https://blockworks.co/tag/staking">staking</a> marketplace model is the best solution for validators, the Solana blockchain, and now, with Marinade Native, for institutions,” Stern said in a statement. “It is the model for how DeFi will become the standard system for financial services and I&#8217;m thrilled to further contribute to this case with my expertise.”



Read more: <a href="https://blockworks.co/news/lightspeed-newsletter-stake-auction-marketplace">Marinade V2 introduces stake auction marketplace</a>



Also this week, crypto exchange Bybit brought aboard Chris Aruliah to lead its institutional team, the company said Thursday. The move comes in a bid to “meet the evolving demands of sophisticated clients.”



Aruliah will oversee efforts to attract and service institutional clients such as hedge funds, asset managers, brokers, market makers and family offices, ByBit added.



The executive was most recently a managing director at Wincent, a crypto investment fund that also offers OTC services.&nbsp;



Aruliah also previously held leadership stints — as chief product officer and chief commercial officer — at payment account and trading services provider BCB Group. Prior to that, he was head of business development at crypto exchange Bitstamp.&nbsp;



Speaking of hiring, Congress’s Committees on the judiciary, financial services and oversight and accountability are investigating whether or not the Securities and Exchange Commission is hiring civil service employees “based on their political affiliations,” according to a Tuesday <a href="https://x.com/EleanorTerrett/status/1834210398842581351/photo/1">letter</a> to SEC Chair Gary Gensler.&nbsp;



In the letter, US House Reps. Jim Jordan, James Comer and Patrick McHenry cite the agency’s decision to hire Dr. Haoxiang Zhu as the its director of trading markets. They point to an email from Zhu saying he was “in the right place on the political spectrum” six months before he was hired.&nbsp;



“If these allegations are true, the SEC is violating the Civil Service Reform Act to fill the agency with employees who possess a particular ideology, which undermines the SEC’s purported impartiality,” the House Republicans wrote.



An SEC spokesperson told Blockworks: “Chair Gensler will respond to members of Congress directly.”



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



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



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Crypto Hiring: Ex-Fidelity exec joins Solana-based staking protocol

Donovan Choy

The SocialFi network friend.tech has taken a significant step this week, and appears to have abandoned further development of its once-popular platform.



On Monday, friend.tech <a href="https://x.com/friendtech/status/1832581118165709140">announced</a> it was transferring the administrative and ownership rights of the platform’s code to a null address. This effectively makes any future changes to fee rates or functionalities impossible.



Though friend.tech will continue to exist on the Base blockchain, this move is being interpreted by <a href="https://x.com/flippen6485/status/1833261855462330677">community members</a> on X as a lack of desire to continue maintaining the project.



The SocialFi platform first launched on Aug. 10, 2023. It subsequently undertook an unprecedented 100% community allocation of FRIEND tokens to users in May 2024, in contrast to most projects where a certain percentage of tokens are set aside for early investors.&nbsp;



Post-airdrop, FRIEND reached a peak of $2.86 but has since cratered to $0.09. Even with the introduction of new features in a v2 update, including social clubs, the platform has struggled to revive trading volumes, which <a href="https://dune.com/queries/2844757/4753456">reached</a> multi-million dollar <a href="https://blockworks.co/news/friend-tech-copycats">figures last September</a>.



<a href="https://blockworks.co/tag/friend.tech">Friend.tech</a> has generated about $22.3 million in protocol fees, according to <a href="https://dune.com/cryptokoryo/friendtech">Dune</a>.



<h2 class="wp-block-heading">Osmosis goes cross-chain with Polaris portal</h2>



Osmosis DEX <a href="https://x.com/sunnya97/status/1833854372607824199">unveiled</a> its latest product on Wednesday: Polaris, a cross-chain DEX aggregator.



Polaris wants to address the persistent problem of liquidity fragmentation — or the “Great Chain Divide” as Osmosis co-founder Sunny Aggarwal calls it – by letting users trade any asset from any chain with their existing wallets.



Unlike liquidity aggregators, Polaris simplifies cross-chain trading by offering a streamlined interface powered by multiparty computation (MPC) technology. This interface <a href="https://x.com/Polaris_App/status/1833845907168620978">handles</a> complex processes like token conversion, bridging, approvals and gas token acquisition — all from users&#8217; existing wallets.



“Osmosis is the foundation” and “our mission is to build the Interchain DEX,” Aggarwal <a href="https://x.com/sunnya97/status/1833854374604349703">tweeted</a>.



This move marks a notable change in Osmosis’ longstanding strategic focus within the Cosmos ecosystem.



The product will be officially revealed next week at Solana Breakpoint 2024 in Singapore.



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



<ul class="wp-block-list">
<li>Stablecoins volume make up about 70-80% of all value that is being settled on public blockchains in 2024, according to research from <a href="https://x.com/artemis__xyz/status/1834226475916296527">Artemis</a>.</li>
</ul>



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



<ul class="wp-block-list">
<li>In partnership with interoperability platform Wormhole, <a href="https://x.com/worldcoin/status/1834577701182566472">Worldcoin</a> is bringing World ID integration to Solana.</li>



<li>The Azuki NFT project is <a href="https://x.com/ZAGABOND/status/1834397475945504774">introducing</a> Anime.com, where fans and creators can co-create and share in co-ownership of anime intellectual property on “AnimeChain.”</li>



<li>ENS addresses are now <a href="https://x.com/ensdomains/status/1833536140529570039?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1833536140529570039%7Ctwgr%5Ee063d37346302dc8d5b17b867e0053918034ba6e%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fopensea.io%2Fblog%2Farticles%2Fopensea-digest-september-12-2024">supported</a> on PayPal and Venmo for crypto payments.</li>



<li>The L2 gaming chain Immutable is <a href="https://x.com/Portalcoin/status/1831015526358827181">partnering</a> with Web3 distribution platform Portal.</li>



<li>Wrapped bitcoin players make big moves: Coinbase <a href="https://blockworks.co/news/coinbase-wrapped-bitcoin-competitor-cbbtc">launched its own tokenized bitcoin cbBTC</a>, and BitGo is <a href="https://blockworks.co/news/layerzero-interoperability-provider-bitgo-wbtc">taking its WBTC product cross-chain</a> with LayerZero’s OmniChain Fungible Token (OFT) standard.</li>



<li>Onchain voting for DAOs level up: Snapshot leveraged Starknet to <a href="https://blockworks.co/news/cheaper-onchain-voting-snapshot-starknet">launch its new onchain voting protocol</a> Snapshot X, while Aragon leveraged ZKSync’s native account abstraction and LayerZero relays for its new cross-chain voting <a href="https://x.com/AragonProject/status/1834241399283482688">solution</a>.</li>
</ul>



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



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



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Web3 Watch: Friend.tech team steps back, relinquishing control of platform

Casey Wagner

FTX founder Sam Bankman-Fried filed an appeal Friday afternoon to overturn his fraud and conspiracy conviction.&nbsp;



His attorneys argue in the 102-page filing that presiding Judge Lewis Kaplan’s rulings prevented Bankman-Fried from contributing to his defense and deprived him of a fair trial.



“Fair trial principles were swept away in a ‘Sentence first-verdict afterwards’ tsunami, as everyone rushed to judgment following FTX’s collapse,” Alexandra Shapiro, who joined Bankman-Fried’s defense team after his conviction, wrote. “Sam Bankman-Fried was never presumed innocent. He was presumed guilty — before he was even charged.”&nbsp;



Read more from our opinion section: <a href="https://blockworks.co/news/sam-bankman-fried-charitable-facade">‘Cryptomania’ reveals the true cost of SBF’s charitable facade</a>



Because the court ruled that Bankman-Fried’s intent to steal the funds was “immaterial,” Shapiro added, the defense was unable to present “evidence that FTX and Alameda” were “solvent.”&nbsp;



“But whether evidence was ‘material’ apparently depended on who was offering it, because the district court simultaneously allowed the government to offer evidence of loss,” Shapiro wrote. “The government thus presented a false narrative that FTX’s customers, lenders, and investors had permanently lost their money.”



These limitations on evidence resulted in the jury only seeing “half the picture,” Shapiro added.&nbsp;



<a href="https://blockworks.co/tag/sam-bankman-fried">Bankman-Fried</a>, who was <a href="https://blockworks.co/news/sam-bankman-fried-found-guilty">convicted last fall for his role in FTX’s collapse</a>, is currently serving a 25-year sentence in prison. He initially indicated his intention to appeal the conviction in April.&nbsp;



The filing comes as Bankman-Fried’s former romantic and business partner <a href="https://blockworks.co/tag/caroline-ellison">Caroline Ellison</a> — who <a href="https://blockworks.co/news/caroline-ellison-testimony-hidden-gems">testified as a government witness</a> during the trial last fall — is scheduled to be sentenced this month.&nbsp;



Ellison’s attorneys this week asked the court for no prison time, citing her “extraordinary cooperation” with prosecutors during and ahead of Bankman-Fried’s trial. Ellison’s role in the crimes was a result of her “warped” moral sense due to Bankman-Fried’s influence.&nbsp;



“Bankman-Fried convinced her to stay, telling her she was essential to the survival of the business, and that he loved her,” her attorneys wrote in their sentencing memo.&nbsp;



At the same time, the memo adds, Bankman-Fried was “perversely demonstrating that he considered her not good enough to be seen in public with him at high-profile events.”&nbsp;



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Sam Bankman-Fried files appeal in fraud, conspiracy case 

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Welcome to the On the Margin Newsletter, brought to you by Ben Strack and Casey Wagner.Here’s what you’ll find in today’s edition:



<ul class="wp-block-list">
<li>A look at where we stand headed into next week’s Federal Reserve interest rate decision. </li>



<li>Bitcoin ETFs have been on the US market for 8 months. Let’s look at the numbers to see how they’re doing. </li>



<li>Happy Friday! We break down some economic data from this week. </li>
</ul>



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



<h2 class="wp-block-heading">Anyone have a Magic 8 Ball?&nbsp;</h2>



The countdown to the Fed’s next interest rate decision is on. Markets, meanwhile, are showing some new uncertainty.&nbsp;



On Friday morning, federal funds futures showed a 45% chance of a 50-basis point cut next week — up from around 18% on Thursday morning.&nbsp;



What changed?&nbsp;



Well, for starters, Chair Timiraos (Nick from the WSJ) published a <a href="https://www.wsj.com/economy/central-banking/fed-interest-rate-cut-size-861c9600">report</a> yesterday afternoon claiming that FOMC members are still debating whether to cut rates by 25bps or 50bps.&nbsp;



Initial jobless claims on Thursday also showed that the labor market may be tightening. First-time unemployment filers increased by 2,000 to 230,000 in the week ended Aug. 31 and continuing claims also saw a bump, coming in at 1.85 million.&nbsp;



Hiring in June and July was also weaker than we initially thought, thanks to revisions made in August’s jobs report.&nbsp;&nbsp;



Fed Chair Powell has made it clear that he hopes to time rate cuts to avoid additional job market deterioration, but he still hasn’t given any hints about the size of the upcoming cut, or just how bad the labor market would have to get to warrant a more aggressive cut (50bps)



“​​We do not seek or welcome further cooling in labor market conditions,” <a href="https://blockworks.co/news/on-the-margin-newsletter-powell-pivot-dovish">Powell said last month </a>in Jackson Hole.&nbsp;



It’s generally accepted that should the Fed go for a 50bps cut next week, it means the central bank is worried about the economy, and in turn, markets will slump.&nbsp;



As Nicholas Colas, founder of DataTrek Research, wrote this week, the Fed has made an initial 50bps cut twice since 1990: once in January 2001 and again in September 2007. Both of these preceded a recession (the 2001 dot com bubble-fueled downturn kicked off in March 2001 and the Great Recession started in December 2007).&nbsp;



Two data points may not be a ton to go off of, but I found Nick’s case pretty compelling. Afterall, Powell and the FOMC are certainly hyper-aware of the history here.&nbsp;



We will also get central bankers’ quarterly economic projections next week, which will reveal how many rate cuts committee members anticipate before the end of the year. We only have three meetings left: next week, November and December. Even if the committee opts for 25bps in September, this doesn’t mean a larger move is off the table down the line, especially if economic data continues to come in lackluster.&nbsp;



Either way, next week is likely going to be volatile leading up to Wednesday afternoon (and probably after, too). Get some rest this weekend and unplug, we will see you on Monday.&nbsp;



— Casey Wagner



<h3 class="wp-block-heading">$0.58&nbsp;</h3>



The price XRP hit on Thursday following Grayscale’s announcement that <a href="https://blockworks.co/news/on-the-margin-newsletter-bear-market-vibes">it would add an XRP Trust</a> to its product suite.&nbsp;



Ripple’s native token gained as much as 9% yesterday, and while $0.58 may not seem like much, it’s the first positive movement the coin has seen in weeks.&nbsp;



As Ben covered yesterday, you shouldn’t hold your breath for an XRP ETF any time soon. Although based on these market moves, that’s what the XRP army appears to be doing.&nbsp;



<h2 class="wp-block-heading">A look at bitcoin ETF flows by month</h2>



Wednesday marked eight months since the ETFs holding BTC directly launched in the US.&nbsp;



We know the roughly $17 billion of capital that has poured into these new products is unprecedented. We also realize the ETFs have recently gone through a rough patch of outflows (totaling about $1.2 billion from Aug. 27 to Sept. 6).



Perhaps it’s a good time to tally up the segment’s net flows by month using Farside Investors <a href="https://farside.co.uk/bitcoin-etf-flow-all-data/">data</a> (shown in $ millions). January and September are not full months, so consider that as you digest this data.&nbsp;



<figure class="wp-block-table"><table class="has-fixed-layout"><tbody><tr><td>Month</td><td>ETF Category Net Flows (millions $)</td></tr><tr><td>January</td><td>+1,460 </td></tr><tr><td>February</td><td>+6,063</td></tr><tr><td>March</td><td>+4,637</td></tr><tr><td>April</td><td>-345</td></tr><tr><td>May</td><td>+2,073</td></tr><tr><td>June</td><td>+667</td></tr><tr><td>July</td><td>+3,169</td></tr><tr><td>August</td><td>-92</td></tr><tr><td>September (so far)</td><td>-604</td></tr></tbody></table></figure>



Though April and August have been the only full negative net flow months thus far, the funds have so far endured more outflows in September than those periods.



We’ve heard September is historically a <a href="https://x.com/intangiblecoins/status/1830969167757091002">bad month for bitcoin</a> (and for <a href="https://www.finsyn.com/why-is-september-the-worst-month-for-the-stock-market/">the stock market</a>, which BTC is increasingly linked to).



Franklin Templeton’s Christopher Jensen <a href="https://blockworks.co/news/franklin-templeton-institutional-bitcoin-etf-allocation">told Blockworks in the midst of April outflows</a> that the spot bitcoin ETF flows weren’t done. He was right of course, as the next three months saw net money pour in.



Platforms and institutions interested in the asset class continue to educate themselves, he noted — adding: “You’re in the whale-hunting business rather than just opening it up and letting lots of small fish come in.”



To that point, Bitwise research director Ryan Rasmussen said in a Thursday X <a href="https://x.com/RasterlyRock/status/1834248148409352247">post</a> that a registered investment adviser (RIA) confirmed they’re adding a 6% allocation to crypto ETFs to their model portfolios (4% BTC and 2% ETH).



Rasmussen declined to name the RIA, but told me they are based in the US and manage more than $250 million in assets.&nbsp;&nbsp;



“Oh, and they sold the Nasdaq 100 (tech stocks) to buy Ethereum,” he added on X.



More money managers are likely to do the same over time <a href="https://blockworks.co/news/education-required-to-spur-eth-etf-outflows">as they learn more about BTC</a> and ETH. That’s why those bullish on the long-term growth of such investment products — or simply familiar with ETF flow patterns — don’t sweat short-term outflows.&nbsp;&nbsp;



— Ben Strack&nbsp;



<h2 class="wp-block-heading">Did You Notice</h2>



Happy Friday! We’ve made it to the end of the last week ahead of the Fed’s next FOMC meeting. Unfortunately, we are headed into next week as uncertain as ever.&nbsp;



Given Powell’s general goal to never surprise the market, it’s possible we may get some signaling from the central bank head on Monday ahead of the two-day policy meeting. So keep your eyes and ears open.&nbsp;



For now though, here’s a recap of this week’s data:&nbsp;



<ul class="wp-block-list">
<li>The headline figure this week was, of course, <a href="https://blockworks.co/news/on-the-margin-newsletter-cpi-outlook-rate-cut">the CPI print</a>. As we covered on Wednesday, the reading came in mostly in line with expectations, not hot enough to guarantee a 50bps rate cut and certainly not cool enough to change any expectations that we’ll be getting at minimum a 25bps cut. Markets have since recovered from their mild dip on Wednesday and even pared losses. The S&amp;P 500 and Nasdaq Composite are poised to end the week 4% and 5% higher, respectively. </li>



<li>Initial jobless claims inched higher for the first time in three weeks on Thursday. 230,000 people filed for unemployment for the first time in the week ended Aug. 31, up 2,000 from the week prior. Continuing claims also increased to 1.85 million. A weakening labor market is a tick in the “the Fed will cut rates by 50bps” column, but there’s one caveat to remember: Claims data is historically volatile around holidays, and this latest batch of data included the Labor Day long weekend. </li>
</ul>



<h2 class="wp-block-heading">Bulletin Board&nbsp;</h2>



<ul class="wp-block-list">
<li>Coinbase’s <a href="https://blockworks.co/news/coinbase-wrapped-bitcoin-competitor-cbbtc">new wrapped bitcoin token, cbBTC</a> has reached a <a href="https://dune.com/seoul/cbbtc">market cap</a> of more than $100 million in its first day of trading. The current circulating supply is around 1,700, with 42% on Coinbase’s own Base and 58% on Ethereum. </li>



<li>Caroline Ellison, <a href="https://blockworks.co/news/iconic-crypto-couples-valentines-day">SBF’s former girlfriend</a> and CEO of Alameda Research, has been spending her time volunteering and writing (both academic works and pieces of fiction), her lawyers told the <a href="https://www.courtlistener.com/docket/66631291/497/united-states-v-bankman-fried/">court</a> this week. Ellison will be sentenced <a href="https://blockworks.co/news/former-ftx-execs-sentenced-this-fall">for her role in FTX’s collapse</a> on Sept. 24. She’s asking for no prison time. </li>



<li>It’s Friday, so you know what that means! Another weekly roundup episode of On the Margin is coming to your podcast <a href="https://www.youtube.com/playlist?list=PLvER9nHSRN3xVs_p-dl7L7K_ZgL6lSudu">channels</a> soon. Tune in tomorrow morning to start your weekend off right. </li>
</ul>



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The interest rate decision countdown is on

Jack Kubinec

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Regolith Labs, the software company that spun out of the viral ORE project, has raised $3 million in seed funding, it told Lightspeed exclusively.



Foundation Capital led the round, which also drew participation from Colosseum, Solana Ventures, B+J Studios, Third Kind Ventures and Dead King Ventures. With the fresh funds, the three-person startup will aim to expand its experimental proof-of-work currency while also building a PoW token distribution platform.



Interestingly, Regolith investors did not receive any ORE tokens due to the project’s fair launch, anti-pre mine ethos. Tokens — which crypto venture investors tend to favor for their shorter lockup periods and guarantee of a return regardless of whether a company pulls off an IPO — were not entirely absent from the round however: Investors received equity and warrants for a theoretical future token Regolith Labs could launch, perhaps in connection with its token distribution platform. This platform could use proof-of-work to help token airdrops fend off sybil attacks and spam, something that’s <a href="https://blog.torproject.org/introducing-proof-of-work-defense-for-onion-services/">done</a> for Tor’s Onion browser, for instance.



For now though, Regolith is turning its attention to ORE, which is a Solana-based currency that users can “mine” through proof-of-work (though it doesn’t have the security properties of Bitcoin, I should note). The project began as part of a Colosseum hackathon earlier this year, and speculation-driven mining <a href="https://blockworks.co/news/solana-price-falls-ore-mining">caused congestion on Solana</a> until ORE eventually paused operations for months.&nbsp;



As a side note, ORE’s origin story has come somewhat full circle: After being crowned grand champion of Colosseum’s first hackathon, Hardhat Chad has become a judge of the second one, and ORE has a “<a href="https://x.com/OREsupply/status/1830617592647860244?t=2LhaX3aIDdR0eOjitnJJ-A&amp;s=09&amp;ref=blog.colosseum.org">sidetrack</a>” for developers building in its ecosystem.&nbsp;



The much-hyped ORE v2 <a href="https://blockworks.co/news/lightspeed-newsletter-solana-ore-v2-review">went live in early August</a>, but a lack of compelling reasons to hold the token caused some pretty brutal price action: ORE’s price peaked at roughly $1,200 on July 29. Today, it’s trading at around $63. Regolith Labs is looking to reverse those fortunes.&nbsp;



ORE’s founder Hardhat Chad (anonymous, in a subtle homage to Bitcoin’s Satoshi Nakamoto) called the price slide “unfortunate” though “maybe somewhat expected” and said the project is seeking to expand its distribution in the short term by building out a mobile wallet with ORE mining baked directly inside. Today, users who want to mine ORE on their phones, for example, have to do so through the mobile browser on the Backpack wallet app, which leads to a somewhat clunky UX. ORE is hoping to hire more developers, one of whom would be a mobile dev, Hardhat Chad told me.



With ORE’s price sliding so dramatically, more-sophisticated miners are also winding down operations, Hardhat Chad said. At the same time, community-built mining pools have sprung up recently. The pools combine computing power from laptops and phones to mine ORE and pay out reward shares to participants. Hardhat Chad thinks that pools are more sustainable long-term, since fees are divided up, and there’s a lower opportunity cost mining ORE on a laptop than with an ASIC that could be mining other assets.&nbsp;



I asked Hardhat Chad about ORE’s ability to maintain mindshare when it’s not actively bludgeoning the Solana network. The developer said ORE is shifting its focus to “long-term value” instead of “marketing stunts.”



Part of this looks like deepening ORE’s liquidity in things like stablecoins, tokenized commodities, and DePIN tokens.



“This is how we make ORE ‘money,’ it needs to be readily exchangeable for real world things,” Hardhat Chad said.



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ORE’s developer hopes their seed round will reverse the currency’s fortunes

Political memecoins — PolitiFi — had a real moment during the first half of the year. That’s since been put on hold.



The five most prominent tokens, MAGA (TRUMP), MAGA Hat (MAGA), Doland Tremp (TREMP), Jeo Boden (BODEN) and Kamala Horris (KAMA), altogether peaked at over $1.25 billion market cap at the start of June.



Now they’re worth under $170 million, a near-90% collapse.&nbsp;



The remnants of ConstitutionDAO, which <a href="https://blockworks.co/news/constitutiondao-shutting-down-after-raising-49m">lost an auction of a rare first-print</a> of the US constitution to Citadel CEO Ken Griffin in late 2021, now make up almost two-thirds of the entire PolitiFi market, per CoinGecko. Although, it’s arguable whether it should be really <a href="https://www.coingecko.com/en/categories/politifi">ranked</a> alongside political parody memecoins and such.



PolitiFi didn’t even exist this time last year. This election season has been its big moment, with the largest <a href="https://blockworks.co/tag/donald-trump">Trump</a> memecoin launching only in August 2023 — just as bitcoin was warming up for its major rally.



Read more: <a href="https://blockworks.co/news/empire-newsletter-donald-trump-nft-royalties-memecoin-taxes">Memecoin taxes and NFT royalties are paying off for Trump</a>



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcQz3pHNOJUKn0EZb9F_UN0aJMaD-noZdy7Tx5ows83UG1GWQ3dMal7wvvm27BIrLG2k4yDFwqKljLWvQKbmj4gh4vIj_G4dYCEBf7Zmt_Q1c-Q_Ju3e37rsYSTTWDP4tJtdDHORcWn37v5EwzudNECRXs?key=tTebLXZXXyAzxlxGULObPw" alt=""/><figcaption class="wp-element-caption">ETH has now underperformed the S&amp;P 500 over the past 14 months</figcaption></figure>



Bitcoin’s bull run between October and March really gave cover for PolitiFi. The chart above plots the market caps of the big-five political <a href="https://blockworks.co/tag/meme-coins">memecoins</a> (faded areas in the back) against the performance of bitcoin (orange line), ether (purple line) and the S&amp;P 500 (blue line).&nbsp;



You can see that PolitiFi has mostly mirrored ETH price action over that period — the purple line follows the shape of PolitiFi’s market cap — while bitcoin is holding up better, for now at least.



Is PolitiFi over? Probably not. But considering the <a href="https://blockworks.co/tag/kamala-harris">Kamala Harris</a>-themed memecoins aren’t doing any better than the Trump ones is somewhat telling.



A simple reason this particular flavor of memecoin is down could be that there’s no new fresh wave of interested holders entering their markets, whose liquidity might’ve outweighed sellers’ and boost prices.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcHCj_EyuXnfu0jOFvMNdRsHurGAVQFX--LZzNFzItC-GKgs98Jd4RmHOT_U2FNUXvuU7bYCC_ULFMPObF95yyLbrvbEt4x2DE53v5tPTN15nkSiFQIhZQeY6-i828lNB3r1lrBHoSEFtWDa3EJGVFroDdS?key=tTebLXZXXyAzxlxGULObPw" alt=""/><figcaption class="wp-element-caption">MAGA’s holders are split between four different blockchains, with about three-quarters on Ethereum and Solana</figcaption></figure>



This chart zooms into the market cap of the largest Trump memecoin — as shown by the orange line — and maps it against changes in the number of new holders.



Notice that major points in Trump’s narrative directly coincide with huge influxes of new holders.&nbsp;



Thousands of addresses added MAGA (TRUMP) to their bags around the Supreme Court’s election ballot ruling, Trump’s “hush money” guilty verdict and his assassination attempt in July.&nbsp;



No such luck since, with only 424 new holders following the debate against Harris on Tuesday, as of Friday morning. Polymarket <a href="https://polymarket.com/event/presidential-election-winner-2024?tid=1726238033223">odds</a> for a Trump win in November has meanwhile fallen from 52% to 49%.



All told, out of the 80,190 addresses holding MAGA (TRUMP), about 30% of them (24,300) bought in after the token set an all-time high of $17.51 in early June. It’s currently trading at $2.25 after losing nine-tenths of its value.&nbsp;



And sure, 80% drawdowns are one of the <a href="https://blockworks.co/news/cryptocurrency-tradition-drawdowns">oldest traditions in crypto</a>. But if there was a time for a huge Trump headline to revive PolitiFi, then now would be it.&nbsp;



A modified version of this article first appeared in the daily Empire newsletter. Subscribe <a href="https://blockworks.co/newsletter/empire">here</a> so you don’t miss tomorrow’s edition.



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The road to the US election is paved with political memecoins — now down 90%

Andrew Redden

After more than a decade of running crypto startups, I’m ready to call a paradigm shift:



Airdrops are dead, and the same fate awaits developer grant programs. It’s time for blockchain projects to pivot from short-term incentives and instead focus on building long-term, value-driven models that ensure both user and developer loyalty. Failure to do so will lead to developmental stagnation and decline across the industry.



Airdrops first went mainstream in 2020, when the Uniswap DEX distributed 400 UNI tokens to every wallet that had interacted with its platform. This strategy was designed to drive adoption by giving users a financial stake in the project, and it worked — other projects quickly adopted the model, and airdrops rapidly became an expectation within the DeFi community.



Read more: <a href="https://blockworks.co/news/airdrop-branding-layerzero-zro-token-launch">Are crypto airdrops falling out of fashion?</a>



However, unintended consequences have emerged, such as “airdrop farming,” where users create multiple accounts or perform minimal activities solely to qualify for token distributions. These opportunistic users often abandon the project shortly after claiming their rewards, leading to rapid declines in user activity and token value. Instead of fostering long-term loyalty, airdrops have become synonymous with fleeting, speculative gains.



Consider the layer-2 scaling solution <a href="https://blockworks.co/tag/blast">Blast</a>. In June, Blast distributed 17 billion newly-issued BLAST tokens to early adopters, hoping to attract users and capital. The results were less than ideal: <a href="https://blockworks.co/news/blast-optimistic-rollup-launch">Many recipients were frustrated</a> by the small size of their rewards, and onchain data showed that a significant number left the platform shortly after claiming their tokens. The price of BLAST <a href="https://coinmarketcap.com/currencies/blast/">dropped by 20%</a> within hours as recipients sold off. Even more striking, the protocol’s total value locked — the capital the airdrop was intended to attract — had already declined by more than 33% in the month leading up to the airdrop. Depositors had qualified for the windfall then quickly moved on.



Read more: <a href="https://blockworks.co/news/empire-newsletter-ethereum-l2-blast-airdrop">What the airdrop meta says about crypto</a>



Rather than retaining users after getting them in the door, airdrops have largely become targets for “hot money” that collects rewards before quickly exiting in search of the next opportunity. According to <a href="https://coinmetrics.substack.com/p/state-of-the-network-issue-264">recent research by CoinMetrics</a>, two-thirds of all airdropped tokens have lost value since their release. The median return on airdropped tokens held to the present day is -61%.



This isn’t just a problem for developers — it’s systemic. Networks relying heavily on short-term incentives often attract transient users and developers who leave as quickly as they arrive. This constant churn undermines the stability of these networks and erodes trust within the entire DeFi ecosystem.



Blockchain grant programs face similar challenges. Initially successful in bootstrapping new platforms, these grants are proving as ephemeral as <a href="https://blockworks.co/tag/airdrop">airdrops</a>. Developers often hop from one chain to the next, replicating their services across multiple environments in search of funding,&nbsp; but being unable to establish long-term projects on any single platform. This “builder’s dilemma” affects not just developers, but also networks, which struggle to maintain stable, loyal communities.



The instability of these incentive models creates a boom-bust cycle, making it difficult for developers to predict future activity and revenue. Developers frequently pour significant resources into projects, only to be left with a fraction of what they were promised due to an unpredictable and often politicized grant process. This strikes me as the opposite of the intended goal of grants and out of line with crypto’s technical and ethical goals of open access and composability.



In its recent report, <a href="https://coinmetrics.substack.com/p/state-of-the-network-issue-264">CoinMetrics concluded</a> that “airdrops may provide a small-term bump in the protocol’s usage, but it remains to be seen if [they] can create real, sustainable long-term growth.” Based on how most airdrops and grant programs work, there’s no reason to believe that short-term incentives will suddenly start creating long-term adoption, liquidity or positive token price movements.



Airdrops and grant incentives were amazing bootstrapping tools for a particular moment — but that moment lasted from roughly 2020 to 2022. They will continue to have some role in our broader ecosystem, but if they were ever enough on their own to actually foster adoption and growth, that moment has passed.&nbsp;



Read more: <a href="https://blockworks.co/news/blast-ethereum-rollup-hacked">Blast incentives aim to attract strong devs, as value leaks</a>



In the post-Blast era, airdrops will be viewed far more skeptically by would-be farmers. In turn, that means weaker projects will boom and bust that much faster, further turning “airdrop” from an enticing tease into a dirty word. So, what’s the solution? Blockchain projects must move beyond these fleeting incentives and focus on creating long-term, value-driven models that align the interests of all participants. This means developing systems where both users and developers are rewarded not just for showing up, but for staying and contributing to an ecosystem’s growth over time.



Whether you’re a depositor or a coder, you’ll soon be able to choose. You can get paid once, in an unpredictable amount, in a token that’s probably losing 30% of its value by next week. Or you can get paid consistently, for as long as you want, based on the actual performance of the network and the positive contributions you make to it.



Nearly five years after Uniswap’s debut, airdrops and grants are no longer enough. It’s time to build protocols that actually last.



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We need to stop pretending that airdrops work

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Happy Friday.



A friendly reminder to not believe Big Fall propagandists. The super lame “meteorological summer” might have technically ended on August 31, but we still have about nine days left until the much cooler “astrological summer” is actually over, marked by the September equinox.



So, forget what your boss said about no more Summer Fridays. They’re still very much alive. Go on, take the afternoon off. Empire said it’s okay.&nbsp;



In the meantime, enjoy these takes on political memecoins, FTX and prediction markets. Viva La Summer!



— David Canellis



<h2 class="wp-block-heading">Keeping with tradition</h2>



If you’re suffering from severe political burnout, you’re not alone.



Political memecoins — or PolitiFi — are just as down in the dumps about the whole affair as anyone.



The five most prominent tokens, MAGA (TRUMP), MAGA Hat (MAGA), Doland Tremp (TREMP), Jeo Boden (BODEN) and Kamala Horris (KAMA), altogether peaked at over $1.25 billion market cap at the start of June.



Now they’re worth under $170 million, a near-90% collapse.&nbsp;



The remnants of ConstitutionDAO, which <a href="https://blockworks.co/news/constitutiondao-shutting-down-after-raising-49m">lost an auction</a> of a rare first-print of the US constitution to Citadel CEO Ken Griffin in late 2021, now make up almost two-thirds of the entire PolitiFi market. Although, it’s arguable whether it should be really <a href="https://www.coingecko.com/en/categories/politifi">ranked</a> alongside political parody memecoins and such.



PolitiFi didn’t even exist this time last year. This election season has been its big moment, with the largest Trump memecoin launching only in August 2023 — just as bitcoin was warming up for its major rally.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfDr0YLOIXI424Vyd7Slz2JwYgbp4ZNL9vRjobAMnjOYxAoGKvE2HnNjI-jeqGvysJ2psMBLuWqOEvpeBqsbmt3me2fYWUXbk8bjlMbXprWBxUCW09DjRWkylQ7_HjQl2EgQ6FzRixGr_IpjARIpGNrOq4?key=uvthZcmkTGW8HVGcHFQLAQ" alt=""/><figcaption class="wp-element-caption">ETH has now underperformed the S&amp;P 500 over the past 14 months</figcaption></figure>



Bitcoin’s bull run between October and March really gave cover for PolitiFi. The chart above plots the market caps of the big-five political memecoins (faded areas in the back) against the performance of bitcoin (orange line), ether (purple line) and the S&amp;P 500 (blue line).&nbsp;



You can see that PolitiFi has mostly mirrored ETH price action over that period — the purple line follows the shape of PolitiFi’s market cap — while bitcoin is holding up better, for now, at least.



Is PolitiFi over? Probably not. But considering the Kamala Harris-themed memecoins aren’t doing any better than the Trump ones is somewhat telling.



A simple reason this particular flavor of memecoin is down could be that there’s no new fresh wave of interested holders entering their markets, whose liquidity might’ve outweighed sellers’ and boost prices.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfIYubdQ3t_RBz-qS0wOOMX-c4Y4wiWSN5MNcgHJGoUJphY33dR0NoviRhdCTIQOAOpcwBY1UuH-NcXgvbkIqQx1wmN05E4YGzwHDR3tvXyvZHklRgBzBEI41wynsYuLaC3lJ4q0zOeAE1o-oLBCf81tWwP?key=uvthZcmkTGW8HVGcHFQLAQ" alt=""/><figcaption class="wp-element-caption">MAGA’s holders are split between four different blockchains, with about three-quarters on Ethereum and Solana</figcaption></figure>



This chart zooms into the market cap of the largest Trump memecoin — as shown by the orange line — and maps it against changes in the number of new holders.



Notice that major points in Trump’s narrative directly coincide with huge influxes of new holders.&nbsp;



Thousands of addresses added MAGA (TRUMP) to their bags around the Supreme Court’s election ballot ruling, Trump’s ‘hush money’ guilty verdict, and his assassination attempt in July.&nbsp;



No such luck since, with only 424 new holders following the debate against Harris on Tuesday.



All told, out of the 80,190 addresses holding MAGA (TRUMP), about 30% of them (24,300) bought in after the token set an all-time high of $17.51 in early June. It’s currently trading at $2.25 after losing nine-tenths of its value.&nbsp;



And sure, 80% drawdowns are one of the <a href="https://blockworks.co/news/cryptocurrency-tradition-drawdowns">oldest traditions in crypto</a>. But if there was a time for a huge Trump headline to revive PolitiFi, then now would be it.&nbsp;



— David Canellis



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



Empire host Jason Yanowitz spoke to Allen Ng of Everest Ventures Group in <a href="https://blockworks.co/podcast/empire/3238604c-718b-11ef-9408-a7ce2b7b6579">today’s Empire podcast</a>. Which, you may have guessed by the name, is a venture-building group focused on Web3.&nbsp;



Ng gave Empire listeners a rundown on a variety of topics: from the regulatory fallout following the Terra and FTX implosions, to a glimpse of how folks across Asia interact with crypto.&nbsp;



Focusing in on the FTX and Terra of it all, Ng offered insight into how both of those now-defining moments in crypto impacted the way that various Asian countries handled the regulatory environment in the aftermath. Oh, isn’t it fun to recount that time in crypto?



Anyway, Ng very interestingly highlighted the negative impact FTX had in some Asian countries, given that FTX actually started in Hong Kong.&nbsp;



“I think it only [had] a bigger impact in the US because, in the later part, after [they used] Asia for the success [of the] business, they raised a lot of capital from the US and then” they infamously involved a lot of famous people, Ng said.



And now you know.&nbsp;



While we could rehash more of what happened with FTX and the fallout there — and trust me, we’ll be talking about FTX again soon enough with a court hearing coming up — I wanted to turn our attention over to the Commodities Futures Trading Commission’s legal battle with regulated prediction market Kalshi.&nbsp;



Unlike Polymarket, which dropped US users as part of a CFTC settlement in 2022, Kalshi is able to offer US prediction markets. And, as of Thursday afternoon, is now the only firm to offer election markets to US users. (Unlike Polymarket, Kalshi doesn’t run on smart contracts, blockchain or crypto, although it does offer markets for <a href="https://kalshi.com/markets/btcath/btc-ath">crypto-related topics</a>.)



Now, the <a href="https://blockworks.co/news/kalshi-election-markets-cftc">fight between the CFTC and Kalshi isn’t over</a>. CFTC lawyers are pushing really hard for an extension of the emergency stay in court yesterday (which Judge Jia Cobb denied), and the CFTC had a notice of appeal filed before the dust had even settled after the hearing.&nbsp;



The plan, at least from the hearing yesterday, is for the CFTC to seek a two-week emergency stay with the Appellate court.&nbsp;



Kalshi wasted no time getting its election markets up, before having to halt them earlier today as the CFTC moves forward with an appeal. And with the popularity of Polymarket so widespread (not only making prediction markets relevant again, but also quietly pushing a hot use case for crypto), this is going to be a case to watch.



— Katherine Ross



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Election burnout has come for political memecoins

After a court battle with the Commodity Futures Trading Commission — which isn’t quite over yet — Kalshi launched prediction markets for the upcoming US election.



The launch comes after the CFTC was denied another emergency stay by Judge Jia Cobb, who oversaw the case.



In a hearing early Thursday, Judge Cobb sided with Kalshi again. She told the CFTC she wouldn’t grant a stay, citing arguments made by Kalshi’s attorneys.&nbsp;



CFTC attorneys, during the hearing, argued the contracts could pose a “public interest risk.” With the election just a few months out, Kalshi attorneys made a case that waiting any further to launch the markets could cause the company potential economic harm.



Read more: <a href="https://blockworks.co/news/lightspeed-newsletter-prediction-markets-post-election">How prediction markets are bracing for post-election user drop-offs</a>



The <a href="https://blockworks.co/tag/cftc">CFTC</a> was previously granted a stay last week as it asked the judge to reconsider her order.&nbsp;



In an opinion on Thursday, Cobb <a href="https://storage.courtlistener.com/recap/gov.uscourts.dcd.261465/gov.uscourts.dcd.261465.51.0_1.pdf">wrote</a>, “Court finds that Kalshi’s congressional control contracts do not involve activity that is unlawful under any federal or state law, nor do they involve gaming.”



“Kalshi’s event contracts ask buyers to take a yes/no position on whether a chamber of Congress will be controlled by a specific party in a given term. That question involves (relates to, entails, has as its essential feature or any other iteration of the word) elections, politics, Congress and party control; but nothing that any party to this litigation has identified as illegal or unlawful activity,” she noted.



Tarek Mansour, Kalshi’s founder, said that Thursday marked the “the first trade on regulated election markets in nearly a century.”



<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">The first election market is live on <a href="https://twitter.com/Kalshi?ref_src=twsrc%5Etfw">@Kalshi</a>. Today marks the first trade on regulated election markets in nearly a century. This one is for you, the prediction markets community. <a href="https://t.co/USzzVMffQn">pic.twitter.com/USzzVMffQn</a>&mdash; Tarek Mansour (@mansourtarek_) <a href="https://twitter.com/mansourtarek_/status/1834306255348765033?ref_src=twsrc%5Etfw">September 12, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Kalshi’s currently the only legal prediction market in the US. Polymarket, which has quickly become a good gauge for overall sentiment, doesn’t operate in the US.&nbsp;



<a href="https://blockworks.co/tag/polymarket">Polymarket</a> settled with the CFTC back in 2022, which saw the prediction market pay out $1.4 million for allegedly operating an unregistered platform for trading options contracts. As part of the settlement, Polymarket agreed to ban US users without admitting or denying wrongdoing.&nbsp;



Read more: <a href="https://blockworks.co/news/unpacking-potential-polymarket-ban">Unpacking a potential Polymarket ‘ban’</a>



The popular prediction market also came up a few times in Thursday’s hearing, with Kalshi’s lawyers noting that Kalshi being blocked from allowing election markets would just push people to an “unregulated” market such as Polymarket.&nbsp;



The CFTC wants the appeals court to grant an emergency stay for two weeks to prevent the markets from being active as lawyers draw up an appeal. At the Thursday hearing, attorneys for the CFTC warned about potential risks to election integrity.&nbsp;



Updated September 12, 2024 at 5:24 pm ET: Tightened headline for clarity.



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Kalshi launches election markets as CFTC turns to appellate court

Felix Jauvin

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<h2 class="wp-block-heading">What are we really doing here?</h2>



“Uli doesn&#8217;t care about anything. He&#8217;s a Nihilist. Ah, that must be exhausting.”&nbsp;



— Bunny Lebowski, The Big Lebowski



I’ve been thinking a lot about use cases, adoption in crypto and what we’re really doing here.



Bitcoin is up 30% year to date, and yet the vibes have felt like we’re in a bear market. Every altcoin has sunk under the weight of inflated high-fdv, low-float launch strategies and governance tokens that cannot pass on any value accrual to holders due to the regulatory gray zone we live in under the Biden administration.&nbsp;



As our industry sits in limbo with 1) no regulatory clarity, 2) TradFi and crypto constantly talking over each other with no one stopping to think about what the product-market fit opportunities are, 3) the only narrative to speak of this year being ETF adoption (which furthers disassociates buyers from onchain self-sovereign ownership) and 4) quite literally no borrowing markets since the implosion of FTX/Silvergate/3AC…it feels like we’re all lost at sea.



I joined the crypto world through the lens of a macro investor. It felt like bitcoin, along with permissionless DeFi protocols, were the solutions to many of the issues I discovered in my investing journey. Simply put, markets have transformed from efficient capital allocation vehicles into debt refinancing vehicles at the cost of financial equality — e.g. the Fed buying MBS during QE to stabilize markets at the cost of inflating housing prices into unachievable levels for many.



Like many, I believed in this premise during the last cycle and was vehemently excited about the idea that we were on the precipice of a revolution that would realign societal incentives and solve many issues plaguing our modern financial world.&nbsp;



Instead, all we have this cycle are nihilistic memecoins that get pumped and dumped endlessly, inflated VC-backed governance coins with no attachment to any claim of equity and ETFs — a Wall Street-approved speculation vehicle that disintermediate holders from the actual protocol innovations that got us excited in the first place.



Excuse my French, but what the fuck are we really doing here?



I’ve decided I need to do some soul-searching to reconnect with what brought me to this industry in the first place.



First, I went to read up on what Travis Kling has been discussing:



<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">🚨🚨 On the heels of pretty atrocious vibes this summer for crypto, I&#39;m publishing part 3 in a series that included: &quot;A Lack of Pretense That Any of This Shit Does Anything or Will Ever Do Anything&quot; and &quot;Financial Nihilism: The Zeitgeist of Young America&quot;. It&#39;s a ~10 min read.…&mdash; Travis Kling (@Travis_Kling) <a href="https://twitter.com/Travis_Kling/status/1830981118566244633?ref_src=twsrc%5Etfw">September 3, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



He has been expressing a lot of these nihilistic feelings I and many others currently have, which he coins as a general feeling of quiet quitting on the mission that got us here.



One thing that he brings up is how part of this nihilism isn’t fully our fault; it&#8217;s the lack of regulatory clarity.&nbsp;



The lines around what is allowed and isn’t are being obfuscated by a politicized SEC that is going for a scorched-earth approach to regulation that is leading to no one wanting to create or experiment on anything that is actually valuable. The hope is that this coming election brings forth a new wave of regulatory clarity that will allow our industry to actually innovate again.&nbsp;



Second, I sought out and interviewed Austin Campbell to discuss all things stablecoins&nbsp; — a segment in which I realized there has been substantial positive progress. 



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/xLW2CZ9q6iA?si=vBMEYZkgRYezOleW" 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>







The thing is, there hasn’t been much of a way for traders to take advantage of the adoption of an asset that is meant to not ever move, so less people are emotionally excited about it without the associated PnL.&nbsp;



That said, our talk brought forth a wave of optimism and made me realize things are moving in the right direction. There’s hope.&nbsp;



These two thought experiments are giving me something to hold onto. I do think we are on the verge of the next big leg of adoption and innovation; there are just some hurdles right now leading to a despondent market that isn’t going anywhere.&nbsp;



My hope is that this coming election will resolve this. And so, in the meantime, I’m going to continue believing in something, because without that we have nothing.



— Felix Jauvin



<h3 class="wp-block-heading">47%</h3>



The percentage of stablecoin users in Nigeria, India, Turkey, Indonesia and Brazil who said they primarily use the asset class to “save money in dollars,” according to a new <a href="https://castleisland.vc/wp-content/uploads/2024/09/stablecoins_the_emerging_market_story_091224.pdf">report</a>.&nbsp;



Holding savings in a dollar-backed, (in theory) stable currency <a href="https://blockworks.co/news/stablecoin-report-market-capitalization">is becoming an increasingly common</a> alternative to traditional bank accounts, particularly in regions where banking is difficult to access, researchers noted.&nbsp;



The survey, which sampled roughly 2,500 individuals, was conducted by Castle Island Ventures, Artemis and Brevan Howard Digital.&nbsp;



<h2 class="wp-block-heading">SEC again indicates ETH is not a security&nbsp;</h2>



News dropped this morning that the SEC had <a href="https://blockworks.co/news/etoro-sec-settlement">reached a settlement with eToro</a> after the trading platform allegedly violated securities laws by acting as an unregistered broker and clearing agency.&nbsp;



Per the agreement, eToro will pay $1.5 million and cease a chunk of its crypto trading (after giving customers 180 days to sell their assets). US users will still be able to trade bitcoin, bitcoin cash, and most notably, ether.&nbsp;



eToro, without admitting or denying guilt, will be removing all other crypto assets from its platform — each of which, the SEC said, constitute “investment contracts.”&nbsp;



Reading between the lines here: The SEC is signaling that ether is not a security.&nbsp;



eToro’s settlement news comes a day after Prometheum, which is licensed only to custody crypto securities, launched its institutional platform. Prometheum <a href="https://blockworks.co/news/tzero-spbd-license-custody">provides custody services</a> for optimism (OP), the graph (GRT), uniswap (UNI), arbitrum (ARB) and ETH.&nbsp;



I asked the Prometheum Capital team what they think of the eToro settlement and the apparent statement the SEC is making about ether not being a security. This is what CEO Benjamin Kaplan shared:&nbsp;



“The eToro settlement is another clear example of the transition underway in the US to streamline digital asset trading under the purview of the federal securities laws. We are confident the federal securities laws extend to oversee the custody and trading of ETH.”



We’ll have to wait and see if Prometheum makes any changes to its current list of acceptable crypto securities, but you shouldn’t hold your breath.&nbsp;



— Casey Wagner&nbsp;



<h2 class="wp-block-heading">XRP ETF? Don’t get ahead of yourself.</h2>



Grayscale Investments has been busy building out its crypto trust offerings this year while also converting two of them to ETFs.



The investment firm added an XRP Trust on Thursday, giving investors access to a protocol with “an important real-world use case,” Rayhaneh Sharif-Askary, Grayscale’s head of product and research, said in a statement.&nbsp;



&#8220;By facilitating cross-border payments that take just seconds to complete, XRP has the potential to transform the legacy financial infrastructure,&#8221; she added.&nbsp;



Media reports and X posts note this trust is paving the way for a possible XRP ETF. While those statements aren’t wrong per se, I think it’s important to note that could be said for all of Grayscale’s 20+ trusts.



“Each product is intended to follow a four-stage life cycle — with the ultimate goal of uplisting the product to an ETF,” Grayscale notes on its website. “As a product progresses through this intended lifecycle, there is a correlated increase in investor access and transparency.” <img loading="lazy" decoding="async" width="624" height="237" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeA9CIcniUpqprzjLyCGUfU1bgieOsGAP50Ewfxoc-_erfW5-HuQI_D9ER1hKlHGeW2zoILvYaJzIU6gJoAHANlu3iqrXF_zA2EHaf5uVJ33WsQ8g3ieEQjvGVNKc5S1E-rVeRL1vIb9ynoBnKLcM8M1oCJ?key=9PcKYLA2dW24-8GbgV6-ow">



So <a href="https://blockworks.co/news/how-us-canada-solana-fund-filings-differ">issuers can file for solana ETFs</a> and Grayscale can launch this XRP Trust, which starts a process that could lead to a conversion down the line. But ultimately the SEC will have to approve them (as part of Phase 4), which has <a href="https://blockworks.co/news/future-crypto-etf-filings-in-limbo">historically been the big hurdle</a>.



Nate Geraci, president of The ETF Store, <a href="https://blockworks.co/news/us-spot-crypto-etf-approvals-outlook">told Blockworks he still believes</a> it will take one of two things for more spot crypto ETFs (beyond BTC and ETH) to launch: futures for the asset to be listed on a CFTC-regulated venue, or Congress implementing a framework clearly defining which crypto assets are securities and commodities.&nbsp;



“Obviously, neither of those are going to happen overnight,” he said. “In the case of listed futures, history indicates that additional boxes would still need to be checked, including having those contracts develop a trading track record and then having issuers launch futures-based ETFs.”



The upcoming election, and a potentially friendlier administration (if Trump wins, perhaps), remains “the biggest wild card” for accelerating the approval timeline for more spot crypto ETFs, Geraci and others have noted.



So feel free to be optimistic. But it’s important to know the context.&nbsp;



— Ben Strack



<h2 class="wp-block-heading">Bulletin Board&nbsp;</h2>



<ul class="wp-block-list">
<li>House Republicans have launched a probe into SEC Chair Gary Gensler’s hiring practices, which the lawmakers allege is unlawfully influenced by political affiliation. Reps. Jim Jordan, James Comer and Patrick McHenry (who is not running for re-election after his term ends this year) claim that under Gensler’s leadership, the SEC has hired “individuals from left-leaning organizations to fill senior roles.”&nbsp;</li>



<li>Nearly two-thirds of the 3,600 consumers in the US, UK and Europe surveyed by Deutsche Bank earlier this year said they could see cryptocurrencies replacing cash.&nbsp;</li>



<li>Want to hear some hot takes about the disconnect between TradFi and crypto? Tune into the latest episode of the On the Margin podcast <a href="https://blockworks.co/podcast/onthemargin/97375e9e-7091-11ef-8ad9-2b7fdc7a5e32">here</a>, or wherever you get your podcasts.&nbsp;</li>
</ul>



Updated September 13, 2024 at 3:23 pm ET: Adjusted to emphasize that DCG remains fully operational.



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Our industry is in limbo. What’s going on?

Today, enjoy the Lightspeed newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to the Lightspeed newsletter</a>. 



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Toronto-based holding company Cypherpunk Holdings has rebranded to Sol Strategies in a pivot to a Solana-first investment approach, the firm disclosed today.



Following the rebrand, Sol Strategies will begin focusing on staking Solana and investing in the Solana ecosystem’s projects and infrastructure, the company said in a press release. The strategy shift was unanimously approved by the company’s board of directors at its July 30 shareholder meeting, Sol Strategies said in a press release.



Cypherpunk Holdings has been scaling up its Solana exposure for months now — particularly since ex-Valkyrie CEO Leah Wald took over the top job in early <a href="https://x.com/LeahWald/status/1810685437687525423">July</a>. When it disclosed its holdings on March 31, Cypherpunk held zero SOL. By July 16 — a week after Wald took over — Cypherpunk had 63,000 SOL. On Aug. 1 — two days after Cypherpunk internally finalized its strategy shift — that figure had swelled to 86,300 SOL, worth some $11.6 million at current prices.&nbsp;



Still, rebranding the company around just one blockchain ecosystem is pretty eye-catching. The revamped <a href="https://solstrategies.io/">website</a> reads that Sol Strategies’ “edge” is investing “in the Solana ecosystem.” Sol Strategies will also operate a Solana validator node through a third party service provider, the company said in a press release.



The company, which began dealing in crypto in 2018, trades on the Canadian Securities Exchange and OTC market.



In comments shared with me today, Wald said the strategy shift wasn’t “predetermined” when she took over as CEO, adding that Solana is a “high-growth” investment opportunity that seemed to be the “next logical step” for Cypherpunk Holdings.



At first blush, the mental model for this rebrand could be that Sol Strategies is offering an upgraded version of a spot SOL ETF. Investors in the company’s stock get compliant, regulated exposure to not only the price of SOL with staking and validator revenue included, but to the success of Solana ecosystem projects as well.&nbsp;



Wald told me a version of this today: ETFs are just passive spot funds, she said, adding: “Our approach goes beyond passive exposure as we are actively engaged in staking and exploring strategic investments.”&nbsp;



Plus, something that Ethereum ETF issuers are <a href="https://blockworks.co/news/education-required-to-spur-eth-etf-outflows">learning the hard way</a> is that demand for regulated crypto investment products only runs so deep. In March 2024, Cypherpunk Holdings <a href="https://solstrategies.io/wp-content/uploads/2024/09/cypherpunk_q2fs_05292024.pdf">reported</a> roughly $23 million in assets. In the institutional investment world, that isn’t very much money.&nbsp;



Perhaps Wald — who had been a Cypherpunk Holdings board member since 2021 before stepping in as CEO — is making the bet that Sol Strategies can differentiate itself from its larger competitors by being the best possible regulated investment in a certain niche.



“As the only publicly traded company in North America focused on the Solana ecosystem, we are providing exposure to Solana’s growth and innovation prior to Solana-specific ETFs [being] approved in either the US or Canada,” Wald said.



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A publicly-traded holding company is all-in on Solana

Coinbase is moving forward with the launch of cbBTC, an ERC-20 tokenized bitcoin that will go live on Base and other Ethereum ecosystems.



The new bitcoin token will be backed 1:1 by bitcoin reserves and presumably held in centralized custody by Coinbase.



Coinbase first teased the impending cbBTC on Aug. 14 amid a swirl of controversy surrounding BitGo. Today, it was formally <a href="https://x.com/coinbase/status/1834208544247144949">announced</a>.



This marks the first significant competitive threat to BitGo’s wrapped bitcoin (WBTC), which controls a dominant 96.6% market share across the Ethereum ecosystem today, according to<a href="https://dune.com/hashed_official/btc-on-ethereum"> Dune</a>.



Read more:<a href="https://blockworks.co/news/bitgo-wbtc-custodial-changes"> BitGo moves to allay fears over WBTC custodial changes</a>



Coinbase’s tweet claims cbBTC will be <a href="https://x.com/coinbase/status/1834208546235334972">available</a> on several protocols including Aerodrome, Curve, Aave, Morpho, Compound, Moonwell, Spark and more.



“<a href="https://blockworks.co/tag/coinbase">Coinbase</a> is helping users do more with their bitcoin,” Coinbase vice president of engineering Will Robinson told Blockworks. He added that “cbBTC is a big step forward for DeFi, giving bitcoin a much more active role.”



BitGo’s <a href="https://www.bitgo.com/resources/blog/bitgo-to-move-to-jurisdictional-custody-to-accelerate-global-expansio/?utm_source=blockworks-research.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=bridging-btc-from-multisigs-to-bitvm&amp;_bhlid=9219a8da5ae77319203ba8c8702c4aaf4709a4ce">announcement</a> of a “strategic partnership” that involved TRON founder Justin Sun sparked concerns, leading to Sky (<a href="https://blockworks.co/news/maker-rebrands-as-sky-dai-will-be-changed-to-usds">previously Maker</a>) <a href="https://forum.makerdao.com/t/wbtc-changes-and-risk-mitigation-10-august-2024/24844?utm_source=blockworks-research.beehiiv.com&amp;utm_medium=referral&amp;utm_campaign=short-term-risk-elevated">delisting</a> WBTC as collateral from its DAI stablecoin.



BitGo declined to provide a comment on cbBTC’s launch.



Following Coinbase’s announcement, Spark Protocol immediately <a href="https://forum.makerdao.com/t/sep-12-2024-proposed-changes-to-spark-for-upcoming-spell/25076">launched</a> a proposal to onboard cbBTC, citing “a strategic need to have a replacement BTC on SparkLend as collateral.”



In anticipation of cbBTC, Aave DAO also <a href="https://governance.aave.com/t/arfc-onboard-cbbtc-to-aave-v3-on-base-and-mainnet/18988?utm_source=blockworks-research.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=bridging-btc-from-multisigs-to-bitvm&amp;_bhlid=5c24f6de3a6c55d34ea765bbd0fca1ea2074fb99">floated</a> on Tuesday a governance proposal to onboard the collateral to Base and Ethereum mainnet, with about $150,000 of incentives to bootstrap its growth.



Early comments to the proposal cited the security considerations and regulatory risks surrounding cbBTC.



“If Coinbase were ever to have their accounts frozen for investigation or face further regulatory action, it would put all Aave users at severe risk,” user @DeFiWhale said.



Another user, @midapple, cited the proposal as “premature” without knowledge of the minting and redemption mechanisms of cbBTC being publicly known yet.



Other than WBTC, only BTCB, a wrapped bitcoin on BNB Chain, and the multichain Borderless Bitcoin (BTC.b) have a market share over 1%.



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Coinbase introduces wrapped bitcoin competitor ‘cbBTC’

Tether has made a habit of sharing truly massive quarterly profit numbers alongside its attestations reports — and they’re bigger than BlackRock’s.



The firm has reported $12.72 billion in net profit since Q4 2022, compared to BlackRock’s $9.83 billion.



What isn’t usually discussed is that Tether is lumping in the profit from US Treasurys with the mark-to-market gains of its bitcoin and gold holdings — potential profit or unrealized gains — as outlined in one of its blog <a href="https://tether.io/news/tether-releases-q1-2024-attestation-reports-record-breaking-4-52-billion-profit-highest-treasury-bill-ownership-percentage-ever-total-group-equity-of-11-37-billion/">posts</a>. And it’s inflating Tether’s numbers.



<a href="https://blockworks.co/tag/tether">Tether</a>’s quarterly attestations describe assets in the pool of reserves that give tethers their value. As of its most recent <a href="https://assets.ctfassets.net/vyse88cgwfbl/6h4YWqZOXbwtBaPtYgICGy/d7462f312aa15b872f8474322ba90363/ISAE_3000R_-_Opinion_on_Consolidated_Financials_Figures_30.06.2024_RC134792024BD0209.pdf">report</a>, for the end of Q2, there was almost $118.44 billion backing the tethers in circulation — conveniently over $5 billion more.



Read more: <a href="https://blockworks.co/news/tether-q2-2024-earnings-report">Tether reports net profit of $5.2B in H1 2024</a>



Which means all tether is all properly backed by an equivalent value of assets in reserve, and then some. (It’s worth noting that attestations are not audits and Tether has never been “audited,” for <a href="https://www.dlnews.com/articles/markets/tether-ceo-just-told-us-why-the-big-4-wont-audit-its-books">reasons</a>.)



Short-dated US Treasurys made up around 68% of Tether reserves, with reverse repurchase agreements, money market funds, secured loans and bitcoin as the next largest categories.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcCUThTZDM_ogxfwEsV1iotjgRMHVBx5uz1bo6_smlze2WkTWdovBSpRMeOu2Rc2bHlX69bPvopjVph673kOm3iwj8EoMxZu_7EPQuGwc3ipqbPNJ-lC4taovM4exhgnTer32rEqgKNgpCBfW23w1gTi3Y5?key=bacHLEf431I5gVwzvzunVQ" alt=""/><figcaption class="wp-element-caption">Tether has been adding bitcoin to its reserves, rising from 2% of the total to 4% over the past year</figcaption></figure>



<h2 class="wp-block-heading">Bitcoin is cash — no need to sell it</h2>



Tether reported $1.3 billion in quarterly profit alongside that Q2 disclosure. A staggering amount considering how few people it employs, believed to be under 100.



Much of that profit comes from the US Treasurys it buys. Three-month Treasury bills currently carry a rate of 4.85%, and considering Tether owned almost $81 billion worth, the 10-figure profit sounds about right.



But take this year’s first quarter. Tether reported $4.52 billion in profit. At the same time, the price of bitcoin went up almost 70%, which Tether apparently considers free profit.&nbsp;



Read more: <a href="https://blockworks.co/news/stablecoin-report-market-capitalization">Nigeria is undergoing a ‘real crypto dollarization event’: Nic Carter</a>



When bitcoin hasn’t been so volatile, Tether has usually reported profits of between 1.01% and 1.81% of the value of its treasury. In Q1 2024, when bitcoin <a href="https://blockworks.co/news/bitcoin-all-time-high">hit an all-time high</a>, that figure was 4.1%.



The firm also reported that its bitcoin holdings increased in value by $2.56 billion throughout that period — from $2.82 billion to $5.37 billion. Tether appears to have bought 8,888.88 BTC ($513.6 million at current prices) during the quarter, going by the attestations and its onchain history, but it’s unknown at what price it bought those coins.&nbsp;



If we take the average price of bitcoin over the quarter, Tether would’ve spent $481.5 million on that BTC.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcIUrCqjKuhS9ZKi0pM1VAaYPeqUG6usoN8DYnqjUMOawypXSJgMXtG6dgviLG1VTPunr4pgyLE75-WcVdcr9lejGgUVLKtZ9tokjLUBBgWwuwwvNaOCWPWQXBoHyZslckmFb6pqjb07LO_qOzcRego2K-C?key=bacHLEf431I5gVwzvzunVQ" alt=""/><figcaption class="wp-element-caption">Estimated bitcoin profits are in orange, US Treasurys in blue and gold in yellow. The price of bitcoin is shown by the orange line</figcaption></figure>



Subtracting its estimated spend from the increase in value of its entire bitcoin stash shows what Tether’s quarterly “bitcoin profit” would be: $2.08 billion, or 46% of the total that Tether reported. US Treasurys would’ve otherwise contributed 51%, while gold’s price appreciation perhaps offered around 3%.



To be clear, these are just estimates based on average prices during a volatile time for bitcoin’s price. Tether deposits BTC into a reserve address directly from its sister exchange Bitfinex, so it’s unknown exactly how it acquires the bitcoin that it deposits into its treasury.&nbsp;



Still, the estimates suggest that for the first quarter of this year, bitcoin made up less than 5% of Tether’s reserve portfolio, while it contributed nearly half of its reported quarterly profits.&nbsp;



For what it’s worth, Tether <a href="https://tether.io/news/tether-releases-q1-2024-attestation-reports-record-breaking-4-52-billion-profit-highest-treasury-bill-ownership-percentage-ever-total-group-equity-of-11-37-billion/">says</a> it made $1 billion out of Q1’s $4.52 billion from US Treasurys, while the rest came from unrealized bitcoin and gold gains. That would mean BTC was responsible for much more of Tether’s total reported profits, even as much as 75%.



Tether wrote at the time: “The main contributing [Tether Holdings Limited] entities are those in charge of issuing stablecoins [Tether] and managing the respective reserves where approximately $1 billion of this profit stemmed from net operating profits, primarily derived from US Treasury holdings. The remainder of reported profits were comprised of mark-to-market gains in bitcoin and gold positions.”



<h2 class="wp-block-heading">Tether could technically turn ‘unprofitable’ if BTC dives</h2>



This, of course, means that Tether’s profits are reduced when the prices of bitcoin and gold go down.&nbsp;



Tether reported only $1.3 billion in profit in last quarter, nearly 70% below Q1, even though it held almost $6 billion more in US Treasurys.



The difference is largely because the price of bitcoin fell 12% between quarters, so the value of Tether’s bitcoin went down by $648 million. Tether also didn’t add any BTC between periods, so there wasn’t any opportunity for a big boost of unrealized profit from freshly acquired coins, as was the case in the previous two quarters.&nbsp;



Had bitcoin retained its value, Tether would’ve reported almost $2 billion in quarterly profit. It appears only Tether’s Q1 2024 disclosure delineated bitcoin and gold profits from US Treasurys, as was the case with Q2.



So, does Tether earn more profit than <a href="https://blockworks.co/tag/blackrock">BlackRock</a>?&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdoOKgMZzs7WzZt3x8mMdgldBIrFakCFGgFGfUQnZ25e9oNXqNqMirYxi2-kO7FcyAZJaZ8kL0Fk9YYQ-kOk5V4pPjbJhkwADCr8esQeWsfbYyajRF-H5re52_4Ghel2iDqtq9cy4cHPgUuiohqGciFdL7N?key=bacHLEf431I5gVwzvzunVQ" alt=""/><figcaption class="wp-element-caption">Watch for Tether to really blow BlackRock out of the water if it keeps buying loads of bitcoin. Tether previously <a href="https://blockworks.co/news/tether-buying-bitcoin">pledged</a> to direct 15% of profits to buying BTC.</figcaption></figure>



Lumping in bitcoin and gold appreciation with US Treasurys profits, sure, Tether is more profitable than BlackRock. Tether must actively continue buying US Treasurys to earn money from them, but it doesn’t have to do anything to report its bitcoin and gold profits, only hold.



By that system, Tether has indeed reported higher profits than BlackRock.



If you only count Tether’s disclosed profits without bitcoin and gold, Tether would’ve made under $7.7 billion from its US Treasurys, going by the ballpark estimates outlined above.&nbsp;



That’s a difference of about $5 billion. Still monstrous profit, but it would fall just shy of outpacing the world’s largest asset manager.



Tether is likely in any case the most profitable company in crypto, and one of the most profitable outside of it as well.



Depending on your definitions of profit, it might still need a few more years to eclipse BlackRock — but it seems inevitable.



A modified version of this article first appeared in the daily Empire newsletter. Subscribe <a href="https://blockworks.co/newsletter/empire">here</a> so you don’t miss tomorrow’s edition.



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Is Tether really more profitable than BlackRock?

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Stablecoins are having a moment, that much is clear.



As the rest of crypto trades sideways, the market capitalization of stablecoins has steadily increased. It sits now at $170 million, per rwa.xzy, though there has been a slight dip over the past few days.



Castle Island Ventures, alongside Artemis, Visa and Brevan Howard Digital made a new survey that looks into the prevalence of stablecoins in certain emerging markets. The survey looked into roughly 2,500 crypto users in Nigeria, India, Turkey, Indonesia and Brazil.&nbsp;



“Our survey results contradict the common belief that stablecoins are exclusively used as a tool for the speculative trading of crypto assets. Forty-seven percent of crypto users surveyed list saving in dollars as their stablecoin objective, 43% cited efficient currency conversion and 39% said yield generation. Gaining access to crypto exchanges remains the top use case for those surveyed, but a long tail or ordinary (non-crypto) economic activities is evident as well,” the report said.



Read more: <a href="https://blockworks.co/news/stablecoin-empire-emerging-economies-user-interface">Stablecoins are ‘a better product’ than local currencies in emerging economies, Carrica says</a>



“The findings are clear: non-crypto uses account for a meaningful share of stablecoin usage modes in the countries surveyed.”



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcyvbKQJGsZpUMo-FWEnTl2CZcGRl3gGWc-HK4M83_rWf78IfI-Nfp4kr_QEeXKJrwz6VJiRnc5vzSHUPW5VJ3pc6G0xJH93JpbqnubTZUWK4-7hlBQFTg4rvlodwgyk0N7FAg3WnphcTadWS_p-b7le7H-?key=vFvNC1NDWEBw6TGiMs3aEQ" alt=""/><figcaption class="wp-element-caption">Source: Castle Island Ventures, Artemis</figcaption></figure>



Nic Carter of Castle Island Ventures told Blockworks he’s been curious about tracking the data because he wanted to better understand how folks are using stablecoins.&nbsp;



From here, Carter will take the findings to Washington DC. Lawmakers on Capitol Hill, and various US officials, have been <a href="https://blockworks.co/news/federal-reserve-cbdc-tokenization-stablecoins">pretty vocal about their stablecoin opinions</a>. There is also a push from Senators Kirsten Gillibrand and Cynthia Lummis to <a href="https://blockworks.co/news/stablecoin-bill-bipartisan-support">introduce regulations around stablecoins</a>.



“If you&#8217;re <a href="https://blockworks.co/newsletter/daily/issue/post_6e8e2c0b-f694-4fee-8e50-1d45832b905e">looking at emerging markets</a>, this is a case of currency substitution where savings would be held in the naira or the Turkish lira or the Indian rupee, and it&#8217;s actually being converted into the dollar,” Carter explained.



“So this is a positive buying pressure for the dollar and all the dollar assets that the stablecoin issuers hold (which are Treasurys). So my point is: This is a flow into the dollar. It&#8217;s a new source of demand. It&#8217;s very meaningful, and obviously it&#8217;s supportive of US interests.”



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdTk84nqV7WNG0eiysle-8aRgNsb-pk_UFf52DDdzNtCrxR7UZkSv03n67lES8jIiveZe9thRvyDG2r3NTfE7dBm22X-tvF1M5iqirGCSUorAE67kQa0gU-oHztjMb4G_yR8dnYojWKtKpB8v8UtvlZNwg?key=vFvNC1NDWEBw6TGiMs3aEQ" alt=""/><figcaption class="wp-element-caption">Source: Castle Island Ventures, Artemis</figcaption></figure>



But while it may impress US lawmakers, those in, say, Nigeria might not be as thrilled with some of the results. As we’ve <a href="https://blockworks.co/news/binance-ends-support-nigeria-naira">previously reported</a>, Nigeria became more hostile toward crypto earlier this year, <a href="https://blockworks.co/news/binance-employees-detained-nigeria">detaining two Binance executives</a> (American <a href="https://blockworks.co/news/continued-detainment-binance-executive-outrageous">Tigran Gambaryan</a> is still being held in the country), and charging Binance with tax evasion and money laundering.&nbsp;



Nigeria’s attempts to regulate the industry have perhaps not been as successful as the country hoped, based on the data snapshot from the report. The survey took place from May to June earlier this year, with some onchain data being gathered through July. Nigeria arrested Gambaryan at the end of February.



“Nigerians love <a href="https://blockworks.co/tag/stablecoins">stablecoins</a>,” Carter noted. Perhaps the country even has a right to be “paranoid,” given that the full survey results show that Nigeria came out on top in every category.&nbsp;



Users in the country “transact most frequently, stablecoins compose the largest share of respondent portfolios, they report the highest share of non-crypto-trading uses for stablecoins, and they maintain the highest self-reported knowledge of stablecoins,” the report stated. Other countries such as Turkey had different uses for stablecoins (the report found that Turkish users tend to use them to earn yield, with trading closely following).&nbsp;



“I think there actually is a crypto dollarization event happening in <a href="https://blockworks.co/tag/nigeria">Nigeria</a>, as far as I can tell, where people are actively deserting the naira and going to dollars via stablecoins. I think this is ongoing. It&#8217;s the first real crypto dollarization event,” Carter told me.



He did warn that he’s not sure if you can “quantify that 15% of [naira’s] devaluation is due to crypto,” especially given that the survey targeted crypto users. But the results show that perhaps Nigeria has a right to show concern.&nbsp;



Nigeria aside, the study was able to show that stablecoins, when used by some in emerging markets, allow access US dollar exposure, which could be interpreted as a boon for the US.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeBVX-KJ6Ukps7WbWWuc4U04DX75cRJXSAr3IzmtpiUhuu9Q2zV6rqoO9G7bmXmf2ks2fnhVNQTNxflJz1ELQVZIGk05a0jqXgDpUsYBgGRZIfD_GRBBssr6AKJCfgLLZm5IcMq6PToGZSXAbPM1daBYX7k?key=vFvNC1NDWEBw6TGiMs3aEQ" alt=""/></figure>



But, as stated above, there isn’t currently a regulatory framework for stablecoin issuers, even as Circle — the firm behind USDC — seeks to go public. But Carter also thinks that the issuers are “stymied” because none of them can issue interest-bearing stablecoins.&nbsp;



“All of the interest bearing stablecoins, they&#8217;re issued overseas,” he said. Carter pointed to Paxos, which has an interest-bearing stablecoin in Dubai despite being a US-based company. Offerings from Mountain Protocol and Ethena are also offshore.&nbsp;



“…I do think that the interest-bearing stablecoins will out-compete the ordinary ones at the margin with time. So they can&#8217;t do that in the US, because the [Securities and Exchange Commission] is so adamant that it makes it a security, right? So that&#8217;s one of the issues that&#8217;s…hobbled us for now,” Carter explained.&nbsp;



The report points out there’s not one single answer to address why stablecoins are so heavily dollarized.&nbsp;



“The US dollar is the global reserve currency but in no other category of usage does it dominate to the same extent it does with stablecoins,” it pointed out.&nbsp;



But there’s no denying that it seems to have hit its mark with stablecoins. Now time will tell if the US will take advantage of that.



A modified version of this article first appeared in the daily Empire newsletter. <a href="https://blockworks.co/newsletter/empire" target="_blank" rel="noreferrer noopener">Subscribe here</a> so you don’t miss tomorrow’s edition.



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