stake.link

Felix Jauvin

Casey Wagner

Ben Strack

Today, enjoy the On the Margin newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox.&nbsp;<a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the On the Margin newsletter</a>.



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Welcome to the On the Margin Newsletter, brought to you by Ben Strack, Casey Wagner and Felix Jauvin. Here’s what we unpack in today’s edition:&nbsp;



<ul>
<li>Why inflation is the wrong figure to watch when trying to predict Fed policy.&nbsp;</li>



<li>An update on the bitcoin miners wading deeper into AI.</li>



<li>BTC has rebounded a bit. Meanwhile, its correlation to equities continues to slide.</li>
</ul>



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<h2 class="wp-block-heading">Unemployment is the issue, not inflation</h2>



To understand the Fed’s policy path moving forward, you need to be looking at the unemployment side of the mandate, not inflation.&nbsp;



By all accounts, inflation is largely set to hover around the current 3% zone for the foreseeable future, barring a recession. The biggest reason for it not hitting the 2% target right now is lagging Owners Equivalent Rent inflation, something the Fed cannot easily target with monetary policy due to how long the lag is.&nbsp;



With inflation pretty close to the Fed’s arbitrary 2% target, the balance of risks has turned to the unemployment rate, which has been steadily increasing since bottoming last year at 3.4%.&nbsp;



Based on the latest Summary of Economic Projections, the Fed is expecting the unemployment rate to remain flat at the current 4% into year-end, and then slowly rise to 4.2% in 2025.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXdnx93ybqNf6Mo-H_uhbfJEt7rwXbY5XTLC0ipysmjohy1IL8PBFbFwKECioR-y2vi22Ia-MAW9bEA3ZbBNjWMNpOXrRyEDKlmqiR8qr6Bl6UfkXA8zYQMpzVSZOHie8JZxMRml809XO7JEPoTFuOXoQqk?key=ockkvBtE-I3kM7vm4nZL_Q" alt=""/></figure>



Simply put, the Fed doesn’t expect any further increase in the unemployment rate this year. That sets up a very interesting opportunity for a downside surprise that could push the Fed into cutting rates in the next couple of meetings.



A great way of understanding this framework is looking at the Sahm rule: “<a href="https://fred.stlouisfed.org/series/SAHMCURRENT">Sahm Recession Indicator</a> signals the start of a recession when the three-month moving average of the national unemployment rate (U3) rises by 0.50 percentage points or more relative to the minimum of the three-month averages from the previous 12 months.”



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXcE-PZzFTht9Z36TghUdNzVjkeW3eYz12vvsQmhJtwPJV8CubC4dS-EUl08DU5kj3RPrPj2934NJNWE695lFIGAnmMSfPNAAECfa762KZTD1exef-D993QJJSpk7EEGBbSlv350-GPyBpaXJol576kW0EV-?key=ockkvBtE-I3kM7vm4nZL_Q" alt=""/></figure>



The Sahm rule was established by Claudia Sahm, a previous Fed economist, and is an effective real-time indicator of recession risk.



Currently, the Sahm rule is at 37 bps. When it hits 50 bps, the Sahm rule will be triggered, which is a real-time indicator of recession risk as seen in the unemployment rate:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXcpMPVTMfz04a9iCYYhX7PbE0hMfoHuH7WyjfMqWdWCZV9r_zdMoOFxjCiUS7RXfRBtT-v2G-39hdbi_XiSBP_Nzu9Nd8eWa0Cfb7mHIAwHai4Od4c8l8pnWuJwV10DyirsRwhLOO7-glTp9KDDLy9uO2i-?key=ockkvBtE-I3kM7vm4nZL_Q" alt=""/></figure>



To understand the Fed’s calculus for easing, this is where we should be focusing as investors. Not inflation. The bar for easing based on inflation is still too high. But the bar for easing based on employment is very low as it stands.



If/when this rule gets triggered, I believe we will see some major shifts in policy from the Fed.&nbsp;&nbsp;



— Felix Jauvin



<h2 class="wp-block-heading">7</h2>



The percentage of surveyed bank professionals who say their companies have digitally transformed their data systems and processes and are “fine-tuning for more innovation.” That’s obviously a pretty small number. The biggest bucket of banks — 41% — say they are only in the early stages of doing so (aka working to catch up), according to a report by Gresham Technologies.



Meanwhile, “neo-banks and the crypto world are setting new standards for innovation” via next-gen products and efficient back-end processes, Gresham solutions engineer director Julian Trostinsky said.&nbsp;



Still, JPMorgan, Citibank and others have been among the TradFi giants <a href="https://blockworks.co/news/tradfi-blockchain-trials-mass-adoption">exploring</a> more ways to use blockchain tech in recent years. Most banks are hopping on the AI train, with nearly a quarter of survey respondents identifying “incorporating AI or automation” as the most important system change.



<h2 class="wp-block-heading">Don’t look at stocks if you’re trying to trade BTC&nbsp;</h2>



Bitcoin’s correlation with stocks is on the decline again.



The 90-day correlation coefficient between BTC and the S&amp;P 500 dipped to 0.07 Monday, down from 0.7 a month ago. A correlation of 1 means the two assets are moving in lockstep, while a coefficient of -1 would indicate the opposite.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXd_pTVyHhjkfzXzAgnuG4PtCSerCzgiAizKbIqXYkgXOcXgLfL9_N2v3qs4Gw0gJNKvH-1U1GKB-YfOiiDABI4mQR55Ycc17V1J-EfC1hVkAtBQLhgBdql-BGouIMGX3DElhZswzsTJ_uQFQzndecsmzz5I?key=ockkvBtE-I3kM7vm4nZL_Q" alt=""/></figure>



Bitcoin remains more closely tied to the tech-heavy Nasdaq, although this correlation has also dropped off in recent weeks. The 90-day correlation coefficient between BTC and the Nasdaq hovered around 0.4 Monday, down from 0.9 earlier this month.&nbsp;



The decline comes even as crypto assets appear to be more impacted by macroeconomic conditions — like inflation readings and central bank interest rate decisions. Still, as Crypto is Macro Now newsletter author Noelle Acheson pointed out, emotions play a big role in bitcoin prices.&nbsp;



BTC’s recent decline, which has seen the largest cryptocurrency lose about 11% this month, makes traders nervous and frustrated.&nbsp;



“This is often a set-up for reactive panic sells, which usually lead to a sharp round of liquidations of margined positions,” Acheson said. “These moves trigger forced sells, which means more downward moves and more forced sells until vulnerable positions are closed.”



Since stocks seem to be providing little insight into bitcoin’s future moves, investors may want to keep an eye on bitcoin’s funding rate, which is typically positive but has dipped negative in recent weeks. When the funding rate went negative in May, BTC eclipsed $70,000 just days later, so there may be hope a rebound is coming after all.&nbsp;



— Casey Wagner



<h2 class="wp-block-heading">BTC miner AI moves proliferate</h2>



A number of bitcoin miners clearly see the opportunity to dedicate a larger part of their businesses to the HPC/AI vertical, as we have seen such shifts proliferate.



Stock prices indicate the market approves.



Reminder: HPC = high-performance computing, and hopefully you know the artificial intelligence shorthand by now.



Hut 8 secured $150 million in funding (through a convertible note) from tech-focused investment firm Coatue Management, it revealed Monday. The investor deems the miner “well-positioned to accelerate new compute capacity” and advance AI.&nbsp;&nbsp;&nbsp;



Indeed, Hut 8 CEO Asher Genoot told Blockworks he sees “hundreds of megawatts of opportunity” to build upon its <a href="https://blockworks.co/news/bitcoin-miner-targets-gaming-web3-with-cloud-services-expansion">existing footprint</a> in the sector.&nbsp;



Hut 8 stock had soared more than 17% on the day, as of 2 pm ET.&nbsp;



Core Scientific’s stock price has also jumped in recent weeks on the back of its 12-year hosting <a href="https://blockworks.co/news/core-scientific-rejects-coreweave-buyout-bid-after-big-hpc-deal">contract with CoreWeave</a>. It noted it was set to host the cloud provider’s NVIDIA GPUs for HPC operations. The Texas-based miner built upon that deal Tuesday, noting in a news release it would deliver an additional 70 MW to CoreWeave. CORZ stock was up nearly 7% on Tuesday, by 2 pm.



“The market is big enough,” Genoot said when asked about Core also wading deeper into the sector. “I don’t think it’s direct competition.”&nbsp;



Despite <a href="https://blockworks.co/news/btc-miners-evolving-revenue-post-halving">new opportunities</a> after the Bitcoin halving, neither company is looking to ditch bitcoin mining anytime soon, or ever.&nbsp;



Hut 8 intends to grow the businesses “in parallel” — though it might take a contrarian approach on the BTC side, its CEO noted. “We won’t necessarily grow when everyone else is growing,” Genoot added. “And we might grow when people aren’t growing, because that’s when we believe growth is cheapest and has the best return.”



— Ben Strack



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



<ul>
<li>US spot bitcoin ETFs collectively bled $175 million on Monday, marking a record-tying seventh straight trading day of net <a href="https://blockworks.co/news/us-bitcoin-etf-seventh-day-outflows">outflows</a> for the category. The negative flows for the 10 BTC funds <a href="https://farside.co.uk/?p=1321">tracked</a> by Farside Investors have amounted to roughly $1.1 billion over the span.&nbsp;&nbsp;</li>



<li>BTC’s price, which briefly fell below $60,000 on Monday, was above $61,400 at 2 pm ET Tuesday — down more than 7% from a week ago. In case you missed what industry watchers are expecting next on that front, check out yesterday’s On the Margin <a href="https://blockworks.co/news/on-the-margin-newsletter-btc-price-movement-dip">newsletter</a>.&nbsp;</li>



<li>Ethereum is in the midst of its longest inflationary period, as ETH’s circulating supply has now risen steadily for almost 72 straight days. Check out the analysis by Blockworks’ David Canellis <a href="https://blockworks.co/news/ethereum-longest-inflationary-period-since-merge">here</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.

On the Margin Newsletter: If you’re watching the Fed, look at unemployment

Jack Kubinec

Jeff Albus

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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Howdy!



To briefly continue this newsletter’s sandwich discourse: I was down in Florida for a wedding this weekend, and I went to Publix for the first time to try a Pub Sub — a regional delicacy, I’m told.



I got a chicken bacon ranch sub and saw the light. New York’s culinary scene reins supreme generally, but Florida has us beat on grocery store sandwiches, I’ll grant. Anyways:&nbsp;



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<h2 class="wp-block-heading">Blinks, actions, and buying Solana tokens within X</h2>



This morning, I bought BONK directly <a href="https://x.com/phantom/status/1805588666993037752">within</a> my X feed, which was something I couldn’t do yesterday.



The Solana Foundation and Dialect just <a href="https://x.com/solana/status/1805587979723063440">released</a> actions, which deliver signable Solana transactions directly from applications to users — so you can buy a token on X without leaving the platform, for instance. These actions can be turned into shareable blockchain links, or blinks, which make it possible to interact onchain anywhere a URL can be displayed.&nbsp;



With its X-centric release, blinks feel a bit like a <a href="https://blockworks.co/tag/solana">Solana</a>-meets-Crypto Twitter version of Farcaster Frames. Frames let developers on the crypto-native social media platform embed external apps or website actions within users’ feeds.



Actions and blinks appear to have broader ambitions though: Dialect <a href="https://x.com/saydialect/status/1805588507337146484">said</a> the tools will expand to support more internet “surfaces” in coming weeks, including Reddit and Discord.



“Blockchain protocols have always been limited by their reach,” Jon Wong, ecosystem engineering lead at the Solana Foundation, told me. Actions allow crypto transactions to happen away from crypto-aware applications, which should help with broader adoption, Wong added.



Wong said actions are an advancement on Solana Pay remote transaction technology that was developed roughly two years ago.&nbsp;



Still, “Farcaster Frames definitely catalyzed some of the efforts here,” Wong said, noting that actions aim to be available on any website, as opposed to Frames which are limited to Farcaster.



But the decision to initially deploy actions and blinks on X — where much of crypto discourse still happens — may speak to some pragmatism on the Solana ecosystem’s end as well.



“X is just such a good product, and already has the network effects where all of [crypto Twitter] lives on X,” Tensor Chief Technology Officer Richard Wu told me in a DM. “Bringing what are essentially ‘Frames’ for X to the user, vs the other way around (asking users to go to [a] different app to use frames), could be the unlock to integrate crypto into our existing online lives.”



Arnold Lee, CEO of actions and blinks user Sphere, said the tools’ launch speaks to “Solana&#8217;s cultural engineering focus,” where the network’s developers think backwards from the user experience.



I asked Wong for some business lines actions and blinks might enable (other than, you know, buying memecoins more easily).&nbsp;



Customers could pay with crypto at a retail store using a QR code with actions, and online content creators could receive tips directly in-platform with blinks, Wong cited alongside several other examples. (He also said readers could vote on community policies via links in newsletters — should we drop Lightspeed blinks?)



A host of protocols partnered with blinks on day one, including wallet apps Phantom and Backpack, along with notable Solana ecosystem projects like Helium, Jupiter, and Sanctum. The new feature launch also has everyone talking on my timeline in a way reminiscent of Frames’ launch — which led to a <a href="https://blockworks.co/news/social-media-farcaster-interview">spike in Farcaster usage.&nbsp;</a>



I’ll be curious to see where blinks get deployed outside of X. Both TikTok and Instagram have tested the waters on in-app shopping — with not-always-inspiring results. Solana transactions that charge low fees and don’t require external wallet apps could be eye-catching for social giants of their ilk.



— Jack Kubinec



<h2 class="wp-block-heading">Zero In</h2>



<h3 class="wp-block-heading">$60 million</h3>



That’s the size of the venture fund Colosseum just <a href="https://blog.colosseum.org/announcing-colosseum-fund-i/">announced</a> for Solana ecosystem projects.&nbsp;



Colosseum does venture capital <a href="https://blockworks.co/news/lightspeed-newsletter-solana-startup-accelerator">in a kind of novel way</a>: It runs hackathons and invests in the winners, while accepting some into its startup accelerator. The fund’s co-founder previously started the Solana Foundation’s hackathon program.



This $60 million fund will go entirely to Solana projects, a Colosseum spokesperson told Blockworks. It’ll be a pretty notable capital injection into an ecosystem that around a year ago was battling regulatory scrutiny and watching its native token trade in the teens.



— Jack Kubinec



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



Last Friday, Light Protocol <a href="https://x.com/LightProtocol/status/1804241026334548366">announced</a> ZK Compression — a new primitive to reduce token and account costs while enabling native zero-knowledge compute on Solana. ZK Compression <a href="https://www.zkcompression.com/learn/in-a-nutshell">stores</a> only state roots on-chain, using ZK proofs to ensure state validity. This is meant to drastically cut costs while maintaining security and performance.



The announcement <a href="https://x.com/Lolpual1/status/1804968339476783501">sparked</a> <a href="https://x.com/zahar1ev/status/1804434354795594002">some</a> <a href="https://x.com/finoopin/status/1804695632591929671">controversy</a> on social media, with some accusing Light Protocol of repackaging Ethereum concepts without proper credit. Ryan Berckmans <a href="https://x.com/ryanberckmans/status/1804888354275655960">argued</a>, &#8220;Solana&#8217;s zk compression has some features of Ethereum&#8217;s validity rollups, some features of Ethereum&#8217;s planned statelessness with verkle tries, and relies on three different kinds of offchain node software.&#8221; He <a href="https://x.com/ryanberckmans/status/1804549672641376617">called</a> it a disguised L2 solution, prompting a heated debate. Mert Mumtaz from Helius Labs <a href="https://x.com/0xMert_/status/1804639481774928051">responded</a> to the varied criticisms, stating &#8220;Solana&#8217;s decoupling of compute and data is not a thing in Ethereum [&#8230;] the problem sets and bottlenecks in the different systems are completely different.&#8221;



Mert&#8217;s defense <a href="https://x.com/0xMert_/status/1804712268837372351">emphasized</a> the uniqueness of Solana&#8217;s approach, further noting that &#8220;calling this a rollup or validium would confuse the shit out of literally everyone because almost nothing would apply.&#8221; Some sided with Mert, with users such as @crypto_is_good <a href="https://x.com/crypto_is_good/status/1804711242487022079">saying</a>, &#8220;I wouldn’t listen to insecure eth maxies.&#8221; Others took a <a href="https://x.com/adamscochran/status/1804736068173885650">less favorable</a> stance, with @SolarEtherPunk <a href="https://x.com/SolarEtherPunk/status/1804629400467706361">commenting</a>, &#8220;Grifters gonna grift. It’s called ZK roll up you scammers.&#8221;



Despite the differing opinions, ZK Compression is set to bring even greater scalability to the Solana ecosystem. As user Bitsperity <a href="https://x.com/Bitsperity/status/1804969909488615487">said</a>, &#8220;Let’s focus on substance rather than semantics. This industry is divided but there will be a product fit for different stacks.&#8221;



— Jeffrey Albus



<h2 class="wp-block-heading">One Good DM</h2>



A message from FP Lee, co-founder of Sanctum:


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<figure class="aligncenter"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXd8tJqeL_GQz5jGg3ug8MnBGREfYkjT7m8zs31W1i9uPEhwl4RinCDGK33DEqh-P90VzGwCgFlLPvrp14mQRvxz1_H-_u5VZOUBFU0MsPuXzv5wToUmjZA_8YI1fG8aeK4ojbIPZ2xQVfnfGE9LDKMYajk?key=QvPQNANUqZZyUbLMRc9Spw" alt=""/></figure></div>


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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.

Lightspeed Newsletter: Solana transactions can now happen directly within X

US spot bitcoin ETFs endured net outflows for a seventh straight trading day on Monday — tying a record run earlier this year.



The 10 funds, tracked by Farside Investors, have collectively bled assets each trading day from June 13 to June 24 (excluding the Juneteenth federal holiday).



Outflows have totaled roughly $1.1 billion over those seven days — an average of $162 million per day, the <a href="https://farside.co.uk/?p=1321">data</a> shows. Notably, Fidelity’s Wise Origin Bitcoin Fund (FBTC) has seen more capital exit its coffers than the outflow-leading Grayscale Bitcoin Trust ETF (GBTC). The segment’s asset leader — BlackRock’s iShares Bitcoin Trust (IBIT) — has maintained very slight inflows of about $21 million during the run.&nbsp;



Overall, the fund category’s net inflows since the January launches have dipped to about $14.4 billion.  



Read more: <a href="https://blockworks.co/news/bitcoin-surfs-elliot-waves-to-beat-the-heat">Empire Newsletter: Bitcoin surfs Elliot Waves to beat the heat</a>



The streak is nearly unprecedented.&nbsp;



Seven consecutive days of outflows happened just once before, from April 24 to May 2, Farside Investors data indicates.&nbsp;



Negative flows during that span were only slightly heavier that time around, amounting to about $1.2 billion. About half of the hemorrhaging — $564 million — <a href="https://blockworks.co/news/unprecedented-us-spot-bitcoin-etf-outflows">came on May 1 alone</a>.&nbsp;



Read more: <a href="https://blockworks.co/news/why-etf-flows-do-dont-matter">Why tracking bitcoin ETF flows matters. And why it doesn’t.</a>



Analysts had, in part, attributed the outflow streak from April 24 to May 2 to investors taking profits after seeing big price appreciation on their shares.&nbsp;



This latest spot bitcoin ETF net outflow streak coincides with <a href="https://blockworks.co/news/on-the-margin-newsletter-btc-price-movement-dip">a substantial BTC price dip</a>.



BTC price briefly fell below $60,000 on Monday. It was at about $61,760 at 11 am ET Tuesday — down 7% from a week ago.



Industry analysts and executives have noted the lack of near-term catalysts for the asset given <a href="https://blockworks.co/news/bitcoin-sell-in-may-and-go-away-phase">upcoming Mt. Gox repayments</a>, miners selling their BTC holdings and the Fed <a href="https://blockworks.co/news/federal-reserve-interest-rates-unchanged">holding interest rates steady</a> earlier this month.&nbsp;



Still, some expect bitcoin to hit a new all-time high above $73,000 in the coming months amid inflationary pressures, an ultimate Fed interest rate cut and continued institutional adoption.&nbsp;



<a href="https://blockworks.co/news/mike-novogratz-crypto-us-election">The result of the US election</a> in November could also prove to be a catalyst for BTC, depending on the winner.&nbsp;



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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.

US bitcoin ETFs see seventh straight day of outflows, tying record

David Canellis

Ethereum is in the midst of its longest inflationary period so far. And “blobs” could be to blame.



The circulating supply of ether has now risen steadily for almost 72 days in a row, having added nearly 50,000 ETH ($168.7 million) since the middle of April.



<a href="https://blockworks.co/price/eth">ETH</a> holders benefit from any net supply burns due to increased scarcity. However, the opposite is currently happening — ETH is becoming less scarce — now that Ethereum’s base fee is sitting at some of its lowest points in the past two years.



All while the number of <a href="https://blockworks.co/tag/ethereum">Ethereum</a> mainnet transactions has gone up and layer-2 activity has exploded.



Read more: <a href="https://blockworks.co/news/ethereum-blob-base-fee-surges">Blob base fee surges, Ethereum misses slots as ‘BlobScriptions’ go viral</a>



ETH has only turned inflationary for an extended period on a handful of occasions <a href="https://blockworks.co/news/whats-next-for-ethereum-in-a-post-merge-world">since the Merge</a> in September 2022, the longest being a 40-day stretch shortly after the hard fork and a 30-day period late last year.



(There’s no universal standard for when ether is in an inflationary period. For the purposes of this piece, inflationary periods begin when the total ETH supply increases at least three days in a row, and vice versa.)



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/18504963/embed#?secret=IOGdE3ul2z" data-secret="IOGdE3ul2z" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">The purple line shows the total ETH supply since the Merge. Weekly fee spend is in blue, and inflationary periods are marked by the purple bands.</figcaption></figure>



Ether is inflationary because there are far fewer base fees to burn. The Dencun update in March made special room in every block for layer-2 networks to settle “blobs” of transactions without bidding against regular mainnet users.&nbsp;



This, combined with more efficient data availability through <a href="https://ethereum.org/en/roadmap/danksharding/">proto-danksharding</a>, led to massively reduced competition for block space.&nbsp;



With enough block space for everyone — including <a href="https://blockworks.co/tag/layer-2-2">layer-2</a> users via blobs — Ethereum base fees have nosedived 90% since Dencun, making it more likely that every block issues more ETH than can be burned.&nbsp;



On top of ditching proof of work for proof of stake, the Merge allowed ether to turn deflationary <a href="https://blockworks.co/news/is-ether-deflationary-now-it-depends">on a per-block basis</a>. Ethereum’s base fee, which users pay to transact on the network, had previously gone to miners as part of their reward for spending electricity to discover blocks.&nbsp;



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/18506884/embed#?secret=qaFAYfg3Ok" data-secret="qaFAYfg3Ok" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Ethereum’s base fee is way down, layer-2 activity is way up, and mainnet activity is growing slowly</figcaption></figure>



But without any electricity costs post-Merge, the total block reward would have far exceeded overheads. This could’ve skewed the currency’s supply distribution over the long run, with validators eventually accumulating a disproportionate ETH that would be almost pure profit.&nbsp;



To make many things fairer for regular users, developers opted for base fees to be burned. Validators instead receive a mixture of priority fees, reduced block rewards, and if they activate it, additional MEV yield.&nbsp;



The reward per Ethereum <a href="https://bitinfocharts.com/ethereum/">block</a> right now is just over 2 ETH ($6,800) with fees contributing less than 2.5%. Proof-of-work Bitcoin is paying almost 3.3 BTC ($200,000) per <a href="https://bitinfocharts.com/bitcoin/">block</a>, although with significantly higher costs.



To be clear, Ethereum has burned a ton of supply since the Merge, although most of it was pre-blobs. Overall, 1.71 million ETH ($5.8 billion) has been burned and 1.36 million ETH ($4.46 billion) has been issued, resulting in a supply reduction of 346,000 ETH ($1.17 billion).&nbsp;



Read more: <a href="https://blockworks.co/news/ethereum-bitcoin-merge">Ethereum’s Justin Drake is unconcerned despite ether’s middling year pricewise: Q&amp;A</a>



That puts ETH deflationary by 0.161% <a href="https://ultrasound.money/">per year</a>.



If Ethereum were still running on proof-of-work, the supply would have gone up by 6.76 million ETH ($22.87 billion) — yearly inflation of over 3%.&nbsp;



So, even with its recent inflationary bent, holders are still way better off, albeit slowly and slightly diluted.



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Ethereum hits longest inflationary period since Merge

Katherine Ross

<h2 class="wp-block-heading">Just keep swimming</h2>



How low can we go?



Maybe the question should be: What’s the next high?



After bitcoin (briefly) broke below $60,000 yesterday, I saw some speculation on the next support level for bitcoin.



So I chatted with John Glover, Ledn’s chief investment officer, to get some insight into technical levels for bitcoin and the market at large.



This is clearly a topic we’ve discussed a few times here in the last couple of weeks as bitcoin searches for a foothold above $65,000. One such support level I mentioned was $60,000, and with that lost, Glover said the next level would be $55,000 or $56,000 (a level we saw back in May).



If bitcoin manages to break through that level, then keep an eye on $49,000.&nbsp;



Obviously, when bitcoin drops, the larger market tends to take a beating. Glover, however, was still pretty optimistic overall. In fact, I asked about a potential “rough summer,” to which he told me he wouldn’t even characterize a summer that way, even if we went lower from here.&nbsp;



Glover’s analysis is based on the Elliott Wave, which if you’re familiar with traditional technical analysis, is a theory focused on longer-term price patterns accounting for both psychology and changes in investor sentiment.&nbsp;



If you’re a nerd like me, it’s an interesting way to gauge a longer-term outlook based on history repeating itself. And it makes for fun charts.



Putting that theory into practice, we’re in for a — shall we say, bumpy — summer. Which we sorta already knew…



Looking at the chart below, I’m happy to inform you that we’re probably at wave three. We’ve definitely gone through waves one and two, tracked by the chart. If we just hit wave three, then we could see yet another pullback before we start carving out a potential new all-time high.&nbsp;



Here’s the thing: I’m talking to analysts and investors pretty much every day right now, and I’m hearing practically the same thing from everyone. Once we get through the summer, it could be smooth sailing from there (key word: could be). I mentioned yesterday and last week that we could see bitcoin above $80,000 by year-end, based on what I was told previously.



“My core case [is] that I believe we&#8217;re going to $85,000 to $95,000 by year end, but I don&#8217;t think there&#8217;s going to be a catalyst to do that until sometimes towards the end of the summer, which will likely be an ETF approval for Ethereum by the SEC, which will drive all asset prices higher,” Glover said.&nbsp;



We could potentially see those ETFs approved by early July, with updated registration statements filed just last week, signaling that the SEC and issuers are close.



Glover’s prediction can be seen in either of the wave fives below.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1600" height="793" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-16.png" alt="" class="wp-image-88334" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-16.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-16.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-16.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-16.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-16.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-16.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-16.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-16.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-16.png?w=80 80w" sizes="(max-width: 1600px) 100vw, 1600px" /><figcaption class="wp-element-caption">Glover’s Elliott Wave analysis of bitcoin</figcaption></figure>



&nbsp;Glover pointed out that, at this stage, bitcoin’s trading like a tech stock. Think Meta or Tesla a few years ago. We’ll see it pull back, but then recover just like it did yesterday.&nbsp;



Anyway, that’s enough on bitcoin specifically because I want to turn our view to other parts of the market. In an earlier edition of Empire, David pointed out that we have yet to see an altcoin season this cycle, which is clearly different from what we saw in 2022 or even earlier.&nbsp;



Part of that can be summed up to investors being different this cycle, with the highly speculative retail investor in the minority this time around as the bigwigs — like BlackRock — take center stage with their products. And perhaps that’s not surprising after the shocker that was 2022, but let’s not dredge that back up right now.



My point is that Glover thinks altcoins may not bounce back this cycle, outside of the top five or so such coins.



“The traditional investors are not buying altcoins, and it&#8217;s just the retail guys who are buying altcoins, and a lot of them got really badly hurt in 2023. I think a lot of those people who used to be more than willing to speculate like crazy in the altcoin marketplace aren&#8217;t there now, they got hurt badly, and now they&#8217;re just like, ‘I don&#8217;t want to feel that pain again.’ So I think it&#8217;s just volumes, and rightly so,” Glover said.&nbsp;



Throughout the next month or two, expect to feel slightly uncomfortable, Glover told me. But once we hit the fall, and there are clearer catalysts, get ready to run.&nbsp;



— Katherine Ross



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



<ul>
<li>BTC is flat over the past day while ETH is up 2%. Both have bounced and are sitting at $61,200 and $3,380, respectively.</li>



<li>Memecoins and AI tokens have rebounded the most in the top 100, led by WIF, BRETT and BONK with over 17%. AAVE is in between them, gaining 16%.</li>



<li>Daily CEX <a href="https://www.coinglass.com/LiquidationData">liquidations</a> have passed $188 million, two-thirds of that coming from longs.</li>



<li>zkSync Era bridges have seen $72 million in net <a href="https://defillama.com/bridges/chains">outflows</a> in the past week, while $50 million net has altogether flowed into Polygon and Polygon zkEVM</li>



<li>Daily derivatives volume hit their highest point in a month on Monday, reaching $12.06 billion, up 150% on the previous day.</li>
</ul>



<h2 class="wp-block-heading">Ultra-elastic money</h2>



Ethereum is in the midst of its longest inflationary period so far. And it’s all blobs’ fault.



The circulating supply of ether has now risen steadily for almost 72 days in a row, having added nearly 50,000 ETH ($168.7 million) since the middle of April.



All while the number of Ethereum mainnet transactions have gone up and layer-2 activity has exploded.



ETH has only turned inflationary on a handful of occasions since the Merge in September 2022, the longest being a 40-day stretch shortly after the hard fork and a 30-day period late last year.



On top of ditching proof of work for proof of stake, the Merge allowed ether to turn deflationary on a <a href="https://blockworks.co/news/is-ether-deflationary-now-it-depends">per-block basis</a>.



Ethereum’s base fee, which users pay to transact on the network, had previously gone to miners as part of their reward for spending electricity to discover blocks. But without any electricity costs post-Merge, the total block reward would have far exceeded overheads.&nbsp;



This could’ve skewed the currency’s supply distribution over the long run, with validators eventually accumulating a disproportionate ETH that would be almost pure profit.&nbsp;



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1600" height="1149" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-15.png" alt="" class="wp-image-88333" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-15.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-15.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-15.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-15.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-15.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-15.png?w=358 358w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-15.png?w=363 363w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-15.png?w=305 305w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-15.png?w=80 80w" sizes="(max-width: 1600px) 100vw, 1600px" /><figcaption class="wp-element-caption">The purple line shows the total ETH supply since the Merge. Weekly fee spend is in blue, and inflationary periods are marked by the purple bands.</figcaption></figure>



To make many things fairer for regular users, developers opted for base fees to be burned. Validators instead receive a mixture of priority fees, reduced block rewards, and if they activate it, additional MEV yield. 



Meanwhile, all ETH holders benefit from any ETH burned due to increased scarcity. However, the opposite is currently happening — ETH is becoming less scarce — now that Ethereum’s base fee is sitting at some of its lowest points in the past two years.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1600" height="1200" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-17.png" alt="" class="wp-image-88335" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-17.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-17.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-17.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-17.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-17.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-17.png?w=343 343w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-17.png?w=348 348w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-17.png?w=292 292w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/image-17.png?w=80 80w" sizes="(max-width: 1600px) 100vw, 1600px" /><figcaption class="wp-element-caption">Ethereum’s base fee is way down, L2 activity is way up, and mainnet activity is growing slowly.</figcaption></figure>



Ether is inflationary because there are far fewer of those base fees to burn. And blobs are the culprit. The Dencun update in March made special room in every block for layer-2 networks to settle “blobs” of transactions without bidding against regular mainnet users.&nbsp;



This, combined with more efficient data availability through proto-danksharding, led to massively reduced competition for block space.&nbsp;



With enough block space for everyone — including L2 users via blobs — Ethereum base fees have nosedived 90% since Dencun, making it more likely that every block issues more ETH than can be burned.&nbsp;



To be clear, Ethereum has burned a ton of supply since the Merge, although most of it was pre-blobs. Overall, 1.71 million ETH ($5.8 billion) has been burned and 1.36 million ETH ($4.46 billion) has been issued, resulting in a supply reduction of 346,000 ETH ($1.17 billion).&nbsp;



That puts ETH deflationary by 0.161% <a href="https://ultrasound.money/">per year</a>.



If Ethereum were still running on proof of work, the supply would have gone up by 6.76 million ETH ($22.87 billion) — yearly inflation of over 3%.&nbsp;



So, even with its recent inflationary bent, holders are still way better off, albeit slowly and slightly diluted.



— David Canellis



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



<ul>
<li>Core Scientific <a href="https://www.businesswire.com/news/home/20240625541641/en/Core-Scientific-Announces-New-Contract-with-CoreWeave-for-Delivery-of-Approximately-70-MW-of-Additional-Infrastructure-to-Host-High-Performance-Computing-Operations">announced</a> a new contract with CoreWeave which could add an additional $1.22 billion in projected revenue over the next 12 years.</li>



<li>Jump Crypto’s president Kanav Kariya, in a post on X, <a href="https://x.com/KanavKariya/status/1805245324610371761">said</a> that he was stepping down.&nbsp;</li>



<li>Strike, the bitcoin payments app, <a href="https://x.com/strikebtc_uk/status/1805546077958881706">announced</a> that it was entering the UK.&nbsp;</li>



<li>Former president Donald Trump may be heading to Nashville to speak at Bitcoin 2024, Axios <a href="https://www.axios.com/2024/06/24/trump-bitcoin-nashville-cryptocurrency">reported</a>.</li>



<li>Julian Assange agreed to plead guilty to a felony charge and will be released after <a href="https://www.nytimes.com/2024/06/24/us/politics/julian-assange-plea-deal.html">reaching a deal</a> with the US DOJ.</li>
</ul>



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



Q: What role does retail play in crypto this cycle?



Retail often gets conflated with the degens. There’s some overlap, but they’re two different camps.



The degens are already here. They’re the ones trying to time the top on Pump.fun memecoins and points farming on blockchain networks in hopes of future airdrops.



Retail, meanwhile, is said to be largely absent from this bull market. Next time you’re in an Uber or on a night out, ask the people around you if they’re in crypto. I’d bet you’re likely to hear something like “not anymore, I lost too much already.”



It’s a cynical take, but if retail’s only role is buying the top — becoming exit liquidity for other investor classes — then crypto may have to get used to life without them for the time being.



— David Canellis



If we were to compare how many times I’ve written “institutions” or “institutional investors” versus “retail” or “retail investors,” the difference would be shocking.&nbsp;



This cycle isn’t about retail. There’s nothing wrong with that, it’s only how this is playing out. And, honestly, maybe it’s for the best. They’re still here, and that’s pretty evident in certain areas, but they’re not the driving force.



As I mentioned above, retail was hit hard the last time around. Give that group a breather, let the institutions come in, and then maybe we’ll see it shake out differently in the future.



You can’t always be the main character. The supporting cast is just as important.&nbsp;



— Katherine Ross



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Empire Newsletter: Bitcoin surfs Elliot Waves to beat the heat

Lukas Bronsvoort

In the Netherlands, we have a saying: “Meten is weten,” which, literally translated, means “measuring is knowing.” We prefer to look at situations directly, because only then do we know what we’re up against —&nbsp;and what needs to be changed.



And it does not take much measuring of Crypto Twitter to know that we are deep in the L2 hype cycle. The sense is that L2 blockchains are more user friendly, safer and better for scalability, and we (as a collective) should focus on their development.



Forgive the directness — but that’s a mistake if we want Web3 adoption to increase.



Here’s what we know keeps users from Web3: security risks and poor performance. Now, L2s on their own do not bring these problems, as technology is neutral. It’s our own hyperfocus on L2s that is the issue. This hyperfocus has created an environment where security risks and poor performance go from minor speed bumps to major adoption obstacles.



It is counterintuitive that a high amount of focus on a technology would lead to security risks, but it’s true.&nbsp;



It’s called inattentional blindness — when we fail to see a “stimulus” (like an exploitable smart contract or overcentralization) even when it is right in front of us. A famous experiment was done to prove this effect, where participants were asked to perform a visual task. Afterwards, they were asked if they noticed the person in the gorilla costume. Half of them did not.&nbsp;



The same effect is happening with L2s. We’re paying so much attention to their potential that an unacceptable level of centralization (the main in the gorilla suit) has gone right past us: centralized sequencers.



Sequencers are responsible for batching transactions and submitting them to the chain. As a single point of failure, they should evolve from their current design to something more robust. However, what is even more concerning is that they are often controlled by the L2 team and, therefore, can be stopped at will. Just this week, Ethereum L2 Linea <a href="https://blockworks.co/newsletter/research/issue/post_1b2a11bc-6b77-4f89-a77c-99ca13767dec">decided to “pause its sequencer”</a> to halt an exploit on its chain.&nbsp;



Situations like this draw the attention of regulators, and for good reason. It is their responsibility to prosecute when their citizens suffer theft (the exploit) and to create and enforce laws for consumer protection. If Visa or Mastercard stopped running transactions for a day because they wanted to prevent being hacked, they would almost certainly be fined to compensate for the missed bill payments and late fees experienced by their users.&nbsp;



And if we want to hit billions of users, we need both an answer to this centralization problem and to be ready for the increased oversight when (not if) someone decides to stop the chain.



The other area of “hyperfocus” that has led to blind spots for Web3 adoption is our overestimation of L2 transaction capacity.&nbsp;



We know that L1s have difficulty processing many transactions per second on the scale of millions, much less billions, of people. This makes Web3 truly unscalable — and L2s were a welcome addition to the ecosystem to help solve the issue. But now that we are very much in the superchain future, there’s still insufficient capacity (even when the sequencer is on).&nbsp;



Read more from our opinion section: <a href="https://blockworks.co/news/bitcoin-runes-ordinals-innovation">Don’t fossilize Bitcoin</a>



In the desire to reach the number of transactions per second of Mastercard or Visa, the focus was on developing more L2s: In reality, we should have also thought about developing more L1s. The immediate effect of doing so would mean more base chains on which to build layers and rollups, which is good for transaction capacity and performance.&nbsp;



However, the longer term and more important effect of focusing more on L1st is innovation. Just look at Solana&#8217;s outsize effect on our ecosystem and user growth. The process of innovation involves changing what seems unchangeable, and in doing so, creating new technological foundations, different value capture mechanisms and better ways of operating. This diversity is good for transaction capacity, but it also hedges us against the possibility of a monolithic technological future.



And it is a monolithic future we’re at risk of creating. The more we emphasize layer 2s, the more we actually centralize ourselves around one chain. Besides the security risk and poor performance this will inevitably create, there’s just no fair and equitable future where one chain is the fundamental basis of the entire digital economy.&nbsp;



The good news is that if we are serious about Web3 adoption, we don’t have to kill off the L2s. We don’t have to unroll the superchain. We don’t have to focus only on the person in a gorilla suit. All we need to do is dedicate just a part of that hyperfocus to L1 development.&nbsp;



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


<div class="wp-block-post-author-biography">Lukas Bronsvoort is the CEO of Klayr Labs, a layer-one web3 startup with a mission to bring digital ownership to more people. He leads the Dutch company that oversees and maintains the layer-one blockchain formerly known as Lisk. Lukas hails from the blockchain ecosystem and has previously co-founded several ventures, including Colecti, an NFT marketplace, and Liskscan, a popular blockchain explorer. He previously served as a digital transformation manager at BNP Paribas, where he specialised in creating impactful partnerships and advised on digitization strategies. He studied marketing at the Vrije Universiteit Amsterdam (VU Amsterdam) for his master’s degree and at the HU University of Applied Sciences Utrecht for his bachelor’s degree. He is an excellent source on the diverging goals of layer-one blockchains vs. layer-two blockchains and the future of web3, cryptocurrency, digital assets, and NFTs. 
</div>


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L2s have gotten hyperfocused — that’s bad news for Web3

Macauley Peterson

The promise of guaranteed high yields with downside protection is often a red flag when navigating a sea of DeFi app marketing speak.



Yields are often exaggerated while risks get buried. It’s easy to promote sky-high APRs when you print your own token to fund temporary incentives.



In the offchain financial world, however, there is such a wild beast emerging from the depths: Shark Fin notes.



DeFi app Cega Finance, a leader in exotic options and structured financial products, launched an onchain version on Ethereum and Arbitrum today.



A Shark Fin is a type of structured financial product that offers a unique risk-reward profile. These notes provide investors with enhanced returns if the price of the underlying asset stays within a predetermined range. The name derives from the shape of the payoff diagram, which resembles a shark&#8217;s fin.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXcUGZajALrZ6D-KeNelpzJLOWKuZT1pTJwOzHhUMkEoCoks_AuiUl13EGy3IOF6wTFTa_XWEPNxYu_xsSx7axEzOaI_TWtTKZefWY9MOTp7sQIhbU26HOX-zz4QSzFiiqVy-L5tL1B4ArCx2F0In9FimLvl?key=Ihq9Kg_2PnrD987IQi93jw" alt=""/><figcaption class="wp-element-caption">Source: Cega.fi</figcaption></figure>



The potential returns sharply increase to a peak if the asset&#8217;s price remains within the range, and then level off or decline if the price moves beyond the specified threshold. This structure allows investors to benefit from stable market conditions while protecting against significant downside risk.



Cega’s launch provides conservative investors an onchain version with crypto as the underlying assets.



<h2 class="wp-block-heading">Expansion from Solana to Ethereum</h2>



Cega debuted its first four vaults on <a href="https://blockworks.co/tag/solana">Solana</a> almost exactly two years ago, but branched out to Ethereum in the second quarter of 2023.



Read more: <a href="https://blockworks.co/news/solana-options-protocol-cega-comes-to-ethereum">Solana options protocol Cega comes to Ethereum</a>



The decision to launch on the Ethereum Virtual Machine (<a href="https://blockworks.co/tag/evm">EVM</a>) was always part of Cega&#8217;s roadmap, but <a href="https://blockworks.co/news/ftx-bankrupt-hacked-investigated-a-timeline-of-events">the collapse of FTX</a> in November 2022 prompted Cega to expedite its plans, according to co-founder Winston Zhang.&nbsp;



“We knew that we couldn’t wait, and we wanted to continue growing,” Zhang told Blockworks.



Initially, the team considered expanding crosschain via <a href="https://blockworks.co/tag/layerzero">LayerZero</a> or <a href="https://blockworks.co/tag/wormhole">Wormhole</a>, but ultimately decided to hire a new team of <a href="https://app.blockworksresearch.com/glossary/#solidity-programming-language-ethereum">Solidity</a> developers to rebuild on Ethereum.



“While that was a little bit slower, it provides the best affordance for safety and security because we&#8217;re able to control the smart contracts design ourselves and not rely on a third party,” Zhang explained.



This transition, which took three to six months, was particularly a response to demand from large-scale investors like DAOs, funds and high-net-worth individuals who prefer the stability of Ethereum.



The decision to add Arbitrum was driven by its strong DeFi community and significant <a href="https://app.blockworksresearch.com/glossary/#total-value-locked-tvl">TVL</a>, making it an ideal target audience for Cega’s products. Arbitrum’s growth, <a href="https://blockworks.co/news/arbitrum-optimism-exceed-ethereum">fueled by platforms like GMX</a>, aligns well with Cega’s offerings, which appeals to trading aficionados and derivatives enthusiasts.



It’s not a migration — Cega maintains a presence on Solana with thousands of users, and the product will continue to be developed there.



“We are having conversations about what it means to reprioritize the Solana ecosystem and how to think about product parity for some of the new products that we&#8217;ve launched on Arbitrum and [Ethereum] mainnet,” Zhang said.



<h2 class="wp-block-heading">Making complex products accessible</h2>



One of the biggest challenges Cega faces is how to simplify complex financial products for their non-professional users. They made a conscious effort to create intuitive visualizations and straightforward documentation to avoid overwhelming users with technical jargon.



Typically reserved for accredited investors in traditional finance, the goal is to make this class of investment tools accessible to everyone, regardless of investment size.



“The products that we&#8217;re building are ultimately derivatives products, but they add a number of benefits for the end user that they can&#8217;t get from existing [<a href="https://blockworks.co/tag/perpetuals">perpetual futures</a>] platforms or vanilla options platforms,” Zhang said.



The new “Shark Bull” vaults target users who might typically have capital on lending platforms like Aave, and want to increase their stablecoin yield without taking directional risk to crypto markets.



These vaults offer 100% principal protection with a guaranteed yield of 12.7%, and the potential for up to 30% returns under certain circumstances by combining lending and options strategies.&nbsp;



Stablecoins’ lending yield forms the baseline return, while a portion of the yield is used to purchase out-of-the-money (OTM) call <a href="https://blockworks.co/tag/options">options</a> on crypto assets — the “bull” component, driving the high bonus payouts if prices rise.



The lending counterparties in this case are not smart contracts but major crypto market makers, so this introduces some credit risk. Cega facilitates these loans but is not a custodian, and manages the risk through stringent legal agreements and ongoing credit monitoring provided by Credora.



Read more: <a href="https://blockworks.co/news/bitcoin-lenders-yield-polkadot">Bitcoin lenders have a new regulation-friendly option for yield</a>



Cega, based in Singapore, emphasizes compliance with global regulations. These days, that requires geofencing the US-based customers.



<h2 class="wp-block-heading">Decentralization plans</h2>



The company <a href="https://blockworks.co/news/crypto-funding-ledger-eigenlabs">raised</a> a total of $9.3 million from notable investors including <a href="https://blockworks.co/tag/dragonfly-capital">Dragonfly</a> and <a href="https://blockworks.co/tag/pantera-capital">Pantera</a>, and does not yet have a token.



Zhang said his team deliberately avoided participating in the points incentivization game <a href="https://blockworks.co/news/defi-points-farming-crypto-investments">popular over the past year</a>, preferring to focus on providing real sustainable yield.



“We&#8217;re actually really proud of that,” Zhang said.



Even without incentives, the platform has about <a href="https://defillama.com/protocol/cega#information">$16.6 million</a> in TVL currently, and about $404 million in cumulative trading volume.



Looking ahead, Cega does plan to launch a token while maintaining its core values of responsibility and prudence, Zhang said.



“There&#8217;s way too many protocols in crypto and in DeFi that just aren&#8217;t built on real foundations,” he said, citing the project&#8217;s published <a href="https://docs.cega.fi/cega">values</a>.



“There just have been way too many examples in the ecosystem of carelessness, and lack of responsibility, and that is not us.”



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Cega Shark Bull vaults on Ethereum and Arbitrum combine stability with high returns

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Welcome to the On the Margin Newsletter, brought to you by Ben Strack and Casey Wagner. Here’s what we are digging into on this (glorious?) Monday:



<ul>
<li>BTC’s price plummeted to $60,000. How much further down could it go?&nbsp;</li>



<li>The economic data to watch for ahead of the July 4 week.</li>



<li>We’re in the US spot ETH ETF homestretch, fund firm filings show.</li>
</ul>



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



<h2 class="wp-block-heading">How low can you go?</h2>



No, we didn’t just pull out the limbo stick at a beginning-of-summer celebration. Nor are the voices of Flo Rida and T-Pain blaring out of a boombox circa 2008.



It’s a less fun type of low, most would agree. We’re talking about the price of bitcoin, which continued its sell-off today.



BTC dropped to about $60,000 around 1 pm ET Monday — a roughly 5% drop from 24 hours prior.



Near-term catalysts for a bull trend renewal appear few and far between, some industry analysts and execs say.&nbsp;&nbsp;&nbsp;



After all, <a href="https://blockworks.co/news/mt-gox-distributions-bitcoin-market-impact">Mt. Gox repayments</a> — in bitcoin and bitcoin cash — are set to start in July, according to a Monday <a href="https://www.mtgox.com/img/pdf/20240624_announcement_en.pdf">letter</a> from the defunct exchange. Blockworks’ own Felix Jauvin weighed in on X:



<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">Been wondering what’s made crypto so weak. Tons of insiders frontrunning mt gox disbursement announcement makes WAYYY more sense. IMO that probs means that nuke on the announcement was the final pricing in. I continue to view the macro front as quite bullish so I’ve been…&mdash; fejau (@fejau_inc) <a href="https://twitter.com/fejau_inc/status/1805242741494005780?ref_src=twsrc%5Etfw">June 24, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Not to mention bitcoin miners “need to aggressively sell their bitcoin reserves” as their costs have more than doubled following the Bitcoin halving in April, noted ZX Squared Capital co-founder CK Zheng.



Mining giant Core Scientific, for example, self-mined 447 BTC and sold 453 BTC last month (it must sell all the bitcoin it mines, per terms upon emerging from bankruptcy in January). Rival Marathon Digital sold 390 of the 616 BTC (63%) it generated in May, and holds about 1,000 less bitcoin than it did at the start of June, according to CryptoQuant <a href="https://cryptoquant.com/asset/btc/chart/miner-flows/miner-reserve?miner=mara_pool&amp;window=DAY&amp;sma=0&amp;ema=0&amp;priceScale=log&amp;metricScale=linear&amp;chartStyle=line">data</a>.&nbsp;



“On the demand side, the institutional investors will jump in to build their new bitcoin positions when the price is pulled back to an attractive level,” Zheng told Blockworks. “The allocation to bitcoin by these investors is still at the very early stage.”



Overall, BTC’s failure to break into new territory (despite numerous chances) has scared people away for now, added Ledn CIO John Glover.



“The main factor continues to be that the market is positioned long and this sell-off is leading to position reduction by those who expected a fast move up to new highs,” Glover said.&nbsp;



It wasn’t long ago some were optimistic that <a href="https://blockworks.co/news/100k-for-btc-is-no-pipe-dream">bitcoin would hit $100,000</a> by the end of 2024 — citing strong bitcoin ETF flows, bipartisan crypto policy momentum in the US and the European Central Bank lowering rates as catalysts for a breakout. But BTC funds have endured outflows in consecutive weeks, Congress is moving slowly and the Fed opted <a href="https://blockworks.co/news/federal-reserve-interest-rates-unchanged">not to</a> follow the ECB’s lead.&nbsp;



Still, Zheng said the <a href="https://blockworks.co/news/bitcoin-bull-markets-comparison">bitcoin bull cycle has probably</a> not even hit its halfway point. The “problematic” US debt level, continued institutional adoption and the eventual Fed interest rate cut is set to spur a new all-time high in the next 12 months, he added.&nbsp;



Glover predicts the rally to pick up again <a href="https://blockworks.co/news/macro-headwinds-bitcoin-summer">toward the end of the summer</a> as a result of ether ETF launches or a jump in inflationary pressures. He gives a target BTC peak for this cycle to be between $85,000 and $95,000.&nbsp;



But in terms of our headline question, BTC likely has more room to fall, the executives said.&nbsp;&nbsp;



Bitcoin’s current mining cost of about $53,000 will most likely serve as the floor of this short-term decline, Zheng said. Glover pegs the floor for this correction to be about $56,500.&nbsp;&nbsp;



Zheng added: “Any significant decline of bitcoin price at today’s level will be a great entry point for the long term investors.”&nbsp;



— Ben Strack



<h2 class="wp-block-heading">$1.2 billion</h2>



The amount of investor capital that has left crypto investment products globally over the past two weeks, according to CoinShares data.&nbsp;



Net outflows from crypto vehicles came in at $584 million last week alone — driven by “pessimism amongst investors for interest rate cuts by the Fed this year,” CoinShares’ James Butterfill said in a Monday report.&nbsp;



Bitcoin products saw the most bleeding, losing $630 million from June 17 to June 21. The US spot BTC funds accounted for about 86% of those outflows.



<h2 class="wp-block-heading">On Our Radar</h2>



Happy Monday! We’re in the swing of summer and there’s a busy week of economic data before the July 4 holiday. Here’s what’s on our radar:&nbsp;&nbsp;



<ul>
<li>Initial jobless claims, as always, will be published on Thursday. After seeing continuing claims increase last week, markets are going to want to see a softer reading. If the labor market can remain strong, economic growth is unlikely to slow too much — ultimately increasing the odds of a soft landing from the Fed. Fingers crossed.&nbsp;</li>



<li>The biggest event of the week will be the PCE report, scheduled to drop before markets open on Friday. Analysts are calling for the headline year-over-year figure to show a 2.6% increase in prices, with Core PCE (which excludes food and energy prices) to remain the same. PCE is the Fed’s preferred inflation gauge, so a drop in May would increase the odds of an autumn rate cut, likely helping equity prices along the way.&nbsp;</li>



<li>We have another busy week for Fed speakers. Fed Board Governor Lisa Cook will give remarks Tuesday, followed by Richmond Fed President Tom Barkin and Governor Michelle Bowman on Friday. After last week, it’s unlikely any will deviate from the party line too much, but it never hurts to tune in.&nbsp;</li>
</ul>



— Casey Wagner



<h2 class="wp-block-heading">The ETH ETF homestretch</h2>



The fund groups poised to launch spot ether ETFs took another step forward on Friday, submitting amended registration statements (S-1s) to the SEC. Finalizing language on these documents is a last step to get the products trading after the US regulator last month <a href="https://blockworks.co/news/sec-approves-ether-etf-proposals">OK’d proposed rule changes</a> from exchanges to list these ETH funds.



The issuers had received “light” suggested revisions from the SEC on June 14, people familiar with the filings told Blockworks last week.&nbsp;&nbsp;



The latest S-1 amendments — while indicating a seemingly smooth back-and-forth between issuers and the SEC — did not include much groundbreaking info.&nbsp;



Among the new tidbits, however, was the 0.20% planned fee for the VanEck Ethereum Trust. Only Franklin Templeton had revealed its planned price — at 0.19% — prior to that.&nbsp;



These fees are similar to those of the spot bitcoin ETFs launched in January. Some industry watchers have said they <a href="https://blockworks.co/news/sizing-up-demand-for-us-eth-etfs">expect ETH fund inflows</a> to be roughly one-fifth of the bitcoin ETFs, which have brought in about $15 billion in their first five and a half months.&nbsp;



Other firms are likely waiting for BlackRock — the world’s largest asset manager — to disclose the price for its iShares Ethereum Trust ETF “to see what they need to orbit around,” Bloomberg Intelligence analyst Eric Balchunas said in an X <a href="https://x.com/EricBalchunas/status/1804251147986964547">post</a>.



SEC Chair Gary Gensler gave a vague “sometime over the course of the summer” timeline for ETH ETF launches. But the continuous SEC-issuers dialogue suggests this could wrap up sooner rather than later.



— Ben Strack



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



<ul>
<li>Bitcoin miner Riot Platforms said Monday it has<a href="https://blockworks.co/news/riot-nominates-bitfarms-board-directors-takeover"> requisitioned a special meeting</a> of Bitfarms shareholders in a bid to replace board directors. It’s the latest development in Riot’s apparent <a href="https://blockworks.co/news/riot-mining-hostile-bid-bitfarms-acquisition">push to take over the company</a>.&nbsp;</li>



<li>Days after <a href="https://fortune.com/crypto/2024/06/20/cftc-jump-crypto-behnam-kanav-kariya-sec/">reports</a> circulated that the CFTC had opened a probe into Jump Crypto, president Kanav Kariya announced his departure from Jump on <a href="https://x.com/KanavKariya/status/1805245324610371761">X</a> Monday. His post did not mention any regulatory hurdles or legal matters.&nbsp;</li>



<li>Reps. French Hill (R-Ark.) and Chrissy Houlahan (D-Pa.) last week <a href="https://x.com/RepFrenchHill/status/1803898800966091087">visited</a> Nigeria to see <a href="https://blockworks.co/news/binance-detained-exec-charges-dropped-nigeria">jailed Binance executive Tigran Gambaryan</a>. The lawmakers said they are pushing for embassy involvement in bringing Gambaryan home.</li>
</ul>



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On the Margin Newsletter: How low BTC’s price might go after Monday’s dip

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Howdy!



Our little newsletter now has its very own email address. They grow up so fast.



If you have any questions, issues, steaming hot takes or other feedback regarding the Lightspeed newsletter, we’d love to hear from you!&nbsp;



You can reach us here: lightspeed.newsletter@blockworks.co



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<h2 class="wp-block-heading">Solana’s under the radar feature for institutions</h2>



When PayPal deployed its stablecoin on Solana a month ago, the network’s “token extensions” — which let merchants customize tokens to become more compliance- and business-friendly — were a big reason why, <a href="https://blockworks.co/news/lightspeed-newsletter-solana-hooks-paypal">I reported</a>.



But there’s a similar institution-focused primitive from the Solana Foundation that gets talked about less: Solana Permissioned Environments, or SPEs. SPEs <a href="https://solana.com/news/solana-permissioned-environments-spe-introduction">allow</a> developers to use Solana’s software for permissioned blockchains powered by the Solana Virtual Machine (SVM) — meaning Solana’s software powers blockchains that can meet the more rigorous compliance standards faced by institutions like banks, for instance.



I spoke with Max von Wallenberg, who is trying to create an on-chain bank named Iron — and is doing so with an SPE.&nbsp;



Banks are a “highly privacy sensitive regulated player,” von Wallenberg said in a text. He said that Iron can use an SPE to benefit from Solana’s core architecture while also enabling tokenized commercial bank deposits, confidential trading, and private real-world asset (RWA) tokenization.&nbsp;



Other iterations of this kind of thing exist. Polygon’s Chain Development Kit (CDK) and Avalanche’s Subnets can also be used to create more controlled instances of blockchains, Nick Ducoff, head of institutional growth at the Solana Foundation, told me. The “big four” accounting firm Ernst &amp; Young is <a href="https://blockworks.co/news/ey-uses-polygon-proof-of-stake-for-business">using Polygon and zero-knowledge proofs</a> to let clients put business contracts on-chain while preserving their privacy, for instance.



The Solana-based <a href="https://solana.com/developers/guides/permissioned-environments#why-should-you-build-with-solana-permissioned-environments?">networks</a> created via SPEs have trouble interoperating with Solana mainnet, and that will be a next growth step for the feature, Ducoff said. Von Wallenberg said Solana’s version of permissioned blockchain tech has some unique benefits though.



“We today don’t see any other chain / environment that can give us enterprise-grade performance + concealed token standards (out of the box) + high throughput + fast settlement time + an accessible team like the Solana Foundation,” von Wallenberg said.



The Solana Foundation <a href="https://solana.com/news/solana-permissioned-environments-spe-introduction">introduced</a> SPEs in September 2023 and remains involved in the technology’s development.&nbsp;



ABK Labs CEO Alex Kehaya started a Telegram group for SPEs, and 15 businesses have joined so far. Ducoff said “large multinational financial institutions” are exploring building with SPEs, though he declined to name which ones.



Other examples of teams currently building with SPEs are payments platform Sphere, oracle service Pyth, and energy trading platform Powerledger.



For the crypto cowboys hoping for fully permissionless and transparent financial infrastructure, permissioned blockchain environments might not be the most sexy concept. But the traditional finance world won’t “touch permissionless networks with a 10ft pole” without some permissioning due to money laundering and counterterrorism standards, Richard Wu, chief technology officer at Solana NFT marketplace Tensor, said in a DM.



“If you think of crypto/blockchain as a tech first and foremost, then SPEs are the easiest way to transition the old system to this new, faster, more transparent system. And I&#8217;d rather have a world where 80% runs on blockchain rails with permissioning than a 2% fringe,” Wu said.



— Jack Kubinec



<h2 class="wp-block-heading">Zero In</h2>



<h3 class="wp-block-heading">$2.7 billion</h3>



That’s roughly how much market capitalization Solana had shed over the past 24 hours at press time, falling from $60.7 billion down to $58 billion, per CoinGecko.&nbsp;



Solana fell roughly 12% on the week, and for some memecoins the drawdown was even more aggressive: dogwifhat is down 28.6%, and MOTHER is down 47.4% over the same time frame.



Some memecoins came out alright though: BONK, Boden, and Popcat all fell less than Solana on the week.&nbsp;



Solana DeFi may have also dodged some of the market dump: Total value locked in the sector is only down around 2.5% over the past week, according to DeFiLlama <a href="https://defillama.com/chain/Solana">data</a>.



— Jack Kubinec



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



Over the weekend, solana experienced a price drop of around 9.5%. Other cryptocurrencies saw their prices fall over the same period — bitcoin dropped 5.4% and ether&#8217;s price shed 7.4% — but solana&#8217;s drop was notably sharper. This decline has sparked a flurry of speculation and theories on social media.



Long-time crypto personality Crypto Bitlord <a href="https://x.com/crypto_bitlord7/status/1805049915871011187">tweeted</a> unconfirmed rumors of an investigation into Solana, causing concern for some. He said, &#8220;We are hearing rumors that $SOL is under investigation and a huge case is about to become public. This has been brewing for weeks now and couldn’t come at a worse time. If what we heard is true, start praying for Solana.&#8221;



Comments ranged from <a href="https://x.com/marian_tsx/status/1805054429885784070">disbelief</a> and <a href="https://x.com/IcedKnife/status/1805050246080110818">ridicule</a> to outright hostility with @HugoMartingale <a href="https://x.com/HugoMartingale/status/1805050155973939283">saying</a> &#8220;Is the clout still worth it if everyone thinks ur a clown?&#8221; Others seemed to take them at their word, such as @jasoncola1, who <a href="https://x.com/jasoncola1/status/1805055455661621603">posted</a>, &#8220;This is deeply concerning,&#8221; and @ItsDave_ADA, who <a href="https://x.com/ItsDave_ADA/status/1805148656401572171">noted</a>, &#8220;Centralization, control, greed, facilitating gambling, with celebrity endorsement and a history of being linked with exploiters. Wouldn&#8217;t surprise me at all. Always said the clock is ticking.&#8221;



Amid the panic, there were also <a href="https://x.com/be4investment/status/1804777201713213732">bullish</a> <a href="https://x.com/alpha_donuts/status/1805223597902032949">takes</a> and signs of <a href="https://x.com/jussy_world/status/1804775961126228205">contrarian</a> <a href="https://x.com/OllieInvesting/status/1804853891516752005">optimism</a>. Users such as @dubzyxbt <a href="https://x.com/dubzyxbt/status/1804769982326468979">remarked</a>, &#8220;Buckle up buttercup,&#8221; while sharing a chart juxtaposing Solana&#8217;s current market conditions to those in 2021, suggesting a similar takeoff might be imminent. User @NFTfeen <a href="https://x.com/NFTfeen/status/1804913090976240127">compared</a> the pull back to, &#8220;The coil before the spring&#8221; while @raiden_crypto <a href="https://x.com/raiden_crypto/status/1805116939389337711">declared</a> &#8220;Idc what the price of $SOL is, I’m just trying to multiply my Solana I know it’ll go up at some point.&#8221;



The uncertainty has led to a mix of bearish predictions, bullish hopes, and humorous takes, showcasing how even the smallest hint of market chaos can lead to frantic, factually dubious tea leaf reading.



Solana&#8217;s price has rebounded to $129 at the time of writing.



— Jeffrey Albus



<h2 class="wp-block-heading">One Good DM</h2>



A message from chainyoda, core contributor to Hadron Founders Club:


<div class="wp-block-image">
<figure class="aligncenter"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXf86eK_rZCecr0GGPsg67sP0D50nUjEVZgWvpyhD4_h1Z2o_9HYOJgtcTMwaUiERho4R4kujQNVhGlzJ9YC8DVnETQoxcOCjAcpBJFH1AJwtI4dXNhK5-e1ccqjU1pJ0Ue3o4SquaDtgvYs4DNWbm4kByLj?key=7_00_Gt0kuuU2ul_gmWpjg" alt=""/></figure></div>


Updated June 25, 2024 at 2:53 pm ET: A previous version of this article stated Ducoff made the Telegram group for SPEs, rather than Kehaya. 



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Lightspeed Newsletter: Solana Permissioned Environments may help court institutions

The markets are seeing red.&nbsp;



Mark Wong, HashKey OTC’s head of trading, chatted with Blockworks about the market, giving a little peek under the hood at the overall vibe.



“What’s interesting is that there’s been no significant technology of yet to build a catalyst. We do feel that sentiment has been basically revolving around most of the same players,” he told me.&nbsp;



The big catalyst earlier this year was clearly the bitcoin ETFs, which led bitcoin to hit a fresh all-time high following the previous bear market. But now, outflows could signal a “true correction” according to CoinShares, which noted that outflows from the US bitcoin ETFs topped $584 million last week.



“We see some dissociation between, for example, bitcoin prices [last] week against the backdrop of soaring stock prices if we look at the S&amp;P. So it does feel as though if there&#8217;s a downturn in the overall macro environment… For example, if the [Federal Reserve doesn’t] cut interest rates at the rate that the market wants them to, there may be more pain on the downside.”



There’s also the news early this morning that Mt Gox will start repayments next month, but Wong says this is all just “very cyclical.”



He told Blockworks he’s currently seeing some profit-taking from early bitcoin adopters, but he also sees buying interest from institutions such as family offices and asset managers. Outside of bitcoin, he’s seeing a trend of folks buying into thematic coins, including real-world assets and DePIN. 



“They’re just thematic sort of movements going on in the space, I think,” he said.



He’s also watching airdrops as they evolve and he’s curious to see how the “tokens increase their user pool going forward. I think that’s something that we’re also looking at as a firm overall.”



In the Empire newsletter, my co-author and Blockworks editor David Canellis has analyzed a lot of data around memecoins, especially celebrity memecoins. For Wong, this is another subsect of crypto to pay attention to.&nbsp;



“I think memecoins have resulted in quite a decent amount of dilution of value all around in terms, but there will be some that are there to stay,” Wong said.&nbsp;



He further noted that the ones that build a good community and also provide “significant entertainment value” are the ones that show the most promise for a long, lasting run.



But outside of the US ETFs and memecoins, Wong thinks we’re in the “eye of the storm” currently, and that this isn’t the start of a more volatile period. But is this a sign of the market maturing, and if that’s the case, can we start to expect less volatility? 



“All around, I believe that the volatility may not have begun yet,” he added. “We haven’t quite seen the 2021 levels of excitement.”



Given that it’s summer, he also pointed out that the classic Wall Street saying “sell in May and go away” may actually be applicable right now.&nbsp;



“I think bitcoin does show better performance within the fourth quarter, so the market may be looking forward to that,” he told me.&nbsp;



His view is in line with others, as <a href="https://blockworks.co/news/telegram-blockchain-surfing-narratives">we’ve previously discussed</a>. Despite the lower levels, I’m told there’s still a pathway to bitcoin near or at $100,000 by the end of the year.



While US bitcoin ETFs have dominated the headlines, Wong’s actually feeling pretty “positive” about the Hong Kong counterparts. HashKey, in partnership with Bosera, <a href="https://group.hashkey.com/en/newsroom/bosera-hashkey-bitcoin-and-ether-spot-etfs">launched</a> both an ether and bitcoin ETF at the end of April.&nbsp;



“There are a number of ETF flows that are related throughout arbitrage so there&#8217;s a trade ongoing that people buy for ETFs and sell sort of CME futures, where that volume may be a lot bigger than just pure buy volume. This is a hedge trade so within the Hong Kong side, we have, in total, [flows coming in around] $10 or $15 million US. We feel like it&#8217;s very positive, and everything that we are confident and continues to grow in the space,” Wong said. 



A shorter version of this article first appeared in Monday’s Empire Newsletter. Sign up <a href="https://blockworks.co/newsletter/empire">here</a> to never miss an issue.



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Bitcoin may be in a ‘sell in May and go away’ phase: Analyst

If you believe in big fractal energy, the next few months will be totally decisive for bitcoin’s price.&nbsp;



For all we know, bitcoin’s <a href="https://blockworks.co/news/bitcoin-all-time-high">all-time high of nearly $73,740</a> in March was the peak of our current cycle.&nbsp;



That would mean the bull market is over. Bitcoin and ether trading 5% lower today — sending practically everything else except stablecoins into the red — surely isn’t helping sentiment.



But the problem with markets is that you never really know when they’ve topped out.



Looking back, bitcoin’s all-time high in December 2017 was clearly the top for the next three years, even if altcoins continued to rally for another few weeks.



Read more: <a href="https://blockworks.co/news/empire-newsletter-summer-market-madness">Empire Newsletter: Market madness arrives just in time for summer</a>



And in March 2021, when bitcoin cleared $61,000 for the first time, it wasn’t set in stone that bitcoin would smash that by another 13% by November — only eight months later — after retracing by nearly half.



At some point, it became obvious that the bull market had run its course. Bears may have called it earlier than the bulls, but either way, the <a href="https://blockworks.co/tag/terraform-labs">Terra</a> implosion in the following May and the cascading liquidations and <a href="https://blockworks.co/news/ftx-comparison-crypto-bankruptcies">bankruptcies that followed</a> were really the nails.



Read more: <a href="https://blockworks.co/news/terraform-agrees-to-pay-proposed-judgment-sec">Terraform agrees to pay nearly $4.5B in proposed judgment with SEC</a>



When it comes to prices, all we can really do is look backward. It’s been 585 days (~20 months) since bitcoin bottomed out in November 2022, which for convenience’s sake, we’ll call the start of our current bull market.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/18492121/embed#?secret=kULrSJ0C8P" data-secret="kULrSJ0C8P" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">This chart plots bull markets against each other. So far, so good.</figcaption></figure>



Using that very basic definition, the previous two bull markets hit their peaks after ~840 and 1,060 days. So, if we’re destined to repeat those periods — a big if — then we’re solidly in the second half of our cycle.



Bitcoin had, at this point in the past two seasons, gone 6x and 3x. Bitcoin has so far posted 4x returns since the bottom, even after the recent dip, placing it in the middle of its most recent bull markets.



That’s if bitcoin is still in a bull market. If bitcoin actually topped out in March, then this would’ve been the shortest bull cycle on record, not counting its first year of price discovery.



In the past two bull markets, most of bitcoin’s gains occurred over the following 200 days, going as much as 20x and 100x on their respective bottoms.&nbsp;



We know that returns are <a href="https://blockworks.co/news/bitcoin-halving-cycle-returns">diminishing every cycle</a> — so whatever bitcoin does from here may not be quite as explosive. That might have crypto investors itching for big profits elsewhere. Historically, altcoin seasons have helped bridge the gap.&nbsp;



But as is now well-documented, there has been no <a href="https://blockworks.co/tag/altcoins">altcoin</a> season so far this cycle, at least not in the same sense as previous periods.&nbsp;



Building on the definition <a href="https://blockworks.co/news/empire-newsletter-bitcoin-etf-shareholders">outlined in a previous edition</a> of the Empire newsletter, there have been three distinct altcoin seasons over the past seven years. Two coincided with Bitcoin halvings, with each of those running for around a year and a half and finishing up when BTC topped out.&nbsp;



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/18492783/embed#?secret=0xVZpTP7Iu" data-secret="0xVZpTP7Iu" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Bitcoin halvings are marked with dotted lines and altcoin seasons by blue</figcaption></figure>



A smaller altcoin season ran for almost seven months from the end of 2018 to halfway through the following year.&nbsp;



This time around, neither ETH or TradingView’s OTHERS <a href="https://www.tradingview.com/symbols/OTHERS/">index</a>, which tracks the market capitalization of all cryptocurrencies outside the top 10, have returned to all-time high valuations since 2021.



Altcoin season either could be late — <a href="https://blockworks.co/news/ethereum-altcoin-etf-sec-gensler">or just not coming</a> — depending on how bullish or bearish you are. 



Either way, this bull market has turned out very different from the others so far.



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How this bitcoin bull market stacks up against the others

Riot Platforms has officially called for a meeting of Bitfarms shareholders in a bid to replace board directors and continue its apparent push to take over the company.&nbsp;



Shareholders will be able to vote on the removal of CEO Nicolas Bonta and director Andrés Finkielsztain at the upcoming meeting, Riot said in a Monday news release. Those individuals are responsible for “poor corporate governance practices and consistent inability to realize Bitfarms’ full potential,” the company claimed in a statement.&nbsp;



A <a href="https://blockworks.co/tag/bitfarms">Bitfarms</a> spokesperson did not immediately return a request for comment Monday.&nbsp;



Read more: <a href="https://blockworks.co/news/riot-mining-acquisition-bid-bitfarms">Riot reveals bid to buy Bitfarms, following CEO ouster</a>



<a href="https://blockworks.co/tag/riot-blockchain">Riot</a> nominated two independent board members to replace Bonta and Finkielsztain — as well as a third to fill a seat formerly held by co-founder Emiliano Grodzki, who was voted off the board earlier this month.



Those nominees include John Delaney, president of Flagler College and the former mayor of Jacksonville; Amy Freedman, an adviser to Ewing Morris and Co. Investment Partners and Longacre Square Partners; and Ralph Goehring, a consultant and former chief financial officer of Global Clean Energy Holdings.



Bitfarms has 21 days to schedule the meeting, according to Riot.



The move comes after <a href="https://blockworks.co/news/riot-mining-hostile-bid-bitfarms-acquisition">Riot sought to buy Bitfarms</a> in April as part of a deal Bitfarms ultimately rejected. Riot is Bitfarms’ largest shareholder, growing its stake to roughly 14.9% in recent weeks.



Read more: <a href="https://blockworks.co/news/riot-bitfarms-miner-takeover-continues">Miner tensions rise as Riot now owns 14% of Bitfarms shares</a>&nbsp;



Riot previously accused Bitfarms of not engaging in “substantive dialogue” regarding its offer to buy the company. It has also criticized the miner’s leadership since <a href="https://blockworks.co/news/eclipse-labs-names-new-ceo">ousting Geoffrey Morphy from the CEO post</a> after Morphy filed a statement of claim against Bitfarms in the Superior Court of Ontario.



A Bitfarms representative told Blockworks last week that while it has invited Riot to participate in its “strategic alternatives review process,” the company has declined to do so.&nbsp;



Riot has instead “continued acquiring common shares of the company in an attempt to undermine the integrity of the process and harm the interests of other Bitfarms shareholders,” the company spokesperson added.



Good-faith negotiations “will not be possible” until there are board changes made, Riot Platforms noted in the Monday news release.



“Riot continues to believe that a combination of Bitfarms and Riot will create the premier and largest publicly listed bitcoin miner globally, with geographically diversified operations well-positioned for long-term growth,” the company added. “Riot remains completely committed to pursuing a transaction with Bitfarms.”



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Riot nominates directors for Bitfarms board as part of takeover saga

Today, enjoy the Empire newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox.&nbsp;<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">Not over until it is</h2>



The trouble with markets is that you never quite know when they’ve peaked.



It’s all so easy in retrospect. Looking back, bitcoin’s all-time high in December 2017 was clearly the top for the next three years, even if altcoins continued to rally for another few weeks.



And in March 2021, when bitcoin cleared $61,000 for the first time, it wasn’t set in stone that bitcoin would smash that by another 13% by November — only eight months later — after retracing by nearly half.



At some point, it became obvious that the bull market had run its course. Bears may have called it earlier than the bulls, but either way, the Terra implosion in the following May, and the cascading liquidations and bankruptcies that followed were really the nails.



For all we know, bitcoin’s <a href="https://blockworks.co/news/bitcoin-all-time-high">all-time high of nearly $73,740</a> in March was the peak of our current cycle. That would mean the bull market is over.



It certainly feels like that today, with practically everything except <a href="https://blockworks.co/tag/stablecoins">stablecoins</a> in the red.



When it comes to prices, all we can really do is look backward. It’s been 585 days (~20 months) since bitcoin bottomed out in November 2022, which for convenience’s sake, we’ll call the start of our current bull market.



Using that very basic definition, the previous two bull markets hit their peaks after ~840 and 1,060 days. So, if we’re destined to repeat those periods — a big if — then we’re solidly in the second half of our cycle. Here’s what the market looks like compared to previous years.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/18492121/embed#?secret=yP6fSYoLxM" data-secret="yP6fSYoLxM" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">This chart plots bull markets against each other. So far, so good.</figcaption></figure>



Bitcoin had, at this point, gone 6x and 3x in the past two seasons. Bitcoin has so far gone 4x, even after the recent dip, placing it in the middle of its most recent bull markets.



That’s if bitcoin is still in a bull market. If bitcoin actually topped out in March, then this would’ve been the shortest bull cycle on record, not counting its first year of price discovery



It goes without saying, but if you believe in big fractal energy, all this makes the next few months totally decisive for bitcoin’s price.&nbsp;



In the past two bull markets, most of bitcoin’s gains occurred over the following 200 days, going as much as 20x and 100x on their respective bottoms.&nbsp;



We know that returns are <a href="https://blockworks.co/news/bitcoin-halving-cycle-returns">diminishing every cycle</a> — so whatever bitcoin does from here may not be quite as explosive. That might have crypto investors itching for big profits elsewhere. Historically, altcoin seasons have helped bridge the gap.&nbsp;



But as is now well-documented, there has been no <a href="https://blockworks.co/tag/altcoins">altcoin</a> season so far this cycle, at least not in the same sense as previous periods.&nbsp;



Building on the definition outlined in a <a href="https://blockworks.co/news/empire-newsletter-bitcoin-etf-shareholders">past edition of this column</a>, there have been three distinct altcoin seasons over the past seven years. Two coincided with bitcoin halvings, with each of those running for around a year and a half and finishing up when BTC topped out.&nbsp;



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/18492783/embed#?secret=SH4zG9w0Ri" data-secret="SH4zG9w0Ri" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Bitcoin halvings are marked with dotted lines and altcoin seasons by blue</figcaption></figure>



A smaller altcoin season ran for almost seven months from the end of 2018 and halfway through the following year.



Altcoin season either could be late — <a href="https://blockworks.co/news/ethereum-altcoin-etf-sec-gensler">or just not coming</a> — depending on how bullish or bearish you are.&nbsp;



Either way, this bull market has turned out very different from the others so far. Let’s hope it&#8217;s not too different and there’s still more room to run.



— David Canellis



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



<ul>
<li>BTC and ETH are down 5% over the past day, sitting at $61,100 and $3,310 respectively.</li>



<li>ORDI, NOT and BRETT are the hardest hit, each losing 10%, followed closely by UNI.&nbsp;</li>



<li>There are 3,745 <a href="https://www.validatorqueue.com/">validators</a> in the Ethereum queue right now, while there’s only one in the exit queue.</li>



<li>DEX weekly <a href="https://defillama.com/dexs">volumes</a> have fallen 10% to $35.4 billion but are still up year to date.</li>



<li>Ethereum and Polygon weekly NFT <a href="https://www.cryptoslam.io/blockchains/ethereum?tab=Collection+Rankings&amp;period=7d">volumes</a> are up 16%, reaching $38.9 million and $18.2 million respectively. Bitcoin NFT volume dropped 30% to $16.8 million.</li>
</ul>



<h2 class="wp-block-heading">Dog days of summer</h2>



What’s the vibe?



I posed the question to Hashkey OTC’s head of trading, Mark Wong, to see what traders are watching as the pullback continues.&nbsp;



Obviously, there’s been a sea of red out there, and that’s become a focal point for Wong.&nbsp;



“What’s interesting is that there’s been no significant technology as of yet to build a catalyst. We do feel that sentiment has been basically revolving around most of the same players,” he told me.&nbsp;



I don’t think I have to explain that bitcoin ETFs sucked the air out of the room for months. They’ve also added to the so-called vibe — or at least did — earlier this year. We’ll have to see if that momentum can continue.



But we’ve spent enough time chatting about the ETFs, so let’s talk about some other things, like <a href="https://blockworks.co/tag/meme-coins">memecoins</a>…



“I think memecoins have resulted in quite a decent amount of dilution of value all around in terms, but there will be some that are there to stay,” Wong said. The ones that build a good community and also provide “significant entertainment value” are the ones that show the most promise for a long, lasting run.



Whether Iggy Azalea’s $MOTHER will join the ranks of Dogecoin isn’t yet clear though.



Ah, it’s Monday morning and we’ve already chatted about memecoins and bitcoin ETFs, all in one go. Still with me?



Let’s zoom out. Wong thinks we’re in the “eye of the storm” right now, and that this isn’t exactly the start of a more volatile period despite bitcoin losing momentum over the weekend and tumbling to $61,000.&nbsp;



To be fair, we hadn’t seen that leg down when I sat down with Wong. But we did discuss whether bitcoin and ETH were maturing this cycle and how that might impact volatility.&nbsp;



Wong’s currently seeing some profit-taking from early bitcoin adopters but also buying interest from institutions, such as family offices and asset managers. Outside of bitcoin, he’s noticed a trend buying into thematic coins, including real-world assets and DePIN.&nbsp;



“All around, I believe that the volatility may not have begun yet,” he added. “We haven’t quite seen the 2021 levels of excitement.”



Maybe that’s par for the course. And, stop me if you’ve heard this before, but we’re in the throes of summer at this point. Wong pointed out that the classic Wall Street saying, “sell in May and go away,” may really be relevant right now.&nbsp;



“I think bitcoin does show better performance within the fourth quarter, so the market may be looking forward to that,” he told me.&nbsp;



His view is in line with others, as <a href="https://blockworks.co/news/telegram-blockchain-surfing-narratives">we’ve previously discussed</a>. Despite the lower levels, I’m told there’s still a pathway to bitcoin near or at $100,000 by the end of the year.



While the vibes are bearish right now, it may just be cyclical.&nbsp;



Keep calm and crypto on, I guess, as we await more catalysts. Better just try to ride out the summer.



— Katherine Ross



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



<ul>
<li>The Mt Gox estate <a href="https://www.mtgox.com/img/pdf/20240624_announcement_en.pdf">said</a> that repayments will begin in July.</li>



<li>Over the weekend, a video clip circulated of Ark Invest CEO Cathie Wood saying that she’d vote for Trump, though content creator Kevin Paffrath has since <a href="https://x.com/realMeetKevin/status/1805094637134385461">deleted</a> the video.</li>



<li>CoinStats “temporarily” <a href="https://x.com/CoinStats/status/1804633869372559788">shut down</a> its app after 1,590 wallets were drained in a hack.</li>



<li>A Nomura survey focused on Japanese institutional investors <a href="https://laserdigital.com/wp-content/uploads/2024/06/Japan-Market-Survey-On-Digital-Asset-investment-Trends-2024-1.pdf">found</a> that 54% plan to invest in crypto within the next three years.</li>



<li>A slew of updated registration statements from potential spot ether ETF issuers <a href="https://www.theblock.co/post/301320/spot-ethereum-etf-issuers-post-fee-and-seed-investment-disclosures-in-latest-wave-of-amended-filings">disclosed</a> seed funding and fees late Friday.</li>
</ul>



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



Q: What can we do when markets turn red that isn’t bearposting or doomscrolling?



Tanking prices can really complicate things for the avid crypto user. Perhaps there are times when users may find themselves holding more stablecoins than they otherwise would.



In those cases, finding the most trustless ways to farm yield on stablecoin balances could make for a fun hobby that still satisfies the number-go-up urge. At least it’s more relaxing than catching falling knives, if you don’t count the paranoia that comes with DeFi.&nbsp;



Though this isn’t investment advice (and you should never do something just because you read it in a newsletter). Otherwise, market corrections are historically great times to start dabbling in non-financial crypto apps, like gaming and social media.



Branch out. If bears are for building, then middle-to-late bull markets are for dabbling.



— David Canellis



It’s such a cliche but no pain, no gain is applicable. And I know that’s not ideal to hear after the last couple of years, but that’s the way the cookie’s currently crumbling.



Instead — and I want to emphasize that this isn’t investing advice — focus on the themes or narratives that can pave the way forward this cycle.&nbsp;



Focusing on negativity isn’t going to change the outcome and, as someone who deals with diagnosed anxiety, it’ll only wear on your mental health.&nbsp;



Don’t let the doom and gloom suck you in. Keep digging into whatever interests you right now, and block out some of this more macro-based noise.



— Katherine Ross



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Empire Newsletter: Market madness arrives just in time for summer

Nikita Ovchinnik

On May 23, the US Securities and Exchange Commission <a href="https://blockworks.co/news/sec-approves-ether-etf-proposals">approved</a> the first spot Ethereum ETFs, a significant milestone for the cryptocurrency market. But while it’s broadly a positive decision, it’s no outright win for the crypto community.&nbsp;



The move follows the earlier approval of <a href="https://blockworks.co/news/sec-approves-bitcoin-etf">bitcoin ETFs in January</a>. Taken together, the two approvals certainly seem to signal a shift in the regulator’s approach towards digital assets, which can only lead to greater adoption.&nbsp;



However, the wait for other cryptocurrency ETFs is likely to be much longer than the wait for Ethereum’s. The SEC’s approval of Ethereum ETFs also represents a glimmer of a dawning, developing regulatory landscape that will prove hazardous for decentralization and its main exponents.



<h2 class="wp-block-heading">The reasons behind the change of heart&nbsp;</h2>



The SEC could be said to have come to its senses.&nbsp;



The decision to approve Ethereum ETFs appears to be based on market pressure and strategic considerations. The approval of Ethereum ETFs means that the SEC clearly recognizes that major cryptocurrencies like Ethereum and Bitcoin are becoming integral to the financial ecosystem — widely adopted, accepted and operating globally — which requires appropriate regulation from authorities rather than a brittle “protectionist” opposition. By shifting to this approach, the SEC can harness the sector’s dynamism while providing a structured environment to protect investors and maintain market integrity.&nbsp;



The SEC&#8217;s regulatory framework for Ethereum ETFs provides improved investor protection through several key measures, principally comprehensive surveillance-sharing agreements with institutions like the Chicago Mercantile Exchange (CME), mandates for transparency in pricing and portfolio holdings and mandates for risk disclosures associated with cryptocurrency investments. These measures enhance investor safety in the cryptocurrency space.



The approval of Ethereum ETFs is likely also influenced by the need to maintain the US&#8217;s competitive edge in financial innovation.&nbsp;



Cryptocurrencies and blockchain have the potential to drive significant economic growth, enhance security in critical industries, foster innovation via new business models like DeFi, and create new investment opportunities. By embracing crypto, the SEC can help the nation remain competitive.



<h2 class="wp-block-heading">One’s victory is another’s loss&nbsp;</h2>



While at first glance the ETF’s approval seems like a clear win for crypto advocates, it also heralds an unwelcome tightening of regulations in many quarters.&nbsp;



The SEC&#8217;s focus on fraud prevention and market integrity means exchanges and wallets, for example, could face increased scrutiny. This will force the difficult decision of complying with regulations or risking exclusion from the mainstream financial system.



Read more from our opinion section: <a href="https://blockworks.co/news/fit21-isnt-crypto-win">FIT21 isn’t the crypto win you think it is</a>



Consequently, achieving true decentralization becomes more challenging. Such platforms might soon have to choose between abandoning their principles or dealing with a stream of constant obstacles — namely, compliance burdens, increased costs and enhanced surveillance. Such challenges demand centralized oversight and data collection. Clearly, attempting to remain true to the principles of decentralization might lead to exclusion from mainstream finance, potentially capping the user base and liquidity for those decentralized platforms.



Under present Chair Gary Gensler, the SEC has consistently signaled a cautious, incremental approach driven by concerns around transparency, market integrity and investor safeguards. Despite the approval of the Ethereum ETF, a flurry of approvals for other altcoin ETFs — which would unlock significant growth potential for the industry and foster an environment of trust and compliance that benefits all stakeholders — is unfortunately highly unlikely in the near future, given the SEC&#8217;s cautious stance and ongoing concerns about market manipulation and investor protection.&nbsp;



As Gensler said in a <a href="https://www.coindesk.com/policy/2024/01/10/gary-genslers-statement-on-bitcoin-etf-approvals/">statement</a> following the approval of bitcoin ETFs, “[this does not signal] anything about the Commission&#8217;s views as to the status of other crypto assets under the federal securities laws or about the current state of non-compliance of certain crypto asset market participants with the federal securities laws.



[T]he vast majority of crypto assets are investment contracts and thus subject to the federal securities laws. Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto.&#8221;



<h2 class="wp-block-heading">In the end, the public decides the fate&nbsp;</h2>



Despite the significance of the decision to approve an ETH ETF, the impact on the established crypto community itself will be relatively limited. There will always be those who favor the decentralized and anonymous nature of cryptocurrencies over regulatory compliance, and these purists are unlikely to shift towards ETFs.&nbsp;



Ethereum ETFs will, however, attract a new wave of investors who were previously skeptical or hesitant about entering the market. I expect these new entrants to significantly increase market liquidity and drive broader adoption.&nbsp;



But while the ETF’s approval signals a more open stance from the SEC, it also foreshadows regulatory challenges for many. The moment nevertheless represents a critical step towards integrating digital assets into traditional finance.&nbsp;



Crypto’s fate now rests firmly in the community&#8217;s ability to navigate the evolving regulatory landscape and, as ever, the public&#8217;s willingness to embrace these new financial products.



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


<div class="wp-block-post-author-biography">Nikita Ovchinnik is a seasoned entrepreneur and early-stage investor in DeFi. He co-founded Barter DeFi, a prominent swap system handling a substantial on-chain volume of 3.5 billion. Barter DeFi collaborates with various partners, such as Hashflow, Origin, Native, Caddi Finance, Mean Finance, and more. As one of the first employees at 1Inch Network, he played a pivotal role as CBDO. Nikita is widely recognized for his expertise and often speaks at global conferences, where he shares valuable insights with industry peers.</div>


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Don’t hold your breath for an altcoin ETF

It was a quiet week on the funding front, with only a handful of announcements coming out.&nbsp;



Web3 recruiting network Bondex announced earlier this week it raised $10 million across rounds. According to a press release, venture capitalist firms Animoca Brands, Morningstar and Chainlink all participated in the rounds.&nbsp;



The firm seeks to shift “incentives and demand away from middle men to reward and empower users [&#8230;]” and “change the professional networking model so that the talent participates in the upside and economics of the social network they are bringing value to,” according to the press release.&nbsp;



Bondex “gamifies” recruitment for both companies and job seekers by offering a token or USD bounty of up to $10,000 for successful hires.&nbsp;



Read more: <a href="https://blockworks.co/news/telegram-tap-to-earn-gaming-trend">Web3 Watch: Telegram tap-to-earn is the new crypto gaming trend</a>



The new capital, according to CEO Ignacio Palomera, will be used to “enhance the platform” as well as integrate it with Web3 and Web2 ecosystems so as to “take on legacy recruitment platforms with a twist of blockchain.”



According to Bondex, <a href="https://blockworks.co/tag/binance">Binance</a>, <a href="https://blockworks.co/tag/chainlink">Chainlink</a> and Blockchain.com all use the platform for hiring.



“Bondex is changing the game for future recruitment through Web3, enabling blockchain technology and the power of referrals to innovate against legacy platforms out there. We’re excited to be a part of that journey, and look forward to introducing the Web3 professional network across the <a href="https://blockworks.co/tag/animoca-brands">Animoca Brands</a> ecosystem,” Yat Sui, executive chairman at Animoca Brands, said. 



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



<ul>
<li>Sonic, a gaming-focused Solana layer-2 network, <a href="https://x.com/SonicSVM/status/1803050032448311308">announced</a> it raised $12 million in a Series A round led by Bitkraft.</li>



<li>Farworld Labs, a <a href="https://blockworks.co/tag/gaming">gaming</a> consortium native to <a href="https://blockworks.co/tag/farcaster">Farcaster</a>, announced a $1.75 million pre-seed funding round led by Lemniscap and Variant Funds.  </li>



<li>Router Protocol announced an oversubscribed strategic funding round, though it didn’t disclose an amount or participating firms.</li>
</ul>



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Funding Roundup: A Web3 recruiting network announces $10M raise

An ex-executive at the world’s largest asset manager has joined another ETF provider as both firms look to soon expand their crypto offerings.



Federico Brokate, formerly the Americas business strategy director for BlackRock’s iShares, now leads 21Shares’ US business. 



21Shares nabbed the BlackRock executive after both companies were among those to launch the first US spot bitcoin ETFs in January. Brokate was responsible for <a href="https://blockworks.co/tag/blackrock">BlackRock</a>’s go-to-market strategy for the iShares Bitcoin Trust (IBIT) — now the largest bitcoin fund, with roughly $19.8 billion in assets.   



The two asset managers are also slated to soon <a href="https://blockworks.co/news/on-the-margin-newsletter-sec-leader-departs">bring to market spot ether ETFs</a> once the Securities and Exchange Commission formally allows their registration statements, or S-1s, to go effective.&nbsp;



Brokate’s “experience across strategy, distribution and product” will be key to <a href="https://blockworks.co/tag/21shares">21Shares</a>&#8216; “continued success in the US market,” 21Shares co-founder Ophelia Snyder said in a statement.&nbsp;



Read more: <a href="https://blockworks.co/news/21shares-ceo-interview-bitcoin-etfs">Short-term view on spot bitcoin ETFs ‘a mistake’ says 21Shares president</a>



Bloomberg Intelligence analyst Eric Balchunas called it a “big-time hire” in an X <a href="https://x.com/EricBalchunas/status/1803069971347452195">post</a> — adding it is a “byproduct of [21Shares’] recent growth.”



The company’s Ark 21Shares Bitcoin ETF (ARKB), which it launched with <a href="https://blockworks.co/tag/ark-invest">Ark Invest</a>, has roughly $3 billion in assets. Though Ark revealed last month it would not be its partner on the company’s spot ether ETF, 21Shares is pushing forward with that product — noting at the time it was “committed to increasing access to crypto as an asset class for US investors.”&nbsp;



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



<ul>
<li>Digital art collection Azuki hired Steve Chung as its first chief operating officer as part of traditional media’s transition from Web2 to Web3. Chung will be “closely involved” with the launch of AnimeChain — a anime fan-focused blockchain network, the company said.  </li>



<li>Investment firm BlockTower Capital appointed David Burke as head of client and partner strategy. Burke was previously a partner at MKP Capital and most recently a senior executive at Orchard Global.</li>



<li><a href="https://blockworks.co/tag/circle">Circle</a> has added 137 staffers since the start of 2024, Bloomberg reported this week — a roughly 15% increase. The company has <a href="https://blockworks.co/news/circle-plans-to-redomicile-usa">expressed its intent to ultimately go public</a>. </li>
</ul>



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