Seele

Macauley Peterson

The advent of EigenLayer restaking has opened up new yield opportunities for Ethereum holders. A handful of protocols now provide liquid restaked ETH, juicing returns for those who know where to look.



A new product from Index Coop aims to bundle those yields into an index token for easy access and built-in diversification.



The High Yield ETH Index (hyETH) set to launch next month, combines into a single token five yield strategies that meet minimum APY and total value locked (TVL), among <a href="https://gov.indexcoop.com/t/iip-185-launch-the-high-yield-eth-index-hyeth-pre-sale/4764">other</a> criteria, using open-source, audited protocols.



To test demand for such a product, Index Coop devised a points-inspired bootstrapping mechanism called Product Revenue Tokens (PRTs).



Read more: <a href="https://blockworks.co/news/defi-points-farming-crypto-investments">DeFi ‘points’ farming has reshaped the crypto investment landscape</a>



Index set a 30-day goal of 500 wstETH (Lido wrapped staked ether) on April 8 — about $1.8 million — at the time, but blew through that target in less than a day. After reaching the minimum to launch hyETH, deposits have since doubled.



“It has exceeded our expectation,” the ecosystem growth lead at Index Coop, who goes by Crews.eth, told Blockworks.



PRTs can only be earned by depositing into the hyETH pre-sale contract, and won’t be distributed until the product launches.



“It&#8217;s definitely inspired by the popularity of point systems, but we prefer to give people a real ERC20 token on-chain rather than just holding points in an off-chain database,” Crews said. “And we prefer to direct real yield from product revenue to the holders of those PRT tokens.”



As with many projects to offer <a href="https://blockworks.co/news/defi-bond-issuer-porter-attempts-rebrand-without-its-founder">structured products on-chain</a> in the wake of <a href="https://blockworks.co/news/barnbridge-sec-dao">Securities and Exchange Commission enforcement actions</a>, Index Coop products are only available to investors outside the US.



Index plans to distribute 30% of the 10,000 PRTs to participants in the hyETH presale, with the remaining 70% going to the Index Coop Treasury.



Prior product launches have tended to share revenue 60/40 between the coop and a methodologist partner, like the DeFi Pulse Index (<a href="https://indexcoop.com/products/defi-pulse-index">DPI</a>).



Index then used its own governance token (<a href="https://blockworks.co/price/index">INDEX</a>) to incentivize liquidity into its products.



“People require social proof when they want to deposit into a new product, so it&#8217;s really good to not have a product that, like, struggles to break through that first million dollars deposited,” Crews explained.



But it found that the partnership model was ultimately unsuccessful, Crews said, citing as an example the Bankless BED Index, which has fewer than 800 token holders and $800,000 in TVL, <a href="https://etherscan.io/token/0x2af1df3ab0ab157e1e2ad8f88a7d04fbea0c7dc6">according</a> to Etherscan.



The cooperative still plans to eventually direct protocol revenue to INDEX holders, but only after&nbsp; consistently breaking even, he said.



PRT holders will have to stake their PRTs to share in the revenue of the new product post-launch.&nbsp;



“Users want to see and know that they are being rewarded for their contributions and using a protocol,” Crews said. “You want the user to understand that you appreciate them being an early mover, an early adopter and risking their capital into an up-and-coming product.”



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Index tokens offer new path to diversified ETH yields

David Canellis

Bitcoin is much bigger than just the blockchain. Bitcoin has its own raft of mining CEOs in orbit, as well as exchange-traded funds, media operations, venture capitalists and lobbyist groups.



Still, the Bitcoin “industry” exists on the same plane as hobbyists mining out of their garages and in DIY farms. Regular folk run full nodes to bolster the blockchain, others operate network monitors and other free services to make it more accessible.



All that’s a far cry from the billion-dollar public companies raising debt to hoover up mining rigs non-stop.



Read more: <a href="https://blockworks.co/news/bitcoin-halving-outlook-for-public-miners">Financial trouble for bitcoin miners: A look back, and ahead as the halving looms&nbsp;</a>



Mining pools bridge these two very different worlds that exist within Bitcoin. Individual miners running a few ASICs in their basement can join a pool to hash alongside operators with thousands or rigs — and split any bitcoin mined based on the hash rate contributed.



While there are exceptions, an overwhelming majority of bitcoin is mined by pools. AntPool, Foundry and F2Pool are the <a href="https://coin.dance/blocks">biggest</a>, responsible for more than 63% of all blocks over the past week.



Blockworks caught up with bitcoin mining veteran Alejandro de la Torre to learn more about the dynamics of bitcoin <a href="https://blockworks.co/tag/mining">mining</a> and pools heading into the halving later this week.



De la Torre has worked for years in the bitcoin mining space, setting up mining operations across the globe. He led both BTC.com and Poolin as vice president and grew those two pools to be the largest for bitcoin global hash rate. Alejandro also worked for Block (formerly Square), assisting with the launch of the firm’s new bitcoin mining hardware.&nbsp;



De la Torre recently co-founded the first <a href="https://stratumprotocol.org/implementation/">Stratum v2</a> mining pool <a href="https://www.dmnd.work/">DEMAND</a>, improving security, efficiency and most importantly decentralization by allowing miners to build their own blocks — which he views as a key milestone in bitcoin decentralization efforts.



Keep reading for excerpts from Blockworks’ interview with de la Torre.



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



Blockworks: What are the biggest concerns for mining pool operators around the <a href="https://blockworks.co/tag/bitcoin-halving">halving</a>? If miners find it uneconomical to mine, could it reduce the number of effective pools?



De la Torre: Reduction of hash rate is the main concern for smaller pools. As they do not have much hash rate to rely on, any reduction from the mining industry due to the halving may be life threatening.&nbsp;



On that point, however, smaller pools tend to be whitelabels of larger pools, giving them a chance to survive the initial drop in hash rate and consequent build up. I still believe that smaller pools face some very hard months, let&#8217;s see.&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-halving-impact-on-at-home-miners">‘BTC will have to hit $79K’: At-home miners brace for the Bitcoin halving</a>



Halvings usually bring in great change in the pool industry, flushing out those pools that are not up to par. I think this change is a net-good for the bitcoin mining industry.&nbsp;


<div class="wp-block-image">
<figure class="alignright size-full is-resized"><img loading="lazy" decoding="async" width="400" height="400" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/04/86JvDFZZ_400x400.jpg" alt="" class="wp-image-84268" style="width:289px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/04/86JvDFZZ_400x400.jpg?w=400 400w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/86JvDFZZ_400x400.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/86JvDFZZ_400x400.jpg?w=150 150w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/86JvDFZZ_400x400.jpg?w=257 257w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/86JvDFZZ_400x400.jpg?w=261 261w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/86JvDFZZ_400x400.jpg?w=219 219w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/86JvDFZZ_400x400.jpg?w=80 80w" sizes="(max-width: 400px) 100vw, 400px" /><figcaption class="wp-element-caption">DEMAND Mining Pool co-founder &amp; CEO Alejandro de la Torre&nbsp; </figcaption></figure></div>


Blockworks: Publicly-traded firms control somewhere around 20% of the hash rate. Are they all that important to bitcoin mining? How influential are they with regard to how pools are run?



De la Torre: Two public companies run their own pools, so yes they influence the pool space. Public companies are important to the ecosystem as they tend to be very large, commanding massive operations and hash rate.&nbsp;



However, I sometimes overestimate their importance. There is a very large amount of hash rate not controlled by public miners, all around the globe. I put more importance to these large private operations.



Blockworks: What’s your take on whether mining pools are a centralizing factor in bitcoin? Are participants in pools reactive enough to mitigate the unlikely scenario of collusion between pool operators, by leaving the offending pools to make 51% infeasible?



De la Torre: It’s concerning, this is why I decided to launch a built-from-the-bottom-up Stratum v2 pool.&nbsp;



Stratum v2 [a bitcoin mining protocol] will help decentralize bitcoin mining further by giving miners the ability to build their own blocks and add their own transactions. This right now, is done only by the pools, leading to the centralization in bitcoin mining.



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



We need Stratum v2 and fortunately for miners, it&#8217;s here. This is the most important milestone in bitcoin mining for a very long time, in my opinion.&nbsp;



As for the 51% scenario, it is unlikely to happen, ever. Pools would be making their business obsolete if they attack bitcoin. Not to mention, it&#8217;s easy for a miner to switch pools, so a miner can monitor and act accordingly.&nbsp;



Blockworks: What is DEMAND aiming to change in bitcoin mining?



De la Torre: Give power back to the miners. Our goal aligns with the Bitcoin ethos: Continue the decentralization effort behind bitcoin mining. 



Read more: <a href="https://blockworks.co/news/bitcoin-halving-outlook-for-public-miners">Financial trouble for bitcoin miners: A look back, and ahead as the halving looms </a>



We are bitcoiners first and foremost. Filippo Merli, our chief technology officer, was the lead developer of the open-source Stratum v2 stratum reference implementation (SRI). I also helped out throughout the last two years. We know Stratum v2 and have plans to unlock its potential for the benefit of miners.&nbsp;



Aside from the security, efficiency and decentralization upgrades with Stratum v2, we will provide a transparent payment system. Usually, mining pools are a black box. With DEMAND, you&#8217;ll be able to verify all your “shares,” or accepted hash rate, you&#8217;ve sent to us. Don&#8217;t trust, verify&#8230;right?



Blockworks: If public mining companies only mine a relatively small percentage of all bitcoin, who are all the other miners? Private companies or individuals?



It&#8217;s a mix. Private companies have the largest chunk of that &#8216;other&#8217; hash rate. But we cannot underestimate the home/individual/solo mining of bitcoin. They represent a strong, ideological driven group. Vital, for the ecosystem. 



Read more: <a href="https://blockworks.co/news/state-of-bitcoin-development-ahead-of-halving">Here’s what the current state of Bitcoin development looks like ahead of the halving</a>



This is the reason why we have released a solo mining pool (now available). We do not intend to make any money from the solo pool. It&#8217;s there for this, honestly, badass group of miners.



Blockworks: What do you see happening with mining after the next halving? Is it headed towards consolidation or are there creative solutions being built?



De la Torre: Some consolidation will occur, without a doubt. This is a hell of an opportunity for those that know what they are doing.&nbsp;



Creativity and innovation is what I am excited about, every halving (this is mine and Filippo’s third) has seen an explosion of new companies coming out with solutions to problems and new ways to unlock potential.&nbsp;



There will be a lot of that in this halving. Especially since there are many more people working in this industry this time around.



This interview was edited for brevity and clarity.



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Halving Q&A: Solo bitcoin miners are ‘vital’ for the ecosystem

Jack Kubinec

EigenLayer and its more than $12 billion in total value locked (TVL) went to mainnet last week, bringing the protocol’s vision for a restaking ecosystem on Ethereum a step closer to reality.&nbsp;



Building an entire ecosystem atop Ethereum could be lucrative — a16z general partner Ali Yahya <a href="https://blockworks.co/news/a16z-series-b-eigenlayer-investment">said</a> EigenLayer has “the potential to change everything” — but it also could come with hard-to-predict risks. EigenLayer’s mainnet launch came with slashing and in-protocol payments disabled, and the protocol pledged to let the marketplace “develop and stabilize” before removing the training wheels.&nbsp;



Read more: <a href="https://blockworks.co/news/eigenlayer-restaking-protocol-on-ethereum">Restaking protocol EigenLayer heads to Ethereum mainnet</a>



In the meantime, the potential restakers, validators, actively validated service (AVS) operators and other members of <a href="https://blockworks.co/tag/eigenlayer">EigenLayer</a>’s orbit cannot be entirely certain what risks the protocol could create down the road.



In a new <a href="https://chorus.one/reports-research/optimal-risk-and-reward-on-eigenlayer-a-first-look">report</a>, the Ethereum node operator Chorus One tried to predict some of these risks. One key assertion the report makes is that EigenLayer could face pressures toward centralization, which could make potential black-swan events further reaching within Ethereum. 



The main catastrophic event that industry watchers speculate could happen to EigenLayer would be a slashing cascade.&nbsp;



Slashing occurs when an operator running one of EigenLayer’s AVSs — varied blockchain services secured by restaked ether — is penalized. In such cases, the operator has some of their stake confiscated for breaking rules set by the AVSs. If a significant amount of ether is locked in EigenLayer and a large operator suffers a major slashing event, it could lead to a cascade of slashing damage. In a worst-case scenario, this could compromise the security of the <a href="https://blockworks.co/tag/ethereum">Ethereum</a> network.



Read more: <a href="https://blockworks.co/news/matt-cutler-interview-ethereum-centralized-blocknative">Ethereum is ‘much more centralized than folks realize’: Blocknative’s Matt Cutler</a>



Put simply, a slashing event could have cascading effects “if there&#8217;s a very small number of node operators that are really big and somebody makes a mistake,” Michael Moser, the head of research at Chorus One, said.&nbsp;



It’s hard to know how big the risk of slashing events on EigenLayer could be, since AVSs are yet to set slashing rules, the report notes. But lest readers take their restaked ether and flock for the exits, it bears note that slashing on Ethereum is somewhat rare: 431 validators have ever been <a href="https://explorer.rated.network/slashings?network=mainnet&amp;timesSlashedPage=1&amp;slashesReportedPage=1">slashed</a> on the network, per Rated.&nbsp;



Most slashing scenarios are caused by human error, Chorus One’s report says, and it would take a major slashing event where the slashed operator didn’t fix the problem for a lengthy period of time for Ethereum’s security to be threatened.



In an interview, the Chorus One team said a perhaps more likely negative outcome of EigenLayer’s launch is centralization.&nbsp;



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



On EigenLayer, AVSs can choose which operators to work with. Chorus One predicts AVSs will pick the operators with the largest amount of pooled security to offer, which will be professional node operators and liquid restaking projects. Even if AVSs are evenly distributed between operators, Chorus One sees the big operators still benefiting from economies of scale to achieve higher margins, meaning they can pay higher yield to those delegating their restaked ether — and cause their portion of the total supply to grow further.



The ability of AVSs to generate yield could also prove unpredictable, Chorus One notes. While running AVSs on testnet, the company found hidden costs from things like data storage or cloud computing, Chorus One’s Gabriella Sofia said. These costs could make margins slim for running some AVSs.



But EigenLayer’s potential risks haven’t stopped Chorus One from <a href="https://x.com/ChorusOne/status/1777787815386104269">drawing</a> delegations as it grows its presence as an EigenLayer operator.



“We are, of course, still running the system,” Sofia said.



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EigenLayer’s biggest risk may be centralization, report suggests

Ernst &amp; Young revealed an enterprise contract management service that would let clients put contracts on a public blockchain while keeping business information private through zero-knowledge circuits. The firm markets its OpsChain Contract Manager as running on Ethereum, although it currently runs on Polygon proof-of-stake (PoS).



The accounting firm — one of the “big four” alongside Deloitte, KPMG, and PwC — has been toying with business implications for zk proofs since at least <a href="https://www.ey.com/en_it/news/2019/04/ey-releases-zero-knowledge-proof-blockchain-transaction-technology-to-the-public-domain-to-advance-blockchain-privacy-standards">2018</a>. The announcement may show another concrete step toward the institutional use of public blockchains, a month after asset management giant BlackRock <a href="https://www.businesswire.com/news/home/20240320771318/en/BlackRock-Launches-Its-First-Tokenized-Fund-BUIDL-on-the-Ethereum-Network">launched</a> a tokenized fund on Ethereum.&nbsp;



Read more: <a href="https://blockworks.co/news/blackrock-tokenized-fund-trading-circle-usdc">Circle debuts way to trade BlackRock tokenized fund shares for USDC</a>



In a press release, EY <a href="https://www.ey.com/en_gl/newsroom/2024/04/ey-launches-opschain-contract-manager-solution-to-support-secure-private-business-agreements-on-public-ethereum">said</a> the service would bring business agreements to <a href="https://blockworks.co/tag/ethereum">Ethereum</a>, but this isn’t exactly the case. Nightfall, the zero-knowledge <a href="https://blockworks.co/tag/zero-knowledge-rollup">rollup</a> EY developed to do things like manage business contracts, actually runs on Polygon PoS, an independent blockchain.&nbsp;



EY Blockchain plans to move Nightfall to Ethereum mainnet and to a layer-3 in Nightfall’s next upgrade, Paul Brody, who has led EY’s blockchain arm since 2016, said.&nbsp;



Brody, reached through a spokesperson, added that Nightfall was developed on Ethereum and is deployed to Ethereum’s test network, but so far, EY’s industrial users have been drawn to <a href="https://blockworks.co/tag/polygon">Polygon</a> for its low transaction costs.&nbsp;



<h2 class="wp-block-heading">Private blockchains aren’t private</h2>



In a prior career stop, Brody was partly responsible for building IBM’s first blockchain based on the alpha version of Ethereum with the help of Ethereum co-founder Vitalik Buterin, Brody told Blockworks in an interview.



Using blockchain technology for enterprise is not a new idea. In earlier days of Bitcoin and blockchain, groups like the Distributed Ledger Group <a href="https://www.ofnumbers.com/2017/02/27/a-brief-history-of-r3-the-distributed-ledger-group/">sprang</a> up to find ways for businesses to make use of distributed ledger technology, often using private blockchains.&nbsp;



This era of so-called enterprise blockchain has mostly fallen out of focus for crypto’s leading edge. Brody said a future for blockchain applications for big business will lie on public blockchains like Ethereum.



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



“The problem with private blockchains is they don&#8217;t actually provide privacy,” Brody said. “People jumped into this without really understanding the technology, and it was only after they got into it that it&#8217;s like, ‘Oh, everybody in the private chain can still see everything.’”



Private blockchains kept rivals from working together partly because they would reveal sensitive information like, for instance, the quantity and prices of a business&#8217;s purchases, Brody explained.



Alongside Nightfall, EY also created Starlight, a zero-knowledge <a href="https://blockchain.ey.com/uploads/Starlight_Application_Brief.pdf">compiler</a> that takes existing smart contracts and privatizes them with hashing.



With these tools, EY will start letting businesses execute business contracts using Polygon’s smart contracts. Nightfall is only accessible to enterprises. The testnet is free, and the full product is priced by EY, Brody said, adding that using a public blockchain makes the deployment cost cheaper for enterprise purposes, since the underlying infrastructure is already built.



A promotional document for the contract manager says EY’s product “revolutionizes how enterprises help manage their contracts by harnessing privacy-enabled blockchain technology to streamline processes and enhance transparency.”



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‘Big Four’ accounting firm EY to use Polygon PoS for business contracts

Jim Myers

We’re just days away from the next <a href="https://flipsidecrypto.xyz/flipsideteam/bitcoin-halving-PDnIDK">Bitcoin halving</a>, and on-chain activity leading up to the event points to a cycle unlike any other.&nbsp;



As public trust in Bitcoin surges, we&#8217;re seeing transaction volumes surpass previous cycles and more gradual but consistent price growth. This combination of record-high transactions and relative price stability suggests a milder halving event followed by a more sustained growth cycle in the coming months.



<h2 class="wp-block-heading">Record-high transactions</h2>



The industry has experienced a sustained increase in BTC transactions leading up to every consecutive halving, with 2024 seeing the highest daily transaction volume and more extreme spikes in activity compared to previous run-ups. And while an increase in transaction volume is to be expected with every new cycle, this year’s activity appears to buck several trends.



Skyrocketing transaction volume



For instance, while daily transaction volume fluctuated similarly during the leadup to the 2016 and 2020 halvings, it skyrocketed this year. On average, the volatility of day-to-day transaction volume in the past three months is double that of the 2020 run-up, whereas the previous run-up only saw a moderate uptick relative to the 2016 cycle. At the same time, overall transaction volume has rarely dipped to levels seen in previous cycles as the market experiences a period of volatile, but elevated, activity.&nbsp;&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/_NaN_LkgXj2aQYr9waNM2hs3xfWC88-5tPpzwhWnw4u-S-_6JhK8CDAZ1Z6QIDQGesBCtvYmHYLysZjt3OESFsAgpliKlncV74U23pFs7K1fOg0OEEt9LqpV4vX2slnhRLuunA_Cs7o060GsykA92Ks" alt=""/></figure>



<a href="https://flipsidecrypto.xyz/flipsideteam/bitcoin-halving-PDnIDK"></a>Trend reversal in BTC transfers



Additionally, this year’s daily transferred volume is similar to that of the 2020 run-up in terms of BTC — but the actual dollar value of these transactions is multitudes higher given BTC’s price appreciation. This contrasts with the past trend, when BTC transfers dropped between 2016 and 2020. A growing daily transferred volume suggests growing user engagement and comfort with significant value transfers on the Bitcoin network as we approach this 2024 halving.



<h2 class="wp-block-heading">Sustained optimism and price support</h2>



On-chain activity from the past three months also shows more consistent price support for BTC this time around, relative to any other recent cycle.&nbsp;



Low price volatility and consistent growth



Leading up to the 2024 halving, BTC exhibited smaller price swings relative to every run-up since 2012, with a standard deviation of 2.2 (compared to 4.3 in 2020 and 2.9 in 2016).&nbsp;



This reduced price volatility — combined with the second-highest average BTC daily price increase of any halving run-up (0.56% daily growth vs. a 0.01% daily drop in the 2020 runup) — points toward a growing public confidence in the Bitcoin market. This holds true even when accounting for BTC’s recent price drop, and the fact that prices are twice as stable as the previous run-up and more consistently positive bodes well for the industry.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/gDhqOCpSdhEuQeRHZ7lGwze4mZx_16zxj3NfBg1pcNVe0uem69tlNcFywT9P2cRsa-smdBM4Tek05er9hT739eV3e-gzGw2h_ZwEdQ_oXhAfE_BtskDJPg8NtjkLXgvwV3ou0Xeko-Qyysz9Cagu6uo" alt=""/></figure>



<a href="https://flipsidecrypto.xyz/flipsideteam/bitcoin-halving-PDnIDK"></a>BTC’s gradual, sustained price growth is especially remarkable given the heightened, volatile transaction volume in recent months, which is usually accompanied by erratic price movements. This consistent price support suggests that investors are increasingly viewing BTC as a more stable asset, contributing to a more mature, self-reinforcing Bitcoin ecosystem.&nbsp;



Record whale wallet inflows



Bitcoin’s outlook looks even more optimistic when considering that net flows reached a record-breaking 2.3 million BTC over the past three months among wallets that hold at least 1 BTC — a 45% increase over the previous cycle. While BTC whale inflows dropped 15% between the 2016 and 2020 cycles, 2024 has not witnessed any major sell-off events. Instead, 2024 is setting multiple new records in single-day BTC whale inflows, which is a strong indication of Bitcoin’s continued deep-pocketed support.



<h2 class="wp-block-heading">Increasing user sophistication</h2>



Unlike the frenzied new user activity that propelled the previous cycle, we are seeing signs that this year’s pre-halving activity has a higher rate of participation among more experienced existing BTC holders.



Heightened activity among existing users



As expected, the number of active daily addresses has increased relative to 2020, though not as significantly as the jump between 2016-2020. However, the number of new BTC addresses created leading up to the halving is lower than in 2020, which suggests that current market activity is largely driven by existing participants rather than new entrants.&nbsp;



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



The argument that existing BTC holders are deepening their engagement seems especially true given the trend-defying surge in transaction volume in recent months, relative to the number of BTC addresses created this year.



More balanced exchange net flows



It’s also worth noting that net BTC outflows from centralized exchanges (CEXs) are down 13% compared to the 2020 run-up, although this run-up is still seeing significant net outflows of BTC from exchanges. Net outflows are often interpreted as a bullish signal, as more BTC is transferred to private wallets and sell pressure drops as the supply of tradable BTC decreases.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/CkwnIVsr41S8pUGq6hXgz0BW4g87F1hDANzXstCoNI5Cj2yx7u5XEl5zQdTCfOll1Vf3tVd7KMmLAKZru7Awwf714mm542wUrSsf3bN0GVyU1uocR14Yw5FrjXGAtFprLCZBhFiqXFM-x-PcHumNTcg" alt=""/></figure>



<a href="https://flipsidecrypto.xyz/flipsideteam/bitcoin-halving-PDnIDK"></a>And while 2024 also logged the highest single-day inflow of BTC of any halving run-up, this may simply indicate more nuanced market behavior as market participants split between holding and trading.&nbsp;



All of which is to say, the fact that net BTC flows to and from exchanges have not skewed excessively one way or another, relative to past cycles, indicates a more balanced, moderate investor sentiment as we approach the next halving.



<h2 class="wp-block-heading">Slow and steady wins the race</h2>



A significant cohort of the crypto community expected a massive pre-halving dump leading up to this year’s halving, but these fears appear to be overblown. While BTC&#8217;s value has trended down in recent days, this is still the first cycle to see a new all-time-high in BTC&#8217;s value pre-halving, and the 2024 run-up still appears to exhibit the most consistently positive growth of any recent cycle.&nbsp;&nbsp;&nbsp;



From this perspective, the fact that BTC’s value has not experienced any massive upwards swings recently may be taken as a positive sign. Rather than undergoing seismic price shifts and frenzied sentiments, we may be witnessing the beginning of a new phase in Bitcoin’s history — one characterized by gradual but consistent growth, sustained market confidence and more balanced user behavior.&nbsp;



In contrast to the dramatic ebbs and flows of some other crypto sectors, this even-keeled growth may be exactly what the industry needs.&nbsp;



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<div class="wp-block-post-author-biography">Jim Myers is an engineer, early-stage investor, and the CTO &amp; Co-Founder of Flipside Crypto, a leading blockchain data analytics and business intelligence platform. Prior to co-founding Flipside, Jim developed the core technology that took products from 0 to 1 at companies such as Mylestone, Pluralsight, and Smarterer. Jim’s journey into the crypto industry began in 2015, eventually co-founding Flipside Crypto in 2017 to help empower crypto communities to create and share data-driven insights on the projects they care most about. Jim&#8217;s passion for building extends to the broader startup community via his developer event series, Stack Dive, and as an angel investor to several local Boston-area startups, including AdHawk and LinkSquares. In a previous life, Jim developed advanced models to quantify risk and abnormal returns in the market for Financial Transmission Rights, a type of energy derivative.</div>


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Bitcoin’s most promising, least dramatic halving is almost here

Ben Strack

BlackRock continues to attract assets to its bitcoin ETF daily, even as its competitors see inflows into similar funds stall.&nbsp;&nbsp;&nbsp;



The asset management giant’s iShares Bitcoin Trust (IBIT) has been a flow-gathering standout since US spot bitcoin ETFs launched on Jan. 11.&nbsp;



It so far has tallied more than $15.3 billion of net inflows — ahead of the $8 billion or so notched by the next-best Fidelity Wise Origin Bitcoin Fund (FBTC).



Read more: <a href="https://blockworks.co/news/blackrock-q1-earnings-bitcoin-fund-inflows">BlackRock bitcoin fund accounts for 20% of the firm’s Q1 ETF net inflows</a>&nbsp;



Grayscale Investments’ Bitcoin Trust ETF (<a href="https://blockworks.co/tag/gbtc">GBTC</a>) has kept a slight assets under management edge over IBIT for now — at about $19.4 billion to $17.1 billion, respectively, as of Tuesday. However, GBTC started with about $28 billion in assets upon converting to an ETF in January and has endured nearly $16.5 billion of net outflows.&nbsp;



Youwei Yang, chief economist at BIT Mining said <a href="https://blockworks.co/tag/blackrock">BlackRock</a>’s strong brand, competitive fee structure and extensive distribution helps the firm’s bitcoin ETF appeal to <a href="https://twitter.com/EricBalchunas/status/1780249379091198042">institutional</a> investors.



Given the growing institutional interest in crypto, IBIT is well-positioned to surpass GBTC in AUM and “potentially maintain long-term leadership in the digital asset management space,” he added.



“This is the ‘winners take all’ scenario where it’s a positive spiral — the more inflows the more liquidity, and thus less fees and then more inflows,&#8221; Yang told Blockworks.&nbsp;



While IBIT quickly proved to be a leader in the space, its consistent net inflows — particularly of late — have once again highlighted its unique status compared to competitors.



Read more: <a href="https://blockworks.co/news/blackrock-bitcoin-etf-battle">Is it too soon to name BlackRock the bitcoin ETF segment winner?</a>



Nine US spot bitcoin ETFs saw zero inflows on both April 12 and April 15, according to Farside Investors <a href="https://farside.co.uk/?p=997">data</a>. IBIT’s net inflows amounted to $111 million and $73 million on those days, respectively.&nbsp;&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Okay too many questions about <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> ETFs and zero flows &#8212; a few quick thoughts: 1. On any given day, the vast majority of ETFs will have a flow number of ZERO &#8212; this is very normal. There are ~3,500 ETFs in the US. Yesterday 2,903 of them had a flow of exactly zero&mdash; James Seyffart (@JSeyff) <a href="https://twitter.com/JSeyff/status/1780243642851995735?ref_src=twsrc%5Etfw">April 16, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



ETF.com analyst Sumit Roy in January called the BTC fund asset race between BlackRock and Fidelity <a href="https://blockworks.co/news/blackrock-fidelity-etf-flows-race">“a heavyweight fight that could go either way.”</a> Fast forward more than two months, and IBIT’s net inflows stand at nearly double those of FBTC.&nbsp;



The lack of inflows for Fidelity Investments’ bitcoin fund on April 12 snapped a 63-day streak for the offering.&nbsp;



Meanwhile, IBIT’s run of days with net inflows continues, standing at 66 days after welcoming $26 million of investor assets on Tuesday.&nbsp;



The streak is unprecedented for a new ETF and very rare for such a fund of any age.&nbsp;



The BlackRock bitcoin ETF passed the 65-day inflow streak set by iShares MSCI USA Min Vol Factor ETF (USMV), according to <a href="https://twitter.com/EricBalchunas/status/1779841828239323330">data</a> posted by Bloomberg Intelligence analyst Eric Balchunas. IBIT could tie a 67-day run set by the Vanguard FTSE Developed Markets ETF (VEA) if it sees net inflows Wednesday.



BlackRock likely “ticks the most investor due diligence boxes” of the spot <a href="https://blockworks.co/tag/bitcoin-etf">bitcoin ETFs</a> given its competitive fee, large asset base, liquidity and <a href="https://blockworks.co/news/wealth-manager-bitcoin-etfs-allocators">availability on platforms</a>, according to CoinShares research head James Butterfill.



IBIT is positioned to be the long-term asset leader in the bitcoin ETF space, he added.&nbsp;



“Being issued by the largest asset manager in the world gives it a lot of credibility in the eyes of investors,” Butterfill told Blockworks. “It has been very successful in other markets in the same way too.”



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BlackRock extends bitcoin ETF inflows lead as category demand slows

Michael McSweeney

The price of bitcoin dipped below $60,000 during Wednesday’s afternoon trade as the crypto market continued to showcase its trademark volatility.&nbsp;



BTC’s price has hit a local low of $59,658, TradingView data shows, though the price has recovered somewhat to trade around $60,600.&nbsp;



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1630" height="1192" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/04/BTCUSD_2024-04-17_12-31-35.png?w=1024&amp;h=1024" alt="" class="wp-image-84376" style="width:702px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/04/BTCUSD_2024-04-17_12-31-35.png?w=1630 1630w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/BTCUSD_2024-04-17_12-31-35.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/BTCUSD_2024-04-17_12-31-35.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/BTCUSD_2024-04-17_12-31-35.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/BTCUSD_2024-04-17_12-31-35.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/BTCUSD_2024-04-17_12-31-35.png?w=351 351w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/BTCUSD_2024-04-17_12-31-35.png?w=357 357w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/BTCUSD_2024-04-17_12-31-35.png?w=299 299w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/BTCUSD_2024-04-17_12-31-35.png?w=80 80w" sizes="(max-width: 1630px) 100vw, 1630px" /></figure>



Bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) last traded below $60,000 on March 5, an event which occurred before the cryptocurrency surged to new all-time highs in the following days. BTC hit an all-time high of $73,780 on March 13 and has seen continued volatility since that time.



Read more: <a href="https://blockworks.co/news/bitcoin-all-time-high">Bitcoin price surges past $69K to hit new all-time high</a>



Some market-watchers have <a href="https://blockworks.co/news/empire-newsletter-start-to-bitcoin-halving-week">pointed to macroeconomic factors</a> for the volatility around bitcoin, like persistent inflation in the United States. Traditional equities, too, are in the red today, <a href="https://www.marketwatch.com/market-data">according</a> to MarketWatch, with the S&amp;P, Dow and Nasdaq trading down as of 12:25 pm ET.&nbsp;



As Blockworks’ Casey Wagner reported in today’s <a href="https://blockworks.co/newsletter/empire">Empire newsletter</a>, the macro picture is a complicated one —&nbsp;and will likely remain so given that Fed Chair Jerome Powell has indicated that long-signaled rate cuts will take longer than anticipated.&nbsp;



“The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” Powell said Tuesday during a press conference.



Read more: <a href="https://blockworks.co/news/bitcoin-slip-powell-delay-rate-cuts">Cryptos slip as Powell doubles-down on delaying rate cuts</a>



The timing of today’s price decline is also notable because bitcoin is set to undergo a transaction reward <a href="https://blockworks.co/news/bitcoin-halving-grayscale-interview">halving</a> this weekend. The number of new bitcoins produced per block will fall from 6.25 BTC to 3.125 BTC. The halving is expected to occur late Friday or early Saturday ET, according to estimates. 



Ethereum’s native asset (<a href="https://blockworks.co/price/eth">ETH</a>) accompanied bitcoin in its own brief dip below a key level. According to TradingView, ETH dropped to a local low of $2,914 before recovering somewhat. At the time of writing, ETH is trading at around $2,965.



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Bitcoin dips below $60K as pre-halving volatility reigns

Following the Bitcoin halving, some mining behemoths appear poised to take a more aggressive approach than others when it comes to acquiring machines, properties and even companies.



A number of segment companies have <a href="https://blockworks.co/news/mining-firms-prepare-for-bitcoin-halving">touted their preparedness ahead of the halving</a>, an event after which per-block mining rewards go lower.



After the halving — expected to hit on April 19 or 20 — miners will collect 3.125 BTC for each block it mines, down from the current level of 6.25 BTC.



Industry watchers expect the per-block reward reduction to spur pain for miners, particularly ones with less capital to deploy and higher energy costs.&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-halving-crypto-miner-consolidation">Bitcoin miner consolidation appears imminent as halving looms</a>



While there is little doubt consolidation across the space will take place, the specific shape those mergers and acquisitions (M&amp;A) will take — and who will be on each side of the deals — remains up in the air.



<h2 class="wp-block-heading">Those poised to acquire&nbsp;&nbsp;</h2>



The best positioned acquirers appear to be the ones with the biggest balance sheets.&nbsp;



Enter Marathon Digital and <a href="https://blockworks.co/tag/riot-blockchain">Riot Platforms</a>, which each had more than $1 billion worth of combined cash and BTC at their disposal as of March 31.



<a href="https://blockworks.co/tag/marathon-digital">Marathon Digital</a> executives said it would <a href="https://blockworks.co/news/marathon-digital-2023-q4-earnings">use the “dry powder” on its balance sheet</a> to help it roughly double its hash rate to 50 exahash per second (EH/s) by the end of 2025.&nbsp;&nbsp;



The company has already started, buying <a href="https://blockworks.co/news/bitcoin-mining-giant-gets-bigger">two facilities in Texas and Nebraska</a> — before then purchasing another facility owned by Applied Digital for $87 million in cash.&nbsp;



Adam Swick, the Florida-based miner’s chief growth officer, told Blockworks last week that Marathon could step in after the <a href="https://blockworks.co/tag/bitcoin-halving">halving</a> to buy machines and sites from industry peers who “stumble” — or potentially purchase companies outright.&nbsp;



Read more: <a href="https://blockworks.co/news/marathon-digital-outlook-bitcoin-halving">Miner Marathon poised to acquire, expand after Bitcoin halving, exec says</a>



Riot Platforms has focused on buying new mining machines, <a href="https://blockworks.co/news/riot-plots-hash-rate-growth">ordering 66,560 MicroBT machines</a> for $290.5 million in December and 31,500 more miners in February.



The company noted in a news release earlier this month that it intends to deploy these miners in its facilities throughout 2024 and 2025, ultimately raising its self-mining hash rate capacity to 41 EH/s. It also continues to <a href="https://www.riotplatforms.com/bitcoin-mining/corsicana/">expand</a> upon its facility in Navarro County, TX.&nbsp;



A Riot spokesperson did not immediately return a request for comment on the company’s post-halving <a href="https://blockworks.co/tag/m&amp;a">M&amp;A</a> strategy.&nbsp;



But more machine buys are very likely for Riot given that it had an option to purchase up to 265,000 more MicroBT miners after its 66,000-plus machine order in December. That would bring its self-mining capacity to 100 EH/s over the long-term, the company has said.&nbsp;



CleanSpark has been vocal about its acquisition intentions, noting it plans to be an active buyer within the post-halving M&amp;A market.&nbsp;



The Las Vegas-based company, like Marathon, has bought sites ahead of the halving, <a href="https://blockworks.co/news/cleanspark-site-acquisition-bitcoin-halving">purchasing three facilities in Mississippi</a> for $19.8 million. CleanSpark had about $300 million in cash and 5,021 BTC — worth about $310 million on Tuesday at 12 pm ET — as of March 31.



“We are now looking beyond halving and expect to be highly active over the coming months given that we have the balance sheet and capital tools to make us one of the most aggressive acquirers in the industry,” CEO Zach Bradford said in a statement.



<a href="https://blockworks.co/tag/core-scientific">Core Scientific</a>, a mining giant that emerged from bankruptcy in January, is set to be more “pragmatic” when considering infrastructure growth via M&amp;A, CEO Adam Sullivan said last month.



“We’re going to be much more opportunistic on the machine purchase side…in not only 2024, but 2025, because our opportunity to grow our exahash is really within our existing facility base,” he added.



Read more: <a href="https://blockworks.co/news/adam-sullivan-core-scientific-bitcoin-halving">Core Scientific CEO: Machine buys, deleveraging key around Bitcoin halving</a>



As for <a href="https://blockworks.co/tag/hut-8">Hut 8</a>, CEO Asher Genoot said last month the company <a href="https://blockworks.co/news/hut-8-growth-bitcoin-halving">does not plan on growing “at all costs”</a> — noting that the decision to build scale or buy scale will depend on the price.&nbsp;



“We’re very active in the M&amp;A markets, but we’re also very cost-conscious,” Genoot noted at the time. “We’re not going to overpay because we know what the cost is to develop ourselves as well, so we’re running both in parallel very aggressively.”



<h2 class="wp-block-heading">Who could be a seller post-halving?</h2>



Applied Digital agreed to sell its facility in Garden City, TX to Marathon last month for $97.3 million as part of a shift in focus to building out its high-performance computing data centers.



A company spokesperson declined to comment about whether it could look to sell more assets or properties after the halving.&nbsp;



Another pre-halving seller is Greenidge Generation, which agreed to sell to NYDIG roughly 25 acres of land and 44 megawatts (MW) of <a href="https://blockworks.co/tag/mining">mining</a> capabilities in Spartanburg, SC. The deal closed in November. The deal helped the company reduce its debt by about $85 million in 2023.&nbsp;



But Greenidge has also built its power capacity through acquisitions and development, noted CEO Jordan Kovler. It most recently purchased 12 acres in Mississippi with 32.5 MW of mining capacity.



Kovler added that the company could look to buy private miners and additional properties after the halving.&nbsp;&nbsp;&nbsp;



“We continue to evaluate potential M&amp;A and partnership opportunities, especially those that will help us make progress against our key <a href="https://blockworks.co/tag/artificial-intelligence">AI</a> initiatives to expand data center capacity and further grow Greenidge’s access to low-cost power,” he said.



When asked about potentially being a seller, Kovler added: “We are always open to discussing any transaction — [whether] it is a specific site or a merger with another company — provided that the transaction has financial merit and will create value for Greenidge’s shareholders.”



Compass Point Research &amp; Trading analyst Joe Flynn said in an April 9 research note that Stronghold Digital’s debt and limited access to capital markets puts it at a disadvantage to some peers. The company could benefit from selling its “valuable” infrastructure, he added.&nbsp;



Stronghold CEO Greg Beard told Blockworks that if Stronghold is deemed an attractive M&amp;A target by an industry peer, such a deal would be “something to consider.”&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-halving-outlook-for-public-miners">Financial trouble for bitcoin miners: A look back, and ahead as the halving looms&nbsp;</a>



Argo Blockchain said in December 2022 <a href="https://blockworks.co/news/argo-bankruptcy-still-on-the-table">it was looking to avoid bankruptcy</a> despite having “insufficient cash” to sustain operations for much longer.



The company last month closed on the sale of its facility in Mirabel, Quebec — using the $6.1 million in proceeds to pay the remaining mortgage on the facility and reduce its outstanding debt to Galaxy Digital.



Argo Blockchain declined to comment on potential further sales.&nbsp;



<h2 class="wp-block-heading">Big deals between public miners could be sparse&nbsp;</h2>



Elliot Chun, a partner at crypto advisory firm Architect Partners, previously told Blockworks he expects “meaningful” mining-related M&amp;A in the second half of 2024 and into next year — noting “a much healthier buyer set.”&nbsp;&nbsp;



But Chun said he doesn’t expect any large publicly traded bitcoin miners to join forces around the halving — barring a play to diversify geographically.



“If you made it through this last cycle, I think you have confidence that [your] growth strategy, as well as your operating acumen, is very high,” he said.



Galaxy analysts wrote in a February <a href="https://www.galaxy.com/insights/research/bitcoin-big-halving-year/">report</a> that the better capitalized miners and more liquid miners with low debt levels are more likely to scoop up smaller miners. Private miners that are vertically integrated, or those with low valuations, may be attractive targets as well, they said.



Matthew Schultz, executive Chairman of CleanSpark, said during a Tuesday X Space that “ongoing discussions” have taken place between public mining companies in recent months.



“The issue is when you look at consolidation, the point is to grow and benefit from scale,” he added. “The only reason that a company would be acquired rather than be the acquirer is if they have a less efficient fleet.”



A number of <a href="https://blockworks.co/news/bitcoin-halving-impact-on-at-home-miners">smaller and less efficient miners</a> will be forced to unplug post-halving. While that could present opportunities for consolidation as larger miners look to buy those companies’ data center space, the value of such a firm could extend only to its infrastructure.



“As far as a headline-grabbing transaction, there might be one or two,” Schultz said. “But I think for the most part the majority of the [larger public miners] are well-positioned for halving.”



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Buyers and sellers: How bitcoin miners are thinking about post-halving M&A

The iris-scanning identification platform Worldcoin plans to launch a layer-2 later this summer, the project announced Wednesday morning.&nbsp;



Currently, Worldcoin runs on the popular Ethereum rollup Optimism. Worldcoin’s layer-2, named World Chain, will be built using Optimism’s software set, the OP Stack. World Chain will use its proof of personhood technology alongside financial incentives to try making it harder for bots to turn a profit.



Worldcoin is a Sam Altman-backed startup using biometric data to, in the project’s telling, distribute a universal currency and verify humanness in the age of AI. Worldcoin <a href="https://blockworks.co/news/worldcoin-not-in-us">launched over the summer</a> and just recently <a href="https://worldcoin.org/blog/announcements/tfh-world-app-passes-10-million-users">surpassed</a> ten million users on its World App wallet.&nbsp;



<a href="https://blockworks.co/tag/worldcoin">Worldcoin</a> says with the growing usage, its current blockchain home is getting a bit cramped. Tiago Sada, the head of product, engineering and design at Worldcoin developer Tools For Humanity, <a href="https://dune.com/queries/3251203/5440632?Chain+List_e71750=OP+Mainnet&amp;Summary+-+Trailing+Num+Days_n26d66=14">told</a> Blockworks that approximately 43% of all activity on Optimism is currently related to Worldcoin.



In an interview with Blockworks, <a href="https://blockworks.co/tag/optimism">Optimism</a> Chief Growth Officer Ryan Wyatt said Worldcoin migrating from Optimism to the OP stack “builds on the momentum” the software has seen with partners also including Base and ZORA. Projects built with the OP Stack share 2.5% of sequencer revenue with the Optimism Foundation, Wyatt added.&nbsp;



Read more: <a href="https://blockworks.co/news/evm-smart-contract-deployments-optimism">Two-thirds of EVM smart contract deployments in 2024 are from Optimism: Report</a>



There are many <a href="https://blockworks.co/tag/layer-2-2">layer-2s</a> at this point, but Worldcoin thinks it can distinguish itself by prioritizing human transactions over bots. Bots and World Chain “power users” will pay&nbsp; slightly more in gas fees to subsidize gas for casual users, most of whom only transact on-chain a couple of times per month, Sada said.&nbsp;



Trading bots are popular in crypto for things like executing trades faster or carrying out automated strategies. A slew of DEX bots tracked by a Dune <a href="https://dune.com/whale_hunter/dex-trading-bot-wars">dashboard</a> did $131 million in daily volume over the past seven days.&nbsp;



Bots can make blockchains less workable for human users though. Bot-related spam is partially <a href="https://x.com/0xMert_/status/1776023674098754014">culpable</a> for Solana’s recent congestion woes, for example.



Read more: <a href="https://blockworks.co/news/solana-network-congestion-transaction-volume">Solana’s cheap fees are turning out to be a curse — for now</a>



The Worldcoin Foundation, a non-profit supporting Worldcoin’s development, will collect the higher gas fees from bots and redistribute them to humans, Sada noted.&nbsp;



“It&#8217;s not even a fair competition,” Sada said of bots trading against humans. “All blockspace goes to bots and then just the [leftovers] can go to humans, and so we want to flip that.”



On World Chain, humans will not only pay less in gas fees but will also be “prioritized for faster confirmation times,” according to a press release.&nbsp;



Worldcoin hopes its bot disincentivization will drive more organic usage on its layer-2. Iris-scanned World App users get WLD airdropped to them every two weeks — and WLD will be used as a gas token on World Chain. Worldcoin’s core team will focus on developing an ecosystem of real-world apps focused around things like payments, stablecoins and identity, Sada said.&nbsp;



Still, Worldcoin’s anti-bot focus could strip the layer-2 of a large driver of trading volume on blockchains.&nbsp;



Bots can create a revenue stream that Worldcoin might lose, Wyatt conceded, but he noted: “If you think about Worldcoin prioritizing humans and actually having ten million users, it&#8217;s not crazy to see them get to 100 million, 300 million users in the future.”



“Maybe there&#8217;s short term opportunities that they miss out on revenue, but you&#8217;ve got to play the long ball here and they are well positioned to do so,” Wyatt said.&nbsp;



WLD tokens currently <a href="https://www.coingecko.com/en/coins/worldcoin">trade</a> at around $4.94, per CoinGecko. The project’s idea of a universal basic income may be seeing some promising early returns: One user recently used his WLD to <a href="https://x.com/tiagosada/status/1775646587857039662">buy</a> himself a goat. 



But it hasn’t been all sunshine and farm animals in Worldcoin land. The platform continues to face regulatory scrutiny over its data collection methods. Worldcoin is <a href="https://blockworks.co/news/worldcoin-taking-legal-action-against-spain">battling a temporary block</a> on its data collection in Spain. Portugal similarly issued a temporary <a href="https://www.reuters.com/markets/currencies/sam-altmans-worldcoin-ordered-stop-data-collection-portugal-2024-03-26/">halt</a> on Worldcoin data collection late last month. <a href="https://blockworks.co/news/worldcoin-kenya-regulators">Regulators in France, Germany, and Kenya</a> have also expressed concerns about Worldcoin.



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Worldcoin teases ‘World Chain’ layer-2

Casey Wagner

Bitcoin’s next halving event, where the reward for miners is cut in half, is slated to come any day now.&nbsp;



Historically, halving events have been followed by new all-time high prices for bitcoin, so traders are optimistic. But given bitcoin’s recent run, escalating geopolitical tensions, and an increasingly uncertain macroeconomic outlook, analysts say this time could be different.&nbsp;



Blockworks sat down with <a href="https://blockworks.co/tag/grayscale">Grayscale</a> researcher Michael Zhao to discuss the possible outcomes and get tips on what investors should be watching.&nbsp;



Keep reading for excerpts from Blockworks’ interview with Zhao.



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



Blockworks: What does history tell us about halving cycles and pricing?



Zhao: While there have only been three halvings in the past, there tends to be a price increase after the halving after a few months. Given there’s a sample size of only three previous events, it&#8217;s hard to say that the price increase is due to the halving. The halving itself is already known to all market participants, so something like a decrease in issuance that’s already well-known theoretically shouldn’t impact the market at all.&nbsp;&nbsp;



Blockworks: What is different, if anything, about this <a href="https://blockworks.co/tag/bitcoin-halving">halving</a>? What impact will this have on pricing?&nbsp;



Read more: <a href="https://blockworks.co/news/state-of-bitcoin-development-ahead-of-halving">Here’s what the current state of Bitcoin development looks like ahead of the halving</a>



Zhao: The halving means the Bitcoin protocol is working exactly as it was programmed to. I think the only difference between this halving and the last halving is the different market dynamics between one: ETF flows representing a counter to an even lower issuance [and] two:<a href="https://blockworks.co/news/binance-ends-support-for-bitcoin-nfts"> increased activity around ordinals</a> and excitement surrounding Runes.&nbsp;



ETF flows seem to be a pretty straightforward story that’s been covered extensively; reducing the inflation rate by halving brings down potential sell pressure. While 3.125 BTC per block might seem like a small number, assuming there are around 52000 BTC produced annually post halving, at a price of $70,000, that’s $3.6 billion of potential sell pressure that is reduced annually. It adds up.&nbsp;



<a href="https://blockworks.co/tag/ordinals">Ordinals</a> and the Runes launch (Runes are essentially another standard for a fungible token on <a href="https://blockworks.co/tag/bitcoin">Bitcoin</a>) will probably spike transaction fees on the day of the halving and will continue to see more and more interest from the crypto native crowd. I’m unsure if this will cause anything significant for price, but this activity will be beneficial for miners, who will see increased transaction fees.



Blockworks: We&#8217;ve seen increased institutional and retail interest in recent years, especially <a href="https://blockworks.co/news/sec-approves-bitcoin-etf">with the launch of bitcoin ETFs</a>. How are these investors thinking going into the halving?&nbsp;



Read more: <a href="https://blockworks.co/news/etfs-helped-legitimize-bitcoin-halving-cme">ETFs helped ‘legitimize’ bitcoin ahead of halving: Q&amp;A</a>



Zhao: I think broadly that others think that price will increase post-halving, given what they’ve read or seen. I think they are probably right. I would caution them that they should study both the crypto and <a href="https://blockworks.co/news/empire-newsletter-start-to-bitcoin-halving-week">macro environments surrounding</a> each of the previous halvings and understand how those factors might have had a larger impact on Bitcoin’s price, more so than the halving itself.&nbsp;



Blockworks: The narrative around the halving seems to be price-positive, but are there potential downsides?



Read more: <a href="https://blockworks.co/news/bitcoin-halving-outlook-for-public-miners">Financial trouble for bitcoin miners: A look back, and ahead as the halving looms&nbsp;</a>



Zhao: It might be a stretch, but there seems to be a competition between the miners right now, where some players are trying to crowd out other players by increasing hash rate, selling bitcoin etc., making it less profitable to mine. While miners have become a smaller and smaller source of Bitcoin volume over time, <a href="https://blockworks.co/news/bitcoin-halving-btc-price-implications">the price of bitcoin could be impacted</a> by this sort of internal competition amongst miners. However, I expect that this won’t be that big of a deal long-term.



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



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Q&A: What to watch ahead of the bitcoin halving 

Katherine Ross

<h2 class="wp-block-heading">The great monolithic hope</h2>



As Solana users wait to see whether a new patch makes it any easier for transactions to go through, it’s clear there’s a lot riding on it.



Besides Bitcoin, Solana is arguably the poster-boy for monolithic blockchains. Much of Solana’s thesis rests on the notion that it’s decentralized to the point that it can’t be easily compromised, while being fast and cheap enough to handle everything that degenerates can throw at it (like memecoins).



If Solana can do all that without suddenly becoming hyper-expensive — as has been the case with Ethereum and Bitcoin when onchain activity is high — then it must be valuable.



Solana Labs wants to achieve that while keeping the overwhelming majority of transactions entirely on mainnet. Co-founder Anatoly Yakovenko has been <a href="https://blockworks.co/news/lightspeed-yakovenko-layer-2-scaling">outspoken</a> about the importance of doing so from a user experience perspective.&nbsp;



The thinking goes like this: Why risk fragmenting Solana’s user base — and all that liquidity — by spreading them across multiple blockchains, each with their own set of apps and risk profiles? It’s not like that turned out <a href="https://blockworks.co/news/noble-solve-cosmos-liquidity">great for Cosmos</a>.



Scaling by tinkering with the base layer may be more effective in the long run. One part of this week’s v1.17.31 <a href="https://github.com/solana-labs/solana/commit/3a7c03365262bb6907505deaa3eb61c4c9d7e02f">patch</a>, for instance, aims to make it easier for high-quality Solana validators — those with more SOL staked than others — to post transactions by penalizing low-quality validators, or those with ultra-low SOL stakes.&nbsp;



The apparent idea is that largely ignoring low-quality Solana validators might allow the larger network to prioritize legitimate users, namely over the memecoin-trading arbitrage bots that have <a href="https://blockworks.co/news/solana-network-congestion-transaction-volume">flooded the network</a> these past few months.



Tracking the efficacy of the new update is difficult, as is the impact of transaction-heavy projects like Ore <a href="https://blockworks.co/news/solana-price-falls-ore-mining">suspending operations</a> as fixes take shape. The number of failed transactions in each block is more-or-less <a href="https://dune.com/ilemi/solana-compute?hours_t66b1c=120">steady</a>, but that doesn’t at all reflect Solana’s actual congestion.



Solana’s spam problem can only really be measured by the number of transactions that are “dropped,” or ones that are submitted for validation but never actually reach the chain. Only the individuals running validator nodes themselves have that data — and few if any actively report those figures. All other evidence is anecdotal, and there’s still the odd X post indicating some degree of dropped transactions.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1387" height="1003" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/04/image.png" alt="" class="wp-image-84349" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/04/image.png?w=1387 1387w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/image.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/image.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/image.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/image.png?w=355 355w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/image.png?w=361 361w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/image.png?w=303 303w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/image.png?w=80 80w" sizes="(max-width: 1387px) 100vw, 1387px" /><figcaption class="wp-element-caption">Solana, in orange, took over a decent chunk of the blockchain fee market as memecoin mania set in</figcaption></figure>



Perhaps tracking fees paid to use the Solana network offers some insight into how users operate. During the first week of the year, Solana raked in less than 3% of the total fees across 11 major blockchains, including Bitcoin, Ethereum, Polygon PoS, Tron and BSC, as well as layer-2 networks Base, Arbitrum and Optimism.



During the third week of March, when peak memecoin mania reigned, Solana users paid almost $24.4 million to transact — more than 14% of all fees brought in by the analyzed blockchains. Only Ethereum and Tron generated more fees in that week.



Solana’s share of those fees has shrunk ever since — now down to 8% after falling to $13.75 million last week. Tron and Bitcoin, meanwhile, are seeing comebacks.&nbsp;



Overall, users of these networks have paid more than $2.42 billion in fees in 2024 so far, according to Token Terminal data.&nbsp;



Crypto moves fast, and Solana has indeed moved quickly to mitigate the poor user experience.&nbsp;



But if it can’t stick the landing soon, its share of those fees may very well diminish, alongside the monolithic thesis.



—- David Canellis



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



<ul>
<li>Out of the blockchains above, Solana is so far fourth for fees generated in 2024, with $129.9 million leading into this week.</li>



<li>Ethereum, Tron and Bitcoin are leading, with $1.32 billion, $440.6 million and $342.25 million, respectively.</li>



<li>Ether is again slightly <a href="https://ultrasound.money/">inflationary</a>, adding 1,617 ETH ($4.92 million) to the supply over the past seven days.</li>



<li>Uniswap, Lido and PancakeSwap are the top three <a href="https://defillama.com/">protocols</a> for fees this week, with $32.5 million, $23.7 million and $11.8 million, per DeFiLlama.</li>



<li>More than $6 billion in fresh stablecoins have been added onchain in April, adding up to a total $156.92 billion.</li>
</ul>



<h2 class="wp-block-heading">No pain, no gain</h2>



The halving is set to take place this weekend, dropping mining rewards down to 3.125 BTC per block.



In 2020 — the last time bitcoin underwent the quadrennial event — the price dropped nearly 20% right before the rewards were lowered, falling to $8,106 from a top of $9,876 in the halving run-up.



Obviously, this <a href="https://blockworks.co/news/history-of-bitcoin-halvings-2">halving looks quite different</a>. Not only did bitcoin carve out new all-time highs, but newly launched spot ETFs opened new doors. Global events are impacting bitcoin’s price, too — just last weekend, Iran attacked Israel and bitcoin dropped nearly 10% before slightly regaining.&nbsp;



Before this month, bitcoin notched a seven-month streak of gains. But as Hashdex CIO Samir Kerbage points out, “corrections are part of the process of recovery and bull market cycles.”



Kerbage thinks that bitcoin could see a pullback to the mid-$50,000 range, which would fall in line with past halving cycles. Bitcoin’s previously seen mid-cycle corrections of 30%.&nbsp;



The range given by Kerbage is slightly more positive than other potential outcomes. JPMorgan analysts, for example, believe that bitcoin could drop to around $40,000 post-halving.



The pullback could “point to a very bullish consolidation after a huge leg up over the past two quarters, similar to what BTC experienced from April to September of last year,” Kerbage said.



A correction now doesn’t change an overall positive outlook for bitcoin through the end of this year, Kerbage added, echoing what other analysts have called for. Standard Chartered, for example, believes bitcoin could top $150,000 by the end of this year.&nbsp;



— Katherine Ross



<h2 class="wp-block-heading">Trading like a tech stock&nbsp;</h2>



You’re probably focused on this week’s Bitcoin halving. But keeping an eye on the macro landscape isn’t a bad idea right now.&nbsp;



Stocks and cryptos may have recovered from Fed Chair Jerome Powell’s <a href="https://blockworks.co/news/bitcoin-slip-powell-delay-rate-cuts">market-moving comments yesterday</a>, but we are not out of the woods when it comes to macro headwinds.&nbsp;



The Dow, S&amp;P 500 and Nasdaq indexes were all in the green during pre-market trading this morning after a disappointing close. Equities took a turn yesterday afternoon after Powell once again indicated that persistent inflation means any and all interest rate cuts will have to be put on the back burner.&nbsp;



“The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” Powell said.



Crypto traders didn’t seem to like the comments either. But as of this morning, <a href="https://blockworks.co/price/btc">bitcoin</a> and <a href="https://blockworks.co/price/eth">ether</a> had posted modest recoveries. Bitcoin is still hovering around $63,000, though; it has a long way to go to reach the new all-time high that bulls are hoping will come after the halving.&nbsp;



March’s CPI print last week showed inflation is still elevated, coming in at 3.5% year over year. It’s a far cry from the 2% target central bankers want to see. Plus, a remarkably healthy labor market and retail sales show the US economy is on solid ground.&nbsp;



A booming economy isn’t bad news — unless you were betting on interest rates coming down. If things keep up, we won’t see a rate cut until the fall, if we even get one this year.&nbsp;



Powell, never one to spook markets if he can help it, hasn’t totally abandoned his earlier outlook that a couple rate cuts will come this year. But markets are increasingly thinking we’ll only see one decrease before 2025.&nbsp;



Central bankers will meet six more times before the end of the year, with the next meeting scheduled for May 1.&nbsp;



CME fed futures data shows a 2% chance of a rate cut in May, which is actually up from the estimate yesterday afternoon of a 0.4% chance.&nbsp;



— Casey Wagner



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



<ul>
<li>The SEC is <a href="https://www.bloomberg.com/news/articles/2024-04-16/sec-targets-its-own-staff-s-texting-nixes-whatsapp-on-agency-s-mobile-phones?utm_source=twitter&amp;utm_campaign=socialflow-organic&amp;utm_content=crypto&amp;utm_medium=social">blocking</a> third-party messaging apps such as WhatsApp and iMessage for employees.&nbsp;</li>



<li>NFTs are <a href="https://www.paypal.com/us/legalhub/upcoming-policies-full?locale.x=en_US&amp;v=1&amp;utm_source=unp&amp;utm_medium=email&amp;utm_campaign=RT002546&amp;utm_unptid=c09814e8-fbef-11ee-b99a-3cecef476576&amp;ppid=RT002546&amp;cnac=US&amp;rsta=en_US%28en-US%29&amp;cust=&amp;unptid=c09814e8-fbef-11ee-b99a-3cecef476576&amp;calc=62d42c0952025&amp;unp_tpcid=online-user-agreement-change-email&amp;page=main%3Aemail%3ART002546&amp;pgrp=main%3Aemail&amp;e=cl&amp;mchn=em&amp;s=ci&amp;mail=sys&amp;appVersion=1.246.0&amp;tenant_name=PayPal&amp;xt=145585%2C104038%2C124817&amp;link_ref=ua_upcoming-policies-full">getting the boot</a> from PayPal’s purchase and seller protection programs starting May 20.&nbsp;</li>



<li>One US senator wants to <a href="https://www.bloomberg.com/news/articles/2024-04-16/stablecoin-law-push-gets-surprise-boost-from-crypto-skeptic-sherrod-brown">combine</a> stablecoin rules with marijuana banking regs, according to Bloomberg.&nbsp;</li>



<li>Snap is adding a <a href="https://techcrunch.com/2024/04/17/snap-plans-to-add-watermarks-to-images-created-with-its-ai-powered-tools/">watermark</a> to AI-generated images on its platform, TechCrunch writes.&nbsp;</li>



<li>New Zealand’s central bank is <a href="https://consultations.rbnz.govt.nz/money-and-cash/digital-cash-in-new-zealand/">undertaking</a> a public consultation on CBDCs as part of a “multi-year” digital cash project.&nbsp;</li>
</ul>



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



What do Norway and Arkansas have in common?



If you guessed “looming restrictions on the bitcoin mining industry,” congrats!&nbsp;



Norway’s government is developing data center-centric legislation that would allow them to potentially push crypto mining facilities out of the country, according to Norwegian media outlet <a href="https://www.vg.no/nyheter/i/9zgyxq/regjeringen-slaar-ned-mot-krypto-datasenter-uoensket-i-norge">VG</a>.&nbsp;



Terje Aasland, the country’s energy minister, reportedly believes that crypto miners are an “unwanted” energy consumer.&nbsp;



Down in Arkansas, meanwhile, legislators are responding to what appears to be local backlash around crypto mining. Specifically, there’s heartburn over a law passed last year that, according to critics, shielded mining firms from local regulations.&nbsp;



Allegations that industry essentially crafted its own rules abound, the <a href="https://arktimes.com/arkansas-blog/2024/04/16/eight-resolutions-on-crypto-mines-advance-out-of-house-committee">Arkansas Times</a> writes, spurring a new round of lawmaking in the state legislature to rework or repeal that earlier measure.&nbsp;



Let’s hope those mining firms have their houses in order ahead of the halving.&nbsp;



— Michael McSweeney



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



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Empire Newsletter: Solana patch targets congestion woes

<h2 class="wp-block-heading">Party pooper in chief</h2>



There are concerns over whether the SEC’s targeting of Uniswap Labs will rain on DeFi’s parade heading into the next potential phase of the current bull market.&nbsp;



Gensler’s <a href="https://blockworks.co/news/sec-issues-uniswap-wells-notice">legal threats</a> may chase innovators offshore and trigger a Web3 brain drain. Or perhaps crypto projects, which may have launched in the US, simply won’t debut at all, for fear of a Wells notice — or worse.&nbsp;



Uniswap Labs CEO Hayden Adams <a href="https://twitter.com/haydenzadams/status/1778126466984575166">swore</a> to fight any lawsuit that comes its way, but the market has still sharply reacted. <a href="https://blockworks.co/price/uni">UNI</a> — the native crypto of the Uniswap exchange which doubles as a DAO governance token — sank as much as 45% after the notice was disclosed last week and has barely bounced back.



UNI’s losses were enough to pull the DeFi sector below centralized finance (CeFi) in terms of market dominance for the first time in over three years, per data from The Tie.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/tqGk2qmKe5FIzgdPYhKw066Gs1zBzQYxTAZpD-0l_Lx4fveVmJGViUbCLg84jFQPNecE3Yn8oFy5Yf1CMG9WXajnlS4MQswzGR7jzYDtITODJNwYJen0Mna6MMOtjJ3knGPe12-_kLvdiLjN3mFB55g" alt=""/></figure>



Each line shows indexed market dominance for different sectors, based on capitalizations of cryptocurrencies related to those segments. CeFi consists of native tokens for exchanges including OKX’s OKB and Bitfinex’s LEO, alongside those for centralized lending platforms like Nexo, and many more.



DeFi is otherwise made up of cryptocurrencies tied to DAOs and protocols including Uniswap, Maker, Athena, and Aave, among others. CeFi is currently about 4.3% of the total crypto market while DeFi represents nearly 3.6%.



Despite their outsized mindshare, memecoins are only 2% of crypto. Memecoins held practically the same dominance in April 2021, as bitcoin neared its first major peak of that year. So, memecoins aren’t exactly bigger today than during the last bull market.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/QrVehrHCT6h5lJKJDvBsehzWBNYU-GR2h8WMSQWBUPQVXMt8hNBgvZyWtTRnXcIscQZEfqGFUcdjNSbLi5EwRwzJgD2y6yTlL_EQw3YM88DG28LjrG--n8C8Vn95ZTjYG_wFuSi9xBk1V8se1P_dfJY" alt=""/></figure>



Dogecoin’s lackluster performance against bitcoin is largely to blame for the segment lagging behind. A raft of new memecoins have indeed exploded in value, but that hasn’t been enough to make up for dogecoin’s underperformance.



Other big plays of this cycle — DePIN, real-world assets and decentralized social media — are seeing varied success. DePIN’s dominance has actually been cut by more than half over the past three years, from 1.85% to 0.72%.&nbsp;



But again, a segment leader has dragged the rest down with it, with filecoin (<a href="https://blockworks.co/price/fil">FIL</a>)’s bitcoin ratio collapsing by more than 65% over the past year. Render, which powers the decentralized computing marketplace of the same name, is now practically tied with FIL for largest DePIN cryptocurrency by market cap, after its bitcoin ratio more than doubled in the past year.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/7FceuAy24HvH_KrxqSJ9x_8ATbK7WeQIbK73TJ65d3OoIlTKZXw69bdsvDnszjidQY3KexU1leluCMqfzQAd3CNPi6cGrl5ybNeny07EysyRVDO-4fvOKu-dXB_P_FgtOH5SsGkXT63xzlZtoIrE2v4" alt=""/></figure>



SocialFi has meanwhile tripled its market dominance in three years, from 0.03% to 0.09%. Tokens tied to real-world asset platforms like Centrifuge, Goldfinch and Ondo have gained even more, blowing past SocialFi, as well as last cycle’s favorites move-to-earn and fan tokens.



Read more: <a href="https://blockworks.co/news/socialfi-web3-social-media">What is SocialFi? Unpacking crypto’s answer to social media</a>



All this goes to show that finding success in crypto markets isn’t just about picking the next big narratives. It also takes backing the right horses in each race, with age seemingly often working against former front-runners.



The same can’t be said for bitcoin. Its market dominance is near its three-year highs, now 54%, as rival <a href="https://blockworks.co/tag/layer-1">layer-1s</a> lose ground on the whole.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/rvlhyyh7sB2wwXhReMia4fnTetY1449uT1hy_oyULjyzt4RrInIl4_CZizHyzRCn8b7PE4dZoBZA2fVQTr4BpnU-0NzqOYBqFHdqa7on2mYPE1cQN6AEv91GQIOJFI9OIuoGA82vlHFyjoQI9SlOmDk" alt=""/></figure>



— David Canellis



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



<ul>
<li>The total ETH locked in Ethereum mainnet DeFi is up to 16.32 million ETH ($48.62 billion), the most in over a year. SOL in Solana DeFi has so far <a href="https://defillama.com/chain/Solana?currency=SOL">stayed</a> flat in April.</li>



<li>Meanwhile, nearly 21,909 validators are <a href="https://www.validatorqueue.com/">queued</a> to join the Ethereum blockchain — a six-month high.</li>



<li>Base now has more native <a href="https://defillama.com/stablecoins/chains">stablecoins</a> than Avalanche: $2.05 billion to $1.72 billion. Most of it is USDC, after a recent pledge to move Coinbase customer deposits to the network.</li>



<li>Margin.fi’s <a href="https://defillama.com/protocol/marginfi?tvl=true&amp;medianApy=false&amp;denomination=SOL">bleeding</a> has slowed since its founder quit. It lost one-third of its total SOL stake in the days following, dropping from around 4.4 million SOL to 2.84 million SOL.</li>



<li>$256.6 million in longs have been <a href="https://www.coinglass.com/LiquidationData">liquidated</a> on centralized exchanges in the past 24 hours.</li>
</ul>



<h2 class="wp-block-heading">All aboard the ETF train</h2>



It’s 13F szn.&nbsp;



The SEC’s 13F form requires institutional investment managers to disclose their holdings quarterly if they manage over $100 million in assets.&nbsp;



Throughout our reporting since January, multiple analysts and experts have highlighted the 13F filing because this batch is our first look at who’s investing in the newly launched funds on an institutional level.&nbsp;



On the other hand, it’s still early for a lot of institutional investors. So we may not see a lot of funds with a lot of assets under management (AUM) disclose holdings in a spot bitcoin ETF…yet.&nbsp;



Valkyrie’s <a href="https://blockworks.co/news/valkyrie-bitcoin-etf-wallet-address">Steven McClurg told Blockworks in February</a> that the firm had spoken to financial advisers and “overwhelmingly, the response is that they’re not ready yet.”



Because the quarter only ended last month, it’s still early for some of these firms to file their 13Fs, and many of the larger positions will likely be reported closer to May. But the early bird gets the worm, right?&nbsp;



So who is already in this space? There are a lot of smaller financial planner offices with exposure to various bitcoin ETFs. One of the first such firms to disclose holdings was Burkett Financial Services, which holds roughly 600 shares of BlackRock’s IBIT.&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-halving-interview-bitgo-ceo">Despite bitcoin ETF approval, institutions are on the sidelines: BitGo CEO</a>



Then you have firms like <a href="https://www.sec.gov/Archives/edgar/data/1729677/000108514624001693/xslForm13F_X02/infotable.xml">LexAurum</a>, which holds nearly 12,000 shares of IBIT worth roughly $430K at current prices.&nbsp;



Brookstone Capital Management owns 85,000 shares of Fidelity’s bitcoin ETF and roughly 9,000 of Bitwise’s ETF, according to SEC <a href="https://www.sec.gov/Archives/edgar/data/1599584/000106299324008407/xslForm13F_X02/form13fInfoTable.xml">filings</a>.&nbsp;



These numbers may not be flashy or as big as some in crypto want. But they show that institutions are slowly entering the market and, if this trend continues, the appetite for <a href="https://blockworks.co/tag/bitcoin-etf">bitcoin ETFs</a> — and potentially other crypto-based ETFs — is poised to grow.



— Katherine Ross



<h2 class="wp-block-heading">Tax man inbound&nbsp;</h2>



Hopefully everybody filed their taxes yesterday, or at least sought an extension. The <a href="https://blockworks.co/tag/irs">IRS</a> is betting a lot of crypto players probably didn’t, however.&nbsp;



Guy Ficco, the IRS’s chief investigating officer, said over the weekend that the agency is preparing to battle more crypto tax crimes this year.&nbsp;



2024 may be one of the final years under the current US crypto-tax policy framework. In March, the Department of Treasury released its 2025 revenue proposals, including new ideas on how to cash in on crypto trading and related activities.&nbsp;



The IRS says it&#8217;s finally time to bring all digital assets under existing wash trading rules, a change that, if passed, would nix a popular — and oftentimes lucrative — trading strategy already banned in equity markets.&nbsp;



The Department wants to add a 30% excise tax on electricity used for any companies that mine crypto. If the proposal is adopted, miners would be required to report the amount and type of electricity used and the cost, when purchased externally.&nbsp;



Read more: <a href="https://blockworks.co/news/us-treasury-2025-greenbook-crypto-taxes">US Treasury once again proposes new crypto tax rules to “modernize” code&nbsp;</a>



Miners that lease equipment would also be responsible for reporting electricity values and firms that use off-grid power would have to pay 30% of estimated costs.&nbsp;



The Biden Administration first proposed excise taxes — along with a slew of other crypto tax rules — on miners last year, citing environmental concerns.&nbsp;



The plans haven’t gotten off the ground yet, so no need to rush to learn any new rules. In the meantime though, there are some things you can do now to make next April 15 a little easier.&nbsp;



<a href="https://blockworks.co/news/taxable-crypto-events-usa-2024">Keep a record of everything</a>. If you made a trade (even if it’s crypto to crypto) it’s probably a taxable event, so write it down. Airdrops have a tax burden, too, so don’t forget to record the initial value of whatever you received. There’s no such thing as free money!



— Casey Wagner



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



<ul>
<li>The Bank of England still hasn’t made up its mind on whether to <a href="https://uk.finance.yahoo.com/news/britcoin-hold-bank-of-england-blockchain-tech-152500661.html">issue</a> a CBDC, Yahoo Finance writes.&nbsp;</li>



<li>Franklin Templeton’s crypto team <a href="https://twitter.com/fti_da/status/1779979775651561691?s=46">explored</a> Runes, the upcoming token standard built on Bitcoin.&nbsp;</li>



<li>A group of banks and payment firms are <a href="https://www.bloomberg.com/news/articles/2024-04-15/barclays-citi-are-among-banks-testing-tokenized-deposits-in-uk">testing</a> tokenized deposits in the UK, according to Bloomberg.&nbsp;</li>



<li>Microsoft <a href="https://www.reuters.com/markets/deals/microsoft-invest-15-bln-emirati-ai-firm-g42-new-york-times-reports-2024-04-16/">bought</a> a $1.5 billion stake in G42, an AI startup based in the UAE, Reuters reports.&nbsp;</li>



<li>Sullivan &amp; Cromwell may <a href="https://www.bloomberg.com/news/articles/2024-04-15/ftx-controversy-derails-top-law-firm-s-bid-for-binance-role?utm_source=twitter&amp;utm_campaign=socialflow-organic&amp;utm_content=markets&amp;cmpid%3D=socialflow-twitter-markets&amp;utm_medium=social">lose</a> out on a job working with the DOJ on Binance oversight because of the law firm’s work for FTX, per Bloomberg.&nbsp;</li>
</ul>



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



Leave it to <a href="https://blockworks.co/tag/ftx">FTX</a> to generate some bipartisan unity in Congress.



Senators <a href="https://blockworks.co/tag/elizabeth-warren">Elizabeth Warren</a>, D-Mass., and Chuck Grassley, R-Iowa, are about as far apart politically as two lawmakers in Washington can get.&nbsp;



But when it comes to <a href="https://www.warren.senate.gov/imo/media/doc/2024.04.12%20Letter%20to%20CFTC%20re%20FTX.pdf">prying</a> details out of the CFTC on their meetings with disgraced FTX CEO Sam Bankman-Fried, it’s time to link arms.&nbsp;



Specifically, the pair want to know what was said between SBF and agency Chair Rostin Behnam, who reportedly messaged directly with the recently convicted crypto mogul.



Warren (perhaps rightfully) is <a href="https://blockworks.co/news/legislation-crypto-greatest-enemy">viewed as an enemy of crypto</a>. But digging into possible coziness between the US government and one of the industry’s most infamous scammers? Sounds good to me.&nbsp;



— Michael McSweeney



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Empire Newsletter: Uniswap’s SEC woes drag DeFi below CeFi

Andreessen Horowitz raised $7.2 billion, co-founder Ben Horowitz disclosed in a new blog post on Tuesday.&nbsp;



The funds were raised for five of their “venture strategies” including American Dynamism, Games, Apps, Infrastructure and Growth. The largest raise was for growth, coming in at $3.75 billion. Games and American Dynamism each raised $600 million.



While it’s not clear how the freshly raised funds will be used, the firm’s Games venture has previously expressed interest in Web3 <a href="https://blockworks.co/tag/gaming">gaming</a>.



Read more: <a href="https://blockworks.co/news/a16z-2024-ideas-list">A16z’s crypto ideas list for 2024 spotlights AI, gaming</a>



“Games are also driving innovation across the entire consumer ecosystem, pioneering best-in-class mechanisms for user engagement, retention, and monetization, such as microtransactions, battle passes and Web3 tokens,” the venture’s page <a href="https://a16z.com/games-fund-one-building-the-future-of-games/">said</a>.&nbsp;



Crypto was not among the initial raises, though Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-04-16/andreessen-horowitz-raises-7-2-billion-plans-more-for-2025">reported</a> that the firm is “still on track to raise additional funds” next year, citing people familiar.&nbsp;



“This marks an important milestone for us,” Horowitz <a href="https://a16z.com/new-funds-new-era/">said</a> in a blog post.&nbsp;



Last fall, Axios <a href="https://blockworks.co/news/a16z-venture-capital-crypto-fundraise">reported that the venture capital firm</a> was eyeing $3.4 billion for some of its funds.&nbsp;



The report from last October backs up Bloomberg’s reporting from earlier today, stating that the new investing vehicles could come in 2025.&nbsp;



<a href="https://blockworks.co/tag/a16z">A16z</a>, in late March, <a href="https://blockworks.co/news/crypto-startup-accelerators-growing">announced that it picked 25 start-ups</a> for its spring 2024 crypto startup accelerator.&nbsp;



The firms received a $500,000 investment in exchange for a16z receiving 7% equity.&nbsp;



Outside of its accelerator, the VC firm has been actively investing and leading rounds in the crypto world. It led a <a href="https://blockworks.co/news/espresso-shared-sequencers-funding-a16z">Series B funding round</a> for Espresso Systems.&nbsp;



“At its core, crypto is a technology movement that builds tools for better human cooperation at a larger scale — especially when the cooperating parties mutually distrust one another,” Ali Yahya, general partner at Andreessen Horowitz, <a href="https://a16zcrypto.com/posts/article/investing-in-espresso/">said</a> in a post at the time.



In February, a16z announced that it was <a href="https://blockworks.co/news/a16z-series-b-eigenlayer-investment">investing $100 million in Series B</a> funding for EigenLayer.



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A16z raises $7.2B

New television spots by crypto stalwarts Coinbase and Grayscale are set to air during NBA and NHL playoff games, the companies told Blockworks.



The commercials come around the highly anticipated bitcoin halving — slated to occur on April 19 or 20 — when per-block mining rewards are set to drop from 6.25 BTC to 3.125 BTC.&nbsp;&nbsp;



The Coinbase commercial, posted on X Monday, shows a spotlighted motorbike in a warehouse-type setting apparently used for pizza deliveries.&nbsp;&nbsp;



“Over time, your money gets you less,” a voice states. “Does bitcoin?”&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Food for thought: What if money was designed to get you more over time, not less?<a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> <a href="https://t.co/z8eHF8JltQ">pic.twitter.com/z8eHF8JltQ</a>&mdash; Coinbase 🛡️ (@coinbase) <a href="https://twitter.com/coinbase/status/1779902729860591745?ref_src=twsrc%5Etfw">April 15, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The commercial shows how much pizza a person could have bought with one bitcoin in 2012, as one box appears on the back of the bike. A stack of boxes is added to show how much 1 BTC was worth in 2016.&nbsp;



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



By 2020, the flood of boxes knocks over the bike. Cardboard rains down further to quantify the 2024 value of a bitcoin in pizza terms.&nbsp;



“Roughly every four years, the future supply of bitcoin is reduced,” the spot states. “So historically, you get more. Not less.”&nbsp;&nbsp;



The ad is set to start airing Wednesday on TNT, ESPN and ABC during NBA playoff games, a <a href="https://blockworks.co/tag/coinbase">Coinbase</a> spokesperson told Blockworks. It will run through April 22.&nbsp;



Grayscale Investments’ ad, published to YouTube on Monday, touts the company’s standing as the world’s largest crypto asset manager. The firm’s Bitcoin Trust ETF (<a href="https://blockworks.co/tag/gbtc">GBTC</a>) holds roughly $20 billion in assets under management <a href="https://blockworks.co/news/gbtc-net-outflows-etf">despite consistent net outflows</a> in recent months.&nbsp;&nbsp;&nbsp;



“Sometimes investing feels like you’re going at it alone, especially when it comes to adding crypto to your portfolio,” the ad states as a man tries to row a racing boat and hang a painting by himself. “But it doesn’t have to be that way.”



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/OLcEYi7Ov4M?si=RgylABhg930iTG44" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







It ends with the tagline: “Crypto investing begins here.”



In addition to appearing online, the <a href="https://blockworks.co/tag/grayscale">Grayscale</a> spot will air on CNBC, CNN, Golf Network, News Nation and NHL Network, a spokesperson told Blockworks — including during the NHL playoffs.



The upcoming crypto commercials during popular sporting events come after companies in the segment opted not to advertise during the Super Bowl in February.



Read more: <a href="https://blockworks.co/news/crypto-firms-super-bowl-advertising">Crypto players skip Super Bowl ads, plot other marketing opportunities</a>



Coinbase is not new to getting out its message during the NBA playoffs, launching a <a href="https://twitter.com/coinbase/status/1648043528797278215">campaign</a> focused on updating the financial system for last year’s postseason games.&nbsp;



The crypto exchange was one of the crypto companies to advertise during the 2022 Super Bowl. It more recently ran a television spot in February featuring a sad Abraham Lincoln on a penny, and the tagline: “Money is happier when it’s digital.”



Grayscale ads have <a href="https://twitter.com/Grayscale/status/1773741995087053057">appeared</a> in various <a href="https://blockworks.co/news/crypto-must-advertise-airports">airports and train stations</a> for years.



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Coinbase and Grayscale unveil new TV spots in time for bitcoin halving 

Crypto exchange OKX released the public mainnet of its zkEVM rollup, X Layer, late Monday.



This new platform integrates with the OKX Exchange and OKX Web3 Wallet, enabling users to bridge assets easily, similar to Coinbase’s Base optimistic rollup and Bybit’s Mantle Network spin off.



The major difference is X Layer’s use of the Polygon zkEVM CDK, which has been live on testnet since November.



Read more: <a href="https://blockworks.co/news/okx-launching-l2-polygon">Centralized exchange OKX launches decentralized L2 with Polygon CDK</a>



This makes it part of the so-called “<a href="https://blockworks.co/podcast/lightspeed/e14b89fa-e5f0-11ee-94eb-d754c5abecb8">Aggregation Layer</a>” (or AggLayer), Polygon’s bid to address UX-pain points like liquidity fragmentation among Ethereum layer-2 networks, Polygon CEO Marc Boiron said.



The platform is expected to quickly host a wide array of dapps, including well-known DeFi offerings like Curve and QuickSwap, <a href="https://www.okx.com/learn/x-layer-mainnet">according</a> to a blog post by Chief Marketing Officer Haider Rafique, published Tuesday.



“The impressive roster of talented developers who have already started to build on X Layer is a testament to the potential of the network,” Boiron said.



The AggLayer currently consists of the Polygon zkEVM and Astar Network, but asset transfers between them are not yet available, an <a href="https://blockworks.co/tag/okx">OKX</a> spokesperson told Blockworks.



X Layer cuts down on transaction fees by using an alternative to Ethereum for data availability (DA), technically making it a validium rollup, similar to Polygon’s plans for <a href="https://blockworks.co/news/polygon-pos-to-validium">upgrading its own PoS chain</a>.



Read more: <a href="https://blockworks.co/news/layer-2-secured-by-ethereum">So your layer-2 is ‘secured by Ethereum’ — what does that mean?</a>



The exchange’s token <a href="https://blockworks.co/price/okb">OKB</a> serves as a gas token, so the chain is tailor-made for users branching out from the exchange experience to Web3. Otherwise, using the chain requires bridging OKB from another chain, like Ethereum. An OKX spokesperson told Blockworks that an OKB faucet was not currently available on mainnet.



<a href="https://blockworks.co/news/polygon-zkevm-post-mortem">Polygon’s zkEVM</a> uses ETH, as do most rollups, but does not yet make use of <a href="https://blockworks.co/news/ethereum-improvement-proposal-4844">Ethereum’s blob space</a> created following the <a href="https://blockworks.co/news/ethereum-dencun-upgrade-mainnet">recent Dencun upgrade</a>. So it will be a few weeks before Polygon’s own chain sees the benefit of cheaper alternatives to Ethereum call data.



Crypto.com also has a zkEVM-based rollup in development — Cronos Chain — that uses rival zkSync’s rollup tech stack.



Read more: <a href="https://blockworks.co/news/ethereum-rollups-using-zkstack">Cronos broadens scaling roadmap from Cosmos to Ethereum</a>



Looking ahead, X Layer aims to enhance wallet services, improve transaction speeds and provide comprehensive support and documentation for developers, Rafique wrote.



OKX has increasingly taken an “ecosystem” approach, including the launch of its own Web3 wallet that competes with MetaMask.



The exchange is a contributor to the Polygon CDK and plans to “provide an advanced tech-stack for builders in collaboration with Polygon Labs, according to Rafique.



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OKX turns on its L2 mainnet, joining the exchange chain club

Cryptocurrencies extended their decline Tuesday while stocks posted a modest rebound following Monday’s stronger-than-expected retail sales data.&nbsp;



Bitcoin and ether slid around 3% each Tuesday, erasing Monday’s slight gains. Bitcoin hovered around $62,400 at time of publication. The largest cryptocurrency looks poised to enter its next halving — expected to happen late this Friday — in the red.&nbsp;



While some traders are betting on the halving being bitcoin’s next catalyst for a run, researchers warn that the event is likely already priced in.&nbsp;



“The halving itself is already known to all market participants, so something like a decrease in issuance that’s already well-known theoretically shouldn’t impact the market at all,” Michael Zhao, researcher at Grayscale, said.&nbsp;



Equities on Tuesday inched into the green. The S&amp;P 500 and Nasdaq Composites gained about 0.1% by mid-way through the trading session.&nbsp;



US retail sales in March increased 0.7%, according to data released by the Commerce Department Monday. Analysts had expected a 0.4% rise. The report, coupled with last week’s hotter-than-expected inflation data, has traders skeptical that the Federal Reserve will cut interest rates before this summer.&nbsp;



A healthy consumer market, as good as it may seem, is not boding well for the interest rate cutting schedule. CME futures <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">data</a> show a 0.4% chance of a rate cut in May and a 19% chance central bankers will slash rates in June.&nbsp;



“More recent data show solid growth and continued strength in the labor market, but also a lack of further progress so far this year on returning to our 2% inflation goal,” Fed Chairman Jerome Powell said Tuesday during a panel discussion at the Washington Forum on the Canadian Economy.&nbsp;



Rates are going to have to stay higher for longer, he added, confirming the widespread market sentiment.&nbsp;



“Fed Expectations has hopes for a June rate cut dashed by the hot CPI report and now the market must deal with the possibility of just two — or even fewer — rate cuts in 2024,” Tom Essaye, founder of Sevens Report Research, said. “Remember the market started the year expecting seven cuts.”



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