Spectral

Donovan Choy

Swiss-based Laser Digital, the digital asset subsidiary of Japanese investment bank Nomura, is reportedly planning to introduce an alternative to spot ETH ETFs.



Unlike the nine ether ETFs launched three days ago, Laser Digital’s ETH fund would generate yield and accrue rewards from the underlying Ethereum blockchain network, according to <a href="https://news.bloomberglaw.com/business-and-practice/nomura-crypto-unit-to-offer-high-yielding-ether-etf-alternative">Bloomberg</a>.



These rewards are made up of the same token emissions and maximal extractable value (MEV) that is accrued by Ethereum validators running their own node, or users staking ETH with a liquid staking platform like Lido. It’s a notably absent element with the current ETH ETFs.



Read more: <a href="https://blockworks.co/news/proposed-ether-etfs-not-staking-eth">Proposed ether ETFs would not stake their ETH, new filings clarify</a>



According to <a href="https://www.bloomberg.com/news/articles/2024-07-26/nomura-s-crypto-unit-to-offer-higher-yielding-ether-etf-alternative?sref=dkjk6XjG">Bloomberg</a>, Galaxy Digital will potentially assist <a href="https://blockworks.co/tag/laser-digital">Laser Digital</a> in running the validator nodes that generate the yield for investors.



The product is planned to be available only to non-US accredited investors in early September. <a href="https://blockworks.co/tag/nomura">Nomura</a> <a href="https://www.laserdigital.com/company-news/laser-digital-asset-management-launches-ethereum-adoption-fund-for-institutional-investors/">previously</a> launched an ETH-focused fund in late 2023.&nbsp;



The firm wasn’t immediately available to comment when reached.&nbsp;



Interest in crypto by traditional finance investors has been slowly but steadily increasing. In a recent EY survey, 55% of 270+ institutional investors claimed they <a href="https://blockworks.co/news/empire-newsletter-tradfi-crypto-institutional-adoption">planned to allocate capital to crypto</a> over the next two to three years.



Laser Digital’s suite of crypto products already <a href="https://live-laser-digital.pantheonsite.io/services/asset-management/">includes</a> a <a href="https://blockworks.co/news/laser-digital-bitcoin-fund-asset-management-crypto">Bitcoin Adoption Fund</a>, Ethereum Adoption Fund and Polygon Adoption Fund — all institutional products for accredited investors to gain BTC/ETH/MATIC exposure.



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Nomura’s crypto unit to offer yield-bearing ETH fund: Report

Ben Strack

Casey Wagner

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



<ul>
<li>A by-the-numbers look at days 1-3 of US spot ETH ETF trading.</li>



<li>Hello from Nashville: Casey Wagner details the initial vibes of Bitcoin 2024.</li>



<li>Let’s talk the PCE numbers drop, and other data points you might have missed.</li>
</ul>



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



<h2 class="wp-block-heading">Make it make sense: The ETH ETF debut</h2>



US spot ether ETFs now have a three-day track record, and the net flow number (in the red) may be a head-scratcher to those not as familiar with the dynamics at play.



A deeper look at the first three days of ETH fund category flow data may offer some clarity, but of course this remains an early-going snapshot. Note: In parentheses are the negative figures posted by <a href="https://blockworks.co/news/ether-etf-fee-war-importance-for-investors">Grayscale’s higher-priced Ethereum Trust ETF</a> (ETHE).&nbsp;&nbsp;



<ul>
<li>Day 1 (July 23): +$107 million (ETHE, -$484 million) Day 2: -$133 million (ETHE, -$327 million)</li>



<li>Day 3: -$152 million (ETHE, -$346 million)</li>
</ul>



And here’s the US spot BTC fund segment’s flow totals early on (with the Grayscale Bitcoin Trust ETF, or GBTC, separated).



<ul>
<li>Day 1 (Jan. 11): +$655 million (GBTC, -$95 million)</li>



<li>Day 2: +$203 million (GBTC, -$484 million)</li>



<li>Day 3: -$52.7 million (GBTC, -$594 million)</li>
</ul>



Quickly comparing the initial three-day totals for the spot ETH and BTC offerings, we get:



<ul>
<li>ETH ETFs: -$179 million</li>



<li>BTC ETFs: +$806 million&nbsp;&nbsp;&nbsp;</li>
</ul>



If we add up the outflows from ETHE and GBTC in their first three days on the market, they are nearly identical, at just under $1.2 billion. Industry watchers expected large outflows from the Grayscale products — given these were pre-existing trusts with sizable asset bases and price points well above those of their ETF peers.&nbsp;&nbsp;



CoinShares research head James Butterfill told Blockworks in an email he does not believe the three-day ETH ETF outflow total — driven by ETHE — should be viewed negatively.



“It likely represents a mix of clients taking profits for the first time in many years and switching to cheaper products,” he noted. “We expect the inflows from the newly issued ETFs to gradually surpass the outflows from the closed-end Grayscale fund.”



The spot ether ETFs are launching during the summer, when trading activity is historically lower. Still, the funds saw trading volumes of roughly $1.1 billion on their opening day Tuesday — about a quarter of the $4.6 billion in volumes spot BTC funds saw on their Jan. 11 debut.&nbsp;&nbsp;



Want another interesting stat? The ETH and BTC funds of inflow-leader BlackRock welcomed $355 million and $710 million, respectively, in the first three days of trading.&nbsp;



So the iShares Ethereum Trust’s initial inflows (for three days) represent exactly half those of its BTC equivalent. That’s <a href="https://blockworks.co/news/sizing-up-demand-for-us-eth-etfs">above several estimates</a> that the broader ETH ETF category would see about 30% of the inflows reeled in by BTC funds.



How about ether’s price amid the launch? ETH is down about 8% from five days ago.&nbsp;



That price response is consistent with the sell-the-news event seen for BTC after bitcoin ETFs launched in January, noted Bitfinex derivatives head Jag Kooner.



He added: “As the market evolves and more TradFi investors become familiar with Ethereum&#8217;s potential, the dynamics could shift, potentially increasing ETH ETF inflows and impacting its price more significantly in the long run.”



— Ben Strack&nbsp;



<h2 class="wp-block-heading">$6.6 million</h2>



The value of the State of Michigan Retirement System’s allocation to the Ark 21Shares Bitcoin ETF, according to a Friday <a href="https://www.sec.gov/edgar/search/#/q=Bitcoin&amp;dateRange=custom&amp;entityName=Michigan&amp;startdt=2024-07-26&amp;enddt=2024-07-26">filing</a>.&nbsp;



This disclosure comes after Wisconsin’s investment board <a href="https://blockworks.co/news/wisconsin-discloses-blackrock-ibit-shares">revealed</a> in May that it held roughly $160 million worth of bitcoin fund shares.



Jersey City Mayor Steven Fulop said in a Thursday X <a href="https://x.com/StevenFulop/status/1816452663191450015?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1816452663191450015%7Ctwgr%5E55ca3594c41eac418c9b64a0a5aa5c72868087d0%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fwww.coindesk.com%2Fpolicy%2F2024%2F07%2F25%2Fjersey-city-to-invest-in-bitcoin-etfs-the-latest-pension-to-dive-into-crypto%2F">post</a> that the city’s pension fund was set to follow Wisconsin in allocating an unspecified percentage of its assets to bitcoin ETFs.&nbsp;



“It will be completed by [the] end of the summer,” he noted, adding: “I’m sure eventually it will be more common.”



<h2 class="wp-block-heading">Recap: Bitcoin 2024 day one</h2>



Hello from Nashville!&nbsp;



It’s been an eventful 36 hours. Stay tuned for lots of conference coverage and a full event recap on <a href="http://blockworks.co">Blockworks.co</a> next week. But for now, here’s a quick update on day one of Bitcoin 2024.&nbsp;



The big event yesterday was “the fight” — a karate combat battle sponsored by Bonk and Influencer Fight Club featuring a headliner mashup of Nic Carter and Coty Kuhn. You truly can’t make this stuff up.&nbsp;



If you’re like me and learning about karate combat for the first time, it’s basically full-contact karate. There is a ref, yes. Though his purpose was not immediately clear given I never actually saw him make a call (save for choosing a winner at the end).&nbsp;



There was lots of live betting, heckling from the audience and — shocker — no line for the women’s restroom.&nbsp;



The real headliner though may have been presidential hopeful RFK Jr., who spent most of the evening posing for selfies and flashing a classic faux-bashful Kennedy smile when the crowd periodically burst into “RFK!” chants.&nbsp;



Also present was <a href="https://www.thecut.com/article/hawk-tuah-girl-viral-tiktok-video-explained.html">Hailey Welch</a>, perhaps better known as “hawk tuah girl.” Welch made the rounds, snapped a <a href="https://x.com/0x_Abdul/status/1816827058103972301">picture</a> with Kennedy and live-streamed the whole thing. It’s unclear whether she knew and/or cared about the event’s connection to the Bitcoin conference.&nbsp;



A handful of blond children ran around the VIP section, pausing to tackle each other on a mat set up outside the ring — presumably mimicking the moves they’d seen inside.



“Kennedy kids,” a bartender told me, nodding toward some not-so-secret Secret Service agents nearby. “Cute, right?”&nbsp;



— Casey Wagner



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



Happy Friday! We are just days away from the next FOMC meeting. Though central bankers are expected to again hold interest rates steady, let’s review the latest data and what it tells us about September rate cut odds.&nbsp;



<ul>
<li>The <a href="https://www.bea.gov/data/personal-consumption-expenditures-price-index">PCE</a> — the Fed’s preferred inflation gauge — came out this morning, showing prices rose 0.1% month-over-month in June and 2.5% from a year ago. Core PCE, which excludes food and energy prices, showed a 0.2% monthly and 2.6% annual increase. This was in line with analyst expectations. The report should set up FOMC members for a September rate cut, which markets now say has an 87% chance of happening, according to CME Group <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">data</a>. </li>



<li><a href="https://www.dol.gov/ui/data.pdf">Initial jobless claims</a> fell more than expected, which could complicate September rate-cut likelihood. In all, 235,000 people filed for unemployment benefits last week, coming in lower than the anticipated 245,000. Had claims surged, the Fed would likely cut more aggressively. It’s worth noting that July’s national holiday (and more generally it being a summer month) tends to skew its data, so take it with a grain of salt. </li>



<li><a href="https://blockworks.co/news/on-the-margin-newsletter-treasury-yield-curve">As we mentioned yesterday</a>, Q2 GDP grew an estimated 2.8% year-over-year, the Bureau of Economic Analysis <a href="https://www.bea.gov/news/2024/gross-domestic-product-second-quarter-2024-advance-estimate">reported</a>. This blows the expected 2% mark out of the water. The reading is also much higher than the first quarter’s figure of 1.4%. Still, growth isn’t too hot, which bodes well for a September rate cut. </li>
</ul>



— Casey Wagner



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



<ul>
<li>Jan van Eck doesn’t follow the traditional approach of allocating only a small portion of one’s wealth (or none at all) to crypto. The VanEck CEO <a href="https://x.com/JSeyff/status/1816860527181644012">said</a> at Nashville’s Bitcoin 2024 that BTC represents “way over 30%” of his portfolio. </li>



<li>Speaking of Bitcoin 2024, former President Donald Trump is slated to give a keynote address there on Saturday afternoon. Blockworks senior reporter Casey Wagner is on-site to cover the event. <a href="http://blockworks.co">Blockworks.co</a> will be the place to go for event-related updates.   </li>



<li>As of 2 pm ET on Friday, BTC was trading at approximately $67,400, reflecting a 2.4% increase over the past 24 hours. Bitcoin’s price is also more than 5% higher than it was a week ago, and up 9% over the past month. Net inflows into US spot bitcoin ETFs this week (excluding today) total $484 million.</li>
</ul>



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On the Margin Newsletter: The ETH ETF debut data takeaways

Macauley Peterson

As the US election season heats up, expect to see volumes and total value locked (TVL) on the leading crypto-based prediction market, Polymarket, continue to rise.



Polymarket growth has gone parabolic this year, with TVL <a href="https://defillama.com/protocol/polymarket#information">doubling</a> over the last 30 days alone.



For most financial assets, derivatives markets are usually orders of magnitudes larger than the underlying spot markets. That’s not yet the case in crypto, much less onchain — the vast <a href="https://www.coingecko.com/en/exchanges/derivatives">majority</a> of futures trading is still done on centralized exchanges today.



But the fully onchain <a href="https://blockworks.co/tag/derivatives">derivatives</a> platform D8X wants to marry the two growing crypto-native phenomenon: prediction markets and perpetual futures.



D8X co-founder Caspar Sauter sees the impending launch of leveraged prediction markets via orderbook-based futures as a natural evolution of the concept.



“As an economist, I love the fact that you can actually have a market to get predictions,” Sauter told Blockworks. “I love [<a href="https://blockworks.co/tag/polymarket">Polymarket</a>], my co-founder loves the product, and we love perps — so the natural next step was to think, ‘can we do leverage?’”



Read more: <a href="https://blockworks.co/news/d8x-perp-dex-protocol-launches-on-arbitrum">D8X protocol brings novel futures exchange to Arbitrum</a>



It turns out to be a rather difficult task, akin to the problems with perp markets on very low-cap crypto assets colloquially known as “alts” or “shitcoins.” Except, it’s worse.



Prediction markets have intrinsic features, like a price bound from $0-1. Sudden, violent moves driven by external events make them unlike highly liquid perps markets such as bitcoin.



For instance, as regards Polymarket’s <a href="https://polymarket.com/event/presidential-election-winner-2024">most liquid</a> offering — the US presidential election winner, with $391 million bet to date — a breaking news headline can potentially change the outcome in an instant.



Try to throw a perp on a spot market that’s highly illiquid and prone to explosive volatility and “you’ll get wrecked, like, from day one,” Sauter said, noting “the difficulties, from a financial engineering point of view, is probably what made people not do it yet.”



One option is to require full collateralization, with no leverage offered. But aside from lacking appeal to the more risk-tolerant speculators, it’s also not a capital efficient way for market participants, including market-makers, to hedge.



The specific financial engineering details to be used by D8X remain under wraps for now. Sauter notes that there are multiple other teams working on similar products, and he is curious to see how each will approach the challenge.



<a href="https://blockworks.co/tag/solana">Solana</a>-based derivatives exchange, Drift, <a href="https://x.com/DriftProtocol/status/1816851169354063972">announced</a> today it is also building prediction markets, for example.



D8X’s testnet deployment is expected to launch in a few weeks.



The platform also won’t stop with political predictions. “Having a prediction market is a fantastic idea,” Sauter said. “The system we have will be relatively flexible to offer more than that.”



But political prediction markets have <a href="https://blockworks.co/news/polymarket-july-all-time-high-trading-volumes">clearly struck a nerve</a>. “Adding leverage to it is kind of the cherry on top,” he said.



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Leveraged Polymarket bet derivatives are coming

Jack Kubinec

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



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Howdy!



Happy Friday afternoon to <a href="https://x.com/CaudilloXIV/status/1808911720079053280">the cheeky pint guy</a>, who I think about at least once every Friday.



“Don’t go home until you’re proud… a-bosh!”&nbsp;



But before then, what should we make of this Jito restaking news?



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



<h2 class="wp-block-heading">Jito is building restaking, and markets like it</h2>



For some time, it was something of an open <a href="https://x.com/ImmutableSOL/status/1774844009967419821">secret</a> that the major Solana protocol Jito was working on a restaking platform that would bring something akin to Ethereum’s EigenLayer to Solana.



The liquid staking and maximal extractible value (MEV) specialist finally confirmed the rumors yesterday when Jito <a href="https://blockworks.co/news/jito-releases-code-for-solana-restaking-network">released the code for Jito restaking</a>. Markets seemed to like the move, with JTO climbing 8% and SOL up 9% over the past 24 hours, according to CoinGecko.&nbsp;



Restaking is the term coined by EigenLayer for taking assets staked to secure blockchains and staking them a second time to secure additional apps and services. For instance, if you staked ETH and received Lido’s stETH, you could take that liquid staking token and deposit it on EigenLayer, where it could be used to secure “actively validated services” (AVSs) such as EigenDA, an in-house developed piece of crypto infrastructure.&nbsp;



This makes stETH more useful, and it extends the use of Ethereum’s security, at least in theory. This could all be done on Solana, too.&nbsp;



But I bet markets are also partly excited about the liquidity that could be coming. EigenLayer has been extraordinarily successful at drawing deposits, even if its ability to generate meaningful yield is something of an open <a href="https://x.com/chudnovglavniy/status/1782253746615177568">question</a>. EigenLayer is already the second-largest crypto protocol in total value locked (TVL), with over $15 billion in assets <a href="https://defillama.com/">held</a> on the platform, according to DeFiLlama.&nbsp;



Much of this investment came in the leadup to EigenLayer’s training wheels launch as investors <a href="https://blockworks.co/news/defi-points-farming-crypto-investments">put their money on platforms</a> thought to soon be airdropping tokens, including EigenLayer. It will be interesting to watch if Jito can also draw this sort of major liquidity — especially as Solana <a href="https://x.com/_ryanrconnor/status/1815753548841300025">passes</a> Ethereum in some DeFi metrics.



Still, at least one person on X who read through the code was excited about Jito’s product letting AVSs cap their deposits. One critique of EigenLayer is that while it has drawn $15 billion in deposits, its AVSs likely won’t need $15 billion in security, meaning yields could be rather low.&nbsp;



“Any AVS that aims to provide a sustainable yield needs to cap the deposit amount,” they <a href="https://x.com/DaftaryNeel/status/1816810083764043890">wrote</a>.&nbsp;



Jito co-founder Lucas Bruder also told me “several” AVSs and liquid restaking token providers are interested in using Jito restaking.



That said, Solana’s restaking race is in fairly early innings. Solayer, the other major Solana restaking outfit <a href="https://www.coindesk.com/business/2024/05/01/restaking-gold-rush-spreads-to-solana-from-ethereum-with-jito-and-others-joining-in/">reported</a> to have raised funding from Polychain, has created some buzz but has yet to release any code.&nbsp;



JitoSOL is Solana’s most widely-held liquid staking token, and it is noteworthy that Jito has already thrown its hat in the restaking ring. This is perhaps in contrast to Ethereum’s liquid staking giant Lido, which missed the early boat on Ethereum restaking and has now <a href="https://www.coindesk.com/tech/2024/06/11/lido-introduces-restaking-vaults-in-collaboration-with-symbiotic-mellow-finance/">latched</a> onto EigenLayer competitor Symbiotic.



— Jack Kubinec



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



Solana just surpassed BNB to become the fourth-largest cryptocurrency by market capitalization, according to CoinMarketCap.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdclu-3xAWq7k4NXWxygWMzJb6iVgN5GcEhlbVvA2EBdYpNIqZAbi8_wmPg6rR3_kbfpL6z8YLxiKV40GV_2Omzrr0bvM6wKBJzt41Jz66mnmTlaGhhKHAzIlkj5HkOFLq4SPWmjQXtjME3MtPClYOGE2my?key=5Rl8IiIUX8Eu7HmYCqFdTg" alt=""/></figure>



CoinGecko still lists solana as the fifth-largest crypto, but if current trends hold, SOL will soon pass the Binance-created token on both platforms.



Market cap is an easy-to-cite statistic for the relative significance of blockchains, and solana’s growth has been something to behold. On Jan. 1, 2023, it <a href="https://coinmarketcap.com/historical/20230101/">was</a> the 17th-largest crypto, trailing the likes of tron, polkadot, and shiba inu. SOL’s market cap has multiplied by nearly 25x since then.



— Jack Kubinec



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



ICYMI this week in Solanaland:



<ul>
<li>Hamilton Lane, a $920 billion asset manager specializing in private markets investments, <a href="https://www.hamiltonlane.com/en-us/news/news-libre-launches-scope-on-solana">launched</a> a fund on Solana through Libre.</li>



<li>Early Solana DeFi protocol Solend rebranded to Save and <a href="https://x.com/solendprotocol/status/1816105880183824603">announced</a> the creation of a stablecoin, liquid staking token, and memecoin platform.</li>



<li>The startup AgriDex <a href="https://x.com/AgriDexPlatform/status/1816088530101096722">settled</a> an agricultural trade on Solana.</li>



<li>SOL’s bullish July continued, with the asset’s price sitting above $180 early Friday afternoon.</li>



<li>Helius and Light Protocol’s zk compression framework <a href="https://blockworks.co/news/lightspeed-newsletter-zk-compression-solana-data-storage">went live on Solana devnet</a>.</li>



<li>Solana <a href="https://x.com/_ryanrconnor/status/1815753548841300025">passed</a> Ethereum layer-1 in trailing 30-day decentralized exchange volume.</li>



<li>Smart wallet platform Privy <a href="https://x.com/privy_io/status/1816132358049030499">launched</a> support for Solana.</li>



<li>Solana wine tokenization platform dVIN <a href="https://blockworks.co/news/lightspeed-newsletter-solana-wine-tokenization">came out of stealth</a>.</li>
</ul>



— Jack Kubinec



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



A message from Stijn Paumen, CEO of Helio:


<div class="wp-block-image">
<figure class="aligncenter"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd9L0rUHKng1QzYe-emhcmPwJWkPgGJT0QaijrhI9rYAVwSZavvnlZZAu4EfhA6KiPXC3hfIvfEJXzWe17aS3ngn-SSOAdCNRI3x98c2oSRXwSxNCvGhtZWL8N-j8xEtBoadeJ3X6zrsuO6kdq-UwDhW_4u?key=5Rl8IiIUX8Eu7HmYCqFdTg" alt=""/></figure></div>


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



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Lightspeed Newsletter: Jito is building a restaking product

David Canellis

Mt. Gox trustees have sent out billions of dollars in bitcoin over the past three weeks, and prices are doing just fine.



Affected users are being credited their long-lost bitcoin to their exchange accounts, 10 years after the platform initially went bust.&nbsp;



So, trustees must send bitcoin to those platforms in batches, the first of which was coincidentally sent right at the pico bottom for bitcoin prices: $54,000.&nbsp;



Almost 54,910 BTC ($3.69 billion) has been forwarded to crypto exchanges on behalf of creditors since July 5.&nbsp;



Read more: <a href="https://blockworks.co/news/mt-gox-customers-crypto-asset-repayments">Mt. Gox customers to receive crypto assets after 10-year wait</a>



The latest batch of repayments was made in the very early hours Wednesday ET, when 2,361 BTC ($158.25 million) was sent to Bitstamp.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/18871976/embed#?secret=JvuYct7Pru" data-secret="JvuYct7Pru" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">The bigger and darker the bubbles, the bigger the transfer to participating crypto exchanges</figcaption></figure>



Markets had anticipated the first <a href="https://blockworks.co/tag/mt-gox">Mt. Gox</a> repayments for weeks, but exactly when they would begin was unknown.



The initial transfer of 1,544.7 BTC to Japanese platform Bitbank was worth $84.9 million at the time. Bitcoin has however since recovered by 22%, so the same sum would fetch $103.85 million right now.



There was initially 141,490 BTC ($9.5 billion at current prices) to distribute to creditors, and now there’s 86,580.2 BTC ($5.37 billion) remaining in Mt. Gox’s wallets, per Arkham Intelligence data. An additional amount in bitcoin cash is also to be distributed, although it would be worth much less in terms of dollar value.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/18671813/embed#?secret=Sy6yJ4rMFp" data-secret="Sy6yJ4rMFp" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">The government of German state Saxony has already dumped all of its bitcoin, which was a far smaller stash than Mt. Gox</figcaption></figure>



That means the repayment process is now 39% complete. Last week, it was <a href="https://blockworks.co/news/mt-gox-bitcoin-repayments-status">36% of the way through</a>.



Payments are expected to wind up completely within the next two and a half months, but it could be that transfers to crypto exchanges accelerate from here on out.



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Gox Watch: Repayments now 39% complete with $5.4B left to go

Crypto firm Ledger unveiled a new security offering during this year’s Bitcoin Conference, continuing the company’s product lineup refresh in 2024.&nbsp;



Called Ledger Flex, the hardware wallet — featuring a touchscreen — is the Paris-based company’s second new product of the year. It introduced Ledger Stax earlier this year.



“Ledger devices already secure more than 20% of the world’s digital assets, and our new secure touchscreen category will make self-custody more accessible than ever before for more consumers and enterprises,” Ledger CEO Pascal Gauthier said in a statement.&nbsp;



Founded in 2014, <a href="https://blockworks.co/tag/ledger">Ledger</a> has sold roughly six million devices over those 10 years. Its Stax product was designed by Tony Fadell, a tech executive known for being instrumental in overseeing the iPod’s development.&nbsp;



Read more: <a href="https://blockworks.co/news/ledger-rolls-out-crypto-life-debit-card-across-uk-and-europe">Ledger rolls out ‘Crypto Life’ debit card across UK and Europe</a>



The differentiation of these new offerings lies in touchscreens that offer proof-of-humanity and proof-of-identity features, the company noted Friday. Such features can help guard against a blurring of reality and fiction accelerated by the growth of <a href="https://blockworks.co/tag/artificial-intelligence">AI</a>, according to Ledger.



A new app for the Flex and Stax products — called Ledger Security Key — offers two-factor authentication and passkey capabilities.&nbsp;&nbsp;



Gauthier noted in a May blog that the company had begun shipping Ledger Stax devices. Ledger Flex is set to start shipping to customers immediately. The “first-of-its-kind display” on the Stax was more difficult to bring to mass production than anticipated, Ledger’s CEO added in May. &nbsp;&nbsp;



“Within the next few years, the crypto revolution will reshape how hundreds of millions of people own and manage all value,” the CEO noted at the time. “But as I’ve said on multiple occasions, our smartphones and laptops lack fundamental security features to let us onboard this era.” 



The product launches come after Ledger endured a “supply chain attack” on its ConnectKit in December. The phishing attack on a former ledger employee was <a href="https://blockworks.co/news/ledger-statement-on-phishing-hack">“an unfortunate isolated incident,”</a> Gauthier said. Ledger had <a href="https://blockworks.co/news/ledger-victims-being-made-whole">pledged to make victims whole</a>. 



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Ledger doubles down with second touchscreen-focused product

Katherine Ross

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



<h2 class="wp-block-heading">The age of adoption</h2>



55%.&nbsp;



That’s how many surveyed institutional investors plan to up their crypto allocations in the next two to three years alone.&nbsp;



The survey, conducted by EY earlier this summer, gives insight into how the institutions are approaching the crypto space. And, mind you, this was conducted before we even knew that ETH ETFs were on the table.



“We may look back on 2023 as the year digital assets firmly planted roots in the challenging soil of traditional finance,” EY wrote.



Fast forward to now, and Wisconsin’s pension fund now includes millions of dollars worth of bitcoin ETFs. In case you’re not ‘boots on the ground’ in Nashville, Jersey City Mayor Steven Fulop on Thursday <a href="https://x.com/StevenFulop/status/1816452663191450015">announced</a> that there was no question that both crypto and bitcoin were “here to stay” and that the two “won” over the doubters.&nbsp;



Most importantly though: Jersey City’s pension fund is following in Wisconsin’s footsteps and plans to allocate a similar amount by the end of the summer (Wisconsin’s is at 2%).



“I do believe blockchain is amongst the most important new technology innovations since the internet,” Fulop added.&nbsp;



So let’s focus on the funds those pension funds are buying — and by that I mean the bitcoin ETFs. EY’s survey had 68% of respondents say they plan to buy them, and just over 60% want exposure to crypto through registered vehicles versus spot products.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfJKhsj2HxE_3kGqYhgGOH89RDp5D_879QB_PGGoHl3gEQ_Rw6J6B4KydkWyzj5kTbKp794vBgVa9L1GEQKpXRBYvDlsXFO3d16RR6AP32K54S7oHevyNXNRdehWCwY83kOwghEgyTNkVk32OnPUDQKRBwj?key=hKUz3ePeRU26RvIXlw4eWA" alt=""/><figcaption class="wp-element-caption">Source: EY-Parthenon</figcaption></figure>



To put these percentages in perspective: EY surveyed over 270 institutional investors. The majority were either institutional asset managers and asset managers, but there were some RIAs and hedge funds surveyed as well.&nbsp;



“To date, while 62% of investors have allocated greater than 1% of their assets to crypto, the survey shows that percentage increasing to 81% two-to-three years out, showing more than a 30% increase in the investors willing to commit more than 1% of assets to crypto,” the report said.



“When it comes to family offices in particular, the appetite for crypto is even greater, with 24% allocating more than 5% of their investments.”



EY’s Prashant Kher told me that 59% of respondents also said they planned to launch a crypto fund in the next two years, or, if you bump their AUM to $500 billion (yes, with a B), then that percentage shoots up to 90%.&nbsp;



The bigger the AUM, the more likely they are to have a larger allocation. And those hedge funds I mentioned? They’re looking to be the “most aggressive in increasing allocations.”



It’s not just bitcoin or the ETFs getting all of the love. Tokenized assets are attracting lots of attention from these firms.&nbsp;



“I think the fund space is a quite interesting one to watch, where we’ve seen some successful launches with the money market funds and treasuries. We know of others that are working on tokenizing alternatives. And then the second angle in tokenization is the blockchain-based payments and tokenized cash. And how you&#8217;re seeing pilots with different banks launching their own tokenized cash,” Kher said.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdcpb9SuRjpnJzlkz7jmxCE6ohfk1bDjHFv8kg9jxOjKtRNSxIBD_p8GdRSmbarw6nBr-X2XIIyKsOJuWY4NRsWIyXRF1T3UFbPPQsNE70w4hAOyJsrAXWvOE_BhAjWGYJgZnIxO3QEGX3z44FEWtfjO6RV?key=hKUz3ePeRU26RvIXlw4eWA" alt=""/><figcaption class="wp-element-caption">Source: EY-Parthenon</figcaption></figure>



As for what these firms want: The majority said connectivity to liquidity providers is first and foremost, followed closely by prime brokerage services. 26% of the firms are looking for stablecoin payment support.&nbsp;



We’re now past halfway through the year, and institutional adoption continues to show strength. Now we’ll just have to see how this narrative pushes our current market cycle forward.&nbsp;



— Katherine Ross



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



<ul>
<li>Over $3 billion has net <a href="https://farside.co.uk/?p=997">flowed</a> into bitcoin ETFs so far in July compared to $666 million in all of June.</li>



<li>Ether ETFs have otherwise seen $179.1 million of net outflows across its first three days of trading, per Farside Investors <a href="https://farside.co.uk/?p=1518">data</a>.</li>



<li>BTC and ETH have bounced, up 5% and 2.5% in the past day, respectively (BTC: $67,350; ETH: $3,250).</li>



<li>POPCAT, TAO and AAVE are rebounding the hardest, between 16% and 13.3%.</li>



<li>Another all-time high for Ethereum validators: 1,044,670 with 4,300 in the <a href="https://www.validatorqueue.com/">queue</a>.</li>
</ul>



BlackRocked&nbsp;



BlackRock’s tokenized money market on Ethereum, BUIDL, is paying out steady yield entirely on crypto rails.



And those dividends are growing. BlackRock fund managers tally yields each day and distribute them on the first business day of every month.



Similar to stablecoins like Tether, USDC and DAI, the yield mostly comes from US Treasurys and various repurchase agreements.&nbsp;



Fund contributors receive their share of dividends in BUIDL tokens. BUIDL can be redeemed 1:1 for USDC through a smart contract built with issuer Circle, with payouts available round-the-clock.



To date, the blockchain data shows BUIDL paying out yield to 15 different addresses, although that also includes RWA protocol Ondo and a small amount to restaking platform Karak.&nbsp;



Initial participants include Coinbase, Fireblocks, BitGo and Anchorage Digital Bank, according to a spokesperson from Securitize, which handles much of BUIDL’s infrastructure.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc3msIg_ZgXeCriyjZZJWug1OkbmZe1TfL-GQ89Hkc0CAsLiDKCwDthvv6lFovIV5bpFwDTtIFFG1gFK9i163v9rBp7T4YyJhSm7-nm20CFC-XpioUmMtj_7dHdl1EtkGa6Sh9Plejfu0xz10WBlh2fCWlP?key=hKUz3ePeRU26RvIXlw4eWA" alt=""/><figcaption class="wp-element-caption">Green columns are BUIDL mints (inflows), red are burns (outflows) and purple are monthly dividends</figcaption></figure>



Since its launch in March, BUIDL has paid:



<ul>
<li>$265,400 at the start of April.</li>



<li>$1.21 million in May.</li>



<li>$1.67 million in June</li>



<li>$1.82 million in July</li>
</ul>



The rising dividends match the growth in BUIDL’s AUM — now $527.6 million, up from just over $280 million at the time of the first payout.



BUIDL holders have otherwise opted to cash in $55.7 million for USDC since its launch in March.



All told, BUIDL is performing well for token holders. Its cumulative yield to date is 1.15% — paid over the space of four months — while ether is down 7.3%.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcXUZggR2xXjAw0yg1uLwwtycyn2X4_rPcbeCDg7KUTzSoQhLr8BRGSB3aH-cvZSiwYIhMgvVjoslNTvwEesnkz47gzmVpqMG6llciXIS3ZkNUbU1hnEZ7NwjZ9CWoxwl1UcVwaZ1znRUVdopDkxzQbhYbs?key=hKUz3ePeRU26RvIXlw4eWA" alt=""/><figcaption class="wp-element-caption">BUIDL yield is anything but volatile</figcaption></figure>



The S&amp;P 500 is outwise up almost 3.5% over the same period while the yen has slipped about 2%.



If it wasn’t already clear, BlackRock’s fund is aptly named.&nbsp;



It’s building capital for its investors slowly and steadily — a nice change from what usually goes on in crypto.



— David Canellis



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



<ul>
<li>X has <a href="https://cointelegraph.com/news/x-removes-crypto-emojis-bitcoin-2024">scrapped</a> hashtag emojis, including bitcoin and other crypto logos.</li>



<li>Bancolombia Group’s Wenia is <a href="https://www.prnewswire.com/news-releases/wenia-part-of-bancolombia-group-taps-chainlink-to-increase-transparency-of-its-stablecoin-backed-11-by-the-colombian-peso-302205816.html">integrating</a> Chainlink’s Proof-of-Reserve to bring transparency to the COPW stablecoin’s Colombian peso reserves.&nbsp;</li>



<li>$4 million worth of crypto has been donated to former President Donald Trump’s campaign from donors such as Ripple’s Stuart Alderoty and BitGo’s Mike Belshe, CNBC <a href="https://www.cnbc.com/2024/07/25/trump-raises-more-than-4-million-in-bitcoin-other-cryptocurrencies.html">reported</a>.</li>



<li>The United Kingdom <a href="https://www.revolut.com/news/revolut_receives_uk_banking_licence/">granted</a> financial technology firm Revolut a banking license.</li>



<li>Marathon Digital said it <a href="https://www.globenewswire.com/news-release/2024/07/25/2918789/0/en/MARA-Purchases-100-Million-of-Bitcoin.html">bought</a> $100 million worth of bitcoin, to hold over 20,000 bitcoin on its balance sheet.</li>
</ul>



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



Q: Is this the final form of institutional participation in crypto?



Final is, well, too final of a word to use.&nbsp;



Instead, I’d probably say that this is the middle stage of institutional participation. We’re finally starting to see real interest, and it’s not just conversations in a conference room anymore.&nbsp;



Things are finally actually happening, which makes all the difference. But I don’t think we’ll be anywhere close to the finish line until the unfriendly — and uncertain — regulatory environment in the US is cleared up.&nbsp;



It’s, unfortunately, simple and complicated at the same time. But until there’s clarity, we’ll keep seeing the institutions that really want to take part be very creative about how they get involved with the overall industry.&nbsp;



— Katherine Ross



The way it’s going, definitely not. Two things crypto needs from institutions to help reach its true final form:



<ol>
<li>Stock markets that run entirely on a blockchain — with crypto-to-stock trading pairs.</li>



<li>Tokenized initial public offerings and direct listings that are integrated with traditional stock exchanges.</li>
</ol>



Bonus points for stablecoins baked into banking apps (especially ones that allow deposits and withdrawals with external, non-bank sources).&nbsp;



Not to mention, home loans and mortgages that don’t penalize for interacting with crypto exchanges and other service providers. Institutions might be chasing exposure to crypto’s growth, but there’s still lots of room to go deeper than that.



— David Canellis&nbsp;



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Empire Newsletter: Crypto’s next wave of smart money

Solana’s biggest liquid staking project is taking the plunge into restaking.



Earlier today, the Jito Foundation announced in a blog post that it had released the code for Jito restaking. This move places the Jito Foundation ahead in the race to build restaking on Solana, as the network&#8217;s fast and low-cost DeFi ecosystem continues to expand.



Restaking refers to using staked crypto to secure other blockchain apps and services, theoretically extending the security of the blockchain’s base layer. In theory, this should put unproductive staked assets to use and make proof-of-stake systems more efficient.&nbsp;



Read more: <a href="https://blockworks.co/news/lightspeed-newsletter-solana-defi-activity-expanding">Lightspeed Newsletter: Solana’s DeFi activity keeps expanding</a>



Eigen Labs pioneered the concept on Ethereum with EigenLayer, which has drawn billions in deposits on top of a <a href="https://blockworks.co/news/a16z-series-b-eigenlayer-investment">$100 million investment</a> from a16z.



Restaking is yet to go live on Solana, though Jito releasing its codebase represents a noteworthy step forward. One major competitor is Solayer, which has drawn significant interest during the brief periods where it has accepted deposits. Solayer’s GitHub doesn’t <a href="https://github.com/solayer-labs/docs/tree/main">contain</a> code for its restaking product.



Jito’s restaking pivot pairs one of the <a href="https://blockworks.co/tag/solana">Solana</a> ecosystem’s most notable pillars with one of crypto’s buzziest narratives. Jito runs a fork of the original Solana Labs validator client with some modifications to allow for maximal extractible value (<a href="https://blockworks.co/tag/mev">MEV</a>). This MEV can be quite lucrative for validators running the Jito-Solana client. Earlier today, one validator earned a $311,000 tip on a transaction, Jito co-founder Lucas Bruder <a href="https://x.com/buffalu__/status/1816480964509622511">said</a> on X.



Read more: <a href="https://blockworks.co/news/solana-mev-validators-ethereum">MEV collected by validators is now higher on Solana than on Ethereum</a>



Users who stake their Solana tokens with Jito’s liquid <a href="https://blockworks.co/tag/staking">staking</a> pool can receive liquid JitoSOL. This pool is the network’s <a href="https://solanacompass.com/stake-pools">largest</a> by a wide margin, and JitoSOL can be used elsewhere in DeFi while also earning staking and MEV rewards. Since launching in November 2022, JitoSOL has become Solana’s dominant liquid staking token, <a href="https://dune.com/21co/solana-liquid-staking-tokens">comprising</a> roughly 45% of all liquid staking tokens on the network. (Of note, only <a href="https://dune.com/ilemi/solana-staking?ref=bankless.ghost.io">about</a> 6% of all staked SOL is held in liquid staking tokens.)



Jito’s restaking product, as detailed in a Thursday blog <a href="https://www.jito.network/blog/announcing-jito-restaking/">post</a>, uses similar nomenclature to <a href="https://blockworks.co/tag/eigenlayer">EigenLayer</a>. Node operators can enable stakers to restake their assets, which are used to secure actively validated services (AVSs). Nodes that misbehave can be slashed.&nbsp;



One notable difference is that Jito Restaking can accept any token using the Solana SPL token standard, whereas EigenLayer only takes EIGEN and staked or liquid staked ether.



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Jito unveils code for Solana restaking network

Monoswap, a small DEX on the Ethereum rollup Blast, announced today that it had been hacked under questionable circumstances. The team attributed the loss of funds from the DEX’s staked liquidity pools to a phishing attack that installed malware on a single developer’s computer.



The team urged users to withdraw any remaining funds and to avoid using the protocol while they work on deploying new smart contracts.



<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">At the moment, we are deploying new contracts for all features immediately to avoid further attacks from the hackers. All deposit methods, including MonoChest, Lottery, Farm, Dividends were disabled. Users can unstake xMONO and MonoPass as usual. MONO can be redeemed for xMONO…&mdash; MonoSwap (@monoswapio) <a href="https://twitter.com/monoswapio/status/1816462185322979712?ref_src=twsrc%5Etfw">July 25, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The security lapse decimated the exchange&#8217;s already paltry total value locked (TVL), which <a href="https://defillama.com/protocol/monoswap#information">peaked</a> at $2.8 million back in April.



As described, some have indicated that the attack seemed easily preventable. The Monoswap team will need to explain how its contracts were so fragile in the first place.



<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">To show you how low quality this dev is if you search “Kakaocall” on X you would have seen many posts warning about a meeting call scam with the exact same name from as early as May 2024. <a href="https://t.co/2lbgmHPGVx">pic.twitter.com/2lbgmHPGVx</a>&mdash; ZachXBT (@zachxbt) <a href="https://twitter.com/zachxbt/status/1816380481136648261?ref_src=twsrc%5Etfw">July 25, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The alleged level of incompetence on display naturally has some suspecting an inside job, although there’s nothing clearly pointing to that conclusion for now.



Read more: <a href="https://blockworks.co/news/blast-dapp-exploit-inside-job">Blast dapp hack was an inside job, and it could have been worse</a>



<h3 class="wp-block-heading">Blast Phase 1 claims end</h3>



The past couple months have not been kind to <a href="https://blockworks.co/tag/blast">Blast</a>. Chain-wide TVL has <a href="https://defillama.com/chain/Blast">halved</a>, and activity is down about 35% from its June peak, indicating an exodus of capital and users lured by airdrop farming.



For the early users of the rollup, a fork of <a href="https://blockworks.co/tag/optimism">Optimism</a> — “Phase 1” — concluded June 26 with a token <a href="https://x.com/blast/status/1805964805414830506">airdrop</a>, claimable for 30 days.



Read more: <a href="https://blockworks.co/news/blast-optimistic-rollup-launch">Blast launch leaves users confused about withdrawals</a>



<a href="https://blockworks.co/price/blast">BLAST</a> is down -25% this week and about -45% since launch, while bitcoin is up about 6% in the same period.



The project’s &#8220;Phase 2&#8221; guide, introduced on July 2 and detailing a 12-month rewards season, failed to halt the slide to its local bottom at about $0.013 on July 5.



According to the proposal, the next year of rewards are to be split equally between “Points” and “Gold,” with Points earned based on ETH, USDB — the yield-bearing stablecoin akin to sDAI — and BLAST balances. Using native yielding assets is a Blast specialty but the BLAST token lacks any&nbsp;— making it less attractive to hold.



Read more: <a href="https://blockworks.co/news/tether-competes-stablecoin-project-increase">To unseat Tether, upstart stablecoins are sharing the wealth</a>



<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">This feels&#8230; off. The vision is great: Mobile-first, native yield, and focused on dapps. The valuation is great: If the vision attracts users and novel applications, the FDV is much lower than comparable chains. The Phase 2 rewards are not great: ETH and USDB receive native… <a href="https://t.co/mJbwcJWmIB">https://t.co/mJbwcJWmIB</a> <a href="https://t.co/e5SDsohl9c">pic.twitter.com/e5SDsohl9c</a>&mdash; darran (@darran0x) <a href="https://twitter.com/darran0x/status/1808260672028819884?ref_src=twsrc%5Etfw">July 2, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



&#8220;Gold&#8221; refers to a type of reward given within the Blast network, used as an incentive mechanism primarily geared toward developers and early adopters of dapps on the rollup. Among a raft of gimmicky incentive schemes, “Big Bang” competitions aim to incubate new dapps, which must distribute available Gold before receiving further allocations.



“Golden Tickets” — designed to encourage active participation and engagement with dapps — continue to offer users the chance to earn Points, Gold and Prizes.&nbsp;



All told, the market expected more in the short-term from marketing maven <a href="https://x.com/PacmanBlur">Pacman</a>, whose brainchild, after all, <a href="https://blockworks.co/news/3-years-launch-eth-staking">attracted hundreds of millions</a> of dollars in deposits before building began in earnest.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The only users of blast are blast holders, blast holders will not hold blast if price keeps going down. Hes screwing all the holders of his chain. With massive unlocks coming in 26 days, why would I not sell everything and just hold eth.&mdash; wick.eth (@j_wickwick) <a href="https://twitter.com/j_wickwick/status/1808568201015419141?ref_src=twsrc%5Etfw">July 3, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Pacman was <a href="https://x.com/MattsCryptoX/status/1808561642265047226">criticized</a> for placing too much focus on measures to drive long-term value, and giving <a href="https://x.com/PacmanBlur/status/1808589767547682951">short shrift</a> to the notion of DAO governance.&nbsp;



Read more: <a href="https://blockworks.co/news/blast-developers-layer-2-liquidity">Blast developers drawn by layer-2’s liquidity and founder’s success building Blur</a>



In response, a Blast Improvement Proposal <a href="https://x.com/blast/status/1810803799822389612">switched on</a> double Points for BLAST holders. The token was also <a href="https://x.com/tradeonblitz/status/1814329987392249978">added</a> as a collateral asset on Blast-based DEX Blitz on July 19.



The chain remains a leading optimistic rollup by TVL and <a href="https://l2beat.com/scaling/activity">activity</a>, and recently <a href="https://x.com/blast/status/1813272949191024824">added</a> Across Protocol as a faster bridging option. It’s a bet on a mobile-centric layer-2 that appeals to the retail gambler set. The jury is out on whether that’s a formula for longevity.



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Blast incentives aim to attract strong devs, as value leaks

Felix Jauvin

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



<ul>
<li>A look at what the Treasury department is up to, and how it’s impacting markets.</li>



<li>New economic data has dropped, and it features a “real shocker.”</li>



<li>The top asset-gathering ETH ETFs after two days of trading, and which are well positioned going forward.  </li>
</ul>



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



<h2 class="wp-block-heading">Is the Treasury manipulating the yield curve?</h2>



If you missed the most <a href="https://blockworks.co/podcast/forwardguidance/0d345cee-488a-11ef-8a49-c31d5d996b80">recent episode</a> of the Forward Guidance podcast, you may be unaware that a seminal piece of work related to the tug of war between fiscal and monetary policy was published this week.



Written by renowned economists Nouriel Roubini and Stephen Miran, the economic paper discusses the recent rise of what they call activist Treasury issuance, or ATI.



“By adjusting the maturity profile of its debt issuance, [the] Treasury is dynamically managing financial conditions and through them, the economy — usurping core functions of the Federal Reserve,” the economists wrote. “By manipulating the amount of interest rate risk owned by investors, ATI works through the same channels as the Fed’s quantitative easing programs,” they <a href="https://www.hudsonbaycapital.com/documents/FG/hudsonbay/research/635102_Activist_Treasury_Issuance_-_Hudson_Bay_Capital_Research.pdf">added</a>.&nbsp;



Simply put, despite the most aggressive rate hiking cycle in history, the economy has been staying afloat and markets keep hitting new highs each week. This is because the Treasury is doing “hidden QE” by restricting supply of available long duration debt, making for less duration that the market needs to absorb.&nbsp;



Whereas QE through the Fed works on the demand side, ATI reduces supply of duration at the onset.&nbsp;



The Treasury department has done this by tilting its maturity profile towards short-dated T-bills. It is effectively running policy often used during emergencies such as the 2008 financial crisis — but during a time of little strain on the economy:



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdDUzuHePpU8YtUAhLDXeVliek1ECdSfSRxrAjkMEdoJwI8nCE95ZFRSBt-K6AW_abFy0UMeVGn0kVEIyNK_-WvYuTBzxuXVZGXDOriXA3PKCGVw2URH79akFkS0p-JIxZwFqaHt-ryqbnh6U1RfFP0lcaL?key=QBMIdCr4uFdxKGSb7pDMQQ" alt="" style="width:745px;height:auto"/></figure>



By tilting issuance towards the front end of the curve in recent years, the Treasury is now guiding to run above their long-term average of % of bills issued for the foreseeable future:



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfJL5BWB67Uw2ef9CadZa1sdY2bC9VkSdRyBV1hO-LDEnaK-rzAM3ZNXTvuzinc5pntzDnMyO4apveepn09QV2ZDrC1N_ljWxq3e-EYZ6ULlvDgkpH2QTkq8AZjcEyaQ_EOiXn-eeRQow7XLO2G4oT--3wP?key=QBMIdCr4uFdxKGSb7pDMQQ" alt="" style="width:776px;height:auto"/></figure>



Many market experts have discussed this emerging dynamic. But what makes this paper so interesting is the quantitative approach the authors have taken to understand its impact on markets.&nbsp;



Dr. Roubini and Dr. Miran surmised that ATI has led to a lowering of long-term interest rates by 25 basis points, which is the equivalent to 100 bps in rate cuts on the Federal funds rate.&nbsp;



Essentially, this activist Treasury policy has nullified 100 bps of rate hikes from the Fed through this cycle!



Suddenly, the economy’s apparent strength and the labor market remaining secularly tight starts to make sense.



To me, it seems the Treasury has undertaken a soft version of yield curve control. It is attempting — through an activist approach — to directly influence yields in the long end of the yield curve and ensure they do not rise to where they would naturally move.



This entire dynamic has led to stickier inflation and a drawn-out tightening cycle from the Fed. Another result is a roaring stock market that is keeping higher income classes from feeling financial strain from this hiking cycle.&nbsp;



With the Treasury publishing its quarterly refunding announcement next week, the big question on everyone’s mind is what’s next. Will it continue to run this ATI policy or try to pivot back to a normalized maturity profile of issuance? We’ll soon find out.



— Felix Jauvin



<h2 class="wp-block-heading">$100 million&nbsp;</h2>



The value of bitcoin miner <a href="https://blockworks.co/tag/marathon-digital">Marathon Digital</a>’s latest BTC purchase. The company now holds more than 20,000 BTC on its balance sheet.&nbsp;



Marathon revealed it had bought the dip, saying it would be reverting to “a full HODL strategy.” The company cited increased institutional support and an improving macro environment.&nbsp;



&#8220;We believe bitcoin is the world’s best treasury reserve asset and support the idea of sovereign wealth funds holding it,” Marathon CEO Fred Thiel said in a statement. “We encourage governments and corporations to all hold bitcoin as a reserve asset.”



<h2 class="wp-block-heading">Rough waters ahead?</h2>



We’ve made it to Thursday, and as a little treat ahead of tomorrow’s PCE report, we got a slew of economic data this morning.



Second quarter GDP grew an estimated 2.8% year over year, the Bureau of Economic Analysis <a href="https://www.bea.gov/news/2024/gross-domestic-product-second-quarter-2024-advance-estimate">reported</a>. This blows the expected 2% mark out of the water. The reading is also much higher than the first quarter’s figure of 1.4%.&nbsp;



But the “real shocker” of the day, to quote <a href="https://x.com/EconguyRosie/status/1816474045485133977">David Rosenberg</a>, was the core PCE, which rose 2.9% between Q2 2023 and Q2 2024.&nbsp;



This is a decline from the Q1 2024 annualized rate, which was 3.7%. The second-quarter figure is a tad higher than expected, but so far hasn’t been enough to quell market expectations of a September rate cut. That sat at 89%, as of this afternoon.&nbsp;



But it’s not exactly smooth sailing. Rosenberg said tomorrow’s PCE monthly figure could show an increase of 0.3%, a bit higher than the expected 0.2%. This could have a more detrimental impact on rate cut expectations.&nbsp;



Meanwhile, initial jobless claims fell more than expected. In all, 235,000 people filed for unemployment benefits last week, coming in lower than the anticipated 245,000.&nbsp;



All eyes turn to tomorrow’s PCE print and then Wednesday’s FOMC results. We feel a bit more optimistic than Rosenberg seems to be, but we’ll just have to wait and see.&nbsp;



— Casey Wagner&nbsp;



<h2 class="wp-block-heading">An early look at the ETH ETF flow leaderboard</h2>



US spot ETH ETFs have completed their first two days of trading, and the world’s largest asset manager is — unsurprisingly — looking good out of the gate.



The flow <a href="https://farside.co.uk/?p=1518">data</a> shows themes we have seen play out after six-plus months of US spot BTC funds on the market — with BlackRock’s strength being just one.&nbsp;



The firm’s iShares Ethereum Trust (ETHA) has so far attracted $284 million of net inflows, edging the Bitwise Ethereum ETF’s (ETHW) second-place two-day total of $234 million. Fidelity’s Ethereum Fund (FETH) has brought in $146 million.&nbsp;&nbsp;



Does anyone else have déjà vu?



On the BTC side, BlackRock’s IBIT has blown competitors out of the water with $19.6 billion of inflows since January. Fidelity — the other financial services titan — has watched $10 billion enter its bitcoin fund.&nbsp;



“Mainstream investors are more comfortable with the likes of BlackRock and Fidelity,” said Neena Mishra, director of ETF research for Zacks Investment Research. “BlackRock’s excellent distribution network and marketing power will ensure that ETHA will continue to remain ahead of its peers.”



Outside of BlackRock and Fidelity, Bitwise appears to be the smaller, crypto-focused firm of choice for many. The latter company’s bitcoin ETF (BITB) has tallied $2.6 billion of net inflows — good enough for third-best in that category.&nbsp;



Another similar theme this time around? Big outflows from Grayscale’s more expensive trust-converted-ETF.&nbsp;



Its bitcoin version (aka GBTC) has bled $18.7 billion since January. The Grayscale Ethereum Trust (ETHE) — priced at 2.5% — has watched $811 million exit the product in its first two days. That has dragged down the category’s net flows into the red (-$27 million) after two days.&nbsp;



But there was a difference this time around. Grayscale planned for those outflows by offering a “Mini” ETH Trust — featuring the category’s <a href="https://blockworks.co/news/grayscale-changes-proposed-eth-etf-fee">cheapest</a> price point (0.15%) and a liquidity headstart amounting to about $1 billion in assets.



That potential advantage has so far resulted in $61 million of net inflows for the Mini Trust, putting it in the middle of the pack.



It’s still early, sure. And Mishra told Blockworks she is not giving up on Grayscale’s cheap option — noting its “ultra-low” price “should attract some younger investors.”



VanEck, Franklin Templeton, 21Shares and Invesco/Galaxy all have catching up to do.&nbsp;



But at the end of the day, the real winners are the investors that finally have all these options.



— Ben Strack



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



<ul>
<li>Galaxy Digital has secured $113 million for its latest crypto venture fund. Mike Novogratz’s firm is hoping to hit $150 million, so if you’re interested, now apparently is the time. </li>



<li>The Trump campaign notched another $1 million in crypto donations since the start of the second quarter, bringing its grand total to $4 million, CNBC <a href="https://www.cnbc.com/2024/07/25/trump-raises-more-than-4-million-in-bitcoin-other-cryptocurrencies.html">reported</a>. We’re curious to see if the former president’s speech to bitcoiners in Nashville this weekend will inspire others to open their pocketbooks. </li>



<li>Speaking of Nashville, <a href="https://x.com/caseywagnerr?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor">Casey</a> is on the ground at Bitcoin 2024. It is, as expected, a bit of a circus. More on that tomorrow. Say hi if you’re around!</li>
</ul>



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On the Margin Newsletter: Behind the most important economic paper of the year

Jeff Albus

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Howdy!



Happy (merry?) Christmas in July to all who celebrate. I know I’m in the minority for celebrating here, but I’m pushing for it nonetheless, because who would turn their nose up at a second Christmas?



I hope your email reading is merry and bright. Anyways:



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<h2 class="wp-block-heading">What’s the deal with zk compression?</h2>



As blockchains grow in size, they become increasingly expensive to manage and maintain.



Several million Solana accounts are created every day, <a href="https://app.blockworksresearch.com/assets/sol/analytics?dashboard=sol-onchain-activity">according</a> to Blockworks Research. Many of these accounts may not even be actively used, but developers and users of the blockchain shoulder the cost of what’s referred to as “state” — basically the most updated look at things like how much currency is in different accounts. Storing state is expensive, because thousands of distributed validators all have to have access to the most current copy of it at all times.&nbsp;



Keeping track of a lot of data costs a lot of money, so Solana has turned at times to something called “compression” — or putting a unique string of letters and numbers called a hash on the blockchain’s state space, rather than posting all of the data itself.&nbsp;



The most recent instance of this is zk compression, a new tool being developed by Light Protocol and Helius that compresses Solana state while still being part of the layer-1. The tool puts underlying state data in Solana’s ledger space, which is cheaper than its state space.



A successful rollout could make rent much cheaper on the blockchain — by an order of up to 5,000 times, Light <a href="https://www.zkcompression.com/">claims</a>.



Yesterday, the infrastructure went <a href="https://x.com/swen_sjn/status/1816134679571095560">live</a> on Solana’s devnet, which lets developers run test transactions on Solana. Light Protocol’s co-founder Swen Schaeferjohann told me he hopes to bring the technology to mainnet by the time of the Solana Breakpoint conference in September.&nbsp;



Zk compression is an evolution of compressed NFTs, which were <a href="https://blog.crossmint.com/compressed-nfts-explained/#:~:text=NFTs%20on%2Dchain.-,Compressed%20NFTs%20are%20the%20newest%20NFT%20standard%20on%20Solana%2C%20improving,Explaining%20NFT%20Compression">introduced</a> to Solana in 2023 — and initially developed during Instagram’s now-defunct NFT phase. The technology reduces onchain NFT data to a hash, which makes it much cheaper to use the assets.&nbsp;



Compressed NFTs enable Drip to do things like mint videos as NFTs on Solana. Its founder is equally excited about zk compression.&nbsp;



“Account rent is really the last hurdle to making the cost of storing data and interacting on-chain with Solana equivalent to Web2. I’m very excited to see the core developer community continuing to iterate on cost and speed,” Vibhu Norby, the founder of Drip, said in an email.



The “zk” in zk compression stands for zero-knowledge, which essentially means the compressed state can be confirmed to be accurate without giving away the state’s contents. This could prove especially important to privacy-sensitive users.



“In a time where the FTC is investigating larger companies such as Mastercard and Chase for surveillance pricing, consumers are now looking for an alternative to keep their information safe while performing transactions,” Intuition founder Billy Luedtke said of zk compression in an email.&nbsp;



Also of note, the term “zk compression” was sort-of-coined by Light and Helius upon introducing the new piece of infrastructure last month, and it created quite the little semantic battle with the Ethereum crowd, which <a href="https://x.com/ryanberckmans/status/1804549672641376617">complained</a> that the developers had actually created layer-2s under a different name.



This won’t matter much in the long run however. It’ll be much more important to see whether the tech can work.



— Jack Kubinec



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



It’s been just a few weeks since celebrity memecoin mania was at a crescendo, but the tokens appear to have already plummeted from early price runs.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcJk8fyk2FHlxbO21es5hNE2N02Qh--XcnrU7uI8ZJ9NbQwhIrlE2L7fvDDbvy4PjZnKa0A-kVvqPJqDPkxoyeean4d7a4zUeW8DJWa4XUF6sEVcy5ZpXnPvbuYKf7sETBSUUBc4UWSDt9yXkPZ2xJbqfl4?key=MdR-6A6mbBIQjlHcm3PKjA" alt=""/></figure>



This chart <a href="https://x.com/SlorgoftheSlugs/status/1816283505804075184">posted</a> by the pseudonymous Slorg shows a bloodbath generally following these tokens hitting all-time highs. Nearly a third of the celebrities to launch have since deleted their X posts about the projects. Not even Iggy Azalea, who continues to post constantly about MOTHER, has been spared from the carnage.&nbsp;



Incidentally, MarginFi just released a new <a href="https://x.com/mrgnswap">platform</a> where traders can take leveraged short positions on Solana tokens, which may be a good tool to have in the arsenal after looking at this chart.



— Jack Kubinec



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



I don&#8217;t know where the rest of you buried your seed phrases, but I keep mine in an abandoned amusement park. Not a bad ruse, all things considered. But my days of dressing up as a ghost pirate to scare meddling kids away from me gold may be coming to an end, thanks to the rise of abstracted accounts from projects like Privy. Privy wants to streamline the integration of blockchain functionalities into various Web2 and Web3 ecosystems, making it <a href="https://www.privy.io/blog/solana-support">easier</a> for developers to onboard users who may have never interacted with blockchain before. Traditionally, web3 onboarding requires juggling multiple tools and complex systems, like keeping seed phrases safe and managing various wallets. Though common practice for elderly coiners like myself, these methods have always been a hassle for newcomers. Privy&#8217;s embedded wallets take a more intuitive approach, allowing users to log in with familiar methods like email or social media — whether they already have a wallet or not.



It’s worth noting that Privy has drawn venture investment from the likes of Paradigm and Sequoia Capital. The team has also partnered with notable Ethereum-based projects like OpenSea and Friend.tech. As of yesterday, Privy has <a href="https://x.com/privy_io/status/1816132358049030499">introduced</a> support for Solana, allowing developers to create embedded Solana wallets for web and mobile applications. Users can choose to build exclusively on Solana or provision both Solana and Ethereum addresses for a cross-chain experience.



The launch has been well-received by the community. Solana’s official Twitter account <a href="https://x.com/solana/status/1816139143824695607">welcomed</a> Privy to the ecosystem, while Privy developer Osker Lu <a href="https://x.com/skerskerrr/status/1816139799402864910">shared</a> his excitement about expanding from Ethereum to Solana. Paradigm investment partner @caitlinxyz <a href="https://x.com/caitlinxyz/status/1816166658962014293">commented</a>, &#8220;The world is converging towards self-custodial wallet logins&#8230; excited for Solana devs to now have access to Privy&#8217;s embedded wallets.&#8221; This sentiment was echoed by @zjbrenner, who <a href="https://x.com/zjbrenner/status/1816139332886855912">remarked</a>, &#8220;Huge news! There&#8217;s also some alpha in this post that I had no idea about!&#8221;



@solcostcomember <a href="https://x.com/solcostcomember/status/1816141601636602217">told</a> followers, &#8220;Can&#8217;t wait to see the things people build powered by Privy,&#8221; and @SpeeksX of Tensor Labs <a href="https://x.com/SpeeksX/status/1816139588731384227">acknowledged</a>, &#8220;Privy have been awesome to work with.&#8221; The Solana Foundation&#8217;s @therealchaseeb <a href="https://x.com/therealchaseeb/status/1816139707350409530">captured</a> high hopes of the community with the rallying cry &#8220;world domination&#8221;!



— Jeffrey Albus



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



A message from Swen Schaeferjohann, co-founder of Light Protocol:


<div class="wp-block-image">
<figure class="aligncenter"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeQzJkRWxQgAbp-nT5FPItpihcnCFpoh2PKpuTPkKLBKeIEjGGiyPTHzTkg6G5NbgeJ-RDBVE67hIGLsrhfTTkaKb-ClKfnIJ4VoeE6g7da4KGNTs7ex8dB2QZF925SoQdQxRDhf1ABbE0Fm-mXu9kw1n3_?key=MdR-6A6mbBIQjlHcm3PKjA" alt=""/></figure></div>


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Lightspeed Newsletter: Zk compression may help Solana’s data storage problems

CB Payments Limited (CBPL), a subsidiary business under the Coinbase Group, has been fined $4.5 million by the UK’s Financial Conduct Authority for inadequate anti-money laundering controls.



CBPL is a regulated electronic money institution (EMI) that serves as a gateway for UK customers to trade crypto assets between entities in Coinbase Group.



In late 2020, it agreed to improve its anti-money laundering controls and not accept high-risk customers in the UK after the FCA issued a warning.



However, the financial watchdog claims that CBPL subsequently provided e-money services to roughly 13,000 “high-risk” customers — receiving about $24.9 million from 31% of these customers — in a timespan of two years.&nbsp;



Read more: <a href="https://blockworks.co/news/uk-fca-crypto-firm-warnings">FCA issued 450 warnings to crypto firms in the final months of 2023</a>



“CBPL&#8217;s controls had significant weaknesses and the <a href="https://blockworks.co/tag/fca">FCA</a> told it so, which is why the requirements were needed. CPBL, however, repeatedly breached those requirements,” Therese Chambers, FCA&#8217;s joint executive director of enforcement and market oversight, <a href="https://www.fca.org.uk/news/press-releases/fca-first-enforcement-action-against-firm-enabling-cryptoasset-trading">said</a>.



<a href="https://blockworks.co/tag/coinbase">Coinbase</a> pushed back in a blog <a href="https://www.coinbase.com/blog/coinbase-and-fca-reach-agreement-to-resolve-investigation-into-voluntary-requirement-breaches">post</a>, claiming that its business had “&#8230;unintentionally onboarded some customers between Oct. 30, 2020, and Oct. 1, 2023, (representing 0.34% of customers on-boarded) who were classified as high-risk.”



This marks the first time the FCA has taken an enforcement action against a crypto-related business under the 2011 Electronic Money Regulations. The regulation is generally designed to regulate smaller companies in the business of digital payment services.



Because CBPL agreed to “resolve the matter,” the FCA noted that the firm qualified for a 30% discount on its fine.



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Coinbase UK subsidiary fined $4.5M for insufficient money laundering controls

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<h2 class="wp-block-heading">Moon signals</h2>



It’s been said that the stock market is like astrology for dudes in finance.



If that’s the case, then mapping politics to markets must be akin to crystal healing, or animal magnetism.



Let’s not let that get in the way of a good time.



Republican nominee and former President Donald Trump is scheduled to appear later this week on stage in Nashville at Bitcoin 2024.&nbsp;



It’s set to be a landmark event for Bitcoin and the broader crypto space. It’s not the first known instance of a former US president participating in an industry event — President Bill Clinton took that honor <a href="https://nypost.com/2023/01/19/sam-bankman-frieds-ties-with-the-clintons-helped-dupe-investors/">alongside</a> former UK Prime Minister Tony Blair at Sam Bankman-Fried’s Crypto Bahamas Conference in April 2022.&nbsp;



Terra would implode a few weeks later and FTX collapsed six months after that, mostly under the weight of Bankman-Fried’s fraud. He was later sentenced to 25 years in prison, almost 700 days after the Bahamas event.



Fingers crossed Trump’s appearance at Bitcoin 2024 bodes better for crypto.&nbsp;



And there are plenty of folk who believe that it will. Same with Trump’s <a href="https://www.nytimes.com/2024/07/20/business/dealbook/silicon-valley-trump.html">positivity</a> towards Silicon Valley — the general consensus being that the tech-heavy stock market will have more room to run under a second Trump administration.



And while the Nasdaq has decoupled from bitcoin over the past three weeks, what’s good for tech stocks is still considered pretty good for crypto.



Now’s time for the crypto’s political palm reading. Five different administrations have directed American politics over the last 30 years, two Republican (Bush and Trump) and three Democrat (Clinton, Obama and Biden).



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfTMWqmurgotvWjb67rRC8NHgTNDeS4FneGLDkSSzxRQY4ATA444TbXpVQ_IBUpQgk_e6-5-ZR4OVlnhhWihtukQwuGKqKdYt1UgaHcEvrBmUZuuCuNY29WecyBKDC_kiMhX1YyJdyD9qix1I6_sjzO_B-_?key=QG4ucSEGoD_2Wi1fDvKXaQ" alt=""/><figcaption class="wp-element-caption">Red for Republican, blue for democrat, AAPL for scale (chart is in &#8220;log&#8221; view)</figcaption></figure>



Markets under Bush struggled. He came in just as the dot-com bubble burst at the turn of the millennium and quickly pulled the US into wars in Afghanistan and Iraq, which together lasted two decades.



The S&amp;P 500 dipped more than 20% in the four months following Obama’s win in November 2008. But since then — a period that includes both Trump and Biden presidencies — stocks have mostly trended upwards, sans a few hiccups (like the Covid crash) and an eight-month stretch in 2022, when the S&amp;P also retraced by over 20%.



Satoshi Nakamoto mined the first Bitcoin block less than three weeks before Obama first took office. Bitcoin, the currency, exploded by nearly 80 million percent across his two terms, alongside the launch of thousands of cryptocurrencies, including ether.



Were Obama and the Democratic Party at all responsible for all that crypto-wealth generation? Are you feeling particularly moody <a href="https://cafeastrology.com/thisweekinastrology.html">today</a> because the full moon is in Capricorn this time of year? Who’s to say.



For what it’s worth, it’s really under Trump that “crypto” flourished into the mainstream. Bitcoin’s $20,000 all-time high, the Ethereum ICO boom and DeFi Summer all happened with Trump in the White House.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfsjQAO9GffLnDnBkUhbCwqXJhcvJIVGLdfN7dfJF5KAfCCNI-j4se07aVTboscJoyJrSMLYsu429i04f1Hpr8-ESWkfn2g4pAldj-bHqTA_9dhsnwjkxIhbCxKEFjPUSqPe6ETc1DONmaC6Hz_9oAaqdRt?key=QG4ucSEGoD_2Wi1fDvKXaQ" alt=""/><figcaption class="wp-element-caption">The orange dotted lines are Bitcoin halvings — which happen half a year before each US election</figcaption></figure>



Crypto’s total market cap went from $1 trillion to as much as $3 trillion in Biden’s first year. But the second was marred by a series of debacles for crypto, the biggest shown on the dotted lines on the chart above.&nbsp;



And even despite bitcoin’s surge to new all-time highs, the rest of the crypto market still hasn’t returned to its 2021 peak.



Bulls would say a second Trump term could make all the difference. But with Mercury going into retrograde a few weeks after the election in November, anything could happen.



— David Canellis



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



<ul>
<li>BTC and ETH are down 3.7% and 8.5% apiece after the S&amp;P 500 posted its <a href="https://www.cnbc.com/2024/07/23/stock-market-today-live-updates.html">worst</a> day since 2022 (BTC: $64,000; ETH: $3,180).</li>



<li>TRX is the only <a href="https://www.coingecko.com/">top-100</a> cryptocurrency still in the green over the past day, up 1.3%.</li>



<li>LDO and the newly-formed AI supertoken ASI (still trading as <a href="https://fetch.ai/blog/artificial-superintelligence-alliance-unveil-token-with-migration-d-app-tools-now-live">FET</a>) are the worst hit over the past week, slipping 20% and 17%, respectively.</li>



<li>ETH ETFs saw $133.3 million in net <a href="https://farside.co.uk/?p=1518">outflows</a> on Wednesday, their second day of trading, bringing the cumulative total to negative $26.7 million.</li>



<li>Weekly Ethereum and Solana NFT sales <a href="https://www.cryptoslam.io/blockchains">volumes</a> are up 16.5% and 19%. Ethereum leads with $34 million to Solana’s $28.25 million. Bitcoin recorded $18.8 million.</li>
</ul>



<h2 class="wp-block-heading">Times are a-changin’</h2>



How the turn tables.



That’s one way to think about former President Donald Trump’s shift in stance when it comes to crypto.&nbsp;



Last election, Trump was staunchly anti-crypto. He even tweeted (back when journalists, myself included, reported on his posts) that he was not a “fan” of bitcoin and crypto.&nbsp;



“Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity,” he said at the time. Looking back on it now, it almost seems like something Senator Elizabeth Warren, D-MA, would <a href="https://www.warren.senate.gov/newsroom/press-releases/warren-demands-answers-from-crypto-firms-on-abuse-of-the-revolving-door-to-undermine-bipartisan-efforts-to-rein-in-crypto-terrorist-financing">say</a> given her staunchly anti-crypto stance.



Trump even went after the now-defunct Libra stablecoin project from Facebook (before it was Meta), claiming that it would need a banking charter.



Now one has to wonder how he’d approach such a project, given his support for the crypto industry this election.



I feel the need to note that we haven’t seen Trump float any actual policies for crypto. Similarly, though, we have yet to see or hear anything on the industry from Vice President Kamala Harris’ campaign. Her camp did turn down an offer to appear at Bitcoin 2024, unlike both Trump and Robert Kennedy Jr.



Trump, however, has already made strides not only by hosting events and making appearances with folks in crypto, but also by becoming the first major party nominee to accept crypto donations to his campaign earlier this year.&nbsp;



And, in a way, when you look back on the price of bitcoin throughout the years, there’s a far-fetched argument that Trump’s always been good for it — even when he was staunchly anti-crypto.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity&#8230;.&mdash; Donald J. Trump (@realDonaldTrump) <a href="https://twitter.com/realDonaldTrump/status/1149472282584072192?ref_src=twsrc%5Etfw">July 12, 2019</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Take a look at 2016, for example. After Trump’s victory, bitcoin was boosted to over $730. In fact, it was one of the few sectors to actually benefit from the 2016 election victory. The futures for the major indices on Wall Street all sold off pretty abruptly. And so started bitcoin’s journey as a safe-haven asset… but I digress, let’s go back to Trump.&nbsp;



In 2021, Trump continued his vocal anti-crypto approach. He <a href="https://www.foxbusiness.com/markets/trump-bitcoin-a-scam-us-dollar-should-reign">said</a> that bitcoin “just seems like a scam.” He <a href="https://www.foxbusiness.com/politics/crypto-potentially-a-disaster-waiting-to-happen-trump.amp">added</a> later that year that crypto investing was “potentially a disaster waiting to happen.”



Given what was just around the corner, with the depegging of Terra’s algorithmic stablecoin and the shitshow that was FTX, he may not have been totally wrong on that one, if we’re being fair. But alas, no one had a crystal ball to really see what was lying in wait for the industry.&nbsp;



I think I’ve made my point: There’s a very detailed history of Trump favoring the US dollar over crypto. But something’s changed this cycle.&nbsp;



Oh how I’d love to be a fly on the wall (and a time traveler to boot) to hear some of the conversations the Trump campaign had around crypto this year, given the narrative shift.&nbsp;



— Katherine Ross



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



<ul>
<li>Galaxy Asset Management, Michael Novogratz’s company, raised $113 million for a new crypto fund, per <a href="https://www.bloomberg.com/news/articles/2024-07-25/michael-novogratz-s-galaxy-raises-113-million-for-a-new-crypto-venture-fund?utm_source=twitter&amp;utm_medium=social&amp;utm_campaign=socialflow-organic&amp;utm_content=crypto">Bloomberg</a>.&nbsp;</li>



<li>CB Payments Ltd, the payments processor linked to Coinbase, was <a href="https://www.coindesk.com/business/2024/07/25/coinbases-cbpl-fined-45m-by-uk-regulator-for-money-laundering-lapses/?utm_medium=referral&amp;utm_source=rss&amp;utm_campaign=headlines">fined</a> over $4 million by the UK government.</li>



<li>Hashdex filed an S-1 for an ETF that would hold both ether and bitcoin, a <a href="https://www.theblock.co/post/307338/hashdex-files-s1-for-an-etf-that-holds-bitcoin-and-ether-leaves-door-open-for-other-assets?utm_source=rss&amp;utm_medium=rss">first</a> for the US.</li>



<li>Bitstamp <a href="https://x.com/Bitstamp/status/1816133303549800768">said</a> it will start distributing Mt. Gox bitcoin and bitcoin cash on Thursday.</li>



<li>Lumerin’s decentralized AI project Morpheous went live on the Arbitrum Test Network, CoinDesk <a href="https://www.coindesk.com/tech/2024/07/25/morpheus-decentralized-ai-project-from-lumerin-goes-live-on-arbitrum-test-network/?utm_medium=referral&amp;utm_source=rss&amp;utm_campaign=headlines">reported</a>.</li>
</ul>



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



Does crypto revolve around the US?



I think the narrative tends to, but maybe not so much the entire ecosystem.&nbsp;



The US, when looking at crypto, is like one of the popular kids in high school. Everyone’s chatting about them, and they tend to suck up a lot of the air in the room, even if they’re not the only ones innovating and creating.&nbsp;



I wouldn’t be surprised if this trend stayed in place until more friendly regulators, or just plain regulation, is voted in.



Projects, founders and VCs would love to see the US as the center of crypto, even in this current environment. So it’s not surprising that the US tends to dominate the conversations. However, a lot of folks have also been scared away from the US.



I guess this is a test of patience. How long can crypto endure in the hopes of establishing a US-based hub?



— Katherine Ross



The US crypto space is definitely a major force. Just like US tech is in the global technology sector.



But it really depends what part of “crypto” you’re talking about. Tether, which operates the largest stablecoin by far, is not a US company. Neither is Binance, the largest exchange by trade volume.



Nor are the entities behind some of the largest DeFi protocols in Lido and Aave registered to the US.



An antagonistic SEC has forced them into regulatory arbitrage, you might say. That’s probably true.&nbsp;



But if offshore firms can keep the crypto space turning over the years, despite all of the pressure from three-letter agencies, then maybe the US isn’t the center of the blockchain space after all.



— David Canellis



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Empire Newsletter: How US presidencies map to crypto markets

Repayments to the customers of Mt. Gox are set to begin after a decade-long court process.&nbsp;



Tokyo-based Mt. Gox once processed more than 70% of all BTC transactions at its peak before collapsing in 2014 after the loss of 950,000 BTC. Bitcoin was worth just $600 at the time.



About 20,658 customers will receive a portion of their lost assets this month, estimated at over $9 billion worth of BTC, BCH and ETH today.



The repayment process is planned to begin with BTC and BCH repayments first, <a href="https://www.mtgox.com/img/pdf/20240624_announcement_en.pdf">according</a> to Mt. Gox’s rehabilitation trustee. 



Kraken CEO David Ripley announced the successful redistribution of Mt. Gox BTC and BCH to creditors yesterday. A sum of <a href="https://platform.arkhamintelligence.com/explorer/tx/ef538385618f0fce71b2939be30d683902dc7df4bff6dcb978001348ff17bb35">48,641</a> BTC was sent to an address suspected to be a Kraken wallet on July 16.



<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">1/ <a href="https://twitter.com/krakenfx?ref_src=twsrc%5Etfw">@krakenfx</a> has successfully distributed <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> and Bitcoin Cash from the <a href="https://twitter.com/MtGox?ref_src=twsrc%5Etfw">@mtgox</a> estate back to creditors. It’s been nearly a decade since Kraken was selected by the Trustee to facilitate the investigation and return of client funds. It was our privilege and it was our duty. <a href="https://t.co/ptKexzN4gm">pic.twitter.com/ptKexzN4gm</a>&mdash; Dave Ripley (@DavidLRipley) <a href="https://twitter.com/DavidLRipley/status/1815880303254323603?ref_src=twsrc%5Etfw">July 23, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Bitstamp has publicly <a href="https://blog.bitstamp.net/post/bitstamp-to-restore-crypto-assets-to-mt-gox-creditors/">confirmed</a> receiving funds and began redistributing <a href="https://blockworks.co/tag/mt-gox">Mt. Gox</a> assets back to non-UK creditors.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">We&#39;re pleased to announce that we&#39;ve received the Mt. Gox assets. We&#39;re working diligently to distribute them to our Bitstamp customers who are Mt. Gox creditors. Please allow up to one week for security checks. We&#39;ll inform you when the transfer is finalized. Thank you for your…&mdash; Bitstamp (@Bitstamp) <a href="https://twitter.com/Bitstamp/status/1816133303549800768?ref_src=twsrc%5Etfw">July 24, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Arkham Intelligence data first <a href="https://platform.arkhamintelligence.com/explorer/entity/mt-gox">showed</a> that the European-based exchange received on Monday 1,980 BTC and 382,377 BTC in two separate transactions, followed by another 1,979 BTC and 382 BTC yesterday.



Despite long-standing fears <a href="https://blockworks.co/news/bitcoin-carving-out-low-german-government">of a supply overhang</a>, prices of both assets are holding steady on the news. BTC is up 0.3% to $66,064, while BCH has seen a slight decline of 0.3% to $366.



Based on Arkham’s data, Mt. Gox still <a href="https://platform.arkhamintelligence.com/explorer/entity/mt-gox">holds</a> about 90,344 BTC ($5.77 billion), about 64% of the original 140,000 BTC recovered by law enforcement.



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Mt. Gox customers to receive crypto assets after 10-year wait

As the end of July nears, analysts look ahead to August, a historically volatile month made more interesting this year by the US presidential election.&nbsp;



The S&amp;P 500 and Nasdaq Composite indexes in August 2023 lost 1.6% and 2.1%, respectively. The year prior, the S&amp;P 500 lost just under 1% and the Nasdaq Composite slid 4.6% during August.&nbsp;



The CBOE Volatility Index (VIX) has, for the past eight presidential election years, peaked most often during the first half of the year. Given the especially uncertain nature of this year’s presidential race, volatility in 2024 could peak later than is typical, analysts say.



Read more: <a href="https://blockworks.co/news/joe-biden-re-election-decision-potential-bitcoin-effects">How Biden ending his re-election campaign could impact bitcoin</a>



The VIX at time of publication was 17.3, up more than 20% over the past five days and at its highest level since the spring. So far in 2024, the VIX peaked in April at 19.2.&nbsp;



Given the looming Federal Reserve policy-setting meeting, the Democratic delegate vote and earnings season reports, a rising VIX is to be expected. However, it still has yet to hit 20, the level historically seen as a key indicator of swelling volatility.&nbsp;



Markets seem confident that central bankers will start their rate-cutting cycle in the fall, and delegates have all but confirmed Vice President Kamala Harris as President <a href="https://blockworks.co/tag/joe-biden">Joe Biden</a>’s replacement, so investors may not be too worried about the coming months.&nbsp;



Investors will also be looking ahead to October, which will also be when presidential election speculation will peak as campaigns make their last attempts to woo voters and early voting kicks off.&nbsp;&nbsp;



Read more: <a href="https://blockworks.co/news/kamala-harris-vp-short-list-crypto-issues">Harris VP short list shows mixed support for crypto issues&nbsp;</a>



The S&amp;P 500 and Nasdaq Composites lost 2.1% and 2.8%, respectively, in October 2023.&nbsp;



Still, as DataTrek Research co-founder Jessica Rabe pointed out, stocks more often than not peak during the final quarter of the year. In the past four-plus decades, the S&amp;P 500 has posted its high during the fourth quarter.&nbsp;



Stocks have already posted double-digit returns during the first six months of the year, with the S&amp;P 500 and Nasdaq Composite indexes gaining around 15% and 18%, respectively. A strong first and second quarter performance for equities historically leads to a slowdown in the final half of the year, Rabe said.



“The S&amp;P’s rally tends to slow in the back half after rising by double digits in the first half, so the bulk of the index’s gains are likely already in for this year,” Rabe explained. “That said, the S&amp;P is only up 1.7% in 2H thus far versus the average of 6.7%, so history says there’s still gains to be had.”



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Markets brace for volatility as VIX rises to highest level since April 

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



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



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



<ul>
<li>We’re heading into one of the more volatile months for equities. Here’s what to watch for.&nbsp;</li>



<li>Bitcoin-based stablecoins may be the reality soon enough. Let’s unpack how.&nbsp;</li>
</ul>



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



<h2 class="wp-block-heading">We’re in Leo season, so buckle up&nbsp;</h2>



Happy birthday to our Leo readers!&nbsp;



As we approach the end of July, I’m starting to think about what is ahead for August, and I’m not talking about astrology. It’s a historically tough month for markets, and I have a feeling this year will be no different. (I’m also wondering how the summer flew by so quickly, but I digress.)



The S&amp;P 500 and Nasdaq Composite indexes in August 2023 lost 1.6% and 2.1%, respectively. The year prior, the S&amp;P 500 lost just under 1% and the Nasdaq Composite slid 4.6% during August.&nbsp;



This August is special — just like every other month of 2024 — because it’s an election year. Curiously, the CBOE Volatility Index (VIX) has historically peaked more often during the first half of the year in the past eight presidential election years.



Normally, by the third quarter of an election year, we have a better sense of how voters are feeling, or at the very least, who will be on the ballot. But <a href="https://blockworks.co/news/kamala-harris-memecoin-pump-2024-elections">nothing about 2024 has been normal</a>.&nbsp;



Today, the VIX stands at approximately 17.3, having risen over 20% in the past five days. However, it remains below the key threshold of 20, which analysts suggest almost always signals increased volatility. So far this year, the VIX reached its peak in April at 19.2.



The next 30 days are fraught with uncertainty. Earnings season rages on, the FOMC is set to convene for a consequential policy-setting meeting and Democratic delegates will choose their presidential candidate.



It’s no wonder the VIX is climbing, but why is it still relatively low? My best guess is that no one wants to ruin a good thing. Stocks have performed exceptionally well this year, and there’s nothing investors like more than a stable environment. For that reason, I think they may be turning a blind eye to the uncertainty.&nbsp;



Markets are confident the Fed will cut rates this fall and that the Dems will select Vice President Kamala Harris as Biden’s replacement. For now, at least, that appears to be enough.&nbsp;



Another month stocks tend to hate is October, which will see the peak of presidential election speculation as campaigns make their last efforts to woo voters as early voting kicks off.



The S&amp;P 500 and Nasdaq Composites lost 2.1% and 2.8%, respectively, in October 2023.&nbsp;



Still, as DataTrek Research co-founder Jessica Rabe pointed out, stocks more often than not peak during the final quarter of the year. In the past four-plus decades, the S&amp;P 500 has posted its high during Q4.&nbsp;



But what about in years when stocks posted double-digit returns in the first half of the year?&nbsp;



“The S&amp;P’s rally tends to slow in the back half after rising by double-digits in the first half, so the bulk of the index’s gains are likely already in for this year,” Rabe said. “That said, the S&amp;P is only up 1.7% in 2H thus far versus the average of 6.7%, so history says there’s still gains to be had.”



And then, of course, there’s crypto. The wild-card asset class tends to keep us on our toes, but has generally adhered to the “August is a bad month” narrative for the past two years. Bitcoin and ether lost 11.3% and 10% in August 2023, respectively. In August 2022, BTC ended the month 14% lower while ETH dipped 8.5% during the 31-day period.&nbsp;



With regulatory headwinds and the expectation of new investment product launches (we’re <a href="https://blockworks.co/news/nine-us-spot-eth-etfs-live-post-approval">looking at you, ether ETFs</a>), crypto prices face other factors. However, we think the macro narrative is one to watch.



— Casey Wagner



<h2 class="wp-block-heading">$1.08 billion&nbsp;</h2>



This is the collective trading volume for ether ETFs on their first day of trading in the US. This is about a quarter of the volume that bitcoin spot ETFs brought in on their first day of trading in January.&nbsp;



The Grayscale Ethereum Trust saw the most volume, with $456 million worth of trades yesterday. Net inflows across all products came in at $106.7 million.&nbsp;



“Now day one is behind us, the market will continue to analyze the data to gauge underlying demand, while refocusing on upcoming catalysts such as Friday&#8217;s PCE data and Saturday&#8217;s Bitcoin conference where Trump is scheduled to speak,” analysts at Wintermute Trading wrote in a Wednesday note.&nbsp;



<h2 class="wp-block-heading">BTC stablecoins?</h2>



On Tuesday evening, Lightning Labs released Taproot Assets version 0.4. This update allows the Bitcoin layer-2 Lightning Network to support assets other than bitcoin, paving the way for bitcoin-based stablecoins.



&#8220;With Taproot Assets, users can make instant, low fee asset transfers, bringing trillions of stablecoin volume to bitcoin,&#8221; Lightning Labs wrote in a <a href="https://x.com/lightning/status/1815768786752164213">post</a> on X.&nbsp;



The news is exciting for bitcoin fans because it showcases a use case beyond an investment vehicle, Noelle Acheson, author of “Crypto is Macro Now” said.&nbsp;



“Lightning already connects to major exchanges (<a href="https://blockworks.co/news/coinbase-bitcoin-lightning-network-adoption-brian-armstrong">Coinbase</a>, <a href="https://blockworks.co/news/bitcoin-lightning-network-binance">Binance</a> and <a href="https://blockworks.co/news/kraken-supports-bitcoins-lightning-network-after-delayed-launch">others</a>), and it’s not a stretch to imagine new stablecoins forming the base of new trading pairs, especially of bitcoin-based tokens,” she said.&nbsp;



Stablecoins currently have a total market cap of more than $172 trillion. Why add more to an already crowded market? The Lightning Labs team says it’s less about market share and more about interoperability.&nbsp;



“While stablecoins do tend to have a network effect, including the dominance of USDT, the design of Taproot Assets also makes it easier to do cross-asset transfers, for example sending a USD stablecoin and receiving in BTC or sending between two different stablecoins,” CEO Elizabeth Stark said in an <a href="https://bitcoinmagazine.com/technical/stablecoins-are-coming-to-bitcoins-lightning-network">interview</a> with Bitcoin Magazine.&nbsp;



You won’t find us launching any BTC stablecoins anytime soon, but it’s an area we are interested in watching.&nbsp;



— Casey Wagner&nbsp;



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



<ul>
<li>Thanks to a recent market rebound, bitcoin miners are expected to return to profitability soon, according to a <a href="https://blog.bitfinex.com/wp-content/uploads/2024/07/Bitfinex-Alpha-114.pdf">report</a> from exchange Bitfinex.&nbsp;</li>



<li>HSBC Australia <a href="https://www.hsbc.com.au/help/security-centre/cryptocurrency-payment-changes/">said</a> Wednesday that it will automatically block clients from making payments to crypto exchanges due to a recent increase in scams and hacks.</li>



<li>One more shameless plug from <a href="https://x.com/caseywagnerr">Casey</a>, our solo newsletter writer today: If you will be in Nashville at Bitcoin 2024, come say hi!</li>
</ul>



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