Solayer Staked SOL

Ben Strack

Janus Henderson is the latest traditional money manager interested in getting involved in the tokenized fund space.



Nearly two-thirds of the investment firm’s roughly $360 billion of client assets under manager (as of June 30) reside in Janus Henderson equity strategies. The company also has fixed income, multi-asset and alternatives products.&nbsp;



Now, Janus Henderson is set to run Anemoy Limited’s Liquid Treasury Fund — a tokenized fund on Centrifuge’s public blockchain that gives exposure to short-term US Treasury bills. It will manage the fund’s portfolio via subsidiary Tabula.



Tabula CEO Michael John Lytle noted in a Monday statement “a natural overlap between the rapid expansion of ETF solutions and the need to underpin digital investments with stable, liquid stores of value, like US <a href="https://blockworks.co/tag/us-treasurys">Treasury bills</a>.”



Read more: <a href="https://blockworks.co/news/on-the-margin-newsletter-inevitable-institutional-digital-assets-involvement">Digital assets involvement becoming “inevitable” for more institutions</a>



Janus Henderson’s corporate strategy operates on many time horizons, the firm’s innovation head Nick Cherney told Blockworks. Its dedicated innovation effort specifically targets long-term initiatives the firm is betting will shape the financial industry’s future.



“Our decision to partner on a tokenized Treasury fund is the direct result of our focus on preparing for a future in which blockchain technology potentially transforms the way in which we deliver investment insights to our clients,” he said.



Cherney added this represents the firm’s first step into the broader nascent movement to bring “robust, transparent, institutional asset management of real-world assets” onto the blockchain.



The company joins some bigger fish in this space — namely <a href="https://blockworks.co/news/blackrock-tokenized-fund-trading-circle-usdc">BlackRock</a> and <a href="https://blockworks.co/news/stablecoin-with-yield-franklin-templeton">Franklin Templeton</a> — which have attracted hundreds of millions of dollars in assets to their <a href="https://blockworks.co/news/empire-newsletter-blackrock-buidl-milestone">tokenized money market funds</a>.&nbsp;



Read more: <a href="https://blockworks.co/news/blackrock-tokenization-investment">BlackRock doubles down on tokenization via investment in Securitize</a>



State Street said last month it plans to add <a href="https://blockworks.co/tag/tokenization">tokenization</a> and digital custody services via a partnership with crypto infrastructure provider Taurus, and others continue to test <a href="https://blockworks.co/news/tradfi-blockchain-trials-mass-adoption">blockchain tech use cases</a>.



An August OKX <a href="https://www.okx.com/learn/okx-economist-impact-report">report</a> recently spotlighted a 2023 survey showing that about a third of hedge funds labeled tokenization as the most significant future market opportunity.&nbsp;



“What’s clear is that institutions see digital assets as inevitable, as…securities, bonds and central bank digital currencies are tokenized on the blockchain,” OKX Chief Commercial Officer Lennix Lai previously told Blockworks.&nbsp;



Archax, a UK-based digital securities exchange, broker and custodian, said Tuesday it would add Anemoy’s Liquid Treasury Fund to its primary platform.



“This initial fund could have broad applicability for a wide range of crypto native protocols, from stablecoin collateral to DAO treasury management,” Cherney said. “We will continue to explore how we can deepen this effort in jurisdictions globally where we feel there is robust infrastructure to do so.”



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



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Janus Henderson follows TradFi rivals into tokenized fund space

While both traditional and crypto markets are expected to react to the Federal Reserve’s anticipated rate cut Wednesday, the impact is likely to hinge on the size of the reduction.



Though a rate cut is all but guaranteed, markets will be tuning in to Fed Chair Jerome Powell’s Wednesday afternoon press conference to get details about the decision.



As of 11 am ET Tuesday, CME Group’s FedWatch <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html">tool</a> showed a 62% probability of a 50 basis point rate cut and a 38% probability of a 25bps reduction.



Read more: <a href="https://blockworks.co/news/powell-confirms-september-rate-cut">Powell confirms September rate cut, stocks and cryptos rally</a>



Some <a href="https://blockworks.co/news/september-events-that-could-move-markets">industry analysts and executives have noted</a> that while the market would likely view a 25bps cut as a normal measure — and potentially react positively — a 50bps cut could spark investor fears of a recession and potentially increase volatility.



This concern about a larger rate cut weighing heavily on risk assets is contrary to history showing that more rate cuts fare well for such assets, LMAX Group market strategist Joel Kruger told Blockworks.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;



“However, we believe there is a strong chance that in the event we do see 50 basis points, investors will have had more time to feel better about things and will once again welcome the accommodation,” he added.



Matt Lason, chief investment officer of crypto hedge fund Globe 3 Capital, said he’s expecting the Fed to cut by 50bps on Wednesday. Many Fed inflation metrics have been met, he told Blockworks, adding that jobs and other macro data have “softened.”&nbsp;



“This will be very good for crypto and the markets overall,” he argued. “If the <a href="https://blockworks.co/tag/federal-reserve">Fed</a> only lowers 25bps, it might disappoint some temporarily. But in either scenario we are still very bullish on crypto in the long term.”



Then there were Democratic Sens. Elizabeth Warren, Sheldon Whitehouse and John Hickenlooper, who made the request for a more aggressive 75bps cut in a Monday <a href="https://www.warren.senate.gov/imo/media/doc/warren_hickenlooper_whitehouse_letter_to_fed_re_september_rate_cut.pdf">letter</a> to <a href="https://blockworks.co/tag/jerome-powell">Powell</a>.&nbsp;



The trio cited the Fed’s confidence in inflation moving toward its 2% target and data indicating slower job growth.&nbsp;



They noted the Fed should “front-load rate cuts to avoid sliding towards a potential crisis,” adding that high interest rates might even be making worse remaining drivers of inflation, such as housing costs.



Once we learn which route the Fed chooses to take Wednesday, Lawant noted “the more critical question” becomes how large and how long the rate-cutting cycle will be.&nbsp;



Susannah Streeter, head of money and markets at financial services firm Hargreaves Lansdown, said in a statement she’s expecting “a quick succession of cuts.”&nbsp;&nbsp;



She added: “Even if a smaller rate cut is delivered, it’ll raise expectations for a more aggressive loosening of policy in November and December, with 100bps of rate reductions by the end of the year priced in by markets.”&nbsp;



This expected cut is happening as bitcoin’s link to traditional assets has recently increased, FalconX research head David Lawant pointed out in an X post last week.&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">BTC correlation with the main broad equity indices (S&amp;P 500 &amp; Nasdaq) is hitting its highest level since Mar &#39;23. The crypto-equity link is strengthening ahead of the macro regime transition and a critical presidential election in the US. <a href="https://t.co/N6TG2c1OfE">pic.twitter.com/N6TG2c1OfE</a>&mdash; David Lawant (@dlawant) <a href="https://twitter.com/dlawant/status/1833553385880187318?ref_src=twsrc%5Etfw">September 10, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Bitcoin rose above $60,000 this weekend before dipping following a Sunday report of a second apparent assassination attempt on Donald Trump. BTC’s price hovered around $60,350 at 11 am ET on Tuesday — 3.7% higher than 24 hours prior.&nbsp;



Kruger called the early-week price setback “somewhat perplexing” given the seeming lack of “material fundamental catalysts within crypto or traditional financial markets to reconcile the activity.”



Bitcoin’s price has remained in somewhat of a consolidation phase in recent weeks. While traders brace for the potential positive or negative impact these rate changes have on traditional and crypto markets in the short-term, various segment observers have continued to float lofty year-end price forecasts for BTC — particularly if certain things fall into place.



Read more: <a href="https://blockworks.co/news/on-the-margin-newsletter-price-predictions">Price predictions proliferate after volatile week</a>



The wait-and-see game goes beyond Fed rate decisions, as <a href="https://blockworks.co/news/mike-novogratz-crypto-us-election">markets appear to be awaiting</a> whether <a href="https://blockworks.co/news/2024-elections-crypto-policy-outlook">Kamala Harris or Trump</a> (a more vocal crypto supporter so far) will win the November election.&nbsp;



Despite the unknowns, Lason said the fundamental longer-term catalysts for bitcoin remain intact, noting the ongoing institutional demand for the asset, and the bitcoin ETFs.&nbsp;&nbsp;



“With the US national debt crossing $35 trillion and the debasement of fiat currencies across the globe, we expect bitcoin’s upward trajectory to continue,” he added.



Still, the market remains “well aware of seasonality trends that are keeping traders cautious” for at least another couple weeks, Kruger noted. September is a <a href="https://x.com/intangiblecoins/status/1830969167757091002">historically bad month for bitcoin</a> and the stock market.&nbsp;&nbsp;&nbsp;&nbsp;



The LMAX market strategist added: “The silver lining here, especially for crypto, is that October and November are the strongest months of the year.”



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



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What to watch for heading into the next Fed rate decision

Katherine Ross

David Canellis

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



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<h2 class="wp-block-heading">Same but different</h2>



AI is the source of many great ironies in crypto right now. But that might not always be the case.



Perhaps AI makes the crypto space safer, say, through integrations with wallets and web apps to catch phishing and other types of fraud ahead of time.



AI may also boost the power of trading bots so that gains are easier to come by, or even design and code memecoins that make us all stinking rich.



All those use cases utilize AI as a tool — augmenting infrastructure that mostly already exists to simplify the lives of crypto users.



What connects the Bitcoin, crypto and Web3 narratives with AI is, for now, somewhat tangential.&nbsp;



Even to the point that some industrial bitcoin miners are increasingly looking to convert their existing farms into AI-compatible data centers, because the latter <a href="https://blockworks.co/newsletter/daily/issue/post_760f9a83-9b48-4efe-bb77-f6e77ab1f9eb">makes more money</a> at the moment.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcJQnuhEFQ5ay5NBss5elhGZhV8TdJVK_YNLb2QmYqfa2yFNBvVJui0XhqMZosiLW9Xjxfa80sHI_7f4uslDxMI0BxDtKa-8yXib6xK58OofpfRxVGKnn7DsGdWcuzqzFHD7_vLk7o3B-7BqBD5sFEiviA?key=drb30ojJ25SlHPt7iMeV_Q" alt=""/><figcaption class="wp-element-caption">NVDA and crypto have mirrored each other’s growth over the past seven years — with NVDA eclipsing the digital asset market a few months back</figcaption></figure>



It’s a slow process that isn’t easily reversed — as the only similarity between running a bitcoin mining farm and an AI data center is that both require bucketloads of power.



There hasn’t yet been a publicly disclosed instance of a bitcoin miner fully switching over to service AI initiatives, although some are easing into it slowly.&nbsp;



But that trend, if it continues to crystalize, mirrors where the mainstream is at right now.&nbsp;



Google Search trends show interest in AI is at an all-time high right now, having shot up considerably at the end of 2022 — just as interest in bitcoin and crypto reached near-two-year lows.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfuXzjhD1OF6O5_APb_tMrcuphMpw_-preg2wz8A0uu3_mFy3cnzu0BqRnCpdDmpvX3RPQRz0-MOzZCoJ-_-iwvCXQF4MuQ335v4r1muwUWYqgW55SRqoPjKkjdWN_5orQrQ4QSCpAyX2gBQWngMyvKRQE?key=drb30ojJ25SlHPt7iMeV_Q" alt=""/><figcaption class="wp-element-caption">AI search interest, shown by the purple line, has mirrored NVDA’s share price</figcaption></figure>



It’s unlikely that bitcoin miners will undergo a mass exodus toward AI, and even if they did, the Bitcoin network would almost certainly still be impervious to 51% attacks.&nbsp;



And besides, the network’s difficulty would eventually drop to the point that mining bitcoin could end up just as lucrative as AI computing all over again.



It’s apt, then, that decentralized GPU marketplaces persist as the one crypto-AI intersection with reasonable product market fit, as highlighted by Casey Caruso, managing partner at Topology Ventures, on <a href="https://blockworks.co/podcast/empire/520defa8-747a-11ef-8d43-a7370e106aca">today’s episode of Empire</a>.



Just like how the promise of fresh BTC incentivizes miners, blockchains act as a coordination layer for all different kinds of computational resources — from data storage to CPU and GPU services for AI — so that regular crypto users can rent out their machines in return for tokens.



So, while AI coins might appear relatively small on the first chart above, shown by the purple area in the bottom right-hand corner, their total market caps only tell one part of the story.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXevOOSm1YkwLfaPlLFCTlowE2Pg4aShO2qvxW_Yus6iT7r36ETfZGUsZ9IsHbJbWhv4pd8zFyoIOp3c0SCvCPQ81uMlEDeGLXZvvf0qIFZuyTAZkx4O-g51apOhP5djrnSJmubhdpdLDm2RZD3BxVkzr07S?key=drb30ojJ25SlHPt7iMeV_Q" alt=""/><figcaption class="wp-element-caption">AKT price action and daily fee spend on Akash have recently decoupled</figcaption></figure>



GPU marketplace Akash allows users to pay for compute with two different cryptocurrencies: its native AKT and USDC.&nbsp;



In total, the platform has generated over $811,000 for lease providers, and weekly fees reached over $30,000 at the end of August, a new all-time high, and more than double what was recorded around the start of the year.



The overarching quest for Bitcoin, crypto and AI proponents is finding the killer app that makes them make sense for the world’s population.&nbsp;



We’re not exactly sold that chatbots are AI’s killer use case. But for crypto specifically, whatever the killer app is, it’s increasingly apparent it should be decoupled from the price of bitcoin — operating as its own thing, with its own value proposition and market dynamics, something that hasn’t been totally achieved just yet.&nbsp;



Maybe an AI use case will make the difference.



— David Canellis



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



<ul class="wp-block-list">
<li>Crypto markets are mostly flat, with BTC ahead 0.7% on the day and ETH exactly even. (BTC: $59,200; ETH: $2,310.)</li>



<li>SUI has extended its recovery after reaching nine-month lows in early August — rallying almost 120% since to $1.17. It’s still down 45% from its record high in March.</li>



<li>AI coins altogether set a new market cap record in March alongside bitcoin’s own high: $56.3 billion, about 36% above its prior peak in November 2021.</li>



<li>Base is closing in on Solana in terms of stablecoin <a href="https://defillama.com/stablecoins/chains">supplies</a>: now $3.488 billion to $3.849 billion, after gaining 3.43% in the past week.</li>



<li>$231.95 million net has flowed out of Arbitrum <a href="https://defillama.com/bridges/chains">bridges</a> across the same period, with $89.2 million and $36.06 million flowing into Ethereum and Optimism, respectively.</li>
</ul>



<h2 class="wp-block-heading">Wrap it up</h2>



There are still a few crypto bankruptcies looming over our heads, including BlockFi and FTX.&nbsp;



We’re going to hear more about FTX early next month, at a reorganization hearing that’ll seek to confirm the plan shared by the FTX estate earlier this summer.&nbsp;



The plan, the estate <a href="https://www.prnewswire.com/news-releases/ftx-announces-overwhelming-support-from-creditors-for-plan-of-reorganization-302227961.html">said</a>, has received support from creditors, <a href="https://blockworks.co/news/empire-newsletter-ftx-bankruptcy-shortfalls">though it’s a bit controversial</a>. If the confirmation hearing goes well, then we could be one step closer to wrapping up the bankruptcy.&nbsp;



BlockFi is also getting close to the finish line. Haynes and Boone partners Richard Kanowitz and Alexander Grishman told me that their client, BlockFi, is in the “final stages” after the plan was confirmed “<a href="https://blockworks.co/news/blockfi-bankruptcy-chapter-11-greenlight">a while ago</a>,” Kanowitz said.



The timing is still a bit in the air, but the estate is making “interim distributions and looking forward to making a final distribution,” he added. BlockFi’s international arm is still undergoing proceedings with Bermuda courts to get everything tucked away in a neat little bow.&nbsp;



Similarly to FTX, creditors wanted BlockFi’s distributions to be “in-kind,” which essentially means that their crypto is handed back to them rather than receiving a sum of cash. And, unlike FTX, the two lawyers said they were able to access reports and see where assets were. It’s no secret that the teams working for the bankruptcy estate at Sam Bankman-Fried’s former company <a href="https://blockworks.co/news/new-ftx-ceo-says-exchange-commingled-assets">didn’t have such an easy time</a>.&nbsp;



A bankruptcy is still a bankruptcy, even if Kanowitz called BlockFi the “golden standard.” And, given the legal action we’ve seen against the leadership at both FTX and other bankrupt lenders, like Celsius, perhaps the standard is a tad low.



BlockFi, despite being able to access assets, didn’t have enough crypto to distribute in-kind to creditors.&nbsp;



“That [puts the] cart before the horse, right? If they had all those assets to be able to return to customers, [they wouldn’t have needed] to file bankruptcy,” Kanowitz explained.&nbsp;



But there’s long been one question lingering in the back of my mind: Is our current bankruptcy code sufficient enough to tackle crypto?



Kanowitz essentially said yes, that the crypto bankruptcies didn’t have anything “out of the ordinary that the bankruptcy code couldn’t handle.”



Grishman, who worked with BlockFi prior to the bankruptcy, agreed with Kanowitz.&nbsp;



“There was nothing that was so novel” about the case, Grishman said. “It’s just that the underlying asset is novel, and that it is cryptocurrency, but it&#8217;s nothing that the bankruptcy courts are not able to deal with.”



When I posed the question to Bill Hughes, senior counsel and director of global regulatory matters at Consensys, he had a bit of a different take. “What has to happen is, where necessary, you come up with new approaches that seek to serve similar ends, and deal with the reality in which people use a peer-to-peer network. That requires changes to accounting rules … and adding to parts of the bankruptcy code. Perhaps the tax code needs some tweaks,” Hughes told me. “There&#8217;s a way to do it that serves the purposes of the law, but does so in a way that serves the system.”



Though this is perhaps easier said than done given the speed at which legal and regulatory changes are implemented.&nbsp;



— Katherine Ross



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



<ul class="wp-block-list">
<li>Former Binance CEO Changpeng ‘CZ’ Zhao will be <a href="https://www.coindesk.com/policy/2024/09/16/cz-set-to-be-released-from-prison-on-september-29/?utm_medium=referral&amp;utm_source=rss&amp;utm_campaign=headlines">released</a> from prison toward the end of the month.</li>



<li>dYdX will list perpetual futures on prediction markets, CEO Charles d’Haussy told <a href="https://www.coindesk.com/business/2024/09/17/dydx-to-debut-perpetual-futures-on-prediction-markets-as-dex-seeks-to-raise-profile/?utm_medium=referral&amp;utm_source=rss&amp;utm_campaign=headlines">CoinDesk</a>. </li>



<li>Bhutan holds 13,011 bitcoin worth $780 million, according to Arkham Intelligence <a href="https://x.com/ArkhamIntel/status/1835712533854118072">data</a>.</li>



<li>MicroStrategy, once again, <a href="https://www.theblock.co/post/316705/microstrategy-is-selling-700-million-more-in-convertible-senior-notes-to-buy-back-debt-and-more-bitcoin?utm_source=rss&amp;utm_medium=rss">announced</a> a convertible debt offering of $700 million to buy more bitcoin.</li>



<li>Former President Donald Trump unveiled World Liberty Financial, the <a href="https://www.axios.com/2024/09/17/trump-crypto-platform-world-liberty-financial">new crypto venture</a>, in a Spaces on X last night. </li>
</ul>



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



Q: Is Trump launching a token really bullish?



Literally anyone can launch a token. And so many have, whether we’re talking about earlier in this cycle with Caitlyn Jenner or if we’re going back to last cycle. A token launch isn’t novel on its own.&nbsp;



The project behind the token is what really matters. I haven’t yet seen the full white paper for the World Liberty Financial project, so I won’t pass judgment.&nbsp;



What I will say is that one could argue that the token launch is bullish because it could spur on other token launches. Last week, <a href="https://blockworks.co/news/crypto-funding-recovery-signs">PitchBook’s Robert Le told us</a> that there are a lot of projects in the wings waiting for the perfect time to do their own token launches, and this could be the catalyst they need.&nbsp;



Ah, yes, I can just imagine the look on Gary Gensler’s face while being debriefed about the Trump-backed token. What a fun cycle.



— Katherine Ross



I’m with Katherine. If there were any stigma left attached to launching tokens — including governance coins — then Trump may have just severed it altogether, for good.



NFTs did a lot for that cause. Internet inventor Tim Bernes-Lee <a href="https://arstechnica.com/tech-policy/2021/07/video-of-berners-lees-5-4m-nft-hints-another-exists-with-an-error/">sold</a> an NFT of his original web source code in June 2021 — six months later, Jimmy Kimmel and Paris Hilton were gabbing about their Bored Apes on camera.



Understandably, more crypto-native folk might be cringing at Trump’s team hawking its own non-transferrable governance token to accredited US investors while marketing it as DeFi.



It’s not outside the realm of possibility that Kimmel and Hilton may have seen someone like Bernes-Lee dabble in NFTs and figure: “Why not me?”&nbsp;



World Liberty Financial could have the same effect on someone on the fence about whether they should jump into crypto. After all, they could probably <a href="https://x.com/nic__carter/status/1831145983847137451">do better</a>.



— David Canellis



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The case for AI finding a killer app for crypto

Casey Wagner

Flyfish Club, the company behind the members-only club scheduled to open in Manhattan this month, has settled with the Securities and Exchange Commission over alleged violations.&nbsp;



Per the settlement agreement, Flyfish has until Sept. 26 to “destroy all Flyfish NFTs in its possession,” cease accepting royalty payments from secondary market trading platforms on Flyfish NFT sales and pay a civil penalty of $750,000.&nbsp;



In 2021 and 2022, Flyfish sold memberships to its yet-to-be-built private club through non-fungible tokens (<a href="https://blockworks.co/tag/nfts">NFTs</a>) priced between 2.5 ETH and 4.25 ETH. Approximately 1,600 NFTs were sold, generating around $14.8 million in gross proceeds. These funds were used to finance the construction of the &#8220;Flyfish Club,&#8221; a private restaurant in downtown Manhattan, according to the <a href="https://blockworks.co/tag/sec">SEC</a>.



“Flyfish led investors to expect profits from the entrepreneurial and managerial expertise of Flyfish and its principals in building and running the restaurant,” the SEC wrote in the <a href="https://www.sec.gov/files/litigation/admin/2024/33-11305.pdf?utm_medium=email&amp;utm_source=govdelivery">settlement agreement</a>. “Flyfish told investors they could potentially profit from reselling their NFTs at appreciated prices in the secondary market.”&nbsp;



Read more: <a href="https://blockworks.co/news/nft-artists-sue-sec-regulatory-uncertainty">The SEC continues to engage in ‘strategic ambiguity,’ lawyer says</a>



Flyfish also told investors that “leasing” out its tokens to non-members was a way to make a profit.&nbsp;



The club is scheduled to open this week on Sept. 20, according to social media <a href="https://www.instagram.com/flyfishclub/?hl=en">posts</a>. While the club’s <a href="https://www.flyfishclub.com/blockchain-registration">website</a> acknowledges that the venture originally “launched with blockchain-based memberships,” interested members may now only apply for “standard memberships.” Current NFT holders are still allowed to lease their tokens to others to gain access to the club, the website adds.&nbsp;



SEC Commissioners <a href="https://blockworks.co/tag/hester-peirce">Hester Peirce</a> and Mark Uyeda, who have <a href="https://blockworks.co/news/sec-commissioners-disagree-with-coinbase-decision">frequently differed from their colleagues</a> on blockchain-related enforcement actions, issued a dissenting opinion.&nbsp;



“For curmudgeonly commissioners like us, crypto enforcement feels a bit like a trip to a restaurant for a meal, Omakase style,” Peirce and Uyeda wrote, referencing the Japanese dining experience Flyfish Club plans to offer.&nbsp;



“Omakase translates to, ‘I’ll leave it up to you.’ This directive is wonderful in the hands of a renowned chef, but disastrous in the hands of a crypto-obsessed Commission,” they added.&nbsp;



The NFTs in question, Peirce and Uyeda argue, are not <a href="https://blockworks.co/tag/securities">securities</a> as their colleagues claim, but rather utility tokens. This is true even if the restaurant’s success caused the NFT prices to increase, the commissioners say.&nbsp;



Flyfish NFT purchasers did not have a “reasonable expectation of profit,” Peirce and Uyeda say, but rather a reasonable expectation of “wonderful culinary experiences and other exclusive membership experiences.”&nbsp;



“The securities laws are not needed here, and their application is harmful both in the present case and as future precedent,” they added. “The Flyfish NFTs were simply a different way to sell memberships. Why shouldn’t a chef be able to sell memberships to eat at her kitchen table and to collect royalties on resales of those memberships?”&nbsp;



Flyfish did not immediately return Blockworks’ request for comment.



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Days before opening, Flyfish Club settles with SEC for $750K 

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



<ul class="wp-block-list">
<li>With a Fed rate decision coming this week, a look at where markets stand, and where they could head. </li>



<li>Another traditional money manager has hopped aboard the tokenization train.</li>



<li>The big press conference and other data points Casey thinks you should keep an eye on.</li>
</ul>



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



<h2 class="wp-block-heading">A Fed rate cut looms: Expectations abound</h2>



It’s Fed week, folks. You already knew that, but given the anticipation around this rate decision, it felt worth writing out.&nbsp;&nbsp;



This expected cut is happening as bitcoin’s link to traditional assets has recently increased, FalconX research head David Lawant recently pointed out:&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">BTC correlation with the main broad equity indices (S&amp;P 500 &amp; Nasdaq) is hitting its highest level since Mar &#39;23. The crypto-equity link is strengthening ahead of the macro regime transition and a critical presidential election in the US. <a href="https://t.co/N6TG2c1OfE">pic.twitter.com/N6TG2c1OfE</a>&mdash; David Lawant (@dlawant) <a href="https://twitter.com/dlawant/status/1833553385880187318?ref_src=twsrc%5Etfw">September 10, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Bitcoin rose above $60,000 this weekend but had pulled back to $58,100 by 2 pm ET Monday — 1.8% lower than 24 hours prior. The initial dip coincided with a Sunday report of a second apparent assassination attempt on Donald Trump.&nbsp;



But back to the Fed’s imminent decision, coming Wednesday.&nbsp;



We all know the Fed is set to cut rates, but the question remains by how much. You can almost hear an auctioneer chanting: “25, 25, I’ve got 25 (basis points). Do I hear 50?”&nbsp;



As of 2 pm ET, CME Group’s FedWatch <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html">tool</a> showed a 59% probability of a 50bps rate cut (with a 41% probability of a 25bps reduction).&nbsp;&nbsp;



Some analysts have noted that while the market would likely view a 25bps cut as a normal measure (and thus react rather positively), a 50bps cut could spark investor fears of a recession and potentially increase volatility.



Not all necessarily agree.



Matt Lason, CIO of crypto hedge fund Globe 3 Capital, said he’s expecting the Fed to cut by 50bps on Wednesday. Many Fed inflation metrics have been met, he told Blockworks, adding that jobs and other macro data have “softened.”&nbsp;



“This will be very good for crypto and the markets overall,” he argued. “If the Fed only lowers 25bps, it might disappoint some temporarily. But in either scenario we are still very bullish on crypto in the long term.”



Then there were Democratic Sens. Elizabeth Warren, Sheldon Whitehouse and John Hickenlooper, who made the request for a more aggressive 75bps cut in a Monday <a href="https://www.warren.senate.gov/imo/media/doc/warren_hickenlooper_whitehouse_letter_to_fed_re_september_rate_cut.pdf">letter</a> to Fed Chair Jerome Powell.&nbsp;



The trio cited the Fed’s confidence in inflation moving toward its 2% target and data indicating slower job growth.&nbsp;



They noted the Fed should “front-load rate cuts to avoid sliding towards a potential crisis,” adding that high interest rates might even be making worse remaining drivers of inflation, such as housing costs.



Once we learn which route the Fed chooses to take Wednesday, Lawant noted “the more critical question” becomes how large and how long the rate-cutting cycle will be.&nbsp;



To that point, Susannah Streeter, head of money and markets at Hargreaves Lansdown, said in a statement she’s expecting “a quick succession of cuts.”&nbsp;&nbsp;



She added: “Even if a smaller rate cut is delivered, it’ll raise expectations for a more aggressive loosening of policy in November and December, with 100bps of rate reductions by the end of the year priced in by markets.” While traders brace for the potential positive or negative impact these rate changes have on traditional and crypto markets in the short-term, various segment observers have continued to float <a href="https://blockworks.co/news/on-the-margin-newsletter-price-predictions">lofty year-end price forecasts for BTC</a> — particularly if certain things fall into place.&nbsp;



The wait-and-see game goes beyond Fed rate decisions, as <a href="https://blockworks.co/news/mike-novogratz-crypto-us-election">markets appear to be awaiting</a> whether <a href="https://blockworks.co/news/2024-elections-crypto-policy-outlook">Kamala Harris or Trump</a> (a more vocal crypto supporter so far) will win the November election.&nbsp;



Despite the unknowns, Lason said the fundamental longer-term catalysts for bitcoin remain intact, noting the ongoing institutional demand for the asset, and the bitcoin ETFs.&nbsp;&nbsp;



“With the US national debt crossing $35 trillion and the debasement of fiat currencies across the globe, we expect bitcoin’s upward trajectory to continue,” he added.&nbsp;&nbsp;



Summer had plenty of quiet market moments. But the last week of the season appears set to be anything but.



— Ben Strack&nbsp;



<h3 class="wp-block-heading">235&nbsp;</h3>



The number of S&amp;P 500 companies which mentioned the term “inflation” during their second quarter earnings calls, according to <a href="https://insight.factset.com/less-than-50-of-sp-500-companies-cited-inflation-on-earnings-calls-for-q2">data</a> from FactSet Research. This is a decrease from Q2 of 2023, when 297 of the 500 companies talked about inflation on earnings calls.&nbsp;



Also of note, 210 S&amp;P 500 companies mentioned “AI” during Q2 2024 earnings calls — a massive increase from 2022 (the pre-ChatGPT days) when only around 50 companies talked about AI. This still suggests more than half of S&amp;P 500 companies did not think AI was worth mentioning.&nbsp;



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



Happy Monday! We’ve made it to Fed week. While Wednesday’s FOMC interest rate decision and Powell press conference will of course be the main events, other data points are worth keeping an eye on. Here’s what we’re watching:&nbsp;



<ul class="wp-block-list">
<li>On Tuesday we’ll get the August US retail sales report, which is expected to show a 1% month-over-month increase. July’s report showed that retail and food services sales increased 1% from June, coming in higher than the expected increase of 0.4%. Another bump in retail sales from August would be a reassuring data point that implies consumers are feeling healthy. A sharp decline, on the other hand, could signal consumers are pulling back on recessionary fears.&nbsp;</li>



<li>On Wednesday at 2 pm ET we will get the answer to the question on everyone’s mind: Will the Fed cut interest rates by 25bps or 50bps? Is a bigger cut even possible? We’ll also get a lot more insight into the second-most important question: Is the Fed behind the curve? And, by my ranking, the third-most important question we will see answered on Wednesday is: How many more interest rate cuts do central bankers anticipate this year? Buckle up.&nbsp;</li>



<li>Weekly jobless claims on Thursday will once again be an important figure to watch. If claims move significantly higher, the odds of a soft landing decreases. The threshold to watch will be 250,000. We know hiring has slowed, but so far, layoffs have been minimal. If that starts to change, it’s a clear sign the labor market is not as healthy as central bankers would like.&nbsp;</li>
</ul>



— Casey Wagner&nbsp;



<h2 class="wp-block-heading">Another TradFi player betting on tokenization</h2>



Investment firm Janus Henderson is the latest traditional money manager jumping onto the tokenization bandwagon.



This company was one I covered back in the day for another media outlet focused more on the mutual fund space. So to witness its foray into the digital asset realm is particularly interesting to me.



Janus Henderson focuses primarily on equity strategies, but also has fixed income, multi-asset and alternatives products. Managing about $360 billion in assets, it is now set to sub-advise Anemoy Limited’s Liquid Treasury Fund — a tokenized fund on Centrifuge’s public blockchain that gives exposure to short-term US Treasury bills.&nbsp;&nbsp;&nbsp;



Janus Henderson’s corporate strategy operates on many time horizons, the firm’s innovation head Nick Cherney told me. Its dedicated innovation effort specifically targets long-term initiatives the firm is betting will shape the industry’s future.



“Our decision to partner on a tokenized Treasury fund is the direct result of our focus on preparing for a future in which blockchain technology potentially transforms the way in which we deliver investment insights to our clients,” he said.



Cherney added this represents the firm’s first step into the <a href="https://blockworks.co/news/on-the-margin-newsletter-inevitable-institutional-digital-assets-involvement">broader nascent movement</a> to bring “robust, transparent, institutional asset management of real-world assets” onto the blockchain.



The company joins some bigger fish in this space — namely BlackRock and Franklin Templeton — which have attracted hundreds of millions of dollars in assets to their <a href="https://blockworks.co/news/empire-newsletter-blackrock-buidl-milestone">tokenized money market funds</a>. State Street wants to get more involved in tokenization, and others continue to test <a href="https://blockworks.co/news/tradfi-blockchain-trials-mass-adoption">blockchain tech use cases</a>.



“This initial fund could have broad applicability for a wide range of crypto native protocols, from stablecoin collateral to DAO treasury management,” Cherney said. “We will continue to explore how we can deepen this effort in jurisdictions globally where we feel there is robust infrastructure to do so.”



— Ben Strack



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



<ul class="wp-block-list">
<li>Congressional <a href="https://blockworks.co/news/kalshi-election-markets-cftc">election betting on startup platform Kalsh</a>i is <a href="https://apnews.com/article/betting-on-elections-kalshi-gambling-c060aad4d12f9622d36f83e525088dcc">still on hold</a> after a federal appeals court sided with the CFTC on Friday. The regulator is attempting to ban election betting, claiming the market decreases voter confidence in the integrity of election results. </li>



<li>FTX founder <a href="https://blockworks.co/news/sbf-appeals-fraud-conviction">Sam Bankman-Fried filed an appeal</a> Friday afternoon to overturn his conviction. SBF is currently serving a 25-year sentence. His attorneys say the presiding judge in the case unfairly blocked the defense team from showing certain evidence, and the jury in turn heard only “one side” of the story. </li>



<li>The DLT Science Foundation, a global nonprofit <a href="http://v">organization</a> launched in 2023, today announced its creation of the “MiCA Crypto Alliance.” The initiative is designed to “unite” leading companies in the blockchain industry as new compliance and regulatory guidelines come into effect. Members of the alliance include Ripple, Hedera and the Aptos Foundation. </li>
</ul>



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Markets speculate ahead of anticipated rate decision

Jack Kubinec

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In a continuing trend of Ethereum-centric projects <a href="https://blockworks.co/news/lightspeed-newsletter-ethena-solana-integration">expanding into the Solana ecosystem</a>, Worldcoin’s World IDs can now be authenticated on Solana.&nbsp;



<a href="https://blockworks.co/news/cross-chain-protocol-investor-funding">Well-funded interoperability protocol Wormhole</a> is handling the deployment by bridging World ID’s state roots, or snapshots of details like account balances at a given point in time, from Ethereum to Solana. Early Solana-native projects to explore using World ID include DRiP, DSCVR and Flojo.



Worldcoin is an identity project developed by Tools for Humanity, a company that boasts OpenAI CEO Sam Altman as a co-founder. The initiative uses futuristic (or <a href="https://blockworks.co/news/worldcoin-eyeballs-scan-brooklyn">dystopian, depending on how you look at it</a>) Orbs to scan individuals’ irises and establish their uniqueness. This data is used to verify World IDs, which the project <a href="https://worldcoin.org/blog/worldcoin/world-id-faqs">touts</a> as something like a “global digital passport for the age of AI.”



In April, <a href="https://blockworks.co/tag/worldcoin">Worldcoin</a> announced that it was building <a href="https://blockworks.co/news/worldcoin-teases-world-chain-layer-2">an Ethereum L2, World Chain</a>, as a blockchain built with Optimism’s OP Stack software set. At the time, Tools for Humanity <a href="https://worldcoin.org/blog/announcements/introducing-world-chain">said</a> it expected to launch the chain over the summer, although that timeline appears to have been a bit optimistic. A TFH spokesperson did not return a request for comment on World Chain’s status.



For what it’s worth, Worldcoin has made parts of its technology open-source, and the project says that it highly values user privacy. Orb data is deleted by default unless users opt to save it, for instance. Still, for many crypto followers to date, World ID’s relevance has <a href="https://blockworks.co/news/worldcoin-taking-legal-action-against-spain">stemmed more from its legal woes</a> than from its real-world uses.&nbsp;



The project faces legal troubles <a href="https://www.wsj.com/tech/sam-altman-openai-humanness-iris-scanning-4d0e1dab">spanning</a> continents, with regulators in several nations <a href="https://blockworks.co/news/world-coin-temporarily-blocked-spain">voicing concerns</a> over how World IDs are <a href="https://blockworks.co/news/worldcoin-setback-kenya">generated and stored</a>, and what Tools for Humanity does with its data.&nbsp;



That being said, you could argue that World ID is uniquely useful for Solana, given how low fees have made it a hotbed for bots, and spam has at times <a href="https://blockworks.co/news/solana-network-congestion-transaction-volume">crowded out real users’ ability to use the blockchain</a>.&nbsp;



Vibhu Norby, whose DRiP platform is integrated with World ID, told me last week that the project has faced <a href="https://blockworks.co/news/lightspeed-newsletter-drip-seed-raise-nfts">millions of sybil attacks</a> — and that’s for a project that hasn’t promised a native token for active users.&nbsp;



If token airdrops went to verified World ID holders, for instance, then community airdrops would actually reach their intended recipients rather than being soaked up by airdrop farmers posing as multiple people.&nbsp;



Wormhole Foundation co-founder and CCO Robinson Burkey also pointed out that Solana could help World ID be applied to “micropayments” use cases including airdrops, social proof systems, pay-per-content and micro-transactions in video games.



Still, despite the flashy names involved, color me skeptical for the moment. There are <a href="https://worldcoin.org/blog/worldcoin/world-id-faqs">roughly</a> 6.6 million World IDs in existence, and that number’s growth is hindered by Worldcoin’s legality.



World IDs are only useful for something like airdrop verification if they’re widely held, and in many jurisdictions, Worldcoin can only move at the speed of regulators.



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Worldcoin’s World IDs make their way to Solana

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



And many times that’s the case. Compiling tokens listed by Binance and Coinbase so far this year shows that out of the 42 non-stablecoin tokens to hit either platform:



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



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



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



Granted, not all of the tokens newly supported by <a href="https://blockworks.co/tag/binance">Binance</a> and <a href="https://blockworks.co/tag/coinbase">Coinbase</a> this year were already trading elsewhere.&nbsp;



Around 35% — 15 tokens — were either listed or announced to be listed on the same day as their initial launches, including layerzero (<a href="https://blockworks.co/price/zro">ZRO</a>), zksync (<a href="https://blockworks.co/price/zk">ZK</a>), starknet (<a href="https://blockworks.co/price/strk">STRK</a>) and blocklords (<a href="https://blockworks.co/price/lrds">LRDS</a>). Whatever effect listings had on those particular tokens is harder to gauge.&nbsp;



In any case, tracking each freshly-listed token from their initial support until today shows that it’s quite tough for debutants to hold onto any bumps associated with Coinbase and Binance listings.



As of Monday morning ET, only 12 out of the 42 (~29%) have gained value since they reached either exchange — but three of those are memecoins <a href="https://blockworks.co/price/neiro">NEIRO</a>, <a href="https://blockworks.co/price/turbo">TURBO</a> and <a href="https://blockworks.co/price/babydoge">BABYDOGE</a>, which Binance listed today, triggering pumps of between 15% and 60%.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfgFyhiCifONgJAhvCL3sZG8wMKMnG4ForU6p7vlO-0TIPJ0FgfNnV6NKiR2v0O1F3IYMwzeznYxW-d3QWDH_e6JsScmy8qWvmnxG8--yjg0wZtPf7WTxUEXB3Uh3m_t9R068SXPNHH7xDWy1v9FdWjVDL7?key=Ih6Ji8fYhirgJIBQKO97sA" alt=""/><figcaption class="wp-element-caption">Two outliers were removed: AERO and BOME rallied 4,500% and 1,060%, respectively, and would dwarf the others. They’ve since come down to 1,330% and 250%.</figcaption></figure>



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



Green dots indicate the peak returns for each token following their support by either exchange — how much each crypto rallied at some point after the announcement — while the purple dot shows its return to date.



Notice how many purple dots are in the red area representing negative returns since their listings were first announced. Over half — 22 out of 42 — have lost more than 45% of their value.&nbsp;



Timing may have a lot to do with poor performance, especially if the listings came at volatile times for bitcoin’s price.



And of course, there are successes, as shown on the chart below, which plots this year’s listees as if they all debuted at the same time. Real-world asset-focused Ondo Finance has seen its token explode by up to 560% following its Coinbase listing in January, and it’s now up 180% after a correction.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe3N6aTpPmz4uYHcyTyGcMtU_3fLM8N6IuU1EiXZK3Jn3xURoyWCq8WR0Yx1hahD9Pv1Kp-9RuXe2HmCRjbuU0T1PRyetLfPO8rICLoLv92nRU9XCwQLW5XovOgFfS2mYdMAEVX95ItsNyUwL6k6cB3P7SO?key=Ih6Ji8fYhirgJIBQKO97sA" alt=""/><figcaption class="wp-element-caption">Again not shown: AERO</figcaption></figure>



Meanwhile, the governance token for Solana perpetual futures market Drift Protocol is ahead 130% after peaking at 156%. Coinbase added <a href="https://blockworks.co/price/drift">DRIFT</a> to its listing roadmap on May 14 — two days before the protocol opened claims for the token — and listed it for trade later that week.



<a href="https://blockworks.co/price/velo">VELO</a>, the native token for AMM Velodrome, also popped by over 500% before retracing to have gained 240% since its listing that month.&nbsp;



Its equivalent on Base, <a href="https://blockworks.co/price/aero">AERO</a>, can’t even be shown on either chart due to how hard it pumped, having gone thousands of percent.&nbsp;



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



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



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



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Coinbase and Binance listings may be bullish — but usually not for long

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



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



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



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



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



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



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



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



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



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



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



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



Notice how many purple dots are in the red area representing negative returns since their listings were first announced. Around 41%, or 17, of the new listings have seen their prices collapse by more than half. 



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



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



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



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



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



— David Canellis



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



— Katherine Ross



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



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



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



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



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



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



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



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



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



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



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



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



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



— Katherine Ross



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



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



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



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



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



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



— David Canellis



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Major exchange listings may not be so bullish after all

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



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



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">I’m excited to announce the 21 startups we’ve selected to join our Crypto Startup Accelerator (CSX) Fall 2024 cohort, which starts this week. Over the next 8 weeks, they’ll get firsthand lessons from top crypto founders, receive guidance and support from <a href="https://twitter.com/a16zcrypto?ref_src=twsrc%5Etfw">@a16zcrypto</a>’s investing… <a href="https://t.co/KEwcgo93o6">pic.twitter.com/KEwcgo93o6</a>&mdash; Jason Rosenthal (@jasonrosenthal) <a href="https://twitter.com/jasonrosenthal/status/1833180707721453906?ref_src=twsrc%5Etfw">September 9, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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Funding Roundup: a16z announces Crypto Startup Accelerator participants

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



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



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



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



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



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



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



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



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



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



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



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



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

Donovan Choy

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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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

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



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



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



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



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



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



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



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



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



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



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



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



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Sam Bankman-Fried files appeal in fraud, conspiracy case 

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



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



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



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



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



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



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



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



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



What changed?&nbsp;



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



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



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



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



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



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



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



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



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



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



— Casey Wagner



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



— Ben Strack&nbsp;



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



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



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



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



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



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



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



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



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



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



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The interest rate decision countdown is on

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



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



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



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



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



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



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



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



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



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



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



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

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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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

Andrew Redden

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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



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