Fable Of The Dragon

Donovan Choy

The United States celebrates Labor Day on the first Monday of each September.&nbsp;



Almost everywhere else in the world, Labor Day is celebrated on May 1.



How did this come to be?



During the early Industrial Revolution, US trade unions launched a national strike for the eight-hour work day.



What began as a peaceful rally on May 4, 1886 in Haymarket Square, Chicago, erupted in the deaths of at least thirteen people after a bomb was detonated.



Eight anarchists were convicted. Four were hanged in a trial that went down in the annals of history as something of a mock trial.



The first of May was canonized by the Socialist Second International after the bloody Haymarket affair in 1886. With that, unions embedded May Day in labor calendars across Europe, Latin America, Asia and Africa.&nbsp;



Yet, Washington, rattled by the 1894 Pullman Strike, blessed a calmer existing September parade instead, in part to avoid embracing the revolutionary overtones that May 1 had taken on after Haymarket.



The US’s Labor Day landed in September not because history pointed there, but because of politics — even if May 1 had the stronger moral claim.



The whole tale is politics as usual: power vs. power. Trade unions used force (strikes) to reshape the legal rules of industrial capitalism while state governments used force (law) to assert their own.



That’s because politics is fundamentally a zero-sum game. Extraction is the name of the game. When one wins, the other side has to lose.



The libertarian novelist Ayn Rand put it succinctly:&nbsp;



“All men and all private groups have to fight to the death for the privilege of being regarded as &#8220;the public.&#8221; The government&#8217;s policy has to swing like an erratic pendulum from group to group, hitting some and favoring others, at the whim of any given moment — and so grotesque a profession as lobbying becomes a full-time job.”



Contrast that to the positive-sum nature of markets. Trade takes place only when both parties agree they are better off.



Sure, markets aren’t perfect. Markets have a way of being perverted, they are inefficient, are subject to regulatory capture, or end up in cronyistic relationships that are hard to untangle.



Blockchain technology is the once-in-a-century technological advancement that improves upon the market institutions humankind has enjoyed only over the last 200 years.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="657" height="692" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-15.png" alt="" class="wp-image-106904" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-15.png?w=657 657w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-15.png?w=285 285w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-15.png?w=244 244w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-15.png?w=248 248w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-15.png?w=208 208w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-15.png?w=76 76w" sizes="auto, (max-width: 657px) 100vw, 657px" /></figure>



Decentralized ledgers mean crypto communities can use exit, rather than force, to settle disagreements and reshape the rules of markets.



When the big blockers didn’t get their way in Bitcoin’s Blocksize Wars, Bitcoin Cash was born.



When the Ethereum community <a href="https://x.com/dannyryan/status/1531383030786314240">feared</a> Lido’s stake share neared the chain’s liveness threshold of 33% in 2022, ETH stakers opted to stake elsewhere.



When OpenSea tried to <a href="https://blockworks.co/news/blur-opensea-royalties-nft-creators">enforce</a> mandatory royalty fees, the competing NFT marketplace Blur skirted the ban and offered consumers royalty-free trading because NFTs live on open, composable rails.



And when innovation lags, liquidity migrates — from Compound to Aave, from Balancer to Uniswap.



There are countless more examples, but the lesson is the same: When voice stalls, exit disciplines. Because open source has no moat.&nbsp;



Some fear that as the industry institutionalizes, crypto experiences its own “softening” of values. It’s a rightful concern.



Yet the core fact remains: Exit remains on the table, whether it’s ETF wrappers, digital asset treasuries, custodial UX or centralized blockchains.



That is less true for a Big Tech platform because of lock-ins, and least of all for government laws.



The credible option to exit is what makes crypto a fascinating experiment in and of its own right. Its innovation isn’t consensus by force, but consensus by exit.



That is perhaps what a crypto Labor Day could celebrate. Not a day won by politics, but a day where labor keeps the right to walk.



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blockchain

What Labor Day can teach crypto about power

Macauley Peterson

An otherwise quiet US Labor Day Monday in markets was disrupted onchain by the opening of claims on <a href="https://blockworks.co/price/wlfi">WLFI</a> tokens at 8:00 am ET.



Ethereum <a href="https://blockworks.co/tag/gas-fees">gas fees</a> quickly spiked into triple digits, the highest readings in 2025, as recipients rushed to claim tokens, alongside immediate secondary trading.



<a href="https://blockworks.co/tag/world-liberty-financial">World Liberty Financial</a> had flagged the unlock flow <a href="https://x.com/worldlibertyfi/status/1960068943562870830">last week</a> and announced its “Lockbox” ahead of today’s window. 



One reason on-chain swapping skewed high: several large centralized exchange listings were scheduled for later in the day. OKX, for example, set <a href="https://x.com/okx/status/1962486127220175254">spot trading</a> for WLFI/USDT to begin at 9 am ET, after the claims window was already live — pushing early flow toward <a href="https://blockworks.co/tag/uniswap">Uniswap</a> in the interim.



Etherscan’s Gas Tracker showed the network’s median/base fee serge putting the WLFI token into the top spot on the site’s <a href="https://etherscan.io/gastracker#gasguzzler">Gas Guzzlers</a> list.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="2048" height="457" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image.png?w=1024&amp;h=1024" alt="" class="wp-image-106934" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image.png?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image.png?w=80 80w" sizes="auto, (max-width: 2048px) 100vw, 2048px" /><figcaption class="wp-element-caption">Source: <a href="https://etherscan.io/gastracker#gasguzzler">Etherscan</a></figcaption></figure>



While fees eased later, utilization remained elevated with a deep pending queue.&nbsp;



The Uniswap v3 WLFI pool on Ethereum registered over $20 million in volume within the first hour, according to <a href="https://www.coingecko.com/en/coins/world-liberty-financial">CoinGecko</a> as claims boosted DEX activity.



All this despite the fact the token drop was widely anticipated. WLFI’s unlock site outlined the process on August 25. Derivatives flows had already picked up into the event, with WLFI perps volumes <a href="https://www.coinglass.com/currencies/WLFI">jumping</a> to more than $3 billion ahead of the unlock.&nbsp;



After weeks of sub-1 gwei medians, the WLFI unlock is a reminder that large, coordinated claim events can still overwhelm blockspace on Ethereum, when thousands of users hit contracts at once. That had users complaining of gas fees upwards of $100 to execute the claim. As recently as this morning, a similar claim transaction would have cost less than $0.10.



<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">High gas prices is due to a high volume of users and network congestion you can retry later when gases are at the lowest&mdash; Jovanny Algandar | $WLFI (@jovannymontes8) <a href="https://twitter.com/jovannymontes8/status/1962495535622881770?ref_src=twsrc%5Etfw">September 1, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



For teams planning comparable unlocks or airdrops, today underscores the operational need to stagger claims, consider off-chain batching where appropriate, and set realistic user expectations around gas.



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Ethereum

WLFI claims send ETH gas over 100 gwei

Ethereum’s latest All Core Devs dwelled on process, not just code: whether to honor a previously stated 30-day window between client releases and the first testnet fork as the Fusaka upgrade inches forward. Some participants pushed to reaffirm the commitment so infrastructure and app teams have time to adapt; others argued for flexibility to avoid broader roadmap slippage.



The debate unfolded against a backdrop of mixed devnet results. On Devnet-3, a planned non-finality exercise ran long, <a href="https://www.youtube.com/watch?v=S4p0Ha_M_oE">per</a> Barnabas Busa from the Dev Ops team. “We wanted to do approximately two days first, and now we&#8217;re hitting day five,” he said, noting how participation dipped and then crept back above 50%. Finality requires greater than two-thirds of the total effective stake agreeing.



By contrast, a separate testnet recovered quickly after a coordinated restart: “The chain has recovered within, I think two hours,” Busa said. The drill pressure-tests how variables interact in a live incident, which can help <a href="https://blockworks.co/tag/ethereum">Ethereum</a> recover in a crisis.



Read more: <a href="https://blockworks.co/news/ethereum-fusaka-upgrade-delay">Ethereum’s Fusaka upgrade may face delay</a>



With fixes landing in the coming days, the near-term plan is to restore Devnet-3 to full health, rerun the test and then spin up Devnet-5.



But the larger flashpoint was scheduling discipline for public networks. Lightclient underscored the standing promise: “It does say 30 days before the first testnet.” He warned against moving goalposts as a matter of convenience, based on core devs’ assessment of the time needed by other teams not present on the call.



The practical concern is how to improve the cadence of hard forks. Compressing gaps between testing can accelerate forks, but increases the risk that downstream teams ship rushed updates. The counterargument is that prolonged pipelines delay everything else in the queue, which the broader Ethereum community might be unhappy with.



“I don&#8217;t think we should choose timelines based on what the community necessarily wants,” Lightclient said. “The people who are shipping the software said they want 30 days to deliver high quality software that the community is going to use.”



Even so, the somewhat testy exchange drifted toward upholding the written process unless stakeholders explicitly ask for a change.



There was also frustration with revisiting the same question each cycle. “I just think it&#8217;s a really bad precedent to keep letting decisions change,” Lightclient said, noting that app developers and L2s aren’t typically on core calls and rely on predictable windows to schedule their own releases.



For now, the consensus is to proceed as if the 30-day buffer remains in force, while proactively soliciting fresh input, coordinator Tim Beiko said. “We should prep the schedule with what&#8217;s in the [process] document and then in parallel check with the stakeholders that are affected.” If a faster track truly has broad support, the group would formalize that in writing.



For builders who don’t attend ACD calls — such as <a href="https://blockworks.co/tag/rollups">rollup</a> teams, <a href="https://blockworks.co/tag/intrastructure">infra</a> providers and <a href="https://blockworks.co/tag/wallets">wallets</a> — the takeaway is straightforward: Now is the time to weigh in. The window between client releases and testnet forks materially affects integration work, and core developers are explicitly inviting feedback before dates are locked.



One other housekeeping note also surfaced: The planned <a href="https://blockworks.co/news/ethereum-upgrade-testnet-hiccup">Holesky deprecation</a> will follow the Fusaka testnet fork at the end of September, with an announcement imminent. “Expect a blog post in the next week or so,” Beiko said. So, any teams depending on Holesky should plan their migrations accordingly.



In short, the code will be ready when it’s ready, and efforts are being made to keep the process predictable. All things equal, core devs signaled that predictability still wins, but a general sense of urgency is bubbling under the surface.



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Developers

Ethereum core devs spar over process, Fusaka timeline

Ben Strack

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forward-guidance" target="_blank" rel="noreferrer noopener">subscribe</a>.



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As the crypto market (and the investor base within it) continues to evolve, the latest demand for derivatives can help us define some broader segment trends.&nbsp;



With CME Group’s crypto derivatives lineup breaking records of late, I thought it was worth catching up with Giovanni Vicioso, the company’s crypto products head.



You already know that increasing institutional adoption and a clearer regulatory environment has fueled more trading activity this year. Investors might use derivatives (over spot trading, for example) to try to amplify returns and/or hedge risk.



Some stats that Vicioso said stood out to him include:



<ul class="wp-block-list">
<li>Year-to-date average daily volume for full crypto derivatives suite is 230,000 contracts — up 158% year over year.</li>



<li>YTD average open interest (the number of contracts held by market participants at the end of the trading day): 243,000 contracts — up 80% YoY.</li>



<li>The crypto futures lineup, for the first time, reached $30 billion in both notional volume traded and open interest — led by BTC ($16 billion) and ETH ($10.5 billion).</li>



<li>The 985 large open interest holders (LOIHs) for crypto futures on Aug. 11 marked a new record.</li>
</ul>



The last metric is key for measuring institutional interest, as LOIHs hold at least 25 contracts open.



With those general stats out of the way, we can pinpoint the demand for specific products and what it means — starting with renewed enthusiasm for the second-largest crypto asset.



CME Group’s ETH futures LOIHs hit a record of 118 during the week of Aug. 19 — signaling “a strengthening of the professional ecosystem around ether,” Vicioso said.&nbsp;



The company’s micro ether futures complex hit an all-time high of ~490,000 contracts on Aug. 22. Year-to-date micro ETH futures volumes have roughly quadrupled on a year-over-year basis.



“As far as broader trends around the surge…increased network activity, corporate treasury accumulation of ether and positive regulatory developments have further contributed to a broad-based rally around ether and ether-based derivatives,” Vicioso noted.



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1600" height="1290" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-14.png?w=1024&amp;h=1024" alt="" class="wp-image-106893" style="width:749px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-14.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-14.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-14.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-14.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-14.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-14.png?w=319 319w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-14.png?w=324 324w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-14.png?w=272 272w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-14.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



In a Monday update, BitMine Immersion said it held about 1.7 million ETH (today worth around $7.5 billion). That crypto treasury is the largest one focused on ether and second in size only to Strategy’s bitcoin stack worth ~$71 billion.&nbsp;&nbsp;



BitMine said Monday it added 190,500 tokens over the prior week alone. <a href="https://blockworks.co/news/tom-lees-price-predictions">Fundstrat’s Tom Lee</a> (also BitMine’s chair), said the firm is leading crypto treasury peers “by both the velocity of raising crypto NAV per share and by the high trading liquidity of our stock.”



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1600" height="880" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-13.png?w=1024&amp;h=1024" alt="" class="wp-image-106892" style="width:769px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-13.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-13.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-13.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-13.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-13.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-13.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-13.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-13.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-13.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Others are choosing to get ETH exposure via the US spot ETFs. Net inflows into those products (since their July 2024 launches) hit $13.7 billion on Thursday. That’s about a quarter of the $54.3 billion of net inflows that the US bitcoin ETFs have seen — roughly matching the ratio of those assets’ respective market caps.&nbsp;&nbsp;



Nearly $9.5 billion of the net inflows into ETH products have come since July 1 — outpacing bitcoin ETF inflows of $5.4 billion over that span.



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1600" height="884" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-12.png?w=1024&amp;h=1024" alt="" class="wp-image-106891" style="width:770px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-12.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-12.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-12.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-12.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-12.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-12.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-12.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-12.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-12.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



We also have an update on CME Group’s newish solana and XRP futures — launched in March and May, respectively. Those piqued industry interest — in part given that CME futures launches historically precede <a href="https://blockworks.co/news/crypto-etf-launch-timelines-sec">SEC approval</a> of respective spot ETFs.&nbsp;



Not to mention these tools — like ETFs — help create the necessary infrastructure (and credibility) for TradFi to <a href="https://blockworks.co/news/altcoin-autumn">dive into such altcoins</a>. The prices of SOL and XRP are up 35% and 31%, respectively, from three months ago.&nbsp;



XRP futures crossed the $1 billion in open interest in just over three months — faster than any other CME crypto futures offering, Vicioso noted.&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">CME Group says xrp futures contracts have crossed over $1bil in open interest… Fastest-ever contract to do so (took just over 3mos). There’s already $800+mil in futures-based xrp ETFs. Think people might be underestimating demand for spot xrp ETFs.&mdash; Nate Geraci (@NateGeraci) <a href="https://twitter.com/NateGeraci/status/1960399351420772358?ref_src=twsrc%5Etfw">August 26, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Roughly five months after SOL futures debuted, those had open interest rise to a record 11,600 contracts on Aug. 26. That same day, XRP futures open interest eclipsed 8,000 contracts (also an all-time peak).&nbsp;



About 410,000 solana contracts ($17 billion notional volume) and 316,000 XRP contracts ($13.7 billion) have traded since the respective futures launches.&nbsp;



“This growth reinforces the importance of regulated, transparent markets for managing risk and accessing opportunities in the evolving crypto landscape,” Vicioso told me.



Vicioso didn’t want to comment on CME’s product pipeline, and I don’t blame him. But perhaps the company will again <a href="https://blockworks.co/news/cme-group-considering-sol-xrp-futures">mistakenly release its plans</a> before a formal announcement; in crypto, anything seems possible.



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Forward Guidance newsletter

How CME crypto futures records reflect broader altcoin demand

Casey Wagner

US Senators plan to consider a new version of a crypto market structure bill at the end of September, according to a person familiar with the matter who spoke with Blockworks under the condition of anonymity.&nbsp;



The Senate Banking Committee is currently eyeing September 30 for a markup hearing of the Responsible Financial Innovation Act of 2025, the person said. The bill primarily focuses on clarifying the Securities and Exchange Commission’s role in overseeing crypto markets.&nbsp;



The markup hearing gives Committee members the opportunity to present amendments to the bill for consideration. The Committee can then recommend the legislation to the full Senate.&nbsp;



The Senate Agriculture Committee, which oversees the Commodity Futures Trading Commission, is expected to release its draft market structure bill in early September, a second person familiar with the matter told Blockworks.&nbsp;



Senate Banking Chair Tim Scott (R-S.C.) — along with Sens. Cynthia Lummis (R-Wyo.), Bill Hagerty (R-Tenn.), and Bernie Moreno (R-Ohio) — released a <a href="https://www.banking.senate.gov/imo/media/doc/senate_banking_committee_digital_asset_market_structure_legislation_discussion_draft.pdf">discussion draft</a> of the Responsible Financial Innovation Act in July, shortly after the US House passed the CLARITY Act. Senators will release an updated version of the legislation ahead of the markup hearing.&nbsp;



Lawmakers are now tasked with turning the two pieces of legislation into one. Lummis, earlier this month at the Wyoming Blockchain Symposium, <a href="https://www.youtube.com/watch?v=TxVj-Lxj2Sk">said</a> she hopes to have a crypto market structure bill on President Donald Trump’s desk by Thanksgiving.&nbsp;



The <a href="https://www.congress.gov/119/bills/hr3633/BILLS-119hr3633eh.pdf">CLARITY Act</a> passed the House in a <a href="https://blockworks.co/news/us-house-passes-clarity-act">294-134 vote</a>. 78 Democrats voted in favor of the measure.&nbsp;



The Responsible Financial Innovation Act is a significantly pared-down version of the House’s plan. The latest draft spans 35 pages, while CLARITY exceeds 250 pages.&nbsp;



The Senate’s bill requires the SEC to revisit how it defines investment contracts. The bill proposes a new five-part test, as opposed to the four elements currently used in the Howey test. The legislation stipulates that investment contracts require an investment in an enterprise, but not necessarily a common enterprise, as determined by Howey.&nbsp;



The CLARITY Act establishes a definition for “investment contract assets,” which are digital asset commodities that are sold to raise capital, similar to what is currently considered an initial coin offering. These assets, under CLARITY, would be considered securities and fall under the SEC’s purview.&nbsp;



Congress returns next week after the August recess with a tight budget deadline. Should lawmakers not pass a budget by September 30, the Senate Banking Committee is expected to push its crypto market structure bill markup hearing to the week of October 6, one person said.



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congress

US Senate eyes end of September for crypto market structure bill markup: Sources

This is a segment from the Lightspeed newsletter. To read full editions, <a href="https://blockworks.co/newsletter/lightspeed" target="_blank" rel="noreferrer noopener">subscribe</a>.



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Liquid staking is a winner-takes-all game.



Users want staking yield and instant liquidity; the first is an easy commodity to provide, the second is a tough distribution problem.&nbsp;



Each liquid staking token (LST) has to bootstrap deep pools and win listings across money markets, perps, routers and wallets so it can behave like “money.”&nbsp;



But liquidity begets liquidity — hence why Ethereum’s LST market has long been dominated by Lido’s stETH, followed by a long tail of smaller unsuccessful LSTs.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1280" height="640" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/bw-piechart.png?w=1024&amp;h=1024" alt="" class="wp-image-106930" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/bw-piechart.png?w=1280 1280w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/bw-piechart.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/bw-piechart.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/bw-piechart.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/bw-piechart.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/bw-piechart.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/bw-piechart.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/bw-piechart.png?w=80 80w" sizes="auto, (max-width: 1280px) 100vw, 1280px" /></figure>



That same dynamic, however, does not play out in Solana, which has literally <a href="https://app.sanctum.so/explore">thousands</a> of LSTs. That’s largely due to Sanctum, the team responsible for inverting the economics of LSTs on Solana.



How does Sanctum do it?



Sanctum (formerly Socean) provides a white-label issuance service for anyone to launch their LST, and a shared liquidity reserve that any LST issuer can plug into.&nbsp;



This shared reserve enables anyone with SOL to launch their own branded LSTs without worrying about having to raise a giant SOL buffer to meet redemptions.



Sanctum’s co-founder FP Lee told me: “Liquid staking on Solana works differently from liquid staking on Ethereum due to some technical reason with state accounts.”



“I saw a future whereby, as long as you build a unified liquidity layer, that the marginal cost of creating your LST will be zero, and therefore there&#8217;ll be a thousand LSTs eventually.”&nbsp;



To facilitate swapping between thousands of LSTs is where Sanctum&#8217;s own AMM “Router” comes in.



Swaps on Sanctum’s Router don’t rely on liquidity depth as is typical on AMMs. It simply moves underlying stake positions at intrinsic values, similar to how a bank’s clearing network works, letting Sanctum net a small fee. That effectively allows the swapping between LSTs without bonding curves or impermanent loss.



When necessary, swaps can tap into its reserve or the “Infinity” shared pool where thousands of LSTs sit. Here Sanctum takes a small fee and routes it to INF, Sanctum’s yield-bearing product that consists of a basket of whitelisted LSTs.&nbsp;



This additional revenue stream is why INF’s yield has historically outperformed even the yield of Solana’s dominant LST, JitoSOL.



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1288" height="880" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-11.png?w=1024&amp;h=1024" alt="" class="wp-image-106872" style="width:674px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-11.png?w=1288 1288w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-11.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-11.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-11.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-11.png?w=376 376w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-11.png?w=382 382w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-11.png?w=321 321w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-11.png?w=80 80w" sizes="auto, (max-width: 1288px) 100vw, 1288px" /></figure>



INF is commonly referred to as a “LST-of-LSTs,” but it is really more akin to a yield-bearing strategy that involves trusting Sanctum’s curation.&nbsp;



In sum, Sanctum socializes the hard parts of the LST business (depth, redemptions, routing) so everyone can launch an LST and ride the same liquidity engine. Then it builds a superior yield-bearing product on top of everything. Voila.



You wouldn’t guess it from the price action of its CLOUD native token (don’t look), but Sanctum is one of the rare few revenue-generating teams in the industry. Sanctum’s vertically integrated liquid staking product suite has generated substantial revenues, about $5.9 million annualized off this month.



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1270" height="668" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-10.png?w=1024&amp;h=1024" alt="" class="wp-image-106870" style="width:672px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-10.png?w=1270 1270w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-10.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-10.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-10.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-10.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-10.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-10.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-10.png?w=80 80w" sizes="auto, (max-width: 1270px) 100vw, 1270px" /></figure>



Now the team is expanding beyond liquid staking. Sanctum’s v2 <a href="https://x.com/sanctumso/status/1960727723716084084">revamp</a> yesterday unveiled officially a broader push into Solana’s transaction-delivery layer.



At the center is Gateway, a “transaction delivery aggregator” that builds on its acquisition of the DevOps <a href="https://blockworks.co/news/sanctum-acquires-ironforge">infrastructure platform Ironforge</a> last month. Gateway is designed to improve transaction inclusion with full-stack transaction observability of RPC providers.



Gateway works by routing through multiple providers (RPCs, Paladin, Temporal, etc.) and will use pay-as-you-go pricing with tips, rather than an upfront subscription.



The goal is to become the “de facto entry point” for Solana, Lee told me.



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Lightspeed Newsletter

Sanctum V2 expands to Solana’s transaction delivery layer

David Canellis

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire" target="_blank" rel="noreferrer noopener">subscribe</a>.



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



First, the really bullish stuff.



Pantera Capital managing partner Paul Veradittakit just put out a State of Crypto Venture Capital report with plenty to prick up your ears.



First, the industry is on pace to break 2021’s fundraising record of $29.17 billion. Crypto companies this year have raised over $16 billion — which is already more than the total deal value of 2024.



(BTW: Very cool that <a href="https://www.veradiverdict.com/p/e4aa8be1-52e2-477f-b687-7239522cde79?free_preview=false">Veradittakit’s report</a> is grounded in <a href="https://app.blockworksresearch.com/analytics/deal-flow">Blockworks Research data</a>, which covers all things deal flow, including fundraising, M&amp;A and debt financing.)



Veradittakit characterizes this year’s fundraising as a game-changer fueled by record M&amp;A and IPO activity.&nbsp;



He wrote: “2024 was a record year for acquisitions with over 100 mergers and acquisitions (M&amp;A) totaling $1.73 billion and 2025 is set to surpass 2024 in deal count. From January to July of this year it is already at 76 deals and $6.23 billion, which is 3.6× 2024’s full-year dollar volume and is on pace for 130 deals if the current run rate holds.”



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeqPJRPFKp5dO52iaq-GCg7cW-EdajU8JDyCB3oqCbxT-b8Y8pJJlyP1mEHF4aLDtVTDKa0NBEzjd2XSWaP7g5Kcq7NF34XP9vkKSAFv99l46kgsvGZgtY2eCaJo27Fy5N6qfEs?key=VUdjECCR-IQTKGtKSIld6A" alt=""/><figcaption class="wp-element-caption">Nice big green candles. Source: VeradiVerdict</figcaption></figure>



“The momentum in 2025 is less about unleashing pent‑up demand and more a sign of the industry’s natural maturation,” Veradittakit added.



Crypto IPO successes like Circle and Bullish, as well as others coming up (including Figure and BitGo) are making new entrants more comfortable with investing in the blockchain industry.&nbsp;



“This is a pattern seen in other major technological shifts, where a multi-decade build-out precedes explosive growth,” per Veradittakit.



Over on the Empire podcast, Rob Hadick, general partner at Dragonfly Capital, floated the notion that raises like M0’s $40 million and Rain’s $58 million Series Bs were probably the “tail end of the fervor” that came just before the Genius Act rolled out in June.



“I can tell you right now, there&#8217;s definitely some fatigue,” Hadick said.&nbsp;



<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="Stablecoins &amp; Prediction Markets, Nothing Else | Weekly Roundup" width="1024" height="576" src="https://www.youtube.com/embed/XuiL_EyEiEc?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>
</div></figure>



Interestingly, Hadick pointed out that the level of entrepreneurs that are now building in stablecoins is increasing.&nbsp;



One deal that Dragonfly is looking at right now involves founders that were executives at “some of the largest payment companies in the world and they just know how money flows — we haven’t seen that level of entrepreneur before.”



“And so I think we&#8217;ll see this kind of dip in the market, and then we&#8217;re going to see new novel, awesome entrepreneurs, an acceleration into maybe the end of the year [and] next year,” Hadick said.



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Dragonfly Capital

Crypto industry on pace to break 2021 fundraising record

Byron Gilliam

This is a segment from The Breakdown newsletter. To read more editions, <a href="https://blockworks.co/brand/the-breakdown">subscribe</a>



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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Creatures crawl in search of blood / To terrorize y&#8217;all&#8217;s neighborhood” — Michael Jackson, Thriller
</blockquote>



<a href="https://www.fincen.gov/sites/default/files/shared/FinCEN-Notice-CVCKIOSK.pdf">Crypto remains the best money to steal&nbsp;</a>



When Bitcoin Depot went public via a SPAC in 2023, investors marvelled at its ability to charge as much as 25% to use its ATMs.



Now we know why: Bitcoin ATMs are elder-fraud machines.



A recent FinCEN notice details how “convertible virtual crypto kiosks” (CVCs) enable crime by giving scammers a quick way to cash out.



“The speed and difficulty of reversing CVC transactions makes CVCs an attractive payment mechanism for scammers,” it reports. “This generally differs from traditional bank or wire transfers where a payment transaction can remain pending for one to two days before settlement.”&nbsp;



Two-day wire transfers seem like archaic technology, but they’re also a useful deterrent to fraudsters who want their money instantly and irrevocably.



The risk of a bank compliance officer blocking or reversing a transfer is such that fraudsters go through the trouble of convincing their targets to withdraw cash from their bank account, find an ATM and convert the cash to crypto.



These are usually older people: “More than two of every three dollars reported lost to fraud using CVC kiosks was lost by an older adult.”



People like to say crypto is bad to steal because blockchains are transparent, but crypto ATMs provide a vivid counterexample: criminals converting fiat to crypto, because that’s the only way to steal it.&nbsp;



In theory, transparent blockchains should be bad for crime, but revealed preference proves the opposite. Instant, irreversible payments are so helpful to criminals that they pay ATM fees as high as 25% to get their stolen money onchain.



Their money is safer there, even without taking price risk: “Scammers will also often quickly swap scam proceeds into a stablecoin,” FinCEN reports.



Happily, many states have <a href="https://www.governing.com/policy/fearing-scams-states-add-regulations-to-crypto-atms">started regulating</a> crypto ATMs, making them less useful for fraud.



But the revealed preference of criminals paying 25% to use them remains instructive.&nbsp;



<a href="https://www.ft.com/content/d06f66c0-aaf0-42b3-89ad-7db0d0e73946">Crypto dad logic</a>



Financial historian Brendan Greeley reminds us that “over the long run you can’t force people to use a deflationary currency; they either come up with a local workaround or they revolt.”



The founding principle of crypto is that fiat money is inflationary and people should be able to opt out of it.&nbsp;



Greeley thinks of crypto as “finance as if the past never happened.”&nbsp;



He doesn’t mean it as a compliment, but that happens to be my favorite thing about crypto — a chance to rethink finance from first principles.



One thing that doesn’t need rethinking, however, is hard money.&nbsp;



Greeley says he is frequently confronted by “crypto dads,” who have made money in bitcoin and therefore think that hard money is a good form of currency: “To them, an idea can be tested with a bet. If it pays off, they were right.”



By that logic, hard money is good because bitcoin is hard money and the price of bitcoin has gone up.



But hard money, Greeley explains, has only ever benefited pre-modern merchants who traded across oceans and creditors collecting on loans. “For everyone else, hard deflationary standards have been a grinding punishment.”



William Jennings Bryan accusingly labelled the gold standard a “crown of thorns” and a “cross of gold” because hard money favors creditors over debtors and the rich over the poor.



That’s not an indictment of bitcoin — bitcoin is a much needed way for people to voluntarily opt out of fiat. 



But it’s an illogical leap to then conclude that hard money should replace fiat money.



Greeley concedes that if he were a betting man, he would buy bitcoin.



But his focus is elsewhere: “As an American academic who worries about deflation…all I want is for bitcoin to stay the hell away from the dollar.”



I get the logic: I’m an American newsletter writer and occasional betting man who has bought bitcoin because I’m worried about inflation.&nbsp;



But I, too, want it to stay away from the dollar — because the only thing worse than inflation is deflation.



Fiat remains the worst form of currency, except for all the others.



<a href="https://mcga.com/news/trump-media-group-cro-strategy-to-acquire-cro-digital-asset-treasury">The inverted logic of DAT investing</a>



Crypto.com is investing in a digital asset treasury company that will buy tokens issued by Crypto.com.&nbsp;&nbsp;



This creates some unusual incentives.



Investors typically want to buy an asset as cheaply as possible, but Kris Marszalek, CEO of Crypto.com, seems to be taking the opposite approach — his <a href="https://x.com/kris/status/1960502232362967214">public enthusiasm</a> for his new DAT, co-founded with the Trump Media Group, suggests he’s attempting to pay as much as possible for the CRO tokens the DAT plans to buy.&nbsp;



CRO is the native token of Cronos, a nominally decentralized blockchain that <a href="https://www.cryptoninjas.net/news/crypto-com-sparks-chaos-pushes-vote-to-re-mint-70-billion-cro/?utm_source=chatgpt.com">remains controlled</a> by its developer, Crypto.com.



In addition to the $200 million already committed for that purpose, “the company will also have access to a further $5 BILLION LINE OF CREDIT from Yorkville to, yes, you guessed it right, acquire even more CRO.”



Telling everyone how much you’re going to buy something before you can buy it is an unorthodox investing strategy that would seem to benefit the asset (CRO, partially owned by Crypto.com) far more than the buyer of the asset (the CRO DAT, also part-owned by Crypto.com).



It also seems like a tacit admission that Marszalek knows he’s playing a greater-fool game.



Despite its integration with Crypto.com, the Cronos blockchain has not gotten much traction: The chain collected just <a href="https://defillama.com/chain/cronos?tvl=false&amp;chainFees=true&amp;groupBy=monthly">$58,000 in fees</a> last month.&nbsp;&nbsp;



That appears to give CRO very little value, so it makes sense for Marszalek to focus on doing something about its price: “The mission of Trump Media Group CRO Strategy,” he <a href="https://x.com/kris/status/1960321095309144508">explained</a> on X, is to enhance shareholder value by maximising THE FLYWHEEL EFFECT: more funds raised, more CRO bought, prices appreciate, allowing for more funds to be raised and more CRO to be bought.”



This, I think, further explains his pay-as-much-as-you-can investing strategy: When price is the only source of an asset’s value, the more you pay for it, the better.



That appears to be his plan.



The SPAC’s fundraising, Marszalek notes, “will add up to an UNPRECEDENTED amount of DRY POWDER for any Digital Asset Treasury company, exceeding the total market cap of<a href="https://x.com/search?q=%24CRO&amp;src=cashtag_click"> $CRO</a> as of the time of announcement.”



Smart!&nbsp;



Promising to spend more on an asset than its entire market cap is a surefire way to make the price of the asset go up.



CRO has in fact doubled this week, so mission accomplished, I guess.



Even more remarkable, however, is CRO’s fully diluted valuation (FDV), which is now up to $31 billion — 43,000x its annualized revenue!&nbsp;



In addition to doubling this week, CRO’s FDV recently tripled when Crypto.com <a href="https://unchainedcrypto.com/burned-tokens-are-gone-forever-right-for-70-billion-cro-maybe-not/">decided</a> to re-issue 70 billion CRO tokens that were “burned” in 2021.



Projects typically burn tokens by sending them to an address from which they are unretrievable, thereby permanently reducing the maximum supply of the token.



Cronos, however, appears to be a magical place where deceased tokens can rise from the grave.



Token holders were understandably <a href="https://x.com/Wyll_BBK/status/1896452917722296775">unhappy</a> to have their investment diluted by 70%.



But the CRO token traded up on the news — so maybe crypto really is a magical place where normal investing rules don’t apply?



If the new DAT really does have $5 billion to spend on CRO tokens, I guess that could work out for all of its holders — for a trade at least.



But here’s some old fashioned investing advice: Beware of tokens that come back from the dead.



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The Breakdown Newsletter

Thursday links: ATMs, dad logic and zombie tokens

Blockworks

21Shares today filed a form S-1 with the Securities and Exchange Commission, seeking to register the 21Shares Sei ETF, a trust offering direct exposure to SEI, the Sei Network’s native token.



The filing names Coinbase Custody Trust Company as the ETF’s custodian, with Coinbase, Inc. acting as prime broker. Net asset value would be calculated using the CF SEI-Dollar Reference Rate — New York Variant, published by CF Benchmarks, which aggregates prices across multiple spot venues to ensure transparency and reduce reliance on any single market feed.



The filing also allows for discretionary staking of SEI if regulators and tax authorities determine it would not compromise compliance.



21Shares is a crypto-native ETP provider that pioneered the world’s first physically-backed crypto exchange-traded product (ETP) — dubbed “HODL” — on the SIX Swiss Exchange.&nbsp;



By the end of 2024, it was one of the largest global issuers of crypto ETPs with 44 listed products in numerous currencies. The company <a href="https://blockworks.co/news/21shares-parent-company-valued-at-2b-after-marshall-wace-led-fundraise">raised</a> funding in 2022 at a valuation of around $2 billion and is now part of the 21.co Group.



If approved, the Sei ETF would join bitcoin and ether ETFs already trading, alongside pending SEC applications for Solana and XRP.



This is a developing story.



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



This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="https://blockworks.co/author/jeffrey-albus" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



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<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forward-guidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/supply-shock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

21Shares

21Shares files for spot Sei ETF

Rain announced on Aug. 28 that it raised $58 million in a Series B round led by Sapphire Ventures, underscoring its ambition to become the leading enterprise-grade stablecoin platform.&nbsp;



The <a href="https://www.rain.xyz/resources/rain-raises-58m-series-b-led-by-sapphire-ventures-to-become-the-enterprise-stablecoin-platform-of-record">funding</a> follows the company’s direct integration with Visa’s network. Rain became a Visa Principal Member in March 2025, a move that underpins its ability to directly issue cards on the Visa network.



The company positions itself as an API-first infrastructure provider, enabling fintechs, corporations, and financial institutions to build stablecoin-linked cards and settlement tools across multiple jurisdictions. Rain claims its platform can connect to more than 1.5 billion users through a single integration, making it one of the most broadly connected providers of stablecoin payments.



This raise adds to Rain’s active 2025 funding year. In March, the company secured $24.5 million in a round led by Norwest Venture Partners to expand its stablecoin-powered card issuing globally.



By combining blockchain-native settlement with traditional payment rails, Rain is pursuing a dual track that targets both enterprise infrastructure and consumer-facing use cases.



The timing coincides with expanding regulatory clarity around stablecoins, with Europe’s Markets in Crypto-Assets (MiCA) law now fully in effect and the U.S. GENIUS Act, signed in July 2025, entering its implementation phase.



This is a developing story.



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



This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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Rain

Rain raises $58M to expand enterprise stablecoin platform

Felix Jauvin

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forward-guidance">subscribe</a>.



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To the keen observer, there are many crosscurrents hitting the Federal Reserve right now —&nbsp;and those currents are beginning to <a href="https://blockworks.co/news/fed-independence-in-question">erode Fed independence</a>.&nbsp;



The idea of a Fed independent from political influence has ebbed and flowed over the years.&nbsp;



During World War II, the Fed was entirely subservient to the Treasury and was not independent by any means. It existed mostly to fund the war and ensure Treasurys were well bid.&nbsp;



In 1951, the Fed Treasury accords formally established the Fed as independent from the Treasury and, therefore, the executive branch.&nbsp;



In the 1970s, Chair Paul Volcker solidified this independence by hiking rates to tame inflation despite pressure from the president at the time. Someone even showed up to the Federal Reserve building with a loaded gun to try and stop them from raising rates.&nbsp;



In the 40 years since, we’ve seen a steady, secular downshift in interest rates and peacetime for the Fed.&nbsp;



Now, that era is changing. President Trump, referring to his own nominees on the Fed’s board of governors, <a href="https://www.cnbc.com/2025/08/26/trump-fed-majority-cook-interest-rates.html">said</a> Tuesday: “We’ll have a majority very shortly.”&nbsp;



The idea of viewing the composition of the FOMC as one party’s majority vs. the other is new.&nbsp;



Historically, governor appointments were seen as apolitical, although bias still naturally trickled in through the lens of academic perspectives on monetary policy leading more left or right, depending on their background.&nbsp;



With the attempted firing of Governor Cook — (setting aside how valid it was, that’s for the court to decide tomorrow) — it now opens the door to Trump being able to get a majority among Fed governors as well as a heavier hand in deciding which regional Fed presidents are elected. For a better explanation of these dynamics, check out Quinn’s explanation in last week’s roundup: 



<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">Trump wants to fire Fed governor Lisa Cook, but there&#39;s a lot more to his takeover plan.<a href="https://twitter.com/qthomp?ref_src=twsrc%5Etfw">@qthomp</a> breaks down how Trump could soon control a majority of the Fed’s voting power ↓ <a href="https://t.co/ClcwsYLoLc">pic.twitter.com/ClcwsYLoLc</a>&mdash; Forward Guidance (@ForwardGuidance) <a href="https://twitter.com/ForwardGuidance/status/1960344759224172599?ref_src=twsrc%5Etfw">August 26, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



So, where does that shift bring us and how can we quantify this emerging tail risk?&nbsp;



One method I’ve found helpful is the chart below, which contrasts five-year inflation swaps with the price of oil. Oil is one of the primary contributors to expectations of inflation on a medium-term basis, since it’s a large driver of headline inflation. It’s also a key input cost into nearly everything that is consumed.&nbsp;



Typically, when the price of oil rises, inflation expectations also rise.



What’s interesting about 2025, however, is we are seeing five-year inflation swaps grinding higher while oil does the opposite.&nbsp;



My read is that the market is beginning to price in a new risk premium associated with tail risks around the Fed. Specifically, the Fed losing control of prices and inflation expectations becoming unanchored due to the erosion of independence.&nbsp;



Whether this risk premium is warranted or not is a story for another day. Regardless, it&#8217;s evident that the market is beginning to worry about this dynamic.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1200" height="725" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-7.png?w=1024&amp;h=1024" alt="" class="wp-image-106818" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-7.png?w=1200 1200w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-7.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-7.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-7.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-7.png?w=425 425w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-7.png?w=432 432w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-7.png?w=362 362w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-7.png?w=80 80w" sizes="auto, (max-width: 1200px) 100vw, 1200px" /></figure>



When long-held correlations like this diverge, they can be explosive. The last one was in 2022, when we saw gold meaningfully decouple from its long-held inverse correlation with real yields.&nbsp;



That divergence is only increasing as the market digests new variables, like concern for fiat currency stability.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="966" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-8.png?w=1024&amp;h=1024" alt="" class="wp-image-106819" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-8.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-8.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-8.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-8.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-8.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-8.png?w=426 426w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-8.png?w=432 432w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-8.png?w=363 363w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-8.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Keep an eye out for these correlations over the next 12 months — I think it’s going to become very important to do so.



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Donald Trump

What does a Trump takeover of the Fed look like?

On Aug. 28, 2025, the Commodity Futures Trading Commission (CFTC) issued Staff Letter 25-27 — an advisory affirming that offshore derivatives exchanges, including those listing crypto products, can legally be accessed by US participants if they register as a foreign board of trade (FBOT) under Part 48.



This <a href="https://www.cftc.gov/PressRoom/PressReleases/9111-25?utm_source=govdelivery">clarifies</a> that “located in the U.S.” refers to physical presence, not legal domicile, and that these exchanges need not become designated contract markets (DCMs) to serve US traders.



This advisory builds on CFTC’s July 2024 final rule amendment to Regulation 48.4, which added introducing brokers (not just FCMs or CPOs/CTAs) as permissible intermediaries. That change has enabled more nuanced routing of US customer orders through global venues.



For Web3, decentralized trading, and crypto-native platforms, this represents a critical turning point. By lowering structural hurdles and codifying a clear on‑ramp through FBOT registration, the CFTC is effectively signaling that offshore platforms can integrate into US markets under defined conditions, without resorting to broad geographic blocking or being forced into full domestic exchange registration.



The agency is also positioning FBOT registration as a tool to shift trading activity into a more transparent and compliant environment, reducing the reliance on regulatory enforcement after the fact.



In recent months, the agency has rescinded old crypto‑specific staff advisories, including those on digital asset derivatives and clearing risks, and prioritized regulatory clarity over punitive action.



This dovetails with Acting Chair Caroline Pham’s vision of supporting responsible innovation, as seen in initiatives like the crypto CEO forum and digital asset sandbox ambitions.



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



This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="mailto:jeffrey@blockworks.co" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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CFTC

CFTC opens door for Web3 exchanges via FBOT registration

On August 27, 2024, <a href="https://blockworks.co/tag/makerdao">MakerDAO</a> formally transitioned into Sky, a new identity meant to signal a fresh era of modular governance, ecosystem scaling, and real-world integrations.&nbsp;



One year later, the core pillars of that transformation are in place, but the adoption story remains mixed.



The renamed protocol now oversees over $7.8 billion in <a href="https://blockworks.co/tag/stablecoins">stablecoin</a> liabilities across DAI and its successor <a href="https://blockworks.co/price/usds">USDS</a>. But despite heavy investments in marketing incentives and ecosystem spinoffs, Sky’s headline stablecoin metrics have flatlined, or in some cases, reversed. Meanwhile, capital restructuring efforts and a sweeping token migration have begun reshaping protocol governance entirely.



The organizations’ financials are also a bit of a puzzle, Sky co-founder Rune Christensen said during a <a href="https://www.youtube.com/watch?v=OdtG-ewrp8E">community call</a> Wednesday.&nbsp;



“We have three different ways of measuring this stuff, and none of the three tend to agree,” said Christensen. He described the gap between on-chain PnL estimates, like the Steakhouse <a href="https://forum.sky.money/t/protocol-economics-report-2025-q2/27111">report</a> ($8 million Q2 profit), and dashboard forecasts ($300 million run-rate), as a function of “capital transaction” accounting.&nbsp;



“By not counting capital transactions, we&#8217;re actually lowering profits,” Christensen explained.



Critics like PaperImperium have <a href="https://x.com/imperiumpaper/status/1956719059187212681">questioned</a> the effectiveness of management. “The cumulative cost to design, plan, and launch USDS is pretty high,” he wrote on X. “Around $44M went into it over the last few years… expenses currently run around $100m/year annually.”&nbsp;



He noted that, despite these incentives, USDS has not meaningfully surpassed DAI or other stablecoin competitors in market share, even in a favorable environment.



Blockworks contacted the Sky team with questions but was referred to the community call.



Rajiv, a lead contributor to Sky’s analytics effort, offered some nuance on the community call: “It just feels like the sweet spot for sUSDS is really these large, more institutional-type holders who really value the immediate liquidity.” Crypto funds like Galaxy Digital were cited as recent stakers, even as smaller long-tail users pulled back from Sky token reward participation.



Etherscan <a href="https://etherscan.io/token/0xa3931d71877C0E7a3148CB7Eb4463524FEc27fbD">shows</a> sUSDS, which receives the Sky savings rate (currently 4.75%), is held by a total of 4,656 wallets. That excludes some sUSDS pledged as collateral in certain DeFi smart contracts, but the figure should be fairly representative of the number of individuals or entities making use of the protocol.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcp9eHWoCuDQBGDyXpWbsJf8fzPSpYpqpCNpa3Sx3VuNALHFEPshjSjouu4oLN-888IL9d71VgQ05xszsvcGX0KfFgK1GGcal93Itb5mbrq3_5GV8_tRoKHPNiEBEWMcK-eGOD0Vg?key=zERevXWw5Nm8Lnc9w2d0PA" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://dune.com/virady/sky-multichain-analysis">Dune / Viridian Advisors</a> </figcaption></figure>



Still, the combined USDS and DAI supply ended Q2 2025 essentially flat, with a surprising twist: DAI itself is growing again. “Over the last few weeks, there&#8217;s been a very interesting trend of an uptick in DAI demand,” Rajiv noted.



That observation underscores a broader shift: while Sky is no longer betting on transactional stablecoin PMF, it is leaning heavily into the idea of capital formation through bespoke ecosystem units like <a href="https://blockworks.co/news/spark-launch-ignition-airdrop-campaign">Spark</a> and <a href="https://kitchen.steakhouse.financial/p/introducing-grove">Grove</a>. These “Stars” are expected to embed USDS as a super-senior capital layer while onboarding risk capital into higher-return strategies, Christiansen noted.



“Sky is evolving from just offering a stablecoin to offering the more general value of supporting capital formation,” Christiansen said.&nbsp;



He cited Spark as an example: “Sky put in $25 million, and got out $390 million.”



<h2 class="wp-block-heading">From brand to token</h2>



Another core milestone: the transition from MKR to SKY, now nearing completion.&nbsp;



As of May 2025, SKY has exclusive governance authority, with MKR holders able to convert 1:24,000. The pace of conversion spiked sharply in Q2, as shown in Blockworks Research data, following the announcement of a “Delayed Upgrade Penalty” — the planned 1% decay in the conversion ratio every three months starting on September 18.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXenaLzsy6OJr0LldHATULgt7uMddAZ4ta9SZDXul4r8U9Ln7HAxFAJJ6AfgH6Ew-TdM_jMeIw5V5IdOJ9ZZli9LwgCSSO7TskV9hk6NxJJBV-tHAg-to27DPfOeeMGsFOTFyaPQDg?key=zERevXWw5Nm8Lnc9w2d0PA" alt=""/></figure>



Source: <a href="https://app.blockworksresearch.com/analytics/makerdao?dashboard=109">Blockworks Research</a>



“It’s an important step towards eliminating fixed costs and ensuring income flows to SKY holders,” Christiansen <a href="https://blockworks-research.beehiiv.com/p/the-rev-debate">said</a> of the transition at the time. Sky staking is also a bright spot, enabling rewards in USDS, or compounding back into SKY via <a href="https://yearn.fi/v3/1/0xaF71a4f5d93fb88B24C67760BCF9688a6C3A54D4">Yearn Finance</a> liquid-staking vault.



Looking ahead, Sky’s governance architecture is expected to further evolve via the “Core Council,” and staking reforms could introduce lockups and anti-LST protections. Rune framed that as a “two-year” roadmap item, part of a longer arc toward institutional-grade governance and capital structure management.



So far, the market hasn’t rewarded the protocol with breakout usage, although the architecture is in good shape.



“Sky will grow as an entire economy,” Christiansen said. “More vertically integrated growth… [rather than] USDS being used everywhere for some particular specific niche.”



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DAOs

One year into Sky, adoption lags behind vision

Kate Irwin

This is a segment from The Drop newsletter. To read full editions, <a href="https://blockworks.co/newsletter/the-drop" target="_blank" rel="noreferrer noopener">subscribe</a>.



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The metaverse is long over.



And yet, it’s always been here, since the dawn of the internet. You&#8217;re in the metaverse as you read this.



The metaverse in the 2022-era sense of the word was little more than a fancy marketing play around rebranding VR. But every video game, every livestream, and every social media app is arguably all part of the existing metaverse that is the internet.



Paradoxically, the metaverse as corporate executives imagined it never materialized, because it was already here this whole time.



Today we’re unpacking some details about what’s been going on at The Sandbox, one of the OG crypto metaverse projects, and the massive overhaul it now faces.



<h2 class="wp-block-heading">The Sandbox gets slashed, pivots to memes</h2>



Ethereum-based metaverse land game The Sandbox is being gutted and restructured, facing layoffs and executive changes as Animoca Brands reshapes its future.



The crypto newsletter TheBigWhale first <a href="https://x.com/Raph_Bloch/status/1960687502391451716">reported</a> the news on Wednesday. Animoca Brands confirmed to Blockworks that a “restructuring” has occurred.



Animoca Brands has laid off over half of The Sandbox’s 250 employees and moved the game’s co-founders — Sébastien Borget and Arthur Madrid — into new roles.&nbsp;



Animoca CEO Robby Yung was internally appointed The Sandbox’s new CEO about two weeks ago, TheBigWhale notes, with an internal source adding that Borget and Madrid “no longer have executive powers” in their new roles.



In a statement shared with Blockworks, Animoca confirmed the role changes but said that both of The Sandbox’s cofounders “remain deeply involved” with the project.



Borget is taking on the role of “ambassador,” while Madrid is taking a “chairman” role. In a phone call with TheBigWhale, Borget reportedly said: “I remain the person who best represents The Sandbox around the world.”



Borget did not respond to my request for comment.&nbsp;



Animoca suggested in its statement to Blockworks that the layoffs may have been in part due to generative AI.&nbsp;



“The impact of AI advancements in the gaming industry has been well documented: AI allows us to accelerate our deployment of content, features and LiveOps while maintaining a leaner, more agile team,” Animoca’s statement reads.



It continues: “While decisions that impact personnel are always difficult are never made lightly, they are necessary to adapt to technological advances and ensure The Sandbox’s long-term success.”



The Sandbox employees in Argentina, South Korea, Thailand, Turkey and Uruguay are among those most impacted by the layoffs.&nbsp;



<h2 class="wp-block-heading">Many offices for the metaverse</h2>



It’s currently unclear how many offices The Sandbox has open — but I was able to independently verify that The Sandbox has had offices in at least a half-dozen different cities around the world, with offices reported in at least nine.



TheBigWhale’s reporting notes that the game’s offices in Lyon, France are expected to close. Offices in Argentina, Uruguay, South Korea, Thailand and Turkey are also being closed.



A <a href="https://officesnapshots.com/2024/03/25/the-sandbox-offices-los-angeles/">page</a> on the interior design site OfficeSnapshots published last year details how interior design firm Koko3 decorated The Sandbox’s lavish 8,611 square-foot space in Culver City, Los Angeles. The space features arrangements of plush modern chairs, glass-walled meeting rooms and digital screens displaying Bored Ape NFTs.&nbsp;&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdG8XEKzKUPiyEiwt8VdAnDeYP6uwn4lrcsBPECcDTG_rnEqob0c408-waTAvIJz_8WTe7sbTRs5gaZ2fXDYPcBJExHP09I6if9wvfJ7ElwdZaS716XtYLpZhKLA6dlu2LaUx1w?key=Gx6a7qGP8XhsxiVHDplqTw" alt=""/><figcaption class="wp-element-caption">Image: A close-up of The Sandbox metaverse map showing land plots for Faze Clan, Atari, Snoop Dogg, OpenSea and many others.</figcaption></figure>



The Sandbox’s <a href="https://docs.sandbox.game/en/about/about-the-sandbox/the-sandbox-team#the-offices">website</a> confirms the game company has a corporate office in Paris, a game development office in Buenos Aires, an office in Maldonado, Uruguay focused on web operations, plus additional offices in Seoul and London, as well as a “presence” in Hamburg, Germany.&nbsp;



But now, at least six of The Sandbox’s many offices are expected to close as a result of the massive restructuring at the company.&nbsp;



Animoca confirmed to Blockworks that four offices have been closed, and says The Sandbox will still have “a formal presence” in 9 locations globally.



As a blockchain gaming publisher and investor, Animoca is one of The Sandbox’s biggest financial backers. It is The Sandbox’s main shareholder, according to TheBigWhale’s report.&nbsp;



Animoca has offices in Hong Kong and Australia, with its Hong Kong office recently <a href="https://www.coindesk.com/web3/2024/10/29/as-hong-kong-firms-downsize-animoca-built-a-workspace-the-size-of-10-tennis-courts">becoming</a> “the size of 10 tennis courts” late last year.&nbsp;



Animoca has raised over $860 million in total funding, according to Crunchbase <a href="https://www.crunchbase.com/organization/animoca-brands-corporation#financials">data</a>, with its most recent round being a $358.9 million round in 2022 that put it at a pre-money valuation of $5.1 billion.&nbsp;



A source told TheBigWhale that Animoca spent $300 million on The Sandbox in the past eight years, and isn’t impressed with how things have gone. The Sandbox is still believed to have anywhere from $100 million to $300 million, primarily in ETH and stablecoins.&nbsp;



Last year, The Sandbox <a href="https://www.animocabrands.com/the-sandbox-announces-usd20m-funding-at-usd1b-valuation-cap">raised $20 million</a>, putting it at a $1 billion valuation. Crunchbase data shows The Sandbox has raised <a href="https://www.crunchbase.com/organization/the-sandbox-f24f#financials">$115 million</a> to date.



A Dune dashboard indicates that The Sandbox has seen <a href="https://dune.com/KARTOD/the-sandbox-main-dashboard">over $100 million</a> in total NFT volume.&nbsp;



<h2 class="wp-block-heading">Dwindling numbers</h2>



Despite all that cash, however, The Sandbox hasn’t seen many players. A source told TheBigWhale that “many” of the game’s “few hundred” remaining daily users “are bots in South America.”&nbsp;



But even back in the metaverse heyday, reports suggest The Sandbox’s crypto game version had never really seen a userbase that compared to Decentraland or Axie Infinity — and certainly nowhere near the non-crypto metaverse giants like Minecraft, Roblox, and VRChat.&nbsp;



Naavik noted in a January 2022 <a href="https://naavik.co/deep-dives/jan-2022-premium-sandbox/">report</a> that investors were effectively valuing The Sandbox’s <a href="https://medium.com/sandbox-game/we-raised-93m-to-grow-the-sandbox-open-nft-metaverse-a8a2a0411d90">30,000 MAUs</a> reported in November 2021 at $472,000 dollars each — while the game was still technically in alpha.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc8vDgB4qIFAXoo5xNKoDLZw9magcZO5FRQACOvk5JT7Q1hYAKFIxPGdQkE2B9X4XUAzRKtidzq7Aexa1fNugSeHn6Noc-MVc6JmcO2j96dgPQRgUrgSDoWgSoUc64fAjsPLrH3yg?key=Gx6a7qGP8XhsxiVHDplqTw" alt=""/></figure>



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe6c7oIbNCDRnwUt2CY6h1kZj0mxj-sHndSnmZIlRZqvhP3YdEUEo2f4t0a8dtitCL1o4CM4TF-YskdYdzkMNOgITayMCpLxlodI--1tia1u8J9QcmbkbyXlaQ9WZ7BzibcBkCyGw?key=Gx6a7qGP8XhsxiVHDplqTw" alt=""/><figcaption class="wp-element-caption">Images: 2022 data comparing The Sandbox to other metaverse-style games.</figcaption></figure>



So what’s happening now?&nbsp;



The Sandbox is reportedly pivoting to building crypto apps. A pump.fun-inspired memecoin launchpad that uses Base is in the works.



“From the outset we&#8217;ve held to our line on gaming, but you have to take market developments into account,” Borget told TheBigWhale.&nbsp;



It’s unclear what will happen to the game’s SAND token. Its price has remained flat in the past day, and is down 4% in the past month.



Has The Sandbox’s crypto-powered metaverse vision been officially put to rest after so many years? It sounds like it.



But Animoca insists: “The Sandbox is not pivoting away from its core mission, and we are very excited about the opportunities that lie ahead.”



Madrid and Yung did not respond to my requests for comment.&nbsp;



I wonder how Snoop Dogg’s metaverse neighbor who paid <a href="https://decrypt.co/87524/someone-paid-450k-snoop-dogg-metaverse-neighbor">$450,000</a> to “live” next to him in The Sandbox feels right now.



Probably not too great.



Updated 8/28/2025 at 2:30 p.m. ET with additional comments.



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Gaming

The Sandbox co-founders ousted from exec roles amid mass layoffs

This is a segment from the Lightspeed newsletter. To read full editions, <a href="https://blockworks.co/newsletter/lightspeed" target="_blank" rel="noreferrer noopener">subscribe</a>.



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Solana validators have begun voting on SIMD-0326, the governance proposal for its new <a href="https://blockworks.co/news/solana-alpenglow-next-gen-consensus-layer-speed">Alpenglow consensus protocol</a>.



The proposal needs at least 33% of validators to reach quorum. As of this morning, at least 11.8% (135) of Solana’s ~1.3K validators have voted in favor, based on <a href="https://dune.com/kagren0/simd-0326-voting-status">Dune</a>.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe8qXRrteOvrnBbGBNTTt81f6yKynyWZAN1kemQ1T-A85QMfoXg0kKkFi75J-4J3xZq_e3qRx35Cy0ARfrnQdTBFeUvvdQbvN0AnQI_dwgW4XwJQ18BH1zZ1QBK2OArDrejNrui?key=g93vGr6mMwKrQnYKnL2EnQ" alt=""/></figure>



When you send a transaction on Solana today, the chain takes about ~12.8 seconds (32 slots * 0.4s slot time) to reach deterministic finality, though it is also sometimes informally referred to as having a soft/optimistic transaction finality of 500-600ms.&nbsp;&nbsp;



12.8 seconds is fast compared to the 12.8 minute finality of Ethereum’s Gasper consensus, but it pales in comparison to the consensus speed of newer chains like Sui’s Mysticeti, with 390-500ms.



Alpenglow <a href="https://blockworks.co/news/solana-prepares-for-alpenglow">promises to collapse</a> the 12.8-second time window further to 100-150ms, bringing about a 100x improvement, depending on where a validator is geographically located.



It does so by eliminating a few core legacy pieces of Solana’s chain like <a href="https://blockworks.co/news/solana-proof-of-history">proof-of-history</a> (PoH), Tower BFT and gossip-based vote propagation.



The average Solana user has no idea what these are, nor do they need to care, so I&#8217;ll try to keep it simple.&nbsp;



PoH and Tower BFT are the twin core pieces of Solana’s architecture today that allow validators to order blocks without having to interact.&nbsp;&nbsp;



Think of PoH as a pre-consensus cryptographic stopwatch that timestamps blocks. Those timestamps serve as a shared clock which the Tower BFT algorithm then serves up to validators for commitments. This way, the Solana blockchain is able to keep producing blocks without requiring a synchronous consensus round as is typical with traditional chains.



This protocol design has served Solana well, but there are trade-offs.



For one, it creates an overhead cost for voting transactions, which makes up something like 70% of Solana’s onchain transactions (see gray chart below). Vote transactions are distinctly separate from the kinds of transactions that ordinary users send to use the chain; they are an attestation that validators have to pay to lock in their commitments for Tower BFT, or a cost of doing business.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdYseNq0kL6YtWTBAaXpsynKarYP0qNRKRVMx6BszJ81PZ7SztPeA91Lo-03As6z_rf6ZAkBp2qFGUXkP2sFgM6Hb0RCDdHoHOZyCq_58jiO0_MKGZmNj4hiPu0ZKoPVrIVjrP-Iw?key=g93vGr6mMwKrQnYKnL2EnQ" alt=""/></figure>



This has created something of a longstanding pernicious problem for Solana validators.



The bigger the stake of a Solana validator, the more earning opportunities they are given to produce blocks. But every validator, regardless of the size of their stake, pays the same fees to vote.



This “fixed cost, variable income” economics results in a situation where large validators end up with a greater stake over time, in effect centralizing network stake from smaller to large validators. Network decentralization suffers because it’s unprofitable to run a validator unless you’re coming in with deep pockets.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd2dpfuDdqfXstqBVAXWT6TUF_jb5rudhGATKOGQGjrm3H4zsnkzfAmXG7o7xGuanieI09GUaaDp7ciIqvqEiQTIdECBbh0MyOdss4kF-y8997cBuVVAZaHwyT_ml_0ZIVzWj4w?key=g93vGr6mMwKrQnYKnL2EnQ" alt=""/></figure>



(That also explains why the Solana Foundation has an <a href="https://solana.org/delegation-criteria">initiative</a> to subsidize smaller validators in their first year of operations.)



Alpenglow aims to nip this problem in the bud by getting completely rid of voting costs. That’s where its new components, Votor and Rotor, come in.



Votor shifts validator voting off-chain, but records the aggregate as a compact onchain certificate. Alpenglow therefore replaces per-slot vote transactions with a fixed fee, compressing consensus into one-two rounds to achieve its target finality of 100-150ms.



Rotor, on the other hand, is an improved block propagation protocol that replaces Turbine. It uses a simpler relay scheme to reduce the number of times data jumps from node to node, shaving off end-to-end network latency.



Votor and Rotor jointly underpin Alpenglow’s promised “20+20” resilience model. Under this new model, the Solana network preserves safety and liveness even with 20% of stake controlled by malicious validators and an additional 20% offline.



If this is still all too confusing, just picture AI Peter Griffin dancing through a Minecraft map — somehow, consensus starts to make sense.



<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">solana alpenglow in less than 100 seconds (brainrot version) <a href="https://t.co/QPtHd5QQct">pic.twitter.com/QPtHd5QQct</a>&mdash; doppelbanger (brainrot lead) (@doppelbanger_gm) <a href="https://twitter.com/doppelbanger_gm/status/1958478061692707100?ref_src=twsrc%5Etfw">August 21, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



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Alpenglow

Solana validators commence vote on landmark Alpenglow consensus protocol

Lombard Finance has launched its liquid-staked Bitcoin token, LBTC, on Solana, bringing yield-bearing Bitcoin to the high-throughput blockchain.



The token, which represents Bitcoin staked through a decentralized consortium of 14 regulated custodians, has a circulating supply of around 1.5 billion LBTC and generates roughly 1% yield denominated in BTC.



<a href="https://www.lombard.finance/blog/lbtc-comes-to-solana-yield-bearing-bitcoin-meets-high-performance-de-fi/">According</a> to Lombard, the move enables users to deploy LBTC across Solana’s decentralized finance platforms for lending, perpetual trading, and other applications without sacrificing speed or security. The expansion follows LBTC’s rapid growth across Ethereum and other ecosystems, where it has reached more than $2 billion in supply and established integrations with over 70 protocols.&nbsp;



Earlier this month, Lombard <a href="https://www.lombard.finance/blog/yield-bearing-bitcoin-lbtc/">introduced</a> automatic yield accrual, simplifying user experience by embedding staking rewards directly into the token’s value. Partners on Solana include Drift, Jupiter, Kamino, Meteora, and oracle providers such as Pyth and RedStone, positioning LBTC as a base asset in trading and liquidity strategies.



In the release, Solana Foundation growth lead Jiani Chen welcomed the news, saying “Lombard’s LBTC is the first yield-bearing Bitcoin to join the ecosystem, with the scale and liquidity needed to position Solana as a high-performance liquidity hub for BTC. LBTC’s native yield and deep DeFi integrations unlock a new chapter for Solana DeFi.”



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This article was generated with the assistance of AI and reviewed by editor&nbsp;<a href="https://blockworks.co/author/jeffrey-albus" target="_blank" rel="noreferrer noopener">Jeffrey Albus</a>&nbsp;before publication.



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tokens

Lombard brings yield-bearing LBTC to Solana

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