Ultima

Byron Gilliam

This is a segment from the Blockworks Daily newsletter. To read full editions, <a href="https://blockworks.co/newsletter/daily">subscribe</a>.



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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“The counterfeit of business is speculation. A man in business always gives value in return for his revenue, and thus performs a useful function.”



— Andrew Carnegie
</blockquote>



When asked about the competitive threat posed by newly formed Federal Steel, Andrew Carnegie scoffed that its real specialty was “manufacturing stock certificates,” not steel.



That dismissive comment was emblematic of the 1890s boom in industrial “trust” stocks, most of which Carnegie thought had little to do with business and everything to do with speculation.



There were exceptions — the big monopolistic trusts formed in things like oil, sugar and tobacco unsurprisingly turned out to be good investments.&nbsp;



But there were also trusts formed in things like rope, wallpaper and coffins that were essentially stock-promotion schemes that did not.



The 1893 collapse of the National Cordage Company — the “Rope Trust” — even triggered a widespread financial panic that brought down many other trusts that were similarly in the business of “manufacturing stock certificates.”



That outcome might be a cautionary tale for crypto, an industry still best known for manufacturing tokens (not value).



The vast majority of those tokens don’t do anything — and those that do mostly just represent different ways of trading useless tokens.



The crypto market remains highly self-referential like that, but the hope has always been that this would change in time: Build a new financial system and the assets and investors will come.



If so, it feels like they should be arriving any time now — the technology is now good enough, blockspace is cheap and plentiful enough, and the SEC is in remission.&nbsp;



There are hopeful signs that it might be happening.&nbsp;



There’s a notable <a href="https://app.rwa.xyz/treasuries">boomlet</a> of real-world assets moving onchain, for example — mostly thanks to the success of BlackRock’s tokenized money market fund, BUIDL (a product that is in many ways genuinely superior to its off-chain equivalents).



Stablecoin assets are also <a href="https://defillama.com/stablecoins">trending higher</a> and may only be getting started: Mastercard’s <a href="https://x.com/MastercardNews/status/1916896208187986114?t=7DKVU8CYZHfPf5bbyvVSvQ&amp;s=19">announcement</a> this morning that it’ll be facilitating payments with stablecoins may be the thing that finally brings crypto to the non-crypto masses.



From levels of $240 billion now, a recent <a href="https://x.com/jerallaire/status/1915466281479753824">report</a> from Citi predicts that stablecoin assets under management will surge to as much as $3.5 trillion by 2030.



(Note: I did the math and found out that 2030 is four and a half years away. Shocking, I know, but true.)



If there are anything like 3.5 trillion tokenized dollars onchain, investable assets will follow.&nbsp;



I have recently, for example, bought two <a href="https://collectorcrypt.com/marketplace/cards">Pokémon cards</a> and a <a href="https://www.baxus.co/?sortBy=priority%3Adesc">bottle of whiskey</a> onchain, simply because I had some spare dollars onchain and crypto makes it very easy to buy Pokémon cards and bottles of whiskey.



So easy that I now consider both those things investable assets — not having to either take delivery or store collectibles like that is a game changer.



Investing in cards and bottles is also more fun than making 4% in BUIDL or losing 100% in memecoins.



Hopefully, there will soon be more options for crypto investors to choose from.



Kyle Samani even believes there will be all the options: “Virtually all assets will trade on inherently global and permissionless systems like Solana,” he predicted in a <a href="https://multicoin.capital/2025/01/22/the-solana-thesis-internet-capital-markets/">recent report</a> on the future of crypto capital markets.



If so, that will include stocks and bonds, of course, but also — and more intriguingly — all-new kinds of crypto-native assets.



It’s still kind of hard to imagine what these will look like beyond the current offering of blockchain and DeFi tokens — which are almost all self-referentially leveraged to the trading of crypto.&nbsp;



But now that blockspace is so cheap and plentiful, people are trying new things.&nbsp;



<a href="https://x.com/timedotfun?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor">Time.fun</a>, for example, is an experiment in tokenizing people’s time; <a href="https://zora.co">Zora</a> is an experiment in using “content coins” to surface and prioritize information; TRUMP, a “celebrity coin,” is an experiment in tokenizing emoluments; <a href="https://www.story.foundation">Story Protocol</a> is an experiment in programable, tokenized IP; <a href="https://x.com/believeapp">Believe App</a> is an experiment that turns X posts into memecoins (or “idea coins”) that offer to fund the business ideas they loosely represent.



Like most experiments, these will probably fail.



But if crypto capital markets keep throwing spaghetti on the wall like this, some new and interesting things should eventually stick.&nbsp;



Importantly, they might not all be crypto things, either.&nbsp;



Wall Street has been doing less and less experimenting as of late: Tomasz Tunguz <a href="https://tomtunguz.com/ipo-size-2024/">notes</a> that only two companies with less than $100 million of revenue have IPO’d in the US since 2018.



Two!



That failure to offer investors new things to invest in is at least partly because the IPO process has gotten so expensive: Tunguz estimates that it can cost a $100 million revenue company as much as $26 million to list on a US stock exchange.&nbsp;&nbsp;&nbsp;



That is a prohibitively expensive way to raise capital.



Raising capital in crypto, by contrast, is almost infinitely cheaper.



In some cases, literally so: The token that Zora issued is “just for fun,” which means Zora has raised equity capital without having to sell equity — a weird trick that’s only possible in crypto.&nbsp;



That has not worked out very well for crypto investors so far.&nbsp; For most investors in most crypto tokens, returns have been pretty terrible.



Lots of people have gotten rich in crypto, of course, but not by creating or investing in useful things.&nbsp;



Instead, it’s mostly been from the manufacturing of tokens.&nbsp;



Andrew Carnegie would be unimpressed — businesses, he believed, should succeed by giving “value in return for the revenue” and not just offering new things to speculate on.&nbsp;



But he might be sympathetic to crypto markets because stock markets weren’t very serious in his time, either — not until he created the first modern stock by merging his Carnegie Steel Company into US Steel.



US Steel was the product of the kind of financial engineering Carnegie derided.



But it was also the first billion-dollar corporation, the first corporation to publish modern financial statements, and arguably the first to have truly public ownership.



Crypto capital markets are still in their stage of manufacturing tokens.&nbsp;



But their US-Steel moment may — finally — be near.



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



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



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Markets

The time for permissionless capital markets is now

Casey Wagner

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



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Lawmakers are scrambling to pass President Trump’s “big, beautiful” tax and spending bill by Speaker Mike Johnson’s Memorial Day deadline. Disagreements within the GOP, though, are poised to slow things down.&nbsp;



There are a few small but mighty groups of Republican lawmakers with some non-negotiables. They have threatened to derail the legislation should things not go their way. Main points of contention include overall spending and proposed clawbacks.&nbsp;



So-called budget hawks, including Chip Roy (Texas), Andrew Clyde (Georgia) and Lloyd Smucker (Pennsylvania) have indicated that they want bigger budget cuts to compensate for the tax revenue decrease.&nbsp;



The bill currently calls for a minimum of $1.5 trillion in spending cuts over a decade. Nonpartisan think tanks have estimated that extending Trump’s first-term tax cuts would decrease federal tax revenue by $4.5 trillion over a decade.&nbsp;



There’s also a coalition of Republicans concerned about plans to clawback funding and limit tax credits associated with Biden’s <a href="https://www.irs.gov/inflation-reduction-act-of-2022">Inflation Reduction Act</a>. Those against the proposal include Sens. Thom Tillis and John Curtis, who co-authored a letter insisting that the tax cuts allow for more investment in manufacturing and lower utility bills for Americans.&nbsp;



Still, House Ways and Means Committee Chair Jason Smith said this weekend that they’re “days, not months” away from finalizing tax plans. In contrast, Republican committee member Darin LaHood said an early June timeline is more likely.&nbsp;



Either way, this is the priority on Capitol Hill for the foreseeable future. So maybe don’t expect any crypto legislation getting through anytime soon.



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



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha directly in your inbox.</li>



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



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Donald Trump

Republicans aren’t on the same page about Trump’s ‘big, beautiful’ tax bill

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



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We <a href="https://blockworks.co/news/us-equities-trade-tariffs-magnificent-company-earnings">wrote yesterday</a> about Big Tech earnings, but we’re also keeping an eye on results in the auto industry. General Motors this morning kicked off earnings season for the so-called Big 3, which also includes Stellantis and Ford.&nbsp;



In an uncommon move, GM released its Q1 report on Tuesday, but executives delayed its call until Thursday. The headline news from the release was that GM pulled its previous 2025 profit guidance, citing tariff policies.&nbsp;



GM is also pausing an intended $4 billion share buyback — a plan the board approved in February. The automaker’s net income decreased 6.6% from Q4, but revenue increased 2.3%.&nbsp;



Shares of GM opened lower on Tuesday (as expected), but gained as much as 2.8% following news that the White House will soften tariffs on the auto industry. The rally was short-lived, though, and GM shares had reversed the gains within the hour.&nbsp;



The Trump administration said Tuesday that while the current 25% tariff on auto imports will continue, the 25% levy on metals (including steel and aluminum) will not apply. In other words, the two tariffs will not be “stacked.” It’s definitely not bad news, but I understand why it wasn’t enough to boost investor confidence too much.&nbsp;



Coming up, Stellantis is scheduled to report tomorrow, and Ford’s Q1 call will be next week.



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Trump’s auto tariff reprieve does little to help GM stock after earnings release

Ben Strack

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



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FDR had an eventful first 100 days after promising various reforms to combat effects of the Great Depression.&nbsp;



We’re in no way comparing Franklin to Donald, but we’ll keep up the political watchdog tradition of recapping a president’s initial actions within such a timeframe (and we’ll focus on crypto).



Clearly the president’s rhetoric and tariff policies have spurred market shocks that have impacted crypto prices.&nbsp;



But which actions and appointments have had/are set to have a longer-term impact on the asset class? And what’s left on the agenda? Here goes. First came the controversial <a href="https://blockworks.co/news/trump-more-than-a-memecoin">TRUMP memecoin</a>. Then, it took just three days after Inauguration Day for Trump to introduce his crypto-focused executive <a href="https://www.whitehouse.gov/presidential-actions/2025/01/strengthening-american-leadership-in-digital-financial-technology/">order</a>.



“The organization of an interagency Working Group and a clear imperative from the White House to prioritize stablecoin legislation suggests the legislative endgame is near,” said Troutman Pepper Locke partner Alexandra Steinberg Barrage. (More on legislation later).



As we moved into March, we got an executive <a href="https://www.whitehouse.gov/fact-sheets/2025/03/fact-sheet-president-donald-j-trump-establishes-the-strategic-bitcoin-reserve-and-u-s-digital-asset-stockpile/">order</a> for a strategic bitcoin reserve and a digital asset stockpile. The industry reaction <a href="https://blockworks.co/news/trump-btc-reserve-mixed-reactions">was mixed</a>.&nbsp;



Looking ahead, another executive order to watch for might be one addressing Federal Reserve <a href="https://decrypt.co/309392/trump-executive-order-end-biden-crypto-debanking-operation-chokepoint">master account access</a> for crypto players, Steinberg Barrage noted.&nbsp;



A few days after the reserve/stockpile order came the White House crypto summit — marking a milestone for the industry, but <a href="https://blockworks.co/news/crypto-summit-without-substance">lacking substance</a>.&nbsp;



Trump’s first crypto bill landmark came when he signed H.J. Res. 25 into law last month — <a href="https://blockworks.co/news/defi-broker-rule-saga-resolution-25">nixing an IRS rule</a> that opponents argued burdened DeFi players with <a href="https://blockworks.co/news/blockchain-association-defi-broker-rule">unrealistic</a> reporting requirements.&nbsp;



Let’s move on to note what Trump has appeared to facilitate more indirectly. After all, as Foley &amp; Lardner partner Patrick Daugherty told me, “Personnel is policy.” Thus, he argued, Trump’s picks to lead the SEC and CFTC — Paul Atkins and Brian Quintenz, respectively — have been his two most impactful crypto decisions so far.&nbsp;



“[The SEC] favors rulemaking and interpretation, rather than enforcement, as [its] primary regulatory tools,” explained Daugherty, who is also an adjunct digital assets law professor at Cornell and Northwestern.



Most of the SEC’s actions (<a href="https://blockworks.co/news/hester-peirce-reveals-sab-121-rescission">rescinding SAB121</a>, ending lawsuits) are covered <a href="https://blockworks.co/news/sec-actions-timeline">here</a>. Remember the agency’s roundtable on tailoring regulation <a href="https://blockworks.co/news/sec-crypto-round-table-execs">for crypto trading</a>? And there was a custody-focused one last week.



Looking ahead, the SEC is likely to address the uncertain application of the Howey and Reves cases to digital assets, the need for more crypto custodians, and the potential to revise what Daugherty called “rearguard disclosure mandates” that hinder registration.&nbsp;&nbsp;&nbsp;&nbsp;



“‘Come in and register’ must become a realistic opportunity rather than a false promise,” the law firm partner said.



As for the CFTC, it must gear up for the bigger role it will have in overseeing the industry, Daugherty noted. Quintenz, who has been working as a16z crypto’s policy head, “will assure alignment between the two agencies,” he added.



Seeing what Trump’s administration has done already in its first three-plus months, industry players continue to ask for more.&nbsp;



As the last line of a Monday DeFi Education Fund letter to crypto czar David Sacks notes: “The job&#8217;s not finished, and the stakes could not be higher.”



That <a href="https://section1960.defieducationfund.org">letter</a> was about what it called “unlawful DOJ overreach” in the prosecution against Tornado Cash co-founder Roman Storm.&nbsp;



“No one writing code in good faith should have to fear prosecution for the actions of strangers,” they wrote.



Daugherty said he expects Sacks — tasked with leading <a href="https://blockworks.co/news/trump-picks-crypto-czar">crypto and AI efforts</a> — to “promote these two high-tech industries as vehicles for economic growth in America, which is the foremost objective of the president’s economic program.”



The bigger elephants in the room? That would be the timeline around the market structure and <a href="https://blockworks.co/news/senate-advances-stablecoin-bill">stablecoin bills</a>, which when finalized, will delegate detailed rulemaking to regulatory agencies.



“The main role for the White House is to assure coordination among the agencies and to prod reluctant senators and representatives to agree upon bills that the president can sign,” Daugherty said.



There’ll be plenty more to monitor in the next 100 days and beyond.



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Crypto movement in Trump’s first 100 days: ‘Personnel is policy’

Kate Irwin

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



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An RTFKT buyer in Australia is suing Nike via a proposed class-action lawsuit, accusing the apparel giant of deceptive practices, unfair competition, unjust enrichment and unlawful trade practices with its numerous NFT collections.



The lawsuit, filed last week in the Eastern District of New York, alleges that Nike committed a “brazen rug pull” via its subsidiary RTFKT, pronounced “artifact,” which it acquired in late 2021.&nbsp;



“Nike used its iconic brand and marketing prowess to hype, promote, and prop up the unregistered securities that RTFKT sold,” the filing viewed by Blockworks alleges.



The 42-page filing argues in detail that what RTFKT sold across a range of different NFT collections were actually securities under US law. But it also makes the overarching argument that even if a court finds those digital assets not to be securities, there are still five counts in the lawsuit to reckon with. It also argues that the rug pull it says occurred is a “deceptive act” in and of itself.



Nike is accused of violating the New York Deceptive Acts and Practices Unlawful Act, the California Unfair Competition Law, the Florida Deceptive and Unfair Trade Practices Act, and the Oregon Unlawful Trade Practices Act.&nbsp;



It further alleges “Unjust Enrichment,” accusing Nike of further “enriching” itself with the NFT buyers’ funds.



The dispute is over a minimum of $5 million, but the filing does not specifically state a dollar amount of damages desired.&nbsp;&nbsp;



Nike made piles of cash from RTFKT. One <a href="https://dune.com/nakedcollector/nike-x-rtfkt">dashboard</a> found that the CloneX “Mintvials” generated over $80 million in revenue alone.



RTFKT trading activity peaked in 2022, but it had substantially subsided by 2023. The CloneX avatars made with artist Takashi Murakami were the most successful collection by far.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXefZ5fQ19DZOHqNJ4jLjGQCNGtQUT8YemoQgAacFFhhCdtjnc1SgMv7uzxsdK4W3U0hsgCT-G3Fzc2Of_RiguTItbRHRpCjd1JjeTeVgqkeZp6deUFwfw-zrP0fW7QLEYhpjUwwIA?key=gZlJo8brmifzEyhNd4yZUcTp" alt=""/></figure>



RTFKT then <a href="https://x.com/RTFKT/status/1863621178532773928">announced</a> it was shutting down in December 2024, just three years after Nike acquired it. No reason for the shutdown was provided.



RTFKT Head of Tech Samuel Cardillo declined to comment. Cardillo has publicly referred to himself as “the last man standing” at the Nike subsidiary.



Blockworks reached out to Nike as well as RTFKT cofounders Chris Le and Benoit Pagotto for comment. Le’s Linkedin <a href="https://www.linkedin.com/in/clegfx/">shows</a> that he left RTFKT and Nike in January 2025, but Pagotto’s <a href="https://www.linkedin.com/in/benitopagotto/">profile</a> still shows him as employed at Nike and RTFKT.



Last week, a day before the lawsuit was filed, the art for the CloneX RTFKT NFTs <a href="https://blockworks.co/news/cloudflare-rtfkt-clonex-nft-art-service-violation">disappeared overnight</a> due to an issue with its Cloudflare hosting plan. Cardillo later said the issue was due to an error, not an unpaid bill. The collection’s art was then subsequently restored. Cloudflare did not reply to Blockworks’ previous request for comment.



On Monday, Cardillo <a href="https://x.com/CardilloSamuel/status/1916892822671966482">said</a> the CloneX NFTs had migrated (off Cloudflare) to Arweave for “permanent storage.”



If this lawsuit progresses, it won’t be the only class-action suit about an NFT “rug pull.” The class-action lawsuit against Logan Paul’s CryptoZoo NFT game <a href="https://www.courtlistener.com/docket/66783398/holland-v-cryptozoo-inc/">remains ongoing</a> as well.



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lawsuit

Nike accused of ‘brazen rug pull’ in class action lawsuit

Macauley Peterson

This is a segment from the 0xResearch newsletter. To read full editions, <a href="https://blockworks.co/newsletter/0xresearch" target="_blank" rel="noreferrer noopener">subscribe</a>.



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Decentralization is on the clock. 



A new policy framework by the Decentralization Research Center cuts through the noise: Decentralization should be judged by control. As rollups like Scroll hit key milestones, the question is whether real trust minimization is really happening, or if it’s just theater.



<h2 class="wp-block-heading">A new decentralization blueprint</h2>



Forget the vague platitudes. No endless debates about “degrees” of decentralization. A <a href="https://x.com/c_spelliscy/status/1917202715110756416">new report</a> out today from the Decentralization Research Center argues that decentralization should be judged by one thing only: control.



Can any person or group unilaterally control the network? If yes, it’s centralized. If no, it&#8217;s decentralized. Simple. Actionable.



This framing matters because, as the DRC points out, the next two years will shape whether blockchain tech fulfills its original promise, or just recreates Silicon Valley’s closed gardens onchain. Without clear regulatory incentives for real decentralization, the default path will be centralization: cheaper, easier, but more extractive.



The report lays out seven “control principles” to lock in decentralization through law: Networks should be open-source, permissionless, autonomous, credibly neutral, noncustodial, economically independent and broadly distributed. The report may serve as a blueprint regulators could actually use — without crushing innovation.



But the DRC’s smartest move might be what it doesn’t demand: purity at all costs. It explicitly carves out room for practical realities like &#8220;security councils&#8221; that can step in during emergencies.



Take <a href="https://blockworks.co/tag/arbitrum">Arbitrum</a>, for example. After the network’s early <a href="https://blockworks.co/news/arbitrum-walks-back-proposal">governance missteps</a>, the DAO has has <a href="https://blockworks.co/news/measuring-dao-grants-for-growth">mixed results</a>. One thing it’s done well is to provide for a decently large and transparently selected <a href="https://docs.arbitrum.foundation/dao-glossary#security-council">security council</a> with 12 members. This structure doesn’t break decentralization, the DRC argues, if it’s properly constrained, disclosed and accountable.



This carve-out matters because it signals that serious decentralization isn&#8217;t about eliminating all forms of human intervention but rather just limiting unchecked control. Autonomy plus resilience, not code worship.



<h2 class="wp-block-heading">Rollups are growing up</h2>



Last week, Scroll became the latest Ethereum layer-2 <a href="https://blockworks.co/tag/rollups">rollup</a> — and the first using zk/validity proofs — to achieve “Stage 1” status <a href="https://l2beat.com/scaling/summary">on L2BEAT</a>.



Scroll’s <a href="https://x.com/Scroll_ZKP/status/1916871844151406649">Euclid upgrade</a> included two new mechanisms for sequencer accountability:



<ul class="wp-block-list">
<li>Enforced transaction inclusion</li>



<li>Permissionless batch submission</li>
</ul>



These two core liveness and censorship resistance protections are what filled the pie slice to reach Stage 1. Add in the recent move to echo Arbitrum’s 9-of-12 security council multisig (from Scroll Foundation and community members), and Scroll has clearly invested in stronger trust minimization.



But it may be short-lived. Both Scroll and <a href="https://blockworks.co/tag/optimism">OP Mainnet</a> are at risk of downgrade in 90 days unless key guarantees around an exit window to Ethereum mainnet are put in place.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdzaOtC06pWpMIDC4jBZ_S3rmfKn_rHguqrmVNiYE-pDeD8fVCuES6ufcYLCeWjfnojdchSrLzyqLQ9l6f32us2JldHuD2-NNsNVa3fAY_yJbW09_tvEVfaYyigBS2cLR9pQ09PDw?key=wcDdvmlLnC9Emdob5truC4ii" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://l2beat.com/scaling/summary">L2BEAT</a></figcaption></figure>



Per L2BEAT: &#8220;Compromising ≥75% of the Security Council should be the only way (other than bugs) for a rollup to indefinitely block an L2→L1 message or push an invalid L2→L1 message.&#8221;



L2BEAT wants to see users’ exit window to be functional and credibly ungoverned (i.e., not overrideable by a core team with instant upgrade authority). Arbitrum ensures a 10-day exit period, so remains qualified.



The DRC’s work ties into real policy momentum, including elements from last year’s <a href="https://blockworks.co/news/fit21-vote-expected-wednesday">FIT21 Act</a> and ongoing <a href="https://blockworks.co/news/defi-education-fund-sec-safe-harbor-crypto">SEC safe harbor</a> discussions. If adopted more widely, the DRC framework could tackle one of crypto’s biggest regulatory bottlenecks: separating real decentralized infrastructure projects from those that slap a “DAO” label on centralized tech stacks. It gives both builders and policymakers a shared language — one rooted in control dynamics, not vibes.



If crypto is going to survive as something more than Wall Street with a dark mode, serious decentralization tests should be fought for — not just in code, but in law.



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0xResearch Newsletter

Decentralization on a deadline

David Canellis

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



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“Being too far ahead of your time is indistinguishable from being wrong.”



That was Howard Marks, co-founder of Oaktree Capital Management, in his 2011 <a href="https://www.oaktreecapital.com/insights/memo/on-bubble-watch">book</a> The Most Important Thing.&nbsp;



Marks had obviously never heard of bitcoin.



Luckily, two MIT students never took that adage to heart. On this day in 2014, Jeremy Rubin and Dan Elitzer <a href="https://web.archive.org/web/20140429234052/http://bitcoin.mit.edu/announcing-the-mit-bitcoin-project/">announced</a> a bombastic plan to give every undergraduate student at their university $100 in bitcoin.



The price of bitcoin has since multiplied by more than 220x. Take that, Marks!



<h2 class="wp-block-heading">On This Day — the MIT Bitcoin Project</h2>



Granted, mainstream Bitcoin discourse was indeed accelerating by this point in 2014.



Former Federal Reserve Chair Alan Greenspan had recently <a href="https://www.bloomberg.com/news/articles/2013-12-04/greenspan-says-bitcoin-a-bubble-without-intrinsic-currency-value">labeled</a> bitcoin a bubble without intrinsic value. In the 18 months prior, bitcoin’s price had exploded from $10 to almost $1,000, one of its first great bull runs.&nbsp;



The Bitcoin economy was also actively evolving in response to government crackdowns. Mt. Gox had just <a href="https://www.reuters.com/article/business/mt-gox-files-for-bankruptcy-hit-with-lawsuit-idUSBREA1R0FX/">filed</a> for bankruptcy, while Ross Ulbricht’s Silk Road and Charlie Shrem’s BitInstant had peaked preceding the arrest of both founders.



Around the same time, Farmville developer Zynga had started testing bitcoin payments for in-game purchases, mirroring a recent move made by Overstock to accept bitcoin for ecommerce.



Those events put Bitcoin on the macro scale. Rubin and Elitzer went micro, opting to instead seed a bitcoin-based peer-to-peer economy in their campus.&nbsp;



Rubin was a sophomore at the time, studying computer science, and Elitzer a first-year MBA student at MIT Sloan and president of the MIT Bitcoin Club. Rubin went on to contribute to Bitcoin Core and has founded a series of ventures in the space. Elitzer later co-founded venture firms IDEO CoLab Ventures and Nascent.



The MIT Bitcoin Project also had backing from MIT Sloan professors Christian Catalini and Catherine Tucker, as well as from MIT itself, with the BTC drop positioned as an IRB-approved study on the role of early adopters in the tech adoption curve.



<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">Excited to announce the <a href="https://twitter.com/hashtag/MITBitcoinProject?src=hash&amp;ref_src=twsrc%5Etfw">#MITBitcoinProject</a>. $100 in BTC to all MIT undergrads fall 2014. What will you build? Come to the expo, learn more!&mdash; my (@JeremyRubin) <a href="https://twitter.com/JeremyRubin/status/461123888022564864?ref_src=twsrc%5Etfw">April 29, 2014</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“One problem was that there wasn&#8217;t any traditional community in the world where bitcoin was used and understood. Initiating network effects is really hard,” Elitzer wrote in a <a href="https://www.coindesk.com/markets/2017/04/21/that-time-we-gave-500000-in-bitcoin-to-college-kids">retrospective</a> years later.&nbsp;



“Our goal was to create the first such community at the world&#8217;s premier technical university. If there was anywhere bitcoin could take off, it was at MIT.”



The pair had raised $500,000 that would be converted into bitcoin and sent out to students, with half coming from Hudson River Trading co-founder Alexander Morcos and the remaining from around two <a href="https://thetech.com/2014/04/29/bitcoin-v134-n22#:~:text=Rubin%20and%20Elitzer%20said%20they%E2%80%99ve,firm%20based%20in%20New%20York">dozen</a> alumni and other donors from the bitcoin community.&nbsp;



It was enough to cover all 4,494 undergraduate MIT students enrolled in October 2014. Students had to sign up for a waitlist, complete a survey and register a Bitcoin wallet in order to receive the funds. Around 70% of the cohort did so, equivalent to 3,108 undergraduates.



“Giving students access to cryptocurrencies is analogous to providing them with internet access at the dawn of the internet era,” Rubin said in the announcement post. “When the distribution happens this fall, it will make the MIT campus the first place in the world where it will be possible to assume widespread access to Bitcoin.”



Sadly, bitcoin usage at MIT never really took off, despite a Bitcoin Expo and a hack-a-thon in support. Years later, Rubin and Elitzer recounted their experiences with spending bitcoin on campus: “I bought a mango smoothie from a &#8216;bitcoin-ready&#8217; burrito joint, but the cashier was confused on how to do it correctly,” Rubin said.&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">Launching MIT BitComp today, a summer <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> competition w $15,000+ in prizes <a href="http://t.co/HyJdkiUIDG">http://t.co/HyJdkiUIDG</a> Teams need an <a href="https://twitter.com/MIT?ref_src=twsrc%5Etfw">@MIT</a> student/alum!&mdash; my (@JeremyRubin) <a href="https://twitter.com/JeremyRubin/status/474203416252530688?ref_src=twsrc%5Etfw">June 4, 2014</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Elitzer: “I purchased a hat at the Coop, MIT and Harvard’s student store. Not only did it take them five minutes to track down the only iPad in the store set up to take bitcoin, but I had to leave the store to send the transaction because my phone wasn&#8217;t getting any signal at the register.”



As for the MIT <a href="https://news.mit.edu/2017/bitcoin-study-period-exclusivity-encourages-early-adopters-0713">study</a>, it was eventually published in Science in July 2017 with a key finding: delaying early adopters’ access to a new technology could slow down adoption.&nbsp;



The researchers had found that by holding back $100 bitcoin payments for a subset of students classed as &#8220;natural early adopters,” that group was 4.3 times more likely to dump their coins immediately, as long as they lived on campus.



Perhaps the natural early adopters (NEAs) found value in being perceived as having exclusive access to a new technology like Bitcoin, and thought it better socially to opt out if they weren’t first.



“Our results highlight a novel, understudied mechanism through which NEAs might obstruct further diffusion if they refuse to adopt because their desire to feel unique is challenged or the consumption value they derive from early, exclusive access is reduced,” the researchers wrote.



Joke’s on them. It’s unclear how many have sold in the meantime, but in 2017 more than half of the students were reportedly still holding their coins.



Bitcoin has risen by another 4,000% since then, and the $100 worth of bitcoin originally paid to MIT students in 2014 would be worth as much as $26,000 right now, turning the $500,000 originally pledged into $110 million today.



I’d still bet all of them wish they were even earlier.



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Bitcoin

MIT’s free bitcoin experiment now valued at $110 million

Katherine Ross

If you haven’t heard, there’s a huge court battle playing out between two HR and payroll services rivals, Rippling and Deel (they’re both <a href="https://techcrunch.com/2025/04/25/deel-files-countersuit-against-rippling-as-rivalry-escalates/">suing</a> each other).&nbsp;



So, what does this have to do with our industry? Well, there’s a separate ongoing court case happening between two crypto companies. It’s a little complicated, so bear with me.&nbsp;



In December of last year — so before Rippling filed its suit — Toku <a href="https://www.docketalarm.com/cases/Delaware_State_Court_of_Chancery/2024-1334/CONF-WorkCo_Inc._d-b-a_Toku_v._Liquifi_Inc._et_al/">accused</a> its rival firm, Liquifi, and its new general counsel, Benjamin Snipes, of stealing thousands of files containing sensitive business information after Snipes left Toku on not-so-pleasant terms. The lawsuit claims that Snipes wanted a promotion at Toku but didn’t get it, so he quit to work for a firm outside of crypto, only to pop up at Liquifi a couple of months later.



(In Snipes’s affidavit, he confirmed he temporarily left crypto after Toku, calling it a “toxic work environment.”)



Coincidence? Toku doesn’t seem to think so. And, from what I’ve heard, these firms operate in a very small subsection of crypto. There are four big players: Toku, Liquifi, Magna and Pulley. Then there are a few smaller firms that may have some overlap.&nbsp;



Toku is a platform built for tax and payroll compliance through a crypto lens, while Liquifi seeks to automate token vesting (in their words, building the “Carta of crypto”) so you can see where the two compete.&nbsp;



On one hand, we have Toku arguing that it found — through an investigation — that Snipes downloaded company documents before his “heated departure.” Since then, Toku alleges that the two have used the information for their business and engaged in “a campaign of outright lies about Toku in the marketplace.”



A person familiar with the sector told me that Benjamin Snipes also applied for a demo at Magna back in September of last year, which would have been right before Snipes joined Liquifi. According to his LinkedIn, Liquifi officially onboarded Snipes in October 2024.&nbsp;



Snipes confirmed that to me. He added that the demo happened before he spoke with Liquifi, explaining that he was just consulting at the time.&nbsp;



According to court documents, Snipes was “terminated” from Liquifi in the wake of the lawsuit. Toku, he said, “hurt” his reputation, which has since made it difficult for him to find work.&nbsp;



Liquifi, meanwhile, says that Toku’s “claims are all sizzle and no steak.”



Instead, it says that it was once a takeover target for Toku, but the relationship soured after those talks fell through.



Now here’s the thing: The case, while filed back in December, is still in discovery (which is when both sides exchange relevant information ahead of a potential trial to prepare for arguments).&nbsp;



But Toku was handed a defeat on Friday when a judge denied its motion to grant a preliminary injunction, which would have essentially handcuffed Liquifi. However, the case is still ongoing.&nbsp;



“The court&#8217;s verdict speaks loudly: It rejected outright all of the relief sought by Toku against Liquifi at this preliminary injunction stage, validating and confirming what we have always known. Liquifi has always stood for fair competition and innovation over litigation,” Liquifi told me.&nbsp;



“For months, we remained silent out of respect for the legal process. The court has now seen through Toku&#8217;s storytelling and we are pleased to move forward and stay focused on our product, customers and partners.”



Meanwhile, Toku told me: &#8220;The allegations presented in this filing are disturbing and provide shocking documentary evidence of Liquifi and Deel’s behavior in this matter. It’s even more troubling that this information only scratches the surface as we are in early stages of litigation. We will continue to learn about what happened and how files stolen from Toku were used in a failed attempt to destroy our business.”



&#8220;The fact that LiquiFi and likely their partners at Deel are attempting to declare victory over a preliminary ruling that does not impact the material details of this case — where they stole 29,000 documents, which include customer data, personal information of our employees and customers, proprietary information, source code, and more — is absurd. The true nature of their unethical and appalling actions has still not been fully uncovered. We take the protection of our trade secrets and confidentiality very seriously and are committed to pursuing the appropriate steps to deliver justice as the process moves forward,” a Toku spokesperson told me.



Prior to the court decision on Friday, Toku — in its attempt to convince a judge to rule in its favor on the motion — filed a 74-page brief bringing another player into the mix. This is where Deel comes into play. Liquifi and Deel entered into a partnership last year, the court documents claimed.&nbsp;



&#8220;Liquifi is one of the vendor options for the small percentage of Deel’s customers that require token management, a service we do not offer. Working with a skilled vendor to provide complementary services to our product suite is not only standard industry practice, but good business sense,” a Deel spokesperson told me.&nbsp;



Deel and Toku are unlikely competitors: competing not on the crypto level, but as employer of record service providers (which is when a service provider acts as the legal employer for a company’s employees when they’re based in a different country and the company doesn’t have a legal entity).&nbsp;



Deel, according to the filings, sought to “crush” Toku. The <a href="https://www.wsj.com/tech/accused-tech-spy-says-rival-ceo-recruited-him-with-offer-to-be-like-james-bond-793483e1?mod=hp_featst_pos5">alleged spy</a>, Keith O’Brien, was also mentioned in the filing after reportedly applying to work at the firm four times.&nbsp;



“O’Brien’s quest for a Toku position halted approximately when he began his ‘spying’ at Rippling on behalf of Deel,” the filing said.&nbsp;



I asked Deel about O’Brien and its mention in the ongoing case, to which a spokesperson told me: “We cannot comment on another company&#8217;s litigation but understand that the court denied Toku’s request for a preliminary injunction last Friday.”



“Liquifi has many other partners. This is clearly an attempt to attach a months-old lawsuit to a completely unrelated news cycle. And it&#8217;s worth noting that Quinn Emmanuel, the law firm in this case, also represents a company in active litigation against Deel,” they added.



Liquifi, in its response document, didn’t dispute that Deel wanted to “crush” Toku, but noted in a footnote it didn’t mean that Liquifi would use confidential information to do so.&nbsp;



And, according to the filings, “the parties entered into a search-and-destroy Protocol that will wipe all Toku documents from Liquifi’s systems, meaning that there is no risk of Liquifi accessing any documents on a going-forward basis.​​”



As for how this case plays out, it’s early yet. But I’ll be monitoring it <a href="https://blockworks.co/newsletter/empire?utm_source=social">over on Empire</a>.&nbsp;



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crypto hiring

‘All sizzle and no steak’: 2 rival crypto firms duke it out in a court case

Jeff Albus

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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Loopscale Labs had one tough weekend.



Bad actors on Saturday <a href="https://x.com/LoopscaleLabs/status/1916183179469246626">exploited</a> Loopscale&#8217;s pricing functions to make loan collateral seem worth more than it really was, resulting in the theft of approximately $5.7 million in USDC and 1,200 SOL (or around 12% of the platform&#8217;s total assets.)



It’s obviously not ideal to suffer an exploit just <a href="https://blockworks.co/news/solana-defi-protocol-launches-efficiency">two weeks after launching</a>, but this isn’t your typical “DeFi protocol caught with its pants down” moment. On the contrary, many DeFi folks have rallied behind Loopscale&#8217;s response to the exploit, <a href="https://x.com/teethrichards/status/1916490751677972651">applauding</a> the team&#8217;s speed, professionalism and commitment to user recovery.&nbsp;



Loopscale USDC and SOL vault depositors do face losses, though early signs seem to point to a partial or even full recovery.&nbsp;



For those unfamiliar, Loopscale&#8217;s story ‘til now unfolds thusly.&nbsp;



Loopscale is a decentralized finance (DeFi) project that <a href="https://blockworks.co/news/solana-defi-protocol-launches-efficiency">automates</a> recursive leverage to make yield farming more efficient. Loopscale’s bread and butter is “looping” — repeatedly borrowing and redepositing assets to amp up yield and capital efficiency. They weren&#8217;t the first team to try to morph this premise into a mainstream financial primitive, but they have quickly become one of the most compelling. Honestly, it&#8217;s pretty neat work.



While the looping process has <a href="https://fortune.com/crypto/2023/05/25/looping-yields-risky-investment-strategy-automated-defi/">historically been dangerous</a>, Loopscale&#8217;s system offered automation, liquidation protection features, and a user experience that abstracted away many of those perceived risks. Loopscale&#8217;s vaults, known for their attractive yields and tokenized market integrations, became a favorite among farmers looking for structured, lower-friction leverage.&nbsp;



Founded by a small but technically-strong team, Loopscale built a reputation as one of the more serious players among Solana&#8217;s DeFi cohort.



At the core of Loopscale&#8217;s recent growth was its adoption of RateX&#8217;s Principal Token (PT) markets. Simply put, Principal Tokens are created by splitting a yield-bearing asset into two components — principal and yield — allowing users to trade, hedge, or lock in fixed returns more flexibly. In Loopscale&#8217;s case, PT tokens were used as collateral in the vaults on the assumption that their pricing would remain tightly aligned to predictable discounting curves.



But then, on April 26, that predictable curve broke.



According to Loopscale, a person with malicious intent <a href="https://x.com/marygooneratne/status/1916189553494315010">manipulated</a> how its vault system priced the RateX PT tokens, making the tokens seem worth more than they were. As a result, the attacker was able to take out a series of loans that were not fully backed by collateral, managing to withdraw $5.7 million USDC and 1,200 SOL from Loopscale&#8217;s vaults.



The vulnerability was not in RateX itself, as Loopscale has <a href="https://x.com/LoopscaleLabs/status/1916204152318738470">emphasized</a>. The issue was in how Loopscale&#8217;s contracts priced the RateX tokens.



RateX founder Sean Hu <a href="https://x.com/seanhu001/status/1916378332696056270">explained</a>, &#8220;Based on our investigation, the Loopscale incident has been confirmed as an oracle attack. The attacker manipulated the oracle price of collateral on Loopscale to borrow 5.8 million dollars, draining funds from the lending pool. RateX&#8217;s protocol itself has no security issues, and no RateX users suffered losses in this incident.&#8221;



RateX also confirmed it is assisting Loopscale in tracking the hacker and recovering funds.



As soon as Loopscale detected the exploit, it <a href="https://x.com/LoopscaleLabs/status/1916190858463805611">halted</a> all market functions to prevent further damage — disabling new loops, deposits and withdrawals across the platform while working to triage the situation.



In the immediate aftermath, <a href="https://x.com/LoopscaleLabs/status/1916230435291713786">Loopscale&#8217;s handling of the crisis</a> drew frank praise. The team issued a clear initial disclosure, <a href="https://x.com/LoopscaleLabs/status/1916460306219348002">re-enabled critical functions</a> like loan repayments and loop closing by the following day (big for protecting borrowers from unforeseen liquidations), and began coordinating with law enforcement and security professionals.



Then, on April 28, Loopscale announced it had successfully <a href="https://x.com/LoopscaleLabs/status/1916460302704509372">established contact</a> with the attacker. The exploiter had responded to <a href="https://etherscan.io/tx/0x6dcbf6de26631d18eed84410e06741a1940e7f1fc7b7660bf82796d4d133d646">an onchain message</a> proposing a white hat resolution, agreeing (tentatively) to return a portion of the stolen funds in exchange for a bounty.



While Loopscale initially offered a 10% reward, <a href="https://etherscan.io/tx/0x98b6a312a4ab4b1d6c397d64b5e33dba1cc0d3cad3b89fb5d7fa28c28383115c">the exploiter countered</a> with a 20% ask, citing frozen assets on crosschain bridges and offering to immediately return part of the stolen funds to prove good faith.



At the time of publication, negotiations remain ongoing. However, the initial signals are positive. A partial return appears to have already occurred, and Loopscale is preparing a detailed post-mortem and structured plan for resuming vault withdrawals. The team has also promised users a clear roadmap for what recovery will look like.



Updated on April 29, 2025 at 2:24 pm ET: Modified to reflect there were no early RateX contributors on the Loopscale team.



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hacks

Loopscale loses $5.8M in oracle attack

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



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After closing out last week in the green, stocks were back on the decline Monday as investors waited for more signs from the White House that trade deals are in the works.&nbsp;



The forces that moved equities last week were 1) Trump’s confirmation that he <a href="https://blockworks.co/news/us-stocks-retreat-trump-china-trade-deal-uncertain">would not</a> look to fire Fed Chair Powell and 2) Treasury Secretary Scott Bessent’s comments on the <a href="https://blockworks.co/news/global-trade-us-china-deal?utm_source=mail.blockworks.com&amp;utm_medium=newsletter&amp;utm_campaign=fed-independence-may-be-the-next-major-loser">“unsustainable” situation</a> with China. So far today, we just haven’t seen similar optimism.&nbsp;



Bessent, during a CNBC appearance this morning, put the ball in China’s court.&nbsp;&nbsp;



&#8220;I believe it&#8217;s up to China to de-escalate, because they sell 5x more to us than we sell to them,&#8221; he said. &#8220;These 125% and 145% tariffs are unsustainable.&#8221;



Unfortunately, I wouldn’t hold my breath. And I imagine traders feel the same way, given the S&amp;P 500 and Nasdaq Composite indexes lost as much as 1.4% and 1.7%, respectively, intraday Monday.&nbsp;



By 2 pm ET, both indexes had pared some losses but were still well below Friday’s close. The S&amp;P 500 was trading down 0.5% at that time while the Nasdaq Composite had lost 0.8%.&nbsp;



Another big focus this week will be earnings. Four of the Magnificent 7 companies will report this week: Microsoft and Meta on Wednesday, followed by Apple and Amazon on Thursday. In terms of tariff impact on these names, Apple’s reliance on its Chinese supply chain is the most concerning. 



<a href="https://blockworks.co/news/us-equities-china-tariffs-apple-effect-cost">I wrote about this</a> a couple weeks ago, but I think it still applies, so I’ll say it again: If tariffs hit Apple, Trump is going to have a very big problem. My reasoning is that Apple is the largest company in the US, by market cap at least. If iPhones become 145% more expensive, it wouldn’t just anger the masses, it would hit Americans in their retirement accounts.&nbsp;



It took one week and a very <a href="https://blockworks.co/news/dollar-treasury-market-selloff-tariff-week">concerning state</a> of Treasury markets for Trump’s first pivot on his Liberation Day policies. Later, he issued what he said will be a “temporary” exemption for most of Apple’s products. Consider this my official bet that those exemptions will not be temporary.&nbsp;



All this to say, we will certainly be listening to Apple’s earnings call for any comments about its overseas operations. We’re also going to have an eye on the White House for any further tech tariff adjustments, especially should Apple shares take a big hit.&nbsp;



Alphabet reported last week, and execs said they were nervous about Trump ending the “de minimis” imports exemption that applies to goods valued at less than $800. The impact to the Google parent company here is ad spend. If retailers have to pay more to get their products, their marketing budgets shrink (so the logic goes).&nbsp;



Tesla, another Mag 7 that reported last week, also admitted that higher tariffs are bad. Still, investors were happy enough to hear that CEO Elon Musk will be reducing his role at DOGE to rally shares.&nbsp;



Keep an eye on your inbox as we follow this story. It’s sure to be a busy week.



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Apple

US equities dip as investors wait for trade deal updates, Mag 7 earnings

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



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Crypto investment products notched net inflows of $3.4 billion from April 21-25, a CoinShares report highlighted — the largest influx since December and the third-biggest weekly haul ever.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeB4OLtuoZb_KkFlXdSMqCEPSYh9KfmDEWjOIYADeI3fc05criTZUzvlGztiVTo1EbDXJORkK7V1ZkhM9U6zZd8Fli0zkaMwPB0ZkhGvx9iBlipw_3eNZxnRg9jjC2vQS7EHZUocg?key=w_iUrTeVTVGuPWKu9jA-Jnf-" alt=""/></figure>



Nearly $3.1 billion went into US spot bitcoin ETFs, according to Farside Investors <a href="https://farside.co.uk/btc/">data</a>. Their Ethereum counterparts got some love too, as the $183 million of net inflows broke an eight-week outflow streak.&nbsp;



“We believe concerns over the tariff impact on corporate earnings and the dramatic weakening of the US dollar are the reasons investors have turned towards digital assets, which are being seen as an emerging safe haven,” CoinShares’ James Butterfill noted.



The key word is “emerging,” as bitcoin more recently <a href="https://blockworks.co/news/can-btc-sustain-up-only-mode">decoupled from tech stocks</a> (at least temporarily). BTC was trading around $94,130 at 2 pm ET — up 10.5% from a week ago.



It’s difficult to sort out which type of investors these inflows are coming from.



Bloomberg Intelligence’s Eric Balchunas noted the speed at which the bitcoin ETF inflows picked up in an X <a href="https://x.com/EricBalchunas/status/1915375943851311576">post</a>, adding: “Prob some is basis trade back in effect, that&#8217;s the fast money that tends to come in and out [with] price.”



He’s referring to hedge funds seeking to profit from the “basis spread” — the difference between BTC’s futures and spot prices. We do know from Q1 13F filings that hedge funds represent ~37% of the spot bitcoin ETP assets under management (AUM) that is held by professional investors.   



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdffQqiLJh5qKZl2P9MVUpdck4vEIC2oeQnXucabxeHRp_zUk-VJxlpVEJkqKDRQYfbXxHDxHJaKFfRzVvxaNXr4e6irwQOwAIA79YajC8YiFvw9rNtknvPZfrNTYyW59e9SxdxVQ?key=w_iUrTeVTVGuPWKu9jA-Jnf-" alt=""/></figure>



Outside this pro investor cohort that discloses BTC holdings in filings, however, are individual investors and smaller financial advisors that also represent “a significant portion” of the investment activity we’re seeing, Bitwise research head Ryan Rasmussen told me.



“Given that, I&#8217;d assume the flows this week were primarily driven by long-term investors and a less meaningful portion was driven by hedge funds deploying the basis trade,” he added.



And separately (but ETF-related), two quick clarifications as some XRP product headlines might be misleading readers: 



First, the proposed XRP funds by ProShares are futures-based offerings, not spot. Also, a ProShares spokesperson <a href="https://x.com/strack_ben/status/1916862175425056988">told me</a> that while some have reported those going live on Wednesday, the firm has no plans to launch them then. Keep in mind, too, that CME Group isn’t set to introduce XRP futures contracts until May 19.  



You know we’ll offer any important crypto ETF updates to you when we have them.



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CoinShares

‘Basis trade’ or HODLers: What’s behind the crypto ETF inflow spike?

This is a segment from the 0xResearch newsletter. To read full editions, <a href="https://blockworks.co/newsletter/0xresearch" target="_blank" rel="noreferrer noopener">subscribe</a>.



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Ethereum core developers have reached a pivotal decision on the future of the Ethereum Virtual Machine (EVM): the EVM Object Format (EOF) will be removed from the upcoming Fusaka fork.



After years of work, EOF faced a new <a href="https://blockworks-research.beehiiv.com/p/will-appchains-work-this-time">round of attacks</a> ahead of the Fusaka scoping deadline. A final decision was deferred to today’s <a href="https://x.com/i/broadcasts/1nAKEgkDVveJL">Interop Testing call</a>, with broad implications for scalability and developer experience. Developers will continue work on Fusaka focused on PeerDAS and other scaling improvements, but the future of EOF is <a href="https://blockworks.co/news/ethereum-developers-consider-evm-upgrade">once again</a> uncertain.



It was the first time the Interop Testing call attracted over 100 participants, project coordinator Tim Beiko said, thus laying out the stakes. “When we ship something, we cannot revert that, and so we should have a really, really high bar to doing that,” Beiko reminded the group at the start of the call. Despite strong technical support for EOF in certain quarters, the lack of consensus ultimately meant it could not be bundled into Fusaka.



EOF is an upgrade to the <a href="https://blockworks.co/tag/evm">EVM</a> that aims to clean up longstanding technical debt. It would let developers give new contracts a clear, verifiable layout, remove unpredictable code execution paths, and reduce the risk of bugs and security vulnerabilities by making contract behavior easier to analyze and validate.



Geth developer Marius van der Wijden, initially an EOF skeptic, reviewed the evolution of his own thinking in <a href="https://x.com/vdWijden/status/1916379587317043207">an X thread</a>.



&#8220;Someone said &#8216;if we were to design the EVM from scratch, it would probably look like [EOF]&#8217; and that swayed me to work on it,” van der Wijden wrote.&nbsp;



Proponents argue it would make contracts easier to eventually migrate to new architectures like RISC-V. &#8220;Without EOF, it’s much harder to ever get there cleanly,&#8221; Danno Ferrin, one of EOF’s primary advocates, <a href="https://x.com/shemnon/status/1915798023722119195">wrote</a> ahead of the Interop call.



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



Opposition grew louder in recent weeks, particularly among application devs and members of the Vyper compiler team.



On Monday’s call, Charles Cooper, a core contributor to Vyper, reiterated his view that it shouldn’t even be called an “upgrade.”



“If you&#8217;re going to break backwards compatibility, you shouldn&#8217;t say that it&#8217;s an improvement to the EVM,” Cooper said on the call. “It&#8217;s just like a new VM, and it should be sold to users that way, instead of telling them that it&#8217;s an improvement to the EVM, but it breaks all applications.”



Michael Egorov, whose <a href="https://blockworks.co/tag/curve">Curve protocol</a> uses Vyper, has similarly questioned the premises behind EOF. “It really looks like the Solidity compiler trying to solve technical debt by doing something on the EVM level,&#8221; Egorov told Blockworks. He warned that the added complexity could waste valuable resources and potentially slow scalability, as EOFs’ benefits could be addressed through compiler improvements alone.



Tensions also surfaced over the compatibility of major Solidity libraries, like OpenZeppelin and Uniswap. Research from the Ipsilon team <a href="https://x.com/teamipsilon/status/1916495476439818696">confirmed</a> many libraries would require adjustments to compile under EOF. While backward compatibility remains possible, adoption could be uneven.



Ferrin presented a quick review of the top four Ethereum contracts. He showed that EOF would require only minimal changes, if developers opted for “<a href="https://notes.ethereum.org/@ipsilon/eof-option-d-summary">Option D</a>,” a less contentious version that restores code and gas introspection while keeping the core structure improvements.&nbsp;



“If we remove EIP-7069 [the gas introspection ban], most of the problems above here are no longer problems,” Ferrin explained. This compromise would have delayed Fusaka’s Devnet 2 plan by just a couple of weeks, he said. However, it was ultimately not enough to secure consensus for inclusion.



Others on the call noted that as part of any transition, many contracts would likely require fresh audits to ensure full security when revised under the new format. That costs money and time.



Community voices had offered sharply different takes in recent days. Elias Tazartes <a href="https://x.com/ETazou/status/1916756677258354840">pushed back</a> on fears that layer-2 solutions would struggle with EOF adoption. &#8220;The promise of L2s was L1 equivalence, and early benchmarks show EVM with EOF to be easier to prove than without,&#8221; he said. In his view, EOF could even enhance rollup efficiency.



The Solidity team <a href="https://x.com/solidity_lang/status/1916847039784120734">weighed in</a> forcefully ahead of the meeting, defending EOF against common criticisms. They pointed out that EOF has been under active development for over four years, and delaying it further would not significantly improve its &#8220;readiness.&#8221;



Responding to concerns about potential disruption, they emphasized that legacy contracts will continue working, and that users can adopt EOF gradually.



&#8220;EOF is not taking time away from scaling,&#8221; they argued, highlighting that most client work is already complete and that dropping EOF now would squander past investments. Regarding the larger execution layer roadmap criticism, they emphasized that <a href="https://blockworks.co/news/vitalik-ethereum-evm-scaling-l1-plan">migration to RISC-V</a> in the future would not make EOF obsolete — instead, it would make such a transition smoother.



<h2 class="wp-block-heading">The “Nays” have it</h2>



Ethereum core development operates by rough consensus, and the bottom line is, when it comes to EOF, consensus is lacking. As van der Wijden noted:



“We don&#8217;t agree, and we&#8217;re not coming to an agreement about EOF anymore, and so it has to go out,” he said. “I&#8217;m still torn, and I think a lot of people on this call are torn between the two options —&nbsp;and they don&#8217;t really know what the right decision would be — [but] in the past, in these cases, we always defaulted to not changing something, because that&#8217;s the safe option.”



Beneath the technical debate runs a deeper philosophical tension about priorities. Developers debated whether Ethereum’s governance model — modeled after <a href="https://www.ietf.org/about/participate/tao/">the IETF’s</a> (Internet Engineering Task Force) — had failed to catch key issues early enough.



Ethereum&#8217;s governance intentionally differs from, for instance, W3C’s &#8220;priority of constituencies,&#8221; where users are ranked above developers. Even if developer experience sometimes takes precedence in Ethereum governance, it strives for pragmatic decisions.



That’s because core devs are not the ultimate arbiters; each Ethereum node operator ultimately decides what code to run, or not run.



As van der Wijden observed, &#8220;There is a bit of pain with throwing good code away, but that shouldn&#8217;t influence our decision about what’s best for Ethereum.&#8221;



Justin Florentine from the Besu client team was passionate about holding off on a final decision.



&#8220;The idea that we would do an about-face, after a pretty hard-fought decision was reached to go with option A <a href="https://blockworks.co/news/ethereum-full-eof-despite-dev-friction">about a month ago</a>, I find a little shocking,” Florentine said. “I don&#8217;t know that a vocal minority should be listened to.”



He argued the recent objections of app developers should be taken with a grain of salt. “We are stewards of the protocol and have to be responsible for the tech debt that we are accruing and paying it off,” Florentine said. “We need to stop thinking like product developers and more like platform stewards.”



Beiko acknowledged these governance challenges during the call, in calling for EOF to be reconsidered.&nbsp;



&#8220;The cost of shipping the wrong thing is much higher than the cost of delaying,&#8221; he said. “If we do want to overhaul the EVM in such a way, the thing we should do is to do this in conjunction with smart contract developers and the tooling community more broadly.”



Ultimately, while core dev teams like Geth, Nethermind, Erigon, and Besu expressed varying degrees of support for including a scaled-back EOF (while the Reth team was opposed), the lack of overwhelming consensus on a precise way forward was insurmountable.



Beiko suggested that if EOF is to be revived, it would need to go through a fresh planning process for the subsequent hard fork, code named Glamsterdam.



“I think the rest of the community should expect that EOF developers may not be so enthusiastic to keep working on this if it gets removed and as it has been in the past,” Beiko said, concluding that it was nevertheless a necessary risk to take.



So Fusaka will move ahead without EOF, with a narrowed focus on PeerDAS and critical scalability improvements. Ethereum’s future EVM upgrades remain undecided, but the process questions raised today are likely to shape development for years to come.



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Ethereum consensus shifts on EVM upgrade

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



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Sky Mavis has accused one of the games using its Ronin chain of “secretly” making a deal with another blockchain in violation of a preexisting agreement.



The game in question, a mobile fantasy title dubbed Ragnarok: Monster World (RMW), uses both the Ronin and Cross protocols.



Sky Mavis co-founder Aleksander Larsen accused RMW of being unable to keep up with increased competition since the Ronin blockchain became permissionless in February. Being a permissionless chain means game developers no longer need Sky Mavis’ approval to build on Ronin.



“The team behind the game ignored our advice and has since lost favor with the community. To make matters worse, they secretly signed a deal with a separate blockchain, breaching our agreement,” Larsen wrote in a <a href="https://x.com/Psycheout86/status/1916382602329555274">post</a> on Saturday.&nbsp;



“Naturally, this comes as a surprise, given the support we’ve extended to them. The trust has been broken to such a degree that we are ending our professional relationship with 0x&amp;, the team behind Ragnarok Monster World,” Larsen continued.



The Sky Mavis co-founder initially said that the game’s assets would be removed from Sky Mavis products, like Ronin Market, entirely. In a subsequent post, however, Larsen said the assets will remain on the Ronin marketplace but would lose their checkmark there — indicating a lack of endorsement from Sky Mavis.



“This will be our last statement on this matter,” Larsen <a href="https://x.com/Psycheout86/status/1916496438067864037">said</a>.



RMW’s Genesis Land Launchpad and Presale are still prominently featured on the Ronin Market’s homepage as of Monday morning (and its Landverse <a href="https://marketplace.roninchain.com/games/landverse-genesis">collection</a> still has a gold check).&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXde9sGJxJj-G1FwG--axzkBygSA5Ocoyh28ZBi0sG080C60aFZyinjy7ZPX-2bm4JlGPu6j1KbeqAxzzX_-u_I6wVnA3I3wvPxgSomYhcKS9elQ2L2vdWj7nBS-4PU1_pTqtnBE?key=0Gowzhxb6uEgRzFWn-nQ5Z2F" alt=""/></figure>



RMW denied that any “secret agreement” was made and contended that it upheld all “contractual obligations” with Sky Mavis.



“It is unfair to frame this situation as a ‘loss of trust’ based solely on unilateral interpretations,” RMW <a href="https://x.com/RagmonNFT/status/1916399222720762045">argued</a>.



Others have suggested that RMW’s decision was a play to remedy dwindling funds. Blockchain foundations, DAOs or leading labs typically offer substantial grants to game developers to integrate their chains — and RMW may have chosen to go “multichain” to get more funding.



“We&#8217;re going to see this even more,” Moku co-founder Hantao Yuan <a href="https://x.com/Hantao/status/1916519880221942177">predicted</a> in a post about the issue. “Them moving to another ecosystem for a grant just means they have survived for now.”



Blockworks has reached out to 0x&amp; for comment.



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blockchain

Sky Mavis co-founder accuses Ronin game of making secret deal

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



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There is so much more to Bitcoin than Satoshi. Let’s celebrate!



Today is Satoshi Disappear Day, as <a href="https://bitcointalk.org/index.php?topic=6730.20">declared</a> by early contributor Kiba on this day in 2011.&nbsp;



“Since satoshi has been confirmed to be not coming back, the bitcoin community now [has] to fend for ourselves,” Kiba wrote.



“I propose we make a bitcoin holiday in honor of our legendary anonymous founder and to observe the fact that the bitcoin community will be just fine after the inventor of bitcoin left. Even if Gavin is hit by the bus tomorrow, we can live.”



Gavin Andresen had <a href="http://gavinandresen.ninja/eleven-years-ago-today">disclosed</a> his impending meeting with the CIA, both privately with Satoshi and publicly on the Bitcointalk forum, only days earlier.



<h2 class="wp-block-heading">On This Day — Satoshi Disappear Day</h2>



What Kiba said turned out to be true. Since Satoshi left, other contributors have worked together to release 73 new versions of the software on bitcoin’s way to becoming a multi-trillion dollar asset.



In that time, developers have pushed upgrades big and small while mitigating bugs and potential <a href="https://www.coindesk.com/markets/2018/09/21/the-latest-bitcoin-bug-was-so-bad-developers-kept-its-full-details-a-secret">disasters</a>. Bitcoin’s creator was otherwise only around for a half dozen or so, even if they conceived and built the original version all by themselves.



We also can’t exactly draw a direct line between Gavin’s CIA visit and Satoshi’s disappearance. A few days before Gavin announced he was to meet with the CIA, Satoshi in an email had already mentioned to another early developer, Mike Hearn, that he had “<a href="https://blockworks.co/news/satoshi-correspondence-bitcoin-emails-research">moved on to other things</a>.”&nbsp;



But considering Satoshi apparently never replied to Gavin’s email, at the very least we can assume it helped confirm their decision to never return.



Meanwhile, Bitcoin was attracting mainstream media attention, with Andy Greenberg’s <a href="https://www.forbes.com/forbes/2011/0509/technology-psilocybin-bitcoins-gavin-andresen-crypto-currency.html">article</a> in Forbes, “Crypto Currency,” running in the week leading up to the inaugural Satoshi Disappear Day.&nbsp;



The article is a progenitor of the “super shadowy coder” trope that has plagued political crypto discourse ever since. It mistakenly describes Bitcoin developers as Gavin’s “underground cadre of cypherpunks” working on anonymous money used to buy illegal drugs outside of government oversight — an image against which Satoshi wanted to push back.



“I wish you wouldn’t keep talking about me as a mysterious shadowy figure, the press just turns that into a pirate currency angle,” Satoshi told Gavin. “Maybe instead make it about the open source project and give more credit to your dev contributors; it helps motivate them.”



Gavin wasn’t happy with the “wacky pirate money” theme either, and agreed that more credit for other contributors was a great idea.



“On a completely different subject: I did something that I hope turns out to be smart, but might be stupid,” Gavin said. He’d been contacted by In-Q-Tel, a venture capital firm established by the CIA that discovers and invests in cutting-edge technologies that would benefit US agencies.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfuaeYzJ_C1A_8cbtETJxHXeAlKf0Yi5XmqVgU0oAAdYxdMRSec76gBdqG7sd73mnZMRrSTHDcMUIAOz7gPSKoEDEF15cDc24IzvwJw-mkbLm8h-KT1P1lMaTa60tnVA8QlZw37AA?key=osbK7nHTSU9FadKSXHA6lcD4" alt=""/><figcaption class="wp-element-caption">Gavin’s visit with the CIA was a recurring topic of interest in Bitcoin IRC <a href="https://buildingbitcoin.org/bitcoin-dev/log-2011-06-13.html">channels</a>.</figcaption></figure>



In-Q-Tel had invited Gavin to its annual conference on emerging technologies, with the theme of that year being “Mobility of Money.”



“They asked if I’d be willing to talk about Bitcoin, and I committed to giving a 50-minute presentation and participating in a panel discussion,” Gavin wrote in his <a href="http://gavinandresen.ninja/eleven-years-ago-today">email</a>.&nbsp;



“I hope that by talking directly to ‘them’ and, more importantly, listening to their questions/concerns, they will think of Bitcoin the way I do — as a just-plain-better, more efficient, less-subject-to-political-whims money. Not as an all-powerful black-market tool that will be used by anarchists to overthrow The System.”



Gavin found himself between a rock and a hard place. “It might be really stupid if it just raises Bitcoin’s visibility on [the CIA’s] radar, but I think it is way too late for that; Bitcoin is already on their radar,” he told Satoshi.



He was also transparent about the trip. Gavin shared his presentation on BitcoinTalk shortly after (the full version is still available via <a href="https://web.archive.org/web/20160303090048/https://s3.amazonaws.com/gavinandresen-bitcoin/GavinAndresenCIATalk.pdf">archive</a>) and quickly appeared on Bruce Wagner’s The Bitcoin Show to discuss the meeting.



“After thinking pretty hard about it, I decided I would do it because it&#8217;s an open-source project. I figured, you know, going to the CIA and talking very openly about what Bitcoin is and what it can do wouldn&#8217;t hurt the project. It&#8217;s not a secret,” Gavin said on the <a href="https://www.youtube.com/watch?v=1xcMFKfX9ZU">podcast</a>.



The conference itself was a three-day event with the first day unclassified, which meant Gavin could discuss it, while the other two were classified. Gavin said there were people from PayPal and Facebook in attendance, as well as economists from the Federal Reserve.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdsy4Pal5ThIe59pLO34GQzTv1k4JRwr8MrWua3FMHkVvBcpLaLi0tEbfddLDkEEWHQgGE1IEZZfmS4tkvtfTwExZSAlCyFPOvoH6DeZZ3JfKJ_C4-_aq0q0cerdJQnEDU0KMfj?key=osbK7nHTSU9FadKSXHA6lcD4" alt=""/><figcaption class="wp-element-caption">Gavin’s presentation offered a tutorial on how Bitcoin works, alongside a rundown on the state of the ecosystem as it was in June 2011.</figcaption></figure>



As for why the CIA might be interested in Bitcoin, Gavin could only speculate, like the rest of us.



“I mean, obviously, you know, paying people covertly is part of what the CIA does, and so a payment system that they could use to [pay] somebody covertly is very interesting to them,” Gavin said.



For those after more intrigue, this might help: Gavin sold bitcoin to a CIA agent at the conference. “I had a couple of people come up to me afterwards and say they thought bitcoin is really cool. One interesting interaction: I actually sold a bitcoin while I was there to one of the CIA people.”



“I had showed <a href="https://en.bitcoin.it/wiki/Bitbills">Bitbills</a> — I had a couple of Bitbills in my wallet as an example of a physical bitcoin that you can hold. He said it was very cool and wanted to buy one from me so he could show his boss.” Bitcoin traded at around $15 at the time.



So, there you have it. If the CIA “lab leak” <a href="https://x.com/nic__carter/status/1704922555189182784">theory</a> about Satoshi holds any weight (a big “if”), then it took only two and a half years for one of its own to return to headquarters with an actual bitcoin (it’s now worth almost 6,500x more).



Happy Satoshi Disappear Day!



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Satoshi Disappear Day: CIA agent bought bitcoin from former lead developer

Why DePINs need an industry-specific layer-1 blockchain

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>.



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This morning’s Empire podcast was all things BlackRock.&nbsp;



Empire co-host Jason Yanowitz <a href="https://blockworks.co/podcast/empire/2e961ca8-21f4-11f0-9cd1-c355842eeb4c">chatted</a> with BlackRock’s Samara Cohen. There’s a lot of insight to be gleaned from Cohen, who’s a powerhouse in her own right, and she certainly delivered.&nbsp;



It’s no secret at this point that bitcoin’s not really acting the way some folks think it should — that is, being a safe haven like gold during market downturns. 



“This is an important moment to play out in terms of how Bitcoin&#8217;s price performance does show up. I mean, this environment of market volatility is really induced by cross-border tension, and supply chain complexity like this should be Bitcoin&#8217;s environment,” Cohen noted. 



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/61XGfxAgKUc?si=A1MD1MFppq3Qsbhg" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







Cohen added that, if anything, bitcoin’s just increased its correlation with equities.&nbsp;



And yet, BlackRock’s bitcoin ETP IBIT hasn’t seen the level of outflows one might expect. For Cohen, this shows that the price action was focused on retail and speculative positions held by institutions, since IBIT can’t be levered in the same way bitcoin can be.



She added: “ Bitcoin hasn&#8217;t had the volatility in the downtrade. It continues to have this kind of positive skewness to its volatility.”



But it’s not just bitcoin that Cohen or BlackRock are focused on. They’re also quite bullish on tokenization and how it can improve capital markets.&nbsp;



“We  are very much focused on the path to more tokenization in markets. We are very focused on the utility of bridges to investors,” she told Yanowitz.&nbsp;



My takeaway? BlackRock can’t stop, won’t stop its crypto journey. This is just the beginning.



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



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

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