Ethena USDe

Donovan Choy

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I wrote <a href="https://lightspeed-4bed7b.beehiiv.com/p/solana-in-6-charts">two weeks back</a> that SOL does not enjoy the same institutional buy pressure that BTC and ETH do from digital asset treasuries (DATs).



That state of affairs is changing.



The healthcare device company Sharps Technology (STSS) <a href="https://www.prnewswire.com/news-releases/sharps-technology-inc-announces-over-400-million-private-placement-seeking-to-establish-the-largest-solana-digital-asset-treasury-strategy-302537587.html">announced</a> on Sunday that it secured a $400 million private investment structured as a public equity transaction (PIPE) offering to establish a SOL treasury.



That makes Sharps Technology officially the largest Solana DAT to date by announced raise size.



Alice Zhang, co-founder of the <a href="https://blockworks.co/news/jambo-onchain-mobile-network">Jambo</a> Web3 phone, is Sharp’s newly appointed chief investment officer. Her co-founder James Zhang will serve as a strategic advisor.



Then, news broke yesterday that Pantera Capital is planning a $1.25 billion raise for a Solana DAT. It’ll be called “Solana Co.”, <a href="https://www.theinformation.com/articles/crypto-fund-pantera-seeks-raise-1-25-billion-solana-deal">per</a> The Information. The fundraising strategy comprises an initial $500 million equity raise, followed by $750 million in warrants.&nbsp;



Pantera is also an investor in Sharps Technology, and has <a href="https://panteracapital.com/blockchain-letter/dat-value-creation/">deployed</a> more than $300 million on DATs spanning across eight tokens: BTC, ETH, SOL, BNB, TON, HYPE, SUI and ENA.



Bloomberg <a href="https://www.bloomberg.com/news/articles/2025-08-25/galaxy-jump-multicoin-seek-1-billion-for-buying-solana-token?embedded-checkout=true">reported</a> yesterday that the trio of Galaxy Digital, Multicoin Capital and Jump Crypto are also planning to raise approximately $1 billion for a SOL DAT, with Cantor Fitzgerald LP serving as the lead banker for the transaction.



Put together, that’s $2.65 billion in total SOL, or 14,095,744 SOL at today’s price of $188.



Before you get too excited, note that this does not necessarily translate to equivalent spot demand for SOL on open markets. That all depends on how DATs are accumulating SOL.



Are DATs buying SOL off the market, are they purchasing locked SOL in-kind with equity, or are they buying it at a discount? The Sharps <a href="https://www.prnewswire.com/news-releases/sharps-technology-inc-announces-over-400-million-private-placement-seeking-to-establish-the-largest-solana-digital-asset-treasury-strategy-302537587.html">press release</a>, for instance, indicates an arrangement with the Solana Foundation to buy “$50 million of SOL at a 15% discount to a 30-day time-weighted average price.”



On the other hand, purchasing SOL in-kind effectively converts locked SOL holdings into tradable liquidity, and can even potentially contribute to future sell pressure when the resulting equity overhang is sold or redeemed.



The devil’s in the details.



Regardless, $2.65 billion in SOL is fairly significant; that’s about 4.1x more than the SOL holdings (3,431,861) of existing DATs like Upexi (UPXI), DeFi Development Corp (DFDV) and SOL Strategies (CYFRD).



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXceRXw0_phBcCpFYn7Y5zgJK3Dv724mYOPtsKoDbW_d8DLP_mEWVhl8HPLCk_dW-Jm6-xJlWokXRe4-6LcWqlZE35eJHvMkBIxeHp7GR00AcUXaq4cOWFGyTk7NE0CZUrjbAP7pbw?key=NhPrKRh6neYrBS2yjJD26A" alt=""/></figure>



“Solana dats are going to be monstrous and first principles tuned to what makes solana great,” Solana co-founder Raj Gokal <a href="https://x.com/rajgokal/status/1960158597490302998?s=19">tweeted</a>.



Contextualizing the news further, $2.65 billion in SOL is still relatively small compared to the $14.3 billion in ETH that has been stacked by ETH DATs.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdtNLEoDZtDVelTdIZjJnPg4cAViij3tiK4cXU1U70RSzqM9Q8hGhHBjDPcD0HVUJobGw9S6iGL8uuvf9aGDBlshUt69nqikLu24yufEEw4pXXf9VupM_UGMesq86htY7NZOZt5gA?key=NhPrKRh6neYrBS2yjJD26A" alt=""/></figure>



And even smaller compared to the accumulated $80 billion in BTC by BTC DATs:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe-nRbPBg0v6-K7EacRFdWhdNz4WHKuHolm7enKYUrGt1qh60sKR-0rwQZLULrvlokLz-G6RqMTxikTItkBXiyB4ukVsrOBR7JlivuqN4tj3gGG2LRL0sqI8yAe5CI3wYgdmGH76Q?key=NhPrKRh6neYrBS2yjJD26A" alt=""/></figure>



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Lightspeed Newsletter

SOL digital asset treasuries are coming in size

Macauley Peterson

Offchain Labs is making a zero-knowledge play for Arbitrum.&nbsp;



Its venture studio Tandem has entered a one-year exclusive partnership with Succinct to build a zkVM tailored to the <a href="https://blockworks.co/tag/arbitrum">Arbitrum</a> ecosystem.



The agreement, announced Tuesday, binds both companies to collaborate solely with each other on this effort. “For one year, Tandem by Offchain Labs has an exclusive commercial agreement with Succinct to create zkVM for Arbitrum chains,” an <a href="https://blockworks.co/tag/offchain-labs">Offchain Labs</a> spokesperson told Blockworks.&nbsp;



The team declined to comment on whether the partnership represents an all-cash deal, or includes token swaps. The Succinct Foundation, <a href="https://x.com/SuccinctFND/status/1952762687466975570">launched</a> its PROVE token earlier this month.



This partnership accelerates Offchain Labs&#8217; broader strategy around zero-knowledge proving. CEO Steven Goldfeder <a href="https://blockworks.co/news/zk-proofs-escape-velocity-eth">previously described</a> ZK technology as not yet competitive with optimistic proving “in terms of speed cost and maturity.”



But this is starting to change, Goldfeder said in an <a href="https://x.com/BanklessHQ/status/1960331536403759241">interview</a> with Bankless. “It&#8217;s not available quite yet, but particularly for those building on the Orbit stack, they should be aware that they will soon be able to choose to add ZK proofs to their chain.”



Succinct brings to the table its Rust‑based SP1 zkVM and the Succinct Prover Network — now live on mainnet — designed to make zero-knowledge proofs both accessible and performant for developers. Its technology already underpins dozens of deployments across the industry, including <a href="https://blockworks.co/tag/celestia">Celestia</a>, <a href="https://blockworks.co/news/uniswap-across-cross-chain-swaps">Across</a>, <a href="https://blockworks.co/tag/avail">Avail</a>, <a href="https://blockworks.co/news/eigenlayer-restaking-mantle-zksync">Mantle</a> and <a href="https://blockworks.co/tag/polygon">Polygon</a>.&nbsp;



“We’re convinced that every rollup will use ZK,” said Succinct CEO Uma Roy. “Serving Arbitrum chains is a top priority.”



Rather than converting Arbitrum One into a zk-rollup outright, the partnership is focused on giving the Arbitrum DAO — as well as Orbit chains — a credible ZK upgrade path. “We’re building the scaffolding,” Goldfeder said. “It’s up to deployers or the DAO to adopt it.”



Tandem’s Head, Ira Auerbach, emphasized how modular ZK proving can dramatically shrink settlement times — from days to minutes — enhancing capital efficiency, UX, and operational complexity.&nbsp;



“[Succinct’s] approach is directly aligned with our vision of how Arbitrum and the broader blockchain ecosystem can evolve,” Auerbach said.



This integration is only one piece of Offchain Labs’ modular stack push, having already signaled interest in hybrid proving models combining ZK fast paths with optimistic fallback as well as native ZK settlement.&nbsp;



Together with the <a href="https://blockworks.co/news/arbitrums-zerodev-bet">recent the ZeroDev acquisition</a>, the Succinct pact reflect Offchain Labs&#8217; expanding quest to unify developer tooling and cryptographic infrastructure across its stack. For Succinct, the deal grants direct access to the largest <a href="https://blockworks.co/tag/rollups">rollup</a> ecosystem on <a href="https://blockworks.co/tag/ethereum">Ethereum</a> and an opportunity to standardize its modular ZK infrastructure across Orbit chains.



Tandem previously backed infrastructure teams like Espresso Systems, Fhenix and Xai. The partnership focuses on both engineering and distribution: Succinct will lead development of high-performance proving infrastructure and a decentralized prover network, while Tandem provides ecosystem alignment, funding, and go-to-market support.



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Arbitrum

Succinct ties up with Tandem

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>.



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It’s certainly possible to be in crypto for the tech.&nbsp;



In fact, being in it for the tech — I mean, really in it for the tech; digital nation states on blockchain rails, smart cities, and the tokenization of all things — is the most effective path to alpha bull status.



John McAfee: big tech guy. Michael Saylor: huge on the tech. Same with Tim Draper, Marc Andreessen, Brian Armstrong and Balaji Srinivasan. And who’s been more bullish than them?



Fundstrat’s Tom Lee. That’s who.



<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">Mark ⁦<a href="https://twitter.com/MarkNewtonCMT?ref_src=twsrc%5Etfw">@MarkNewtonCMT</a>⁩ again at it. ➡️Calling ETH bottom to happen in next few hours ⁦<a href="https://twitter.com/fs_insight?ref_src=twsrc%5Etfw">@fs_insight</a>⁩ ⁦<a href="https://twitter.com/FundstratCap?ref_src=twsrc%5Etfw">@FundstratCap</a>⁩ Tickers: <a href="https://twitter.com/search?q=%24BMNR&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$BMNR</a> <a href="https://twitter.com/search?q=%24GRNY&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$GRNY</a> <a href="https://t.co/038efU7cZH">pic.twitter.com/038efU7cZH</a>&mdash; Thomas (Tom) Lee (not drummer) FSInsight.com (@fundstrat) <a href="https://twitter.com/fundstrat/status/1960147287491154132?ref_src=twsrc%5Etfw">August 26, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">Lee has, as of 9:08 p.m. yesterday, called the ETH bottom — to happen right about now.</figcaption></figure>



Lee has actually been bullish longer than almost anyone still active today.



As far as I can tell, his first public predictions for crypto came in mid-2017. Bitcoin’s price had more than doubled in the first six months of the year, to $2,500, leading Lee to call bitcoin’s future price on at least 10 different occasions in the 10 months ending May 2018.&nbsp;



His first prediction actually came true. “Cryptocurrencies are cannibalizing demand for gold,” Lee <a href="https://www.businessinsider.com/bitcoin-price-ethereum-cannibalizing-gold-2017-7">wrote</a> to Fundstrat clients eight years ago, in 2017, when bitcoin was at $2,607. &#8220;Bitcoin is arguably becoming a scarcer store of value. Investors need to identify strategies to leverage this potential rise in cryptocurrencies.&#8221;



Base case: bitcoin would reach $20,000 by 2022. Nearly 10x.&nbsp;



Bull case: $55,000 by 2022. A 22x in five years.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd7vSXENdtL86bYIniWmAwc11OjQBVCy7UqTTWf_b8-5h_ZGkjfm8QHAtdVrKs2xdZ8TUYaW_vMMxziQX3y8tnwCSFHczpA80kYvHo_u8za6_IbXOyerUJWCOtKnnxUHlPsvmcb?key=En_UORTZOH0v8ML2nnDsbg" alt=""/><figcaption class="wp-element-caption">This handy graphic of bitcoin scarcity was included in Lee’s note.</figcaption></figure>



Lee was exactly right. Bitcoin crossed $55,000 for the first time in February 2021, a little earlier than expected, and topped out nine months later beyond $69,000.



What makes things complicated is that Lee kept making predictions after that first banger.&nbsp;



Some were ultimately correct, but too low or too early; others didn’t eventuate in the way he envisioned (like the rally around CoinDesk’s Consensus 2018 conference that <a href="https://www.bloomberg.com/news/articles/2018-05-18/crypto-bull-tom-lee-owns-up-after-bitcoin-prediction-goes-awry">never came</a>, or that bitcoin never reached $25,000 in 2018, as <a href="https://cointelegraph.com/news/tom-lee-holds-to-25000-bitcoin-price-prediction-cites-three-supporting-factors">predicted</a> multiple times in the first half of the year).



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcT1NkrAQrhcpn7xR5W0gM7s8dUG0cwdMLst9FkWGUmg1aSl7Zxq4VqqDGHCXzcNaWXnxyxoFWvjYwDyDwLc-iImsWcaPdV8vTZ-G_23BivqOvL_uy4SaOmQ0Oio4w3QXSBwIQy?key=En_UORTZOH0v8ML2nnDsbg" alt="" style="width:642px;height:auto"/></figure>



Still, there were a few other gems. In January 2018, he <a href="https://www.bloomberg.com/news/articles/2018-01-18/bitcoin-bull-tom-lee-goes-hyperbolic-on-latest-price-forecast">said</a> that bitcoin could reach $125,000 by 2022 (which it did, only three years after the fact).



At the end of 2020, he <a href="https://x.com/CNBCFastMoney/status/1344407640873562119">foretold</a> bitcoin trading between $100,000 and $150,000 by the start of 2025, which, all things considered, wasn&#8217;t too far off.



But if the worst criticism of Lee’s calls are that they’re too early, then you’ll dig his most recent ones: $200,000 to $250,000 <a href="https://cointelegraph.com/news/bitcoin-price-prediction-250k-still-possible-fundstrat-tom-lee">possible</a> in 2025 (from three weeks ago) and more than $1 million in the next few years.&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">Absolutely unprecedented. Tom Lee has acquired almost $10 billion ETH over the past 50 days. Over 1.7m ETH. 1.4% of all ETH supply. If Tom gets to his 5% target and ETH goes above $12k Bitmine would be larger than Microstrategy. <a href="https://t.co/DpIZv55DBC">pic.twitter.com/DpIZv55DBC</a>&mdash; RYAN SΞAN ADAMS &#8211; rsa.eth 🦄 (@RyanSAdams) <a href="https://twitter.com/RyanSAdams/status/1960030779267760133?ref_src=twsrc%5Etfw">August 25, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Not bullish enough? You might recall that Lee recently made his first publicly-reported ETH prediction, apparently ever, only about a month after he was <a href="https://blockworks.co/news/eth-treasury-companies-growth">appointed</a> chairman of BitMine, which has its own Ethereum-focused treasury acquisition plan.&nbsp;



Lee’s call: Between $15,000 and $16,000 per ETH is possible by the end of the year, which would be a 3x from here.



So, maybe add on a few more years from that, just to be safe.



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Bitcoin

The worst and best part of Tom Lee’s predictions: they’re too early

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



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MetaMask, the self-custodial crypto wallet developed by Consensys, introduced a new “social login” feature that allows users to create, back up and restore wallets using Google or Apple accounts. The service is powered by Web3Auth, a third-party authentication provider. MetaMask said support for additional login options will follow.



The <a href="https://metamask.io/news/introducing-metamask-social-login">update</a> eliminates the need to manually manage a 12-word secret recovery phrase, long considered a major barrier for new users entering crypto. Instead, users can authenticate with a familiar login and password to access their assets across devices.



MetaMask emphasized that users can set up both methods, retaining the option of a recovery phrase alongside social login.



According to MetaMask, the feature is already <a href="https://x.com/MetaMask/status/1960355478833094794">available</a> on the browser extension (version 13.0.0 and above), with mobile support expected soon. MetaMask said the move aims to “remove friction for onboarding” and give users “a safer, simpler way to start their Web3 journey.”



Wallets linked to Google or Apple accounts automatically sync networks, tokens and accounts across devices, reducing friction for onboarding. Still, the system introduces trade-offs.



While social logins may feel easier, they create dependencies on third-party providers and raise new questions about privacy, security and centralization. If users lose access to their connected social accounts, wallet recovery could be difficult — though retaining a recovery phrase as backup mitigates the risk.



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Apple

MetaMask adds Google and Apple logins to streamline wallet setup

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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Bitwise Asset Management filed an S-1 registration statement with the US Securities and Exchange Commission on Aug. 26, 2025, seeking approval to launch the first US spot Chainlink (LINK) exchange-traded fund.



The fund is <a href="https://www.sec.gov/Archives/edgar/data/2082889/000121390025080461/ea0254517-s1_bitwise.htm">designed</a> to track the CME CF Chainlink–Dollar Reference Rate, a benchmark price for LINK, and would give investors regulated access to the token without requiring direct custody.



Coinbase Custody Trust Company is named as the proposed custodian for the ETF, according to the SEC filing.



The filing comes as asset managers expand beyond Bitcoin and Ethereum ETFs, which won approval in 2024 following years of legal disputes and regulatory hesitation. Bitwise has previously submitted applications for funds tied to Solana, NEAR Protocol, and other tokens, reflecting a broader push to bring alternative crypto assets into the ETF market.



According to Blockworks Research, Bitcoin ETFs have <a href="https://app.blockworksresearch.com/analytics/crypto-etfs">amassed</a> roughly $77.9 billion in cumulative flows, compared to about $23.2 billion for Ethereum ETFs and just $162 million for Solana ETFs. 



<figure class="wp-block-image size-full is-resized"><img loading="lazy" decoding="async" width="734" height="642" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-5.png" alt="" class="wp-image-106619" style="width:629px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-5.png?w=734 734w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-5.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-5.png?w=294 294w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-5.png?w=298 298w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-5.png?w=250 250w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image-5.png?w=80 80w" sizes="auto, (max-width: 734px) 100vw, 734px" /></figure>



The scale of these products has emboldened asset managers to expand into alternative tokens like Chainlink.



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Bitwise

Bitwise files for first Chainlink ETF with SEC

Carlos

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



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Hyperliquid&#8217;s spot volumes have seen a significant rise, particularly when compared to CEXs. Over the weekend, an unknown entity deposited and sold ~22.1k BTC to rotate into ~555k ETH, valued at over $2.4 billion. This surge in spot volumes positioned Hyperliquid as the second-highest exchange by BTC spot trading volume on Aug. 24, with a 12% market share, behind only Binance (38%). This is a substantial increase from Hyperliquid’s 30-day average daily market share of ~1%.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdsk-ZAc7HsJHIz0pRska_YD8_kAqICQPFfzrt6uCcVUx0ITaim5198QmbwzN7R6yux7Jcw4L7_QwrDHMMg4sOBdJ8mHDcGEVPnFPSXd2Go8ZKIJbwVMGKwUSXPnWkaAQElQj18NQ?key=jez8q95NO0rdPaI3OWQE3w" alt=""/></figure>



Stepping back, we can compare Hyperliquid&#8217;s monthly spot trading volumes against various CEXs (including all assets, not just BTC). We observe a consistent rise in Hyperliquid&#8217;s share of spot volumes year to date. This month, Hyperliquid accounted for 38% of Kraken&#8217;s spot volumes, 16% of Coinbase, 15% of OKX, 14% of Bybit, and 2.4% of Binance. Although all figures represent a significant rise from the beginning of the year, they also show that Hyperliquid still has a long way to go to flip some of the largest CEXs.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd7r0MBZfnxDz2VWXbc-c_nu1VPzA70bS92X2gho4a6CUsBPU_cJJ682VNOhqoQGQWOLXECy3IZtgcsASZDPcre0N4aRgox-WLJGC0xHrMrXHXlG4q0MwZZzmqIJNFn4p1mrG2WJw?key=jez8q95NO0rdPaI3OWQE3w" alt=""/></figure>



Regarding perpetual futures volumes, Hyperliquid has been growing significantly faster than its centralized counterparts. The chart below shows that the ratio between Hyperliquid&#8217;s perp volumes and that of the three largest CEXs has increased by more than 6x over the past year. Hyperliquid&#8217;s monthly perps volumes now represent almost 14% of Binance&#8217;s futures volumes, up from just 2.2% a year ago.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeZiT1Nv8S8UYoU8_qrbrTazNkavr7Swv46wKiHM97KurI3sFHvmc9zeeqbvESHTU4Q3fj7PeX5RL3wVjTq-S9NUMk6cg7TekS6IOOpCwDphZkCHNU1GaahPXjz9UqfEwX1CWddtA?key=jez8q95NO0rdPaI3OWQE3w" alt=""/></figure>



Growth in volumes is impressive. But what about revenue, especially as it compares to other chains? Hyperliquid (HyperCore + HyperEVM) has registered about $28 million in weekly revenue for two consecutive weeks, and $98 million in the past 30 days. These figures translate to an annualized revenue run rate of $1.2-$1.4 billion. Below, we see that Hyperliquid has been the top chain by weekly revenue in the last two weeks, achieving a new all-time high market share of 36%.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfS0M5yEQO62_WT60qckG5hoBoM1n9bJxYyz3zFaI3V8ZncYIyk_kAIDsE1epjilv6gPJ9SmnylYwqbhvAs_hSUstcFql-DOset2WGVmLD1LMMjNlBc-A9qsstPgsgPy-Xe2Ax5Ag?key=jez8q95NO0rdPaI3OWQE3w" alt=""/></figure>



The chart below shows that HYPE is the cheapest asset among the leading chains on a price-to-sales basis, with its P/S of 12 representing a 90% discount to the cohort. Even on an FDV/sales basis, HYPE is also the cheapest L1. While we can do mental gymnastics all day long about whether L1s merit a premium or not, or if they should be valued based on revenue or not, the fact remains that HYPE today looks more attractively priced than all other L1s, based purely on this metric.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcgHvLcDocsd9-sYVCCgDyEODO98Dbfv_t_QZUntUXTNBBbT476HFz7rxLXOTr7yJ12xSWKuJT0KWLB4NjUKnE3QPL0z5oFcYKgjHVc2-rjKxzGze4zaFMtMf6HCb2-mbf9ax7E4g?key=jez8q95NO0rdPaI3OWQE3w" alt=""/></figure>



Ask yourself, what happens if the so-called &#8220;L1 premiums&#8221; wear off? What happens when buying pressure from DATCOs subsides? Is it the case that HYPE is undervalued, or simply that other L1s have incredibly elevated valuations that are becoming increasingly harder to justify? We can&#8217;t know for sure, but these are certainly questions worth thinking about.



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0xResearch Newsletter

Either HYPE is still cheap or most L1s are overvalued

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.



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



Donald Trump Jr.’s venture capital firm, 1789 Capital, has made a significant investment &#8220;in the tens of millions of dollars&#8221; into Polymarket, according to initial reporting by Axios.



The investment <a href="https://www.axios.com/2025/08/26/trump-jr-vc-fund-polymarket">aligns</a> with both growing regulatory clarity and expectations that the market for event-based trading may legally reopen to US users. Trump Jr., who joined 1789 Capital as a partner in late 2024, is also set to join Polymarket’s advisory board — even while maintaining a strategic advising role at its rival, Kalshi.



Trump Jr. is not an investment committee member at 1789 Capital, limiting his direct role in allocation decisions.



Polymarket, founded in 2020 by Shayne Coplan, is a cryptocurrency-based prediction market platform that allows users to trade on outcomes of real-world events using USDC on the Polygon blockchain. The company barred US users in 2022 following enforcement actions and a settlement with the Commodity Futures Trading Commission (CFTC).



The July 2025 closure of the Department of Justice (DOJ) and CFTC investigations into Polymarket without new charges cleared a major hurdle for its US return. Soon after, the firm acquired QCEX, a CFTC-licensed derivatives exchange, for $112 million. The acquisition, Polymarket <a href="https://www.prnewswire.com/news-releases/polymarket-receives-strategic-investment-from-1789-capital-and-welcomes-donald-trump-jr-to-advisory-board-302538997.html">said</a> in a separate statement, paves the way for a regulated re-entry into the US market.



In announcing the deal, Coplan said 1789 Capital’s stake would help reinforce Polymarket’s position as a “trusted source of free, transparent and accurate market information.” Trump Jr. added that prediction markets “cut through media spin and so-called ‘expert’ opinion” by letting people bet on their actual expectations of world events. Omeed Malik, 1789 Capital’s founder, described Polymarket as standing “at the intersection of free expression and financial innovation.”



Alongside the investment, Polymarket highlighted a recent partnership with X (formerly Twitter) as its official prediction market partner, as well as significant platform growth. The company said users made roughly $6 billion in predictions during the first half of 2025 alone.



Trump Jr.’s position on both Polymarket and Kalshi further underscores his growing influence in the prediction‑market space, especially as pro sports leagues such as the NFL have <a href="https://www.axios.com/2025/08/25/nfl-sports-betting-prediction-markets">raised</a> concerns about the implications of betting platforms.



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Donald Trump

Donald Trump Jr.’s 1789 Capital invests millions in Polymarket

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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Trump Media &amp; Technology Group (TMTG) announced on August 26, 2025, that it entered into a strategic partnership with Crypto.com through parallel cooperation and purchase agreements.



As part of the deal, Trump Media will <a href="https://www.globenewswire.com/news-release/2025/08/26/3139282/0/en/Trump-Media-Crypto-com-Announce-Strategic-Partnership.html">adopt</a> Crypto.com’s wallet system to power an updated in-app rewards program. Users will be able to exchange earned “gems” for Cronos (CRO), the token tied to Crypto.com, and apply CRO balances toward subscription fees. Opening a Crypto.com account will also grant access to free or discounted Truth+ subscriptions.



The transaction also includes cross-holdings between the companies.



Trump Media purchased approximately $105 million in CRO, equivalent to about 685 million tokens, which it will custody and stake through Crypto.com. In return, Crypto.com invested $50 million in Trump Media common stock. Both positions are subject to lock-up periods.



A new entity, Trump Media Group CRO Strategy, Inc., will also be formed to manage token treasury operations and pursue a planned business combination with Yorkville Acquisition Corp., a special-purpose acquisition company.



The partnership follows Trump Media’s recent ETF filings with the Securities and Exchange Commission that named Crypto.com as custodian, including for a proposed Truth Social Bitcoin ETF. Some analysts have noted that the company’s overlapping business arrangements could draw scrutiny over potential conflicts of interest.



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Crypto.com

Trump Media and Crypto.com sign $155M strategic deal

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">
“If you want to know the real secret of Walt’s success, it’s that he never tried to make money.”



— Ward Kimball, Disney animator
</blockquote>



Andrew Keys is an Ethereum OG whose credentials include attending the first-ever Ethereum meetup in 2014 and making ETH worth more than a dollar.



“The first time Ethereum crossed $1 was because I put a permissioned version of the Java client of Ethereum on top of Azure,” he said on the <a href="https://youtu.be/KHGEZf0TnzY?si=gAPhDSRdZcyTTx6u&amp;t=3326">Empire</a> podcast, “and we put out a 100-word press release in the Wall Street Journal with Paul Vigna creating a concept of blockchain-as-a-service.”



Reading Vigna’s <a href="https://www.wsj.com/articles/BL-MBB-42980">write-up</a> from 2015 is a reminder of how little has changed in the 10 years since.



The narrative justifying $1 ETH was that Microsoft’s Azure would use Ethereum to “improve operations from accounting to logistics to cross-border payments and settlement.”



It never really happened, but we’re now racing toward $5,000 ETH largely on the same idea that Ethereum will be the corporate blockchain of choice.&nbsp;&nbsp;



This remains speculative.



Ethereum generated $1.4 million of REV yesterday — more than it did in 2015, of course, but not a lot relative to its $4,400 token price and $531 billion market capitalization.



Keys, however, thinks that valuation is low because Ethereum is underpricing its services.



“At the expense of near-term profitability, the Ethereum Foundation decided to make L1 blob space dirt cheap,” he explained. “I think in time, the Ethereum community is going to say, ‘Well, this is too cheap,’ and you can raise that pricing.”



Consider this the Uber theory of Ethereum’s value: “Once Uber became ubiquitous, they tripled prices,” Keys notes.



He expects Ethereum to do the same: “As blockspace becomes more competitive, you can raise prices.”



Uber is an extreme example of a standard playbook for profit-maximizing corporations, so I see why he cites it.&nbsp;



But layer-one blockchains are not corporations — and I’m not sure they’re meant to be profit-maximizing.



Instead, I thought the idea was to make blockspace as cheap as possible (without sacrificing decentralization), so we can get as much stuff onchain as possible.&nbsp;



If token holders make money in the process because the blocks fill up and transactions get expensive, that’s great.



But making transactions expensive just so token holders make a profit seems…not very crypto?



Layer-one crypto tokens do have to have value, mostly to deter spam and provide security.&nbsp;



But, ideally, any additional value would come from higher usage, not higher prices.&nbsp;



And even if profitability were the primary goal, higher prices might not be the way to achieve it.



As a future source of profits, Keys cites “blobspace” — a cheap, dedicated lane on Ethereum for temporarily making large amounts of data available for anyone to validate.



But does blobspace have a moat?



“Making data available” doesn’t sound like the kind of differentiated service that would have pricing power — how hard can it be to store some data? I’m guessing Keys would argue that Ethereum will have pricing power because of its security guarantees, brand and market capitalization.&nbsp;



But that remains speculative at this point and I’d counter that it’s easier to start a new blockchain than it is a new riding-sharing service.



So I’m not sure Uber’s is the best business model for Ethereum to emulate.&nbsp;



<h2 class="wp-block-heading">The Walt Disney way</h2>



Ward Kimball attributed Walt Disney’s riches to never trying to become rich: “If you want to know the real secret of Walt’s success, it’s that he never tried to make money. He was always trying to make something he could be proud of.”&nbsp;



Disney told his staff never to mention costs to him — if something made a film or his parks better, he wanted it in, whatever the price.



He built a zoo on the studio lot so animators could study animals while making Bambi. He insisted that the gargoyles on Disney World castles, too high up for anyone to see, be sculpted in full detail.



For Disney, animation and theme parks were passion projects that he pursued against all financial advice, often to the brink of bankruptcy.



It worked out in the end, of course — which proves that sometimes, the most profit-maximizing thing is to not maximize profits.



In other cases, the most profit-maximizing thing is to not make profits at all.



Linus Torvalds, for example, made his fortune by offering the Linux operating system for free. Forever.



It’s easy to imagine Torvalds would now be even wealthier if he charged even a few cents for the use of Linux — billions of devices run on the software he invented, from which he collects exactly $0.



But Linux became a global phenomenon precisely because it was free to use and free to build on — a freedom that turned users into contributors.



Torvalds developed Linux with the help of thousands of enthusiasts eager to contribute to the open-source project simply because they believed in it.



With access to the source code, users didn’t just report bugs to Torvalds — they often sent him the fix, too.



In the early days of its development, this allowed Torvalds to release updated Linux kernels as often as every day.&nbsp;



It’s impossible to imagine Microsoft releasing new versions of Windows every day.&nbsp;



It’s equally impossible to imagine that Linux could have been built any other way.&nbsp;&nbsp;



Today, Torvalds is variously estimated to be worth between $50 and $150 million — a big number, for sure. But also a tiny slice of the unmeasurable value Linux has created for the world.&nbsp;



Still, a tiny slice of a giant number is generally better than a giant slice of a small one.&nbsp;



If Torvalds had charged for Linux, his slice might have been 100% of nothing.



Unlike Linux, Ethereum can’t be free — the chain won’t work unless there’s a cost to using it.



But it doesn’t have to maximize profits, either.&nbsp;



And perhaps it shouldn’t?



By pricing their products and services as commodities, companies like Walmart, Costco, Southwest Airlines and Vanguard became giants by prioritizing growth and revenue over profit margins.



If blockspace is similarly a commodity product, the best way to maximize profits may be not to.



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The Breakdown Newsletter

Should Ethereum maximize profits?

Ben Strack

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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A couple days after Fed Chair Jerome Powell’s widely watched Jackson Hole speech feels like a great time for a high-level update — particularly as macro’s effect on crypto markets has increased over time.



We still don’t know what the Fed will do at its Sept. 17 meeting. But to many, Powell’s comments<a href="https://blockworks.co/news/powell-jackson-hole-speech"> had a dovish tilt</a>, leaving the door open for an interest rate cut next month.&nbsp;



If we look at CME Group’s FedWatch tool — based on 30-Day fed funds futures prices, as of midday Monday — many think a 25-basis point cut is in the cards. The bottom section shows that expectation much higher than a month ago:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe5msJkgjwcgQzk35Zy54JcJpip_H08kmBGj0YVLnbuJa9JXHS6pm_iBF-5J3vvZoPtxflo7yL18ahyB7rq9avlATiGlJAUBUKNadGIi70_PQ5-RlTN-dMFmiT4o_GDUP0oCwYWtw?key=kC-qTijup8gbsaLTwUIxQQ" alt=""/></figure>



While an interest rate cut is generally good for risk assets like bitcoin, it’s a bit more nuanced than that. BTC surged above $117,000 on Friday before reversing course to below $111,000. The asset was trading for around $112,600 at 1:30 pm ET.



The broader trajectory of where crypto markets are headed will still depend on the macro backdrop, argued YouHodler markets chief Ruslan Lienkha.



“If inflationary pressures persist, the Fed may be forced into another prolonged pause, limiting the sustained impact of a single cut,” he told me. “Moreover, if a rate reduction is perceived as an emergency response to a recession, it could weigh on crypto alongside other risk assets.”



The best scenario? A cut that is part of a successful Fed effort to engineer a soft landing. “In that environment, bitcoin is likely to capture the bulk of institutional inflows, given its position as the most established digital asset,” Lienkha said. “Select altcoins could outperform in percentage terms due to their higher volatility and lower liquidity, amplifying upside moves when capital flows broaden beyond bitcoin.”



Speaking of institutional flows, crypto investment products saw more than $1.4 billion leave their coffers last week, <a href="https://coinshares.com/us/insights/research-data/fund-flows-25-08-25/">according</a> to CoinShares — the highest weekly outflow total since March. Within that data, we saw early-week pessimism around the Fed’s stance appearing to drive the outflows, before a recovery later on (mostly with ether products) around Powell’s remarks.



While $625 million flowed into US ETH ETFs on Thursday and Friday combined, $217 million exited BTC funds on those two days. Month-to-date net inflows for ETH and BTC ETFs are at +$2.5 billion and -$1 billion, respectively, “marking a notable change in investor sentiment toward the two assets,” noted CoinShares’ James Butterfill.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXczLfoFS0xWkjQ0VJyMSKiq57KR0UvHhJAvfpTjHbo3KLwkcEkm0Tys9Vf6ZXrZed91pdNPCm9Ni0jPESDVk3BHH6C758XDuCITCGy2P9SMuD-yJ_CbEYX8ixca2T2ewtiHdTg-?key=kC-qTijup8gbsaLTwUIxQQ" alt=""/></figure>



What did asset allocators take away from Friday?&nbsp;



CK Zheng, co-founder of crypto hedge fund ZX Squared Capital, called Powell’s pivot to possibly start cutting rates “significant” for risky asset classes.



His year-end target for bitcoin is between $125,000 and $150,000. He expects ETH to finish the year between $6,000 and $7,000. (It hovered around $4,600 Monday afternoon).



Globe 3 Capital CIO Matt Lason said that any rate cut signal confirms the hedge fund’s bullish positioning given how important more liquidity is in crypto. He expects the intensity of the ongoing crypto bull market to be strongest in Q4.&nbsp;&nbsp;



The expected rate cuts spurred Globe 3 Capital to rotate more of its holdings into smaller cap tokens “as we are seeing early signs of the long-awaited alt coin season,” Lason added.



What should we expect beyond Q4? 50T Funds founder Dan Tapiero weighed in this weekend on X, citing Morgan Stanley research:



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">This bull mkt does not end with 82% of those surveyed by Morgan Stanley saying they do not own cryptocurrency. Tiny long exposure in btc and eth vs &#39;22. All of these metrics will make new highs in price and ownership during this cycle. 2026 will be a boom year. <a href="https://t.co/P5QaGFfd5E">pic.twitter.com/P5QaGFfd5E</a>&mdash; Dan Tapiero (@DTAPCAP) <a href="https://twitter.com/DTAPCAP/status/1959477135011094716?ref_src=twsrc%5Etfw">August 24, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Zheng said he foresees bitcoin dominance continuing to drop after the <a href="https://blockworks.co/news/genius-act-passes-house">GENIUS Act signing</a>, estimating the stablecoin market to 10x (from ~$270 billion) in the next few years. Coinbase’s latest simulations suggest the stablecoin market cap could reach $1.2 trillion by the end of 2028.&nbsp;



We know crypto markets move fast, but I think these “where-we-stand” snapshots are worth it. Even if it all changes in a few weeks, days or hours.



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Checking in on crypto markets as the Jackson Hole dust settles

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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Crypto gaming has seen plenty of multimillion-dollar raises, but in many cases, that funding and hype hasn’t amounted to much. It’s not a guarantee of future success, by any means.&nbsp;



Funding in the crypto gaming sector is also <a href="https://dappradar.com/blog/state-of-blockchain-gaming-in-q2-2025">down 93%</a> year-over-year, meaning there isn’t as much of an appetite for funding large dev teams or splashy marketing budgets right now.



But builders are still finding ways to ship projects with lean teams, turning visions from the GameFi trenches into reality.



Jakpot Games, which is building out its Solana-based site with just three people in its core team, is one of those projects. Their arcade-like platform launched last week, letting players spend the platform’s JAKPOT token to try their hand at getting a high score in one of a few different browser-based games.&nbsp;



Rex Runner and Speed Racer, which both involve speeding through pixelated environments, are the two titles currently on offer.&nbsp;



Currently, each Jakpot tournament has a countdown — meaning players have anywhere from 12-24 hours to try to reach the top of a game’s leaderboard in order to win some tokens.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">To cap off the weekend, we extended our tournament over 440,000 <a href="https://twitter.com/search?q=%24JAKPOT&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$JAKPOT</a> on the line pure skill, pure competition less than $1 to enter <a href="https://t.co/TKc0bvNImK">pic.twitter.com/TKc0bvNImK</a>&mdash; Jakpot Games (@JakpotGames) <a href="https://twitter.com/JakpotGames/status/1959766461842612605?ref_src=twsrc%5Etfw">August 24, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Users connect to the site via crypto wallet tool Privy, and buy the platform’s token using SOL.



85% of every pot is split among the top scorers. 10% goes to the team’s vault for marketing and development, and 5% rolls over into the next round’s pot, Jakpot cofounder Gannon Breslin, who previously authored The Drop, explained to me in an interview.&nbsp;



Like many gaming upstarts, Jakpot has already had to fend off an onslaught of cheaters who sought to unfairly exploit the platform for financial gain.



“They cheated in ways we didn’t even imagine possible,” Breslin said, adding that continuously monitoring and expanding upon their existing anticheat is a top priority.&nbsp;



Since its launch last week, Jakpot has seen 7,316 games played, 16.1 million game credits transferred, and 26.7 million JAKPOT paid out in total.&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">footballdotfun is awesome, and i&#39;m glad its leading the charge for gamefi seaon however, the game is still speculation which is more betting then not outright skill<a href="https://twitter.com/JakpotGames?ref_src=twsrc%5Etfw">@JakpotGames</a> is pure skill with $ on the line 19 hours left with 255,000 in the pot <a href="https://t.co/n9TOZHRnAd">pic.twitter.com/n9TOZHRnAd</a>&mdash; Gannon Breslin (@gannonbreslin) <a href="https://twitter.com/gannonbreslin/status/1959909285292593307?ref_src=twsrc%5Etfw">August 25, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



As often happens with low-cap tokens, JAKPOT’s <a href="https://dexscreener.com/solana/bpehdmdgf92pd4h6bqscaagrzdfpat8tpbas9s2bmti8">price</a> has fallen significantly from its all-time high. 26.7 million JAKPOT was worth over $53,000 just a few days ago, but would now be worth about $15,000.



“We’re 10,000 times more focused on people playing the game than the market cap,” Breslin said of the token.&nbsp;



The team is planning to add a “Degen” mode soon with higher token buy-ins per play to raise the stakes for those who want it.



They’re also building out custom game lobbies and are actively exploring which games they might add to their platform next (I suggested DOOM).&nbsp;



As the Jakpot team continues to build, they’ll have to compete for Crypto Twitter’s attention with the likes of the latest trend-of-the-moment Football.Fun, plus the Abstract gaming ecosystem and existing gaming platforms like Remix.



It’s never easy in the trenches.&nbsp;



Disclosure: Gannon Breslin is the prior owner and writer of The Drop newsletter, which was acquired by Blockworks.



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Gaming

Solana-based Jakpot Games launches pay-to-play arcade

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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A coalition of the world’s leading stock exchanges has urged regulators to crack down on tokenized stocks, warning that blockchain-based assets could threaten investor protection and market stability.



In a letter sent on August 22 to the U.S. Securities and Exchange Commission’s Crypto Task Force, the European Securities and Markets Authority, and the International Organization of Securities Commissions’ Fintech Task Force, the World Federation of Exchanges (WFE) said tokenized equities mimic shares without conferring legal ownership or shareholder rights.



Reuters, which reviewed the letter, <a href="https://www.reuters.com/sustainability/boards-policy-regulation/stock-exchanges-urge-regulators-crack-down-tokenised-stocks-2025-08-25/">reported</a> that the WFE described the tokens as imitations of listed equities that could mislead investors and expose issuing companies to reputational fallout if the products collapse. The trade group said some issuers have already voiced concerns about their shares being replicated without consent.



Tokenized equities allow investors to buy digital tokens that track the value of a company’s shares, but unlike traditional stockholders, token buyers do not gain voting rights or protections under securities law.



As Jamie Alcock <a href="https://www.ft.com/content/c8379d47-7f80-4ee6-8e9d-69b379cea027">argued</a> in the Financial Times earlier this month, these instruments provide only “synthetic exposure” to underlying assets rather than enforceable ownership. Proponents argue the tokens could lower trading costs and enable around-the-clock markets, but regulators have repeatedly stressed that securities laws still apply.



Platforms such as Robinhood and Coinbase have begun experimenting with these offerings, with Robinhood launching tokenized equities for European customers earlier this year and Coinbase seeking U.S. regulatory approval.



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Coinbase

Global stock exchanges call for crackdown on tokenized stocks

Cap Labs’ new stablecoin cUSD has seen rapid adoption since launch, climbing to $67.85 million in circulation over the past week, <a href="https://defillama.com/stablecoin/cap-cusd">according</a> to DefiLlama.&nbsp;



Etherscan <a href="https://etherscan.io/token/0xcccc62962d17b8914c62d74ffb843d73b2a3cccc">shows</a> 2,735 holders of the token to date. The jump signals strong demand for Cap’s yield-layered digital dollar model, which combines regulated reserve assets with EigenLayer-powered credit underwriting.



Built atop the newly launched Cap Stablecoin Network (CSN), cUSD is designed as a 1:1 redeemable stablecoin backed by assets like <a href="https://blockworks.co/tag/paypal">PayPal’s</a> <a href="https://blockworks.co/price/pyusd">PYUSD</a>, <a href="https://blockworks.co/tag/blackrock">BlackRock</a>-managed <a href="https://blockworks.co/news/buidl-collateral-tokenization">BUIDL</a>, and <a href="https://blockworks.co/tag/franklin-templeton">Franklin Templeton’s</a> BENJI. The yield-bearing version stcUSD — minted by staking cUSD — is enabled by a three-party system of lenders, operators, and restakers.



Cap’s core innovation lies in its structure: operators borrow stablecoins to deploy yield strategies, restakers underwrite the operator’s credit risk, and lenders (stcUSD holders) earn a floating yield, currently around 12%, depending on market demand and operator performance. While restaker collateral provides protection against operator default, stcUSD holders are still exposed to fluctuating yield dynamics.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcu_7EBXZi3VItlG_gUlP9ZdT_spy2QXjOEzbUMHu7GkZFHRrKyJZ9-tlygRXK5q_omNcVAeG6WuoQ6iSAgmzzZFOSBYsP0chFvaZY1O5vP7YJeK2iehw-MHotrGOt4ZVsJb5OyEA?key=1HSKtor9sNS05yY8kpZnCg" alt=""/><figcaption class="wp-element-caption">cUSD’s impressive growth; Source: <a href="https://defillama.com/stablecoin/cap-cusd">DefiLlama</a></figcaption></figure>



Unlike many past stablecoin launches, Cap’s model is carefully tuned to comply with the <a href="https://blockworks.co/tag/genius-act">GENIUS Act</a>, the sweeping US stablecoin legislation that prohibits interest-bearing payment tokens. Speaking at the Stablecoin Summit in Cannes <a href="https://youtu.be/fxd5wXtAaC8?si=45kDRI1mmi8Zt56U">in June</a>, Cap Labs founder Benjamin Lens was blunt:



“They said no yield, and it’s pretty clear — there’s no way around it. They do not want stablecoins giving yield to retail investors,” Lens said.



Thus, stcUSD is a separate <a href="https://blockworks.co/tag/erc-4626">ERC-4626</a> vault token, which users can mint by staking cUSD. The yield is generated through a marketplace of borrowing and restaking, not directly from Cap Labs.



“Genius Act covers companies that are generating yield on behalf of users and giving them to the users,” Lens said in Cannes, whereas Cap is “an immutable open protocol like <a href="https://blockworks.co/tag/ethereum">Ethereum</a>, like Bitcoin.”



Combined with the fact that the percentage of any one stablecoin backing cUSD is limited to 40%, Lens thinks they have a compliant mechanism. “This is the standard that we&#8217;ve agreed to with Templeton and BlackRock for our integration with them,” Lens told Blockworks, noting it’s the same arrangement that UStB (from Ethena) made in partnership with BlackRock.



<h2 class="wp-block-heading">Restaking evolution</h2>



Cap’s design aligns with a trend emerging with restaking platforms such as <a href="https://blockworks.co/tag/eigenlayer">EigenLayer</a> and Symbiotic: the financialization of Actively Validated Services (AVSs). Traditionally, AVSs on EigenLayer offered infrastructure services — like oracles or bridges — with risk limited to uptime or correctness. But a new wave of AVSs is using EigenLayer to underwrite financial guarantees.



Cap is one example highlighted by EigenLayer founder Sreeram Kannan. “A staker can stake and promise that an operator [like Susquehanna] is going to make a 10% APR,” Kannan told Blockworks. “You can underwrite financial risk using EigenLayer, which is a very new kind of risk, which requires much, much more active curation and monitoring,” he said.



What makes this possible is EigenLayer’s recent rollout of a new feature, complementary to slashing, which <a href="https://blockworks.co/news/restaking-use-cases-reframed">went live in April</a>.&nbsp;



While slashing enables restakers to be penalized for backing underperforming operators, <a href="https://docs.eigencloud.xyz/products/eigenlayer/concepts/slashing/redistribution">redistribution</a>, launched in late July, allows slashed funds to be redirected back to the impacted AVS — such as Cap’s lending vault — rather than burned.



That change turns EigenLayer into a programmable risk distribution layer, capable of enforcing structured finance contracts entirely onchain.



“With financial AVSs, slashing is the core logic,” Kannan said. “A liquidation is an example — if the hurdle rate is not met — slash and move the money out.” That’s easier than slashing some infrastructure AVSs like a ZK or TEE coprocessor, where it’s harder to adequately express the slashing logic onchain, he added.



The early growth of cUSD “highlights demand for stable, compliant dollars backed by decentralized risk management,” according Misha Putiatin, co-founder of Symbiotic, which also provided infrastructure underlying Cap’s real-time credit risk coverage.



“This marks an important step toward programmable DeFi where anyone can transparently launch, underwrite, and manage new financial primitives,” Putiatin told Blockworks.



According to a research note from Serenity Research and Catalysis <a href="https://serenityresearch.substack.com/p/serenity-premium-cap-money-and-cusd">published</a> Sunday, Cap’s model resembles a CDS-like structure: Restakers sign off-chain legal agreements to cover operator defaults, post collateral onchain, and are liquidated if their guarantee fails. Cap currently lists market makers like Fasanara, GSR, and Amber as operators, with Gauntlet and <a href="https://blockworks.co/tag/symbiotic">Symbiotic</a> restakers providing credit protection.



Cap Labs’ operating company, which handles smart contracts, social media and frontend, is based in Panama, Lens said.



“There are currently no plans to geofence the US. Since we&#8217;re functionally an autonomous, overcollateralized lending market, we&#8217;re taking a similar precedent to <a href="https://blockworks.co/tag/aave">Aave</a> and <a href="https://blockworks.co/analytics/morpho">Morpho</a>,” he said.



As Cap’s model gains traction, it could preview a broader shift in the restaking ecosystem: from securing infrastructure to enabling onchain credit underwriting, with slashing and redistribution forming the enforcement rails for next-gen financial AVSs.



Updated Aug. 26, 2025, at 10:05 am ET: Added comment from Symbiotic.



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EigenLayer

Cap Labs attracts capital with EigenLayer-backed credit model

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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Galaxy Digital, Multicoin Capital, and Jump Crypto are <a href="https://www.bloomberg.com/news/articles/2025-08-25/galaxy-jump-multicoin-seek-1-billion-for-buying-solana-token?embedded-checkout=true">seeking to raise</a> $1 billion to acquire Solana (SOL). If successful, the effort would establish the largest corporate treasury dedicated to the token to date.



According to Bloomberg, the three firms plan to acquire a publicly traded company and convert it into a dedicated digital asset treasury vehicle, with Cantor Fitzgerald serving as lead banker.&nbsp;



The initiative, which has reportedly received support from the Solana Foundation, is expected to close in early September 2025.



Announced on the same day, Sharps Technology <a href="https://www.prnewswire.com/news-releases/sharps-technology-inc-announces-over-400-million-private-placement-seeking-to-establish-the-largest-solana-digital-asset-treasury-strategy-302537587.html">said</a> it priced an over-$400 million private placement aimed at building its own Solana-focused treasury strategy. The Nasdaq-listed company said the plan would involve purchasing SOL both on the open market and directly from the Solana Foundation at a discount.



Investors in the Sharps placement include ParaFi, Pantera, FalconX, Republic Digital, CoinFund, Arrington Capital and other digital asset institutions. The transaction is scheduled to close later in August, subject to customary conditions.



Combined, the two efforts represent a potential $1.4 billion influx into Solana markets, significantly larger than existing treasuries held by companies such as Upexi — worth close to $400 million at current prices — and DeFi Development Corporation, valued near $240 million.



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Galaxy

Galaxy, Jump, and Multicoin align on $1B Solana treasury initiative

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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Last week, we spent some time exploring what the rest of the cycle might look like.&nbsp;



Another reason that this time is different: Crypto has never been in a bull market with an agreeable SEC.



How wild this cycle might’ve looked without Gensler at the helm for the first half.



Don’t get me wrong — having a securities regulator back off on stuff like ETFs (bonus points for in-kind redemptions), liquid staking and staking-as-a-service is grand.&nbsp;



But ICOs are the Holy Grail for the crypto space. The job’s not finished until they’re back.&nbsp;



Hester Peirce, the SEC Commissioner who was earlier to crypto than practically anyone at the agency, is acutely aware that financial accessibility is at the heart of what makes crypto “crypto.”



“Obviously I’m someone who believes very strongly in the dispersion of knowledge across society, and in the fundamental value of every human being, and the ability of every human being to contribute something unique to society. And I think that concept really links up very well with crypto,” Peirce told Yano on today’s Empire podcast.



“[Crypto] is trying to bring the ability of people to engage with one another, peer to peer, and really to draw on people who society might before have shut out. If you have a centralized intermediary, what happens is that that intermediary — either of its own accord or because the government tells it to do so — shuts certain people out.”



We already know that the answer is open-source protocols that “anyone can access and use on the same terms as everyone else,” as Peirce put it. And we already have them.&nbsp;



Still, freedom of access does not come with freedom of consequences for offering token sales to US investors. At least, until the SEC finalizes a clear framework for token sales.&nbsp;



“I mean, the goal is to get a framework in place that would allow people to do ICOs, to do airdrops, in a way that they understood was compliant with the securities laws, and then I think you would see that kind of thing happening here, so that certainly is why we’re working expeditiously to try to get something done,” Peirce said.



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/2OFzH92_DwI?si=VBcXTZ4iGBkbbR0Z" 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>







OK, but what will that framework look like? Crypto Mom didn’t go into detail, but some of her comments earlier on in the podcast might hint towards where it’s going:



“The definition of ‘security’ is very broad. We think often of just stocks and bonds, but you also have investment contracts which are intended to capture anything where someone says, ‘Hey, give me some of your money. I&#8217;ll take it, pool it with other people&#8217;s money. You don&#8217;t have to do anything. I&#8217;ll do all the work and you&#8217;ll get profits based on the work that I do.’



“That&#8217;s something that investment contracts were designed to capture. And that&#8217;s how a lot of these token-distribution events look an awful lot like investment contract transactions. And so trying to figure out: ‘Okay, then, the token was sold as part of that transaction, but it doesn&#8217;t always carry that investment contract with it. How do we think about how long the obligations of the person selling the token should last to the people buying it?’ That&#8217;s really what we&#8217;re wrestling through.”



To me, the most telling part was that Peirce zoomed in on the SEC’s mandate to capture “the capital-raising transaction” when regulating digital assets, “but not saddling the token with securities laws for the rest of its life.”



Compare that with recent comments from SEC chair Paul Atkins, when he said that “there are very few, in my mind, tokens that are securities, but it depends on what’s the package around it and how that’s being sold.”



Something tells me that Atkins might consider many more tokens to be securities had the low-float airdrop meta never taken hold — and those airdrops were ICOs instead.&nbsp;



At this point, it could be another few years until token launches are considered safe enough to really proliferate. Just in time for the next bull market, I guess.



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Empire Newsletter

Hester Peirce on the SEC’s next moves in crypto

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">
“I believe that at the end of the century…one will be able to speak of machines thinking without expecting to be contradicted.”



— Alan Turing, 1947
</blockquote>



Did the AI bubble just have its Burning Up moment? In March 2000, Barron’s published a cover story — <a href="https://www.barrons.com/articles/SB953335580704470544">Burning Up</a> — detailing how quickly internet stocks were going through cash, predicting that investors would be reluctant to give them more.



“When will the Internet Bubble burst?” the article began. “For scores of &#8216;Net upstarts, that unpleasant popping sound is likely to be heard before the end of this year.”



Incredibly, the article was published within 10 days of the Nasdaq’s peak after a five-year, 570% rally — and the start of a 78% crash.



In hindsight, the Barron’s story looks less like coincidence and more like a catalyst: By spotlighting the cash burn, it helped cut off the flow of investor money keeping the bubble inflated.



Now, investors are having similar doubts about keeping the AI bubble inflated after a <a href="https://mlq.ai/media/quarterly_decks/v0.1_State_of_AI_in_Business_2025_Report.pdf">report from MIT</a> concluded that “95% of organizations are getting zero return” on their generative AI spend.



Shares of Palantir fell as much as 20% this week in response, with Nvidia and AMD down 8% and 11%, respectively.&nbsp;



If that turns out to be the beginning of the end of investors’ love affair with those types of AI stocks, the MIT report will surely get the blame.



“These [AI] tools primarily enhance individual productivity, not P&amp;L performance,” the report found, casting doubt on why companies would continue to invest in them.&nbsp;



The problem could be structural, too. Unlike human intelligence, the report finds that “most GenAI systems do not retain feedback, adapt to context or improve over time.”&nbsp;



If that makes companies decide to stop buying AI services from software providers, software providers will stop buying cloud services from the hyperscalers, and the hyperscalers will stop buying GPUs from the chipmakers.



That would be traumatic for investors, of course — and for the whole of the US economy, which has arguably been kept afloat by the hyperscalers’ giant investments in data centers and energy.



But we should remember that this is an investment bubble and not necessarily a bubble in AI itself.



Consider that Alan Turing conceived of artificial intelligence in the 1930s, a decade before the first working computer even existed.



The current investment bubble, if that’s what it is, has dramatically accelerated the realization of Turing’s vision, but his vision is hardly dependent on it.



As the internet before it, AI might do even better after its investment bubble has popped.&nbsp;&nbsp;



If big corporations give up on AI, other more innovative companies will make the most of the infrastructure they leave behind.



When Procter &amp; Gamble <a href="https://www.wsj.com/articles/p-g-slashed-digital-ad-spending-by-another-100-million-1519915621">said</a> in 2018 it was cutting spending on Facebook ads because it wasn’t getting a return on them, many took it as an indictment of Facebook.



In truth, it was an indictment of Procter &amp; Gamble, whose failure to figure out how to use online ads made room for new competitors who did.



The MIT study that so worried investors this week may similarly have surveyed corporations that just don’t know what to do with a new technology.



But it’s not just corporations — the latest iteration of ChatGPT has widely been considered a <a href="https://www.wired.com/story/openai-gpt-5-backlash-sam-altman/">disappointment</a> because it’s not as much of a step-change improvement as previous versions were.



But the new version is also <a href="https://x.com/VraserX/status/1958211800547074548">creating</a> “original research-level mathematics” that human mathematicians could not come up with themselves.



And AI is also designing physics experiments that a human physicist never would: “The outputs that the thing was giving us were really not comprehensible by people,” one researcher told <a href="https://www.wired.com/story/ai-comes-up-with-bizarre-physics-experiments-but-they-work/">Wired</a>. “They were too complicated, and they looked like alien things or AI things. Just nothing that a human being would make.”



If physicists don’t quite know what to make of AI, it’s no wonder that corporations are struggling to.



Even Alan Turing did.



“Machines take me by surprise with great frequency,” Turing<a href="http://www.loebner.net/Prizef/TuringArticle.html"> wrote in 1950</a>, in response to skeptics who said machines will only ever do what we tell them to.&nbsp;



The surprise may not be that the bubble bursts — it presumably will, eventually — but that AI, like the internet, will just be getting started when it does.



Let’s check the charts.



Palantir v. Cisco:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfpdC8lZDBfYU2JmKbwdUzXremQB1Bog9t5sZEQHHV-iQhzCuCGe8nL6HbTKPXnSMCYakxzr0WPT11Bztu1Sbxr8h7_vyerIywXO7Q3AQoOy8wcmVlHePj3l8mXdCkFnAIq7F21YA?key=Gs_roawT9tnrA5MJOblb4w" alt=""/></figure>



John Authers notes that the run-up in Palantir dwarfs even the historic Cisco move in 1999. Appropriately, Cisco is finally approaching its all-time highs from 2000, thanks to a <a href="https://x.com/TheTranscript_/status/1958665424926908793">booming AI business</a>.&nbsp;



The data center boom:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfM0BP_nL2cgo7x14LBIvFFEeEMjQMk4hpvfWDrzb4pNNtBMrcT8rGccal7W-ezLj5xcWNTEkWXjnGX91_fWrXcr9M8v0mH_MarffmKCOlwag0Mp9npymuEbmabToc-5yjiKvKRmA?key=Gs_roawT9tnrA5MJOblb4w" alt=""/></figure>



The US will soon be spending more on data centers than it does on office buildings.



Back to school:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXckLcJse5hiHG9h2SsdUvgSOKNCqRayUXKajDvakK3FtspTPS4exITjRwCcl2VqTrVqhifnRFuEA5Pu2C9Kzr2Z4tZqX3qxCQgb6Hps9Dfx2hJ6pd6y0GvSfbD06iCghoSwWKY4iw?key=Gs_roawT9tnrA5MJOblb4w" alt=""/></figure>



<a href="https://awealthofcommonsense.com/2025/08/the-human-toll-of-artificial-intelligence/">Ben Carlson</a> notes that a steep drop in OpenAI usage coincided with the end of the school year. Investors will have to hope that AI finds a better use case than students outsourcing their homework.



The US is exporting government debt and AI investments:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc_B80UyE5BFWpNQG7B45L5JLvSbswLfAqpVXo572gtvKRrnq6VQGeYHBuH80ZswkzVWIVmHZEanxDpvTluEptIPyvWAZv8-ub5EqyufpPXWu_Ft1Q3uZFWnQtVfxckf6NkRIpxTA?key=Gs_roawT9tnrA5MJOblb4w" alt=""/></figure>



Brad Setser <a href="https://x.com/TheTranscript_/status/1958665424926908793">explains</a> that the AI bubble is funding the US’s current account deficit. The blue area above is thought to be mostly investment flows into US equities. The green area is mostly government debt.



Generation degen:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfneb0L_4F-MCgmS-cuKvizPgcCbedzmRvgXCxzaq_WdVkVoNEM8kWD1MYOSN_zjTQZaOkpSjAl64dYoawASJMAd30JFouxHq6GjyT-NdxWOqFU7wItdxxcZD86nJM73-PR4EtO?key=Gs_roawT9tnrA5MJOblb4w" alt=""/></figure>



This fun chart from BofA (via @MikeZaccardi) suggests millennials are driving the surge in trading volumes on US stock exchanges.



Someone is buying all the debt, too:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdQ167816WkD_62ZgKXjGPUXRSqJbDLOAEcvtVE_tZmec4idAgdpz4NIQSHWsD62DTwD1nOTz62q0XdqckGQk8r_tcQ0P1BITUNMjjm8kvJMqGTK-DYuEaqliSQ0RbI-nCFbb6IFw?key=Gs_roawT9tnrA5MJOblb4w" alt=""/></figure>



Despite all the hand-wringing over unsustainable government deficits, investors are pouring more money into bond funds than ever before.



The market is ignoring the indicators:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdlSgvapTTOitDNOmnDu1QDPm_kyyXarTeSIA5MLm0jQk2qK0Xh7yCl_8Uuo9TpuyySd6yqwoNCxtw5IMGbR-CtZjMeYCQj6WFMAxB-KLrpjCm7K5y-yJT-IrfGaMhxowmHbg1yHw?key=Gs_roawT9tnrA5MJOblb4w" alt=""/></figure>



The Conference Board’s Index of Leading Economic Indicators (in blue) has turned sharply lower. But stocks (in red) have continued to go higher.



The long view:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeh8Mhat59fzKS3leZkrnleRLsdozphl45yFfVIxj4oKkPDCi2Ux2mEHUWaRiLWVSyPzkROOfDwqu2Yozwz2EwEULO5AtcYeq8ypLOenwhyHz9CUxj-A9Pjxq2vhRcE6vPrizPo?key=Gs_roawT9tnrA5MJOblb4w" alt=""/></figure>



It’s always tempting to try to time the next investing bubble, but here’s a reminder of the opportunity cost: Adjusted for inflation, the S&amp;P 500 is up 5,462% over the past five decades.



Past performance is no guarantee of future performance, of course, and the AI investment bubble may well be due to pop. But Alan Turing might advise you to let yourself be surprised.



Have a great weekend, naturally intelligent readers.



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