Verified USD

Byron Gilliam

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Bubbles are the key to realizing a future that is radically different from the present.”



— Byrne Hobart and Tobias Huber
</blockquote>



A modern day Mechanical Turk made waves this week: <a href="https://www.1x.tech/order">Neo</a>, the $20,000 humanoid robot now available for pre-order, can fold your laundry, feed your dog and clean your house — but only with the help of a human to guide it remotely.



Unlike the original Mechanical Turk, however, this is not a hoax.



Instead, the human behind the curtain is there to guide the robot while it collects the data it needs to become genuinely autonomous.&nbsp;



This first human-guided version is necessary because you can’t scrape the kind of data it needs from Reddit or Wikipedia.



To learn how to navigate the physical world, robots need visual data. Neo is one way to collect it.



So, too, are Tesla’s electric vehicles, Google’s Waymo and Meta’s AI Ray Bans — not just cars and glasses, but machines built to turn photons into data.



“The race for photons has begun,” Adam Jones said in a <a href="https://www.morganstanley.com/insights/videos/humanoid-robots-adam-jonas">video</a> that explains why the photons will be so valuable: &#8220;embodied AI,” he believes, has a “deca-trillion TAM.”



In other words, the market for robots that can autonomously navigate the physical world will be worth many trillions of dollars; far bigger than the market for AI that remains pitifully confined to computers.



The problem, though, is that AIs cannot learn from experience, they can only be trained with data.&nbsp;



So even with practice, your first Neo won’t get better at cleaning your house, but cleaning your house allows it to collect the data that will make the next version better at it.



Repeating that process over the entire physical world will require so much visual data it might soon be measured in “yottabytes” — a yottabyte being one septillion bytes, or enough bytes to fill a data center the size of Delaware.



(Jones says yottaflops in the video, but AI tells me that’s a measure of processing power, so I think he means yottabytes, a measure of data.)



Where all these data centers should go is unclear because Delawareans (I looked it up) probably don’t want to leave their beachfront homes to make way for GPUs.



But that, too, might become an issue of photons: also this week, Google <a href="https://research.google/blog/exploring-a-space-based-scalable-ai-infrastructure-system-design/">announced</a> that it&#8217;s developing solar-powered data centers that will orbit the Earth.



It makes sense. If embodied AI will need yottabytes of data, requiring yottaflops of power generation, how better to process it than with the giant fusion reactor at the center of the Solar System?



The Sun emits 100 trillion times more power than the electricity generated on Earth, Google Research noted, so “space may be the best place to scale AI compute.”



Google calls its ambition a “moonshot,” in recognition of the many engineering challenges involved in building communicating constellations of space-based, solar-powered data centers.



But many others are working on it, too, including giants like Nvidia and SpaceX, and startups like <a href="https://www.starcloud.com/">StarCloud</a>.



Only a bona fide investing bubble could get so many people working on such a crazy, long-shot idea (and also make us learn what a yottabyte is).



Which is why investing bubbles are good.



I’m doubtful Google will ever turn a profit on moonshot investments like data centers in space, but Earth is already reaping returns on investors’ enthusiasm for AI.



AI is contributing to <a href="https://x.com/sundarpichai/status/1978507110477332582?t=QLcKtZV7FyUoICh_L-_s6A&amp;s=19">cancer research</a>, accelerating <a href="https://x.com/demishassabis/status/1978863261521998027?t=dG4FqXf6_lW4f3fV5Gai3Q&amp;s=19">fusion research</a> (maybe we won’t need the Sun after all?) and designing <a href="https://www.perplexity.ai/page/ai-designs-antibodies-from-scr-NCYirBzATsuiXjcjyzP_PA">novel antibodies</a>, for example.



And that’s before we’ve even trained the robots to help.



Imagine what Neo will do for you when it’s been trained on yottabytes of photon-generated data, running in a data center in space that’s being effortlessly powered by the Sun.&nbsp;



I can’t wait to find out.



In the meantime, let’s check the charts.



Not enough:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1266" height="682" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-43.png?w=1024&amp;h=1024" alt="" class="wp-image-109866" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-43.png?w=1266 1266w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-43.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-43.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-43.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-43.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-43.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-43.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-43.png?w=80 80w" sizes="auto, (max-width: 1266px) 100vw, 1266px" /></figure>



US electricity generation has stagnated over the past 15 years, with gains in natural gas (in blue) and renewables (green) only offsetting the decline in coal (brown).



Paying in cash — so far:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1131" height="704" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-44.png?w=1024&amp;h=1024" alt="" class="wp-image-109867" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-44.png?w=1131 1131w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-44.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-44.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-44.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-44.png?w=413 413w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-44.png?w=419 419w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-44.png?w=352 352w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-44.png?w=80 80w" sizes="auto, (max-width: 1131px) 100vw, 1131px" /></figure>



The five big hyperscalers have so far funded their AI capex boom with cash, but that is starting to change: Meta, Google and Oracle have collectively borrowed nearly $100 billion from the bond market over the past eight days.



Tapping the brakes?



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1425" height="717" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-46.png?w=1024&amp;h=1024" alt="" class="wp-image-109869" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-46.png?w=1425 1425w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-46.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-46.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-46.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-46.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-46.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-46.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-46.png?w=80 80w" sizes="auto, (max-width: 1425px) 100vw, 1425px" /></figure>



Torsten Slok <a href="https://www.apolloacademy.com/data-center-growth-rates-peaked-two-years-ago/?utm_medium=email&amp;utm_source=pardot&amp;utm_id=310f66842710d1fe33beb80a7eaf3f0b&amp;utm_campaign=EXT_Daily+Spark">notes</a> that investment in data centers is still growing (rapidly), it’s growing at a slower rate. My guess is they can’t build the power generation fast enough to keep up. (There would be no such issue in space.)



Rate cuts incoming?



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1266" height="682" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-43.png?w=1024&amp;h=1024" alt="" class="wp-image-109865" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-43.png?w=1266 1266w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-43.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-43.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-43.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-43.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-43.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-43.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-43.png?w=80 80w" sizes="auto, (max-width: 1266px) 100vw, 1266px" /></figure>



<a href="https://polymarket.com/event/will-the-supreme-court-rule-in-favor-of-trumps-tariffs?tid=1762298567090">Polymarket</a> betting suggests there’s an 80% chance the president’s IEEPA tariffs will be deemed unconstitutional. If the tariffs are revoked, inflation would presumably fall, giving the Fed room to cut interest rates. Tariff payers might even get the $90 billion they paid refunded. What happens if we get rate cuts, bigger deficits and an AI capex boom? The bubble might only just be getting started.



Job cuts:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1080" height="668" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-42.png?w=1024&amp;h=1024" alt="" class="wp-image-109864" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-42.png?w=1080 1080w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-42.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-42.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-42.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-42.png?w=416 416w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-42.png?w=422 422w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-42.png?w=354 354w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-42.png?w=80 80w" sizes="auto, (max-width: 1080px) 100vw, 1080px" /></figure>



Younger workers could use some help from the Fed. The last time the BLS collected data (way back in August) the unemployment rate for 20-24 year-olds had risen to 9.2%.



Not AI’s fault?



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="893" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-45.png?w=1024&amp;h=1024" alt="" class="wp-image-109868" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-45.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-45.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-45.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-45.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-45.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-45.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-45.png?w=468 468w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-45.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-45.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



AI typically gets the blame for companies hiring fewer recent graduates, but layoffs in the most directly impacted industry are expected to be lower this year than last.



Bubble watch:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1325" height="906" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-47.png?w=1024&amp;h=1024" alt="" class="wp-image-109870" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-47.png?w=1325 1325w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-47.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-47.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-47.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-47.png?w=376 376w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-47.png?w=382 382w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-47.png?w=320 320w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-47.png?w=80 80w" sizes="auto, (max-width: 1325px) 100vw, 1325px" /></figure>



Nvidia is <a href="https://x.com/HayekAndKeynes/status/1985472077961334793?s=20">calculated</a> to have a higher weighting in Morgan Stanley’s benchmarked world index than the entire country of Japan.



The scariest chart?



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="1016" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-48.png?w=1024&amp;h=1024" alt="" class="wp-image-109871" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-48.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-48.png?w=300 300w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



The <a href="https://www.ft.com/content/e577411e-3bf2-4fb4-872a-8b7d5e9139d3">FT</a> that the West is losing its “culture of progress,” with worrying implications for public policy: The 2025 Nobel Prize for Economics was awarded to three economists whose work suggests that believing in progress is essential to making it.



Rookie numbers?



<img loading="lazy" decoding="async" src="blob:https://cms.blockworks.co/9a5a354a-233e-42ac-820f-b81e12bd963a" width="624" height="349">Tomasz Tunguz <a href="https://x.com/ttunguz/status/1986594426580574324?s=20">notes</a> that AI infrastructure is only the sixth-biggest infrastructure project in US history (if wars count).



For the sake of progress, let’s hope it gets much bigger.



Have a great weekend, space-based readers.



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The Breakdown Newsletter

Friday charts: The photon economy

Luke Leasure

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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Happy Friday. It was another rough week for crypto markets, with nearly every sector registering negative returns and a handful of long-tail “stablecoins” losing their peg.



Weakness prevails across the board, with all of our tracked indices posting negative returns over the past week, except for DePIN. This weakness comes as the majors BTC, ETH and SOL have established a daily and weekly downtrend, while equity indices have reversed ~3%-5% off their highs, adding risk back to the market. The selloff in equities has elevated the VIX to a level of 20.



Within crypto, DePIN was the one sector of strength, up 2% on the week, while the Launchpad and <a href="https://app.blockworksresearch.com/analytics/solana">Solana Ecosystem</a> sectors were the hardest hit, down 15% and 27.6%, respectively.



<img loading="lazy" decoding="async" width="624" height="348" src="blob:https://cms.blockworks.co/94ba79b5-3c44-4961-afe6-60a3b45372fa">  



Looking at the top winners within DePIN, AR and FIL account for a majority of the sector’s strength, trading up 60% and 31%, respectively.&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1483" height="832" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-41.png?w=1024&amp;h=1024" alt="" class="wp-image-109858" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-41.png?w=1483 1483w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-41.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-41.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-41.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-41.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-41.png?w=465 465w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-41.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-41.png?w=80 80w" sizes="auto, (max-width: 1483px) 100vw, 1483px" /></figure>



The Solana Ecosystem names are among the hardest hit, with MPLX (-24%), RAY (-21%), and JTO (-19%) making the largest downside moves. JTO’s underperformance comes amid a recent $6 million Paradigm-led seed round for <a href="https://www.theblock.co/post/377791/paradigm-harmonic-funding-solana-nasdaq-speed">Harmonic</a>, a team building a new block-building engine on Solana which may seek to compete with Jito’s established integrations. Interestingly, KMNO is the one name in the sector to hold positive, albeit slightly, at only +0.24% on the week.&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1478" height="824" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-40.png?w=1024&amp;h=1024" alt="" class="wp-image-109857" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-40.png?w=1478 1478w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-40.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-40.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-40.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-40.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-40.png?w=468 468w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-40.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-40.png?w=80 80w" sizes="auto, (max-width: 1478px) 100vw, 1478px" /></figure>



In a bearish trend, it will be increasingly important to focus on the sectors of relative strength, or hold patient for oversold and discounted levels on fundamentally strong names with a clear growth path.



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0xResearch Newsletter

Downtrends in BTC, ETH and SOL as risk returns to market

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



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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Use this time wisely.”



— Hester Peirce
</blockquote>



<h2 class="wp-block-heading"><a href="https://youtu.be/yNvcwZov6Jg?si=_zlLR0eysdVP_7OK">Neal Stephenson is still interested in crypto</a></h2>



Neal Stepheson, famous for predicting the Metaverse in his 1992 novel Snow Crash, also predicted crypto.



In The Diamond Age (1995), he imagined a network &#8220;designed from the ground up to provide privacy and security so that people could use it to transfer money.&#8221; (The Diamond Age also predicted large language models.)



In Cryptonomicon (1999), he described a digital currency based on public-key cryptography and backed by physical gold.



In Reamde (2011), the plot revolves around a highly valuable, in-game virtual currency, and all the problems it causes when people try to convert it into real-world currency.



These novels were so prescient because they were steeped in the cypherpunk ideas Stephenson was following at the time — which makes it encouraging that he still finds today’s crypto scene cypherpunk enough to be interesting.



“You see a mix today of people who are genuinely driven by the belief that they&#8217;re doing something socially constructive for society by getting us away from centralized financial institutions and centralized information brokers,” <a href="https://youtu.be/yNvcwZov6Jg?si=_zlLR0eysdVP_7OK">he told Epicenter</a>, “mixed in with a lot of other attempts to commercialize this that I think are often driven by less idealistic considerations.”



That mix has been shifting in favor of the “less idealistic” recently — and, after listening to Stephenson, I wonder if that might be why the crypto industry is struggling to create things that people outside of crypto find valuable.



“It’s impossible to architect a compelling experience backwards from a desired financial outcome,” Stephenson says. “If you start with the goal of ‘let&#8217;s make a lot of money’ and then try to reverse-engineer a creative project from that motive, it&#8217;s not going to work.”



He advises people to “resist that temptation to just immediately financialize everything and concentrate instead on the intangible value of what people are creating.”



To that end, Stephenson is the co-founder of <a href="https://lamina1.com/home">Lamina1</a>, a blockchain platform that hopes to provide the “economic rails” for a Snow Crash–like metaverse, in which creators set their own terms.



Whatever the project&#8217;s merits, I find that encouraging, because if Neal Stephenson still thinks crypto is worth working on, I do, too.



<h2 class="wp-block-heading"><a href="https://southpark.cc.com/video-clips/q9i0dy/south-park-our-crypto-advisor">South Park is still interested in crypto, too&nbsp;</a></h2>



The writers of South Park sum up the state of crypto in just a few lines of dialogue:



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1236" height="244" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-38.png?w=1024&amp;h=1024" alt="" class="wp-image-109852" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-38.png?w=1236 1236w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-38.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-38.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-38.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-38.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-38.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-38.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-38.png?w=80 80w" sizes="auto, (max-width: 1236px) 100vw, 1236px" /></figure>
</blockquote>



Most of us are Stan, I think, trying to make a little money while also pointing out what’s wrong with finance and the world.



But sometimes we forget why we’re here.



Later, when Stan and his crypto advisor are brainstorming how to “create FOMO” for a South Park memecoin, they mistake Kyle’s moral rebuke for a marketing pitch:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1242" height="170" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-39.png?w=1024&amp;h=1024" alt="" class="wp-image-109853" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-39.png?w=1242 1242w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-39.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-39.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-39.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-39.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-39.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-39.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-39.png?w=80 80w" sizes="auto, (max-width: 1242px) 100vw, 1242px" /></figure>



The difference between Kyle and the crypto advisor — between cypherpunk principles and crypto opportunism — can get muddled at times.&nbsp;



The trick, as Neal Stephenson reminds us, is keeping your wits about you and knowing how to distinguish between those things.



<h2 class="wp-block-heading"><a href="https://stratechery.com/2025/the-benefits-of-bubbles/">The benefits of cognitive bubbles</a></h2>



Ben Thompson says there’s a “quasi-spiritual element” to the current AI bubble.



“There are people working at these labs that believe they are building God,” he writes. “That is how they justify the massive investment in leading edge models that never have the chance to earn back their costs.”



This should, in theory, be a good thing.



Bubbles are productive when they leave behind physical infrastructure, like railroads and fiber optic cables (the Carlota Perez thesis).



But they can also be productive by creating “cognitive capacity” — the surge of innovation and invention that occurs when everyone is inspired to pull in the same direction (the Byrne Hobart thesis).



AI is unusually inspiring, so it should, with luck, have unusually high returns from the cognitive capacity it’s creating.&nbsp;



“There are benefits from bubbles that pay out for decades,” Thompson concludes, “and the best we can do now is pray that the mania results in infrastructure and innovation that make this bubble worth it.”



This might be applicable to crypto, too, which is sadly not in a bubble — perhaps because it’s lost some of the “belief and motivation” it once had from a shared faith in cypherpunk values.



<h2 class="wp-block-heading"><a href="https://visserlabs.substack.com/p/bitcoins-silent-ipo-why-this-consolidation">Bitcoin’s IPO</a></h2>



Jordi Visser attributes bitcoin’s current weakness to selling by the first generation of believers: “Addresses that accumulated when Bitcoin was a cypherpunk experiment are finally moving their holdings.”



The original cypherpunks, he says, “are passing the torch [to] entities who care less about ideology and more about returns.”



(Or, in South Park terms: from Kyle to Stan.)



As a result, Visser says, “Bitcoin will probably never again have the radical energy it had in its early years.”



But he sees this as a positive development: “From a market structure perspective, this distribution is enormously bullish long-term.”



Visser equates this to an IPO where ownership of a company passes from a handful of private investors to a broad base of public ones.



That can depress prices for a while, he says, but is long-term bullish because “concentration is fragile [and] distribution is antifragile.”



Each bitcoin that moves from concentrated hands to distributed hands makes the network more resilient.&nbsp;



“The OG whales are having their liquidity event,” he writes — including one “Satoshi-era holder that recently sold <a href="https://investor.galaxy.com/news/news-details/2025/Galaxy-Executes-One-of-the-Largest-Notional-Bitcoin-Transactions-Ever/default.aspx">$9 billion of bitcoin</a> through Galaxy.&nbsp;



“And what they’re leaving behind,” he concludes, “is a Bitcoin that’s stronger, more distributed and more resilient than the one they accumulated.”



<h2 class="wp-block-heading"><a href="https://www.youtube.com/watch?v=2OFzH92_DwI">Crypto Mom advice</a></h2>



This week’s “blue wave” of election results is a reminder that the free pass the crypto industry is currently enjoying might expire in approximately three years.



&#8220;Use this time to build things that are valuable, that are good, that meet the needs of your fellow Americans, people across the world,” Crypto Mom Hester Peirce has advised.&nbsp;



In addition to, you know, just being the right thing to do, it’s also how the industry can insulate itself from politics.



“Build real things with real value for society,&#8221; Peirce concludes, “because that’s the best way to make sure that good crypto regulation will last from administration to administration.”



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Links: Snow Crash, South Park, Bitcoin’s IPO and bubbles

Kunal Doshi

Shaunda Devens

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Markets caught a much needed bid yesterday, snapping a multi-day losing streak. The rebound stretched across both equities and crypto, fueled by optimism that Trump-era tariffs could be rolled back. We look at which sectors led the charge, how subnet tokens continue to defy gravity post-crash, and the debate heating up over Hyperliquid’s HIP-5 proposal.



<h2 class="wp-block-heading">Indices</h2>



After several days in the red, markets found relief yesterday as all major benchmarks posted gains. The rebound was led by BTC and the tech-heavy Nasdaq, which rose 2.36% and 1.15%, respectively.



Optimism was partly fueled by the Supreme Court hearing on the legality of Trump’s tariffs, which <a href="https://www.cnbc.com/2025/11/05/traders-on-prediction-markets-see-a-30percent-chance-supreme-court-backs-trumps-tariffs-.html">raised expectations</a> that some may be rolled back. <a href="https://kalshi.com/markets/kxdjtvostariffs/tariffs-case/kxdjtvostariffs">Odds</a> of the court upholding the tariffs fell from 45% to 29% on Kalshi, lifting sentiment across risk assets.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1165" height="614" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-34.png?w=1024&amp;h=1024" alt="" class="wp-image-109841" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-34.png?w=1165 1165w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-34.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-34.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-34.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-34.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-34.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-34.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-34.png?w=80 80w" sizes="auto, (max-width: 1165px) 100vw, 1165px" /></figure>



Within crypto, DePIN and DeFi led the recovery, climbing 6.7% and 6.1%, on the day. The DePIN index was boosted by HNT and Render, up 11.1% and 8.7%, respectively, together accounting for roughly a quarter of the index.&nbsp;



In DeFi, AERO, PUMP, and ASTER all advanced more than 10%. Aerodrome’s strength comes on the back of the launch of Slipstream v2 this week that aims to optimize efficiency and build on its dynamic fees design.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1169" height="624" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-32.png?w=1024&amp;h=1024" alt="" class="wp-image-109839" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-32.png?w=1169 1169w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-32.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-32.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-32.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-32.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-32.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-32.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-32.png?w=80 80w" sizes="auto, (max-width: 1169px) 100vw, 1169px" /></figure>



The AI sector was the weakest performer, declining 4% despite strong gains over the past month. The pullback likely reflects a rotation toward sectors that had become oversold during the recent correction. Within the AI index, performance was mixed. ICP surged 14.6% on the day, while IP and TAO were the only constituents in negative territory, each down around -4%.&nbsp;



<h2 class="wp-block-heading">Market Update</h2>



In just a few days, we will hit the one-month mark since the brutal Oct. 10 crypto crash that wiped out nearly $390 billion from the market. While most of us would rather forget that day, it is worth looking back to see which sectors and tokens have bounced back stronger. That is often where the next wave of strength begins.



One clear standout has been the AI sector, which is up 7.3% — not just since the Oct. 10 correction but through the recent market weakness as well. Gains from tokens like ICP, up 31.8%, and VIRTUALS, up 18.5%, have helped, but much of the sector’s momentum continues to come from TAO, which makes up a third of the index and is up 10.8% this month.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1169" height="619" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-35.png?w=1024&amp;h=1024" alt="" class="wp-image-109842" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-35.png?w=1169 1169w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-35.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-35.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-35.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-35.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-35.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-35.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-35.png?w=80 80w" sizes="auto, (max-width: 1169px) 100vw, 1169px" /></figure>



When scanning the top 500 tokens by MC, it’s worth noting that subnet tokens are among the few still trading above their pre-crash levels. These include Chutes (SN-64), Ridges (SN-62), lium.io (SN-51) and Targon (SN-4). These are four out of the top five Bittensor subnets by MC.



The amount of TAO staked in Alpha continues to climb, signaling rising demand for subnet tokens.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="900" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-37.png?w=1024&amp;h=1024" alt="" class="wp-image-109844" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-37.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-37.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-37.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-37.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-37.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-37.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-37.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-37.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-37.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



The stake split between Alpha and Root subnets continues to grow as well, from 13.2% in July to 21.1% today, showing growing interest in Bittensor Subnets.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="900" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-36.png?w=1024&amp;h=1024" alt="" class="wp-image-109843" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-36.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-36.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-36.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-36.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-36.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-36.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-36.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-36.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-36.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Despite their low float and inflationary early stages, many subnets are beginning to generate real revenue, a sign of genuine utility rather than hype. Targon, Lium and Chutes are <a href="https://x.com/bloomberg_seth/status/1970913602375655838">estimated</a> to have a combined $20 million in annual recurring revenue, a notable milestone for such young networks.



With the TAO halving approaching in December, the recent emission structure <a href="https://x.com/markjeffrey/status/1985821692346974484">changes</a> and a wave of <a href="https://x.com/Defi0xJeff/status/1986276037437837573">potential catalysts</a> ahead, the Bittensor ecosystem looks well-positioned to capture the next wave of market flows when sentiment turns.



<h2 class="wp-block-heading">HIP-5: Assistance Fund 2</h2>



HIP-5: Staker-Governed Assistance Fund 2, authored by Hyperliquid community members, proposes to divert 1% of Hyperliquid fees (ramping to 5%) into a staker-voted buyback fund for Strict List tokens such as PURR and HFUN.



Under this system, fees would accrue in USDC to AF-2, with HYPE stakers setting weights through real-time gauge voting. Execution would occur via continuous TWAP, votes would persist until changed, and a seven-day initialization window would precede any flow. Eligibility would be limited to the Strict List, with LSDs excluded from voting unless they implement verifiable holder-level passthrough. At September 2025&#8217;s run rate of $91 million/month, a full 5% allocation would equate to $55 million/year in targeted buybacks, while AF-1 would retain 94% of total fees.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="980" height="830" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-33.png" alt="" class="wp-image-109840" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-33.png?w=980 980w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-33.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-33.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-33.png?w=303 303w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-33.png?w=308 308w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-33.png?w=259 259w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-33.png?w=80 80w" sizes="auto, (max-width: 980px) 100vw, 980px" /></figure>



There are multiple reasons behind this decision, and I strongly encourage people to read the full proposal <a href="https://docs.google.com/document/d/1Nf7UmWptLZnCXaPhDnEBAPsyL5n2d-9Qat4v35CKepI/edit?tab=t.0#heading=h.vrzaefgtgwrb">here</a>. Below, I will walk through these reasons cited in the proposal and provide both sides of the argument.



<ol class="wp-block-list">
<li>“Bootstrap ecosystem projects: Provide buy-pressure to existing strict spot Hypercore tokens, giving teams already staking HYPE more incentive to deploy their tokens in Hypercore. At the same time, new projects launching on Hypercore are encouraged to stake HYPE (or incentivize stakers) in order to compete for votes and buybacks.”</li>
</ol>



This is the primary case for implementing this proposal, reminiscent of when the Hyperliquid Foundation did a <a href="https://x.com/HyperliquidX/status/1880988778757820721">buyback of PURR with AF-1</a>. $55 million would indeed be a very significant TWAP given the current state of Hyperliquid ecosystem projects: PURR (~$65 million) and HFUN (~$35 million) sit at very low market caps. Even Kinetiq, arguably one of the most hyped LST projects on Hyperliquid, is projected by <a href="https://polymarket.com/event/kinetiq-fdv-above-one-day-after-launch?tid=1762417112280">Polymarket to launch between $250 million and $500 million.</a> It seems obvious that a $55 million stimulus package would greatly re-rate these tokens. However, the argument against is also very strong:



<ul class="wp-block-list">
<li>Hyperliquid should support strong projects. While buybacks would attract more projects, these are unlikely to be the high quality projects needed.</li>



<li>Forces projects to launch tokens (e.g., Unit, Liminal).</li>



<li>Asymmetrically benefits investors and team members. For example, Kinetiq’s core contributor supply (23%) is equivalent to the supply distributed to Kpoints holders (24%). While this is fair for projects that capture the value they create, it is unfair when HYPE buybacks are redirected to these tokens.</li>



<li>Hyperliquid differentiated itself from pure value capture and revenue generation; subsidizing other projects could dilute the quality of projects building on the HyperEVM (similar to projects on other chains propped up with incentives).</li>
</ul>



Along with this, I would argue that directing revenue in the form of buybacks does little to bootstrap projects beyond a short-term price boost. Finally, this would do little to incentivize projects to buy and stake HYPE, as the notional amount of HYPE needed to materially influence a vote is far too high.



<ol start="2" class="wp-block-list">
<li>“Enhance HYPE Resilience: Diversify value accrual beyond pure exchange revenue”</li>
</ol>



This is a point I am inclined to disagree with completely. The thesis is that Convex-style vote aggregators could provide alternative revenue streams. First, the idea is strange: projects bribing the AF-2 fund for buy-pressure on their token. If this were the case, AF-2 would likely adversely select projects to buy, as the projects most likely to give out tokens aggressively are unlikely to do well long-term.



As noted in the original proposal, “Traditional bribes pay LPs to deepen pools, which often leads recipients to sell the rewards to realize profit, creating sell pressure.” We would likely see projects bribe AF-2 to buy their token, and users then dump on AF-2 with the tokens they received as a bribe.



<ol start="3" class="wp-block-list">
<li>“Preserve Competitiveness: A 5% diversion is negligible (~$150K daily reduction in HYPE buys) compared to the ~$3 million baseline.”</li>
</ol>



Strictly speaking, this is true: The notional value of HYPE is unlikely to materially affect HYPE’s price. However, I believe this does affect HYPE negatively, as it undermines HYPE as a pristine asset that buys back with all its revenues, a value proposition that is easy to understand in a market with complex Ve tokens and lockup periods. It also raises questions about conflicts of interest from voters.



Overall, while HIP-5 would materially improve the price of Hyperliquid ecosystem projects, it creates a negative dynamic where Hyperliquid uses HYPE revenues to support potentially unaligned projects (asymmetrically benefiting founders and private investors). These flows are unlikely to have positive ROI and could allow for manipulation (e.g. voter manipulation, frontrunning, conflicts of interest) and, while not material in notional terms, could dilute HYPE’s role as a pristine asset.



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Buybacks get pushback, and markets rebound

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“In the courtroom, the facts are often less important than how the story is told.”



— Alan Dershowitz
</blockquote>
</blockquote>



Any moment now, 12 jurors in the Southern District of New York will tell us whether blockchain code is law in America.



Anton and James Peraire-Bueno were arrested in May of last year on accusations of “stealing” $25 million in ETH by exploiting Ethereum’s intricate system of building blocks.



Closing arguments in their trial ended yesterday.&nbsp;



Southern District prosecutors told the court the Peraire-Bueno brothers used “tricks and deception” to execute a “bait and switch” exploit that lured a group of lovable, unsuspecting MEV sandwich bots into being sandwiched themselves.



The defense says the brothers were simply playing by Ethereum’s rules: “This is like stealing a base in baseball,” they told the jury.



Technically, the jury will return a verdict on charges of wire fraud and money laundering. But both sides have framed the case as a judgment on whether code is law in the world of decentralized blockchains.&nbsp;



Coin Center persuasively argues that it should be: “Validators compete under a mathematically explicit and self-executing rule set,” it wrote in an amicus brief. “Those rules alone define both the boundaries of permissible conduct and the penalties for deviation.”



The prosecution fundamentally disagrees: “Just because something is possible doesn’t make it legal,” they told the court.



Both sides did their best to translate the arcane art of Ethereum block-building into something a jury could follow well enough to pass judgment on the defendants’ actions.



The defense thinks that’s to their advantage: “If you understand how Ethereum works,” they told the jury, “Anton and James are innocent.”



But anyone who’s read Presumed Innocent or watched 12 Angry Men will know that nothing as complicated as Ethereum should be decided by a jury of normal people.



As recorded by <a href="https://play.google.com/store/books/details/Matthew_Russell_Lee_Crypto_Bros_SDNY_v_Peraire_Bue?id=fBCSEQAAQBAJ">Inner City Press</a>, defense attorney Katherine Trefz tried to make Ethereum block-building relatable to jurors with a cooking analogy:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1850" height="348" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-31.png?w=1024&amp;h=1024" alt="" class="wp-image-109834" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-31.png?w=1850 1850w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-31.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-31.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-31.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-31.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-31.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-31.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-31.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-31.png?w=80 80w" sizes="auto, (max-width: 1850px) 100vw, 1850px" /></figure>



That’s a pretty good start, for sure, and probably good tactics.



As a defendant, I’m not sure I’d want my actions judged with food analogies, but what’s the alternative?



In a case this bewilderingly technical, the best that lawyers can probably do is tell a story.&nbsp;&nbsp;



An expert witness asked to explain MEV arbitrage also resorted to analogy, again with food:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1842" height="260" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-30.png?w=1024&amp;h=1024" alt="" class="wp-image-109833" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-30.png?w=1842 1842w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-30.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-30.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-30.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-30.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-30.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-30.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-30.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-30.png?w=80 80w" sizes="auto, (max-width: 1842px) 100vw, 1842px" /></figure>



Next time you trade on Ethereum, remember: You’re the salami.



Cleverly, the prosecution tried to make the food analogies less appetizing:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1848" height="266" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-29.png?w=1024&amp;h=1024" alt="" class="wp-image-109832" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-29.png?w=1848 1848w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-29.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-29.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-29.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-29.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-29.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-29.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-29.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-29.png?w=80 80w" sizes="auto, (max-width: 1848px) 100vw, 1848px" /></figure>



“Salmonella” is a kind of “poisoned” crypto token used to trap sandwich bots on Ethereum, so a mini-trial might have helped the jury understand the larger trap the defendants had set.



Some highly technical things were explained; some pretty obvious things were not:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1852" height="328" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-28.png?w=1024&amp;h=1024" alt="" class="wp-image-109831" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-28.png?w=1852 1852w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-28.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-28.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-28.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-28.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-28.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-28.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-28.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-28.png?w=80 80w" sizes="auto, (max-width: 1852px) 100vw, 1852px" /></figure>



Anyone who needs a definition of “bot” would presumably need one for “atomic arbitrage,” too; but the defense quickly moved on.



Judge Jessica Clarke seemed similarly eager to move on from technical details:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1958" height="290" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-27.png?w=1024&amp;h=1024" alt="" class="wp-image-109830" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-27.png?w=1958 1958w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-27.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-27.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-27.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-27.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-27.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-27.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-27.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-27.png?w=80 80w" sizes="auto, (max-width: 1958px) 100vw, 1958px" /></figure>



There were a lot of breaks — way more than in the movies.



More importantly, there was much technical substance in between.&nbsp;



The prosecution seemed to recognize that in their <a href="https://x.com/innercitypress/status/1985726633198678111">closing argument</a>, which resorted once again to analogy: “If you go overweight with your bag on Jet Blue, you pay a penalty, you don&#8217;t go to jail. That&#8217;s not the way rules work in our world.”



I don’t know what that means — is Jet Blue Ethereum? Are the defendants passengers? Who’s flying the plane? Block-builders?



Hopefully someone on the jury puzzled it out, because there’s a lot riding on the outcome of The United States of America v. Anton Peraire-Bueno and James Peraire-Bueno — for crypto as well as for the defendants.



For crypto, a guilty verdict would make it look like Ethereum’s code is so unable to keep things orderly that it needs the US courts to come in and police what happens on its network.



Or, since we’re doing analogies: like a kid on a playground who needs his big brother to keep him safe from bullies.&nbsp;



In this case, literally Big Brother: The plaintiff here is not the MEV sandwicher who got sandwiched, but the United States of America.



More importantly, a guilty verdict would likely mean many years in prison for the two defendants.



“This is a hugely consequential decision in the lives of two young men,” the defense concluded. “Not guilty. Thank you.”



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Ethereum

Reasoning by analogy: Can a jury understand Ethereum?

Marc Arjoon

Boccaccio

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Markets turned sharply risk-off as crypto sectors sold off across the board, while traditional assets held relatively firm. BTC (-4.5%) led the broader pullback, with the Nasdaq 100 (-2.1%) and S&amp;P 500 (-1.1%) also slipping modestly. Gold (-1.5%) also retraced, losing the bid from a mild safe-haven bid amid rising Treasury yields and a stronger dollar.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="840" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed.png?w=1024&amp;h=1024" alt="" class="wp-image-109819" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Crypto sector performance was deeply bifurcated. Miners (+2.5%) and L2s (+2.0%) were the only bright spots, supported by renewed optimism around scaling and upcoming fee structure upgrades. In stark contrast, AI (-13.4%) and DePIN (-13.6%) were the biggest laggards, unwinding recent speculative gains. Ethereum (-5.3%) and Solana (-8.2%) ecosystems also underperformed as liquidity rotated out of higher-beta names. Launchpads (-4.4%) and DeFi (-3.9%) continued their grind lower, reflecting weakening onchain activity and profit-taking from the prior week’s rally. 



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="843" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-3.png?w=1024&amp;h=1024" alt="" class="wp-image-109823" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-3.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-3.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-3.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-3.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-3.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-3.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-3.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-3.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-3.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



The selloff came as traders reassessed risk exposure ahead of key macro catalysts, notably Friday’s US payrolls report and ongoing Fed commentary hinting at “higher-for-longer” rates. As seen below, the probability of a 25bps cut has dropped from over 80% to 70%. A sharp drop in small-cap crypto names suggested thinning liquidity and tighter positioning across majors. 



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1522" height="729" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-2.png?w=1024&amp;h=1024" alt="" class="wp-image-109822" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-2.png?w=1522 1522w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-2.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-2.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-2.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-2.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-2.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-2.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-2.png?w=80 80w" sizes="auto, (max-width: 1522px) 100vw, 1522px" /></figure>



Volatility ticked higher as market breadth narrowed, with BTC dominance inching up while alt sectors bled. Attention now turns to whether this is a short-term flush or the start of a broader de-risking phase heading into year-end. All eyes now turn to upcoming ISM Services PMI, US unemployment and payrolls and CPI over the coming days and weeks, with these releases likely to set crypto’s next leg — whether it’s a deeper pullback or a push higher.



<h2 class="wp-block-heading">Market Update</h2>



A rapid retracement in BTC and sliding ETF flows this week signals a shift from accumulation to caution among institutional crypto players. Over Nov. 4-5, BTC tumbled back toward the $100,000 area after topping&nbsp; $126,000 in early October, a drop of more than 15-20%.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="900" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-1.png?w=1024&amp;h=1024" alt="" class="wp-image-109821" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-1.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-1.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-1.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-1.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-1.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-1.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-1.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-1.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-1.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Furthermore, October’s rotation from inflows to redemptions across major BTC ETFs signals waning institutional appetite as macro headwinds bite. After mid-October inflows topping $400 million, late-month sessions saw outflows exceeding $500 million, primarily from IBIT and FBTC, the same vehicles that had driven early Q4 liquidity. Smaller issuers like ARKB and BTCO briefly offset redemptions, but aggregate ETF flows have now been negative for multiple sessions in a row.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1124" height="624" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-4.png?w=1024&amp;h=1024" alt="" class="wp-image-109824" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-4.png?w=1124 1124w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-4.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-4.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-4.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-4.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-4.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-4.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/unnamed-4.png?w=80 80w" sizes="auto, (max-width: 1124px) 100vw, 1124px" /></figure>



ETF flow data is a sentiment index, and right now, it’s blinking yellow. Monitor aggregate ETF flows (especially IBIT and FBTC) as a real-time risk gauge. If redemptions persist another week, the market could transition from “buy the dip” to “protect capital” mode, pressuring altcoins and BTC volatility sellers alike.



<h2 class="wp-block-heading">Top of Mind</h2>



We had a particularly eventful week. Market downturns typically coincide with several predictable patterns: hacks emerge, funds are lost and curators make leveraged bets to recover personal losses. This past week followed the same script. Morpho faced significant criticism after a vault curator&#8217;s losses resulted in user fund depletion.&nbsp;



Morpho&#8217;s defense centers on its permissionless architecture: Anyone can create a vault using its smart contracts. This argument has merit; Morpho genuinely cannot control who deploys on its platform, a design choice that likely reduces both liability and operational burden for the core team by eliminating the need for active curation and risk management.&nbsp;



However, this explanation is incomplete. While anyone can permissionlessly launch markets on Morpho, the platform retains discretion over which projects to amplify and promote. Stream was a protocol that Morpho publicly announced as a partner and hosted on its frontend.&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1186" height="1156" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-26.png?w=1024&amp;h=1024" alt="" class="wp-image-109816" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-26.png?w=1186 1186w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-26.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-26.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-26.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-26.png?w=264 264w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-26.png?w=268 268w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-26.png?w=225 225w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-26.png?w=80 80w" sizes="auto, (max-width: 1186px) 100vw, 1186px" /></figure>



You can be a permissionless product, but you need to be careful who you promote. From a brand perspective, this is a problem for Morpho, and something it needs to address. Morpho needs to have further separation between curators and itself.&nbsp;



To be clear, Morpho is not responsible for all vaults given its permissionless nature. However, in our opinion, the protocol should only promote certain curators, and only host certain curators on its frontend. The rest should use an SDK to integrate on their own frontend. We believe that this would be better for Morpho (as well as all modular lending platforms) as it could easily say: “Our contracts are permissionless, vaults are hosted on their own frontends.”



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Crypto flashes red as ETF flows reverse

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“The great enemy of communication, we find, is the illusion of it.”



— William Whyte
</blockquote>



A recent <a href="https://www.sciencedirect.com/science/article/abs/pii/S0195666325002119">study</a> of web-based surveys reports that AI bots have a preference for “risky sexual behavior.”



That, at least, is what the bots say in those surveys, but surveys are self-reporting and therefore not conclusive. Who knows what they really get up to behind closed doors?



Either way, it’s a problem, because survey-answering bots are making it increasingly difficult to find out what people are getting up to.



Researchers in fields like economics, public health, consumer habits and political science have long relied on surveys to understand human behavior.



Now, because no one picks up the phone anymore, these surveys are conducted almost entirely online.



Bots, however, have proven much happier than humans to fill out online surveys.



Why would they bother?&nbsp;



Money, for one thing.&nbsp;



To offset falling response rates, researchers have resorted to paying people to respond to their questions online — sometimes as much as <a href="https://www.swagbucks.com/articles/are-paid-surveys-legit">$5 per survey</a>.



This has caused a problem with people in low-income countries, where $5 still goes a long way, pretending to be the people in high-income countries that researchers are usually asking about.



It might take, say, 15 or 20 minutes to fill out a $5 survey, but if you’re doing it for the money, you might spend another 45 minutes looking for a survey that pays, so the hourly return is not great.



Unless you’re a bot, that is, in which case the whole process takes only seconds, and the $5 reward will be many multiples of what it costs for a few seconds of data center compute.



More speculatively, bots might also respond to surveys to affect elections by skewing the polls, or just to muddy the informational waters for a geopolitical rival.



Or maybe the bots just want to make themselves heard. Who knows?



Whatever their motivations, bots are now <a href="https://www.lab42.com/blog/have-ai-bots-infiltrated-your-survey-data">estimated</a> to account for as much as 30% of the responses to online surveys — more than enough to invalidate their results.



Worse yet, 37% of all internet traffic is <a href="https://cpl.thalesgroup.com/ppc/application-security/bad-bot-report?utm_source=google&amp;utm_medium=cpc&amp;utm_campaign=&amp;utm_content=&amp;utm_term=imperva%20bad%20bot%20report&amp;utm_source=google&amp;utm_medium=cpc&amp;utm_campaign=&amp;utm_content=&amp;utm_term=imperva%20bad%20bot%20report&amp;gad_source=1&amp;gad_campaignid=22453747885&amp;gbraid=0AAAAAD_tGUS3WdYQkjzdG803x23Fm7HZM&amp;gclid=Cj0KCQiA5abIBhCaARIsAM3-zFVZuehZRRmDlhaB6mhNQPn7wqu37FjPmBJm1tCE4uvDJlWhruWOhvMaAoB_EALw_wcB">attributable</a> to “bad bots” operating with “malicious” intentions.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1062" height="530" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-24.png?w=1024&amp;h=1024" alt="" class="wp-image-109807" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-24.png?w=1062 1062w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-24.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-24.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-24.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-24.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-24.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-24.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-24.png?w=80 80w" sizes="auto, (max-width: 1062px) 100vw, 1062px" /></figure>



37% represents a lot of bad bots, and because CAPTCHAs don&#8217;t trip them up anymore, the $120 billion market-research industry is at risk of being overrun.



There are other defenses survey researchers can try, like excluding results from respondents that answer “honeypot questions” (invisible to humans), or filtering for inhumanly fast response times.



But that is a game of cat and mouse that the bots will surely adapt to.



A more decisive approach is to stop looking for humans altogether: <a href="https://www.societies.io/">Artificial Societies</a> replaces human survey respondents with AIs trained to imitate them.



This replaces bad (or indifferent) bots with bots specially designed to predict how targeted groups of humans would respond — “collectives of AI personas that allow you to run experiments in minutes, not months.”



I’m sure that works for testing out a new marketing campaign, or predicting how a new flavor of Pringles might go over in the Midwest (pumpkin spice, maybe?).



But what about for events where the stakes are a bit higher, such as a presidential election?



It’s a question worth pondering because, with telephone response rates now below 5%, online surveys have become the primary means of understanding 1) how people are going to vote and 2) why they’re going to vote that way.



A lot has been made of prediction markets&#8217; uncanny ability to predict elections better than traditional pollsters, so you might not think we need the polls anymore.



But prediction markets are themselves based on polls: The French trading whale who made Polymarket so accurate by betting big on Trump did so only only after commissioning his own private polling.



Those polls were conducted online, of course — and by 2028, that kind of data could well be so corrupted by bots that it’s unusable, which would make prediction markets unusable, too.



More importantly, if pollsters can’t determine what motivates people to vote the way they do, politicians will have a harder time representing them.



Creating collectives of AI personas seems unlikely to help with this because how would they capture what people are thinking right now?&nbsp;



AIs can only be trained on data that already exists, which seems ill-suited to catching the kind of new information that always seems to make one election different from the last.



For something as consequential as deciding a presidential election, only communicating directly with humans will do.



Soon, there might be only one way to do it: blockchain-based cryptography.



Cryptographic proof-of-humanity has been disappointingly slow to catch on. People have not rushed to scan their retinas with <a href="https://world.org/">World</a>, for example, perhaps because they don’t care much whether the internet content they consume was created by a human or a bot.&nbsp;



But survey-makers do care: Sometimes you need to know what actual humans think, and not just simulated humans.



If online surveys are a form of mass communication, AI-simulated surveys are only <a href="https://machinelearning.apple.com/research/illusion-of-thinking">the illusion</a> of it.



Crypto-enabled proof-of-humanity could enable the real thing — a way to know what real people are thinking again (to the extent that was ever possible).&nbsp;



It’s probably still a long way off.



It would have to become near ubiquitous: A survey of only people who have scanned their retinas in return for crypto tokens won’t be too representative of the general population.



It would also have to be trusted enough that we’re not afraid to tell them what we get up to behind closed doors.



Until we do, humans may find it increasingly difficult to communicate with one another.



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Only crypto can stop the bad bots

Sam Schubert

Carlos

Red day for crypto, green day for miners

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There’s a profound difference between knowing something intellectually and knowing it viscerally — like reading a physics textbook versus watching MythBusters explode a water heater.



The textbook tells you that heating water in a closed system builds hydraulic pressure as the water&#8217;s volume tries to expand.



You read the words, you understand the theory of phase-change physics.



But MythBusters demonstrates how pressure can turn a water heater into a rocket that shoots 500 feet in the air.&nbsp;



You watch their <a href="https://youtu.be/rGWmONHipVo?si=MLcY8Odevxe8f7_J">YouTube video</a>, you understand the reality of a catastrophic steam explosion.



Showing can be more valuable than telling.



Last week, Brian Armstrong showed us George Soros’ <a href="https://www.opensocietyfoundations.org/uploads/2b96bb8c-e2e1-4d88-9eea-badf16d0a2b8/george-soros-financial-markets-transcript.pdf">theory of reflexivity</a> in a real-world experiment that would make the MythBusters proud.



After fielding questions from analysts on an earnings call for Coinbase, Armstrong <a href="https://x.com/0xTyrael/status/1984023540111437882">read out all the remaining words</a> that people in prediction markets had been betting he might say.



“I was tracking the prediction market about what Coinbase will say on their next earnings call,” he said at the very end of the call. “And I just want to add here the words Bitcoin, Ethereum, blockchain, staking, and Web3.”



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1202" height="684" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-13.png?w=1024&amp;h=1024" alt="" class="wp-image-109777" style="width:699px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-13.png?w=1202 1202w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-13.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-13.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-13.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-13.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-13.png?w=459 459w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-13.png?w=385 385w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-13.png?w=80 80w" sizes="auto, (max-width: 1202px) 100vw, 1202px" /></figure>



This got mixed reviews, with some finding it an amusing stunt and <a href="https://x.com/adamscochran/status/1984077017738801420">others</a> calling it market manipulation.&nbsp;



I’d argue it was neither.



Instead, I view it as a vivid illustration of how most financial markets work, as explained by George Soros’ theory that market prices affect the value of the assets they’re attempting to price.



Soros, who aspired to be a philosopher before deciding to be a billionaire hedge-fund manager, credits his success to identifying a flaw in the theory of efficient markets: “Market prices always distort the fundamentals.”



Instead of passively reflecting an asset’s fundamentals, as conventional wisdom assumes, financial markets actively shape the reality they’re meant to measure.



Soros cites the 1960s craze for conglomerates as an example: Investors believed these companies could create value by buying smaller, cheaper companies, so investors bid up their stocks — which, in turn, allowed them to create value by using their inflated share prices to buy smaller, cheaper firms.



In short, this created a &#8220;continuous and circular&#8221; feedback loop where participants&#8217; thinking influenced the events they were betting on — and those events in turn influenced their thinking.



Today, Soros might cite the example of digital asset treasury companies like Strategy, which Michael Saylor pitches to investors with the circular logic that they should value Strategy shares at a multiple of NAV because trading at a multiple of NAV makes the shares valuable.



Writing in 2009, Soros used his theory of reflexivity to argue that the root cause of the Great Financial Crisis was the basic misperception that “the value of [real estate] collateral is independent of the availability of credit.”



The prevailing view was that banks had merely overvalued the real estate securing their loans, while investors had overpaid for the derivatives backed by those loans.



And that is sometimes how it works — a simple mispricing of assets.



But Soros argued that the monumental scale of the financial crisis in 2008 could only be explained by a feedback loop. Investors overpaid for credit, which drove up the value of the collateral that backed it: “When credit becomes cheaper and more easily available, activity picks up and real estate values rise.”



And higher real estate values, in turn, encouraged credit investors to overpay even more.



In theory, prices for credit derivatives like CDOs should reflect real-estate values. In practice, they helped create them.



That, at least, is how a textbook would explain Soros’ theory of financial reflexivity.



But Armstrong didn’t just explain it, he demonstrated it, MythBusters-style.



By saying the words people were betting he’d say, he showed that participants’ views (the prediction market) can directly shape an outcome (what he said) — exactly what Soros meant when he said market prices can distort the underlying fundamentals.



This is a timely lesson because the current AI bubble is Armstrong’s experiment at a multitrillion-dollar scale: People think AGI will happen, so they’re investing in OpenAI, Nvidia, data centers, etc, which makes AGI more likely to happen, which makes more people invest in OpenAI&#8230;



This captures the full meaning of Soros’ famous comment on bubbles: He rushes in to buy because buying makes prices go up and higher prices strengthen the fundamentals — which draws in even more buyers.



But Soros would warn investors against believing in self-fulfilling prophecies because, in the extreme case of a bubble, investors drive up prices faster than prices can drive up fundamentals.



“A positive feedback process that runs its full course is initially self reinforcing,” Soros wrote with the Great Financial Crisis in mind, “but eventually it is liable to reach a climax or reversal point, after which it becomes self reinforcing in the opposite direction.”



In other words, trees don’t grow into the sky and bubbles don’t inflate forever.



There’s no real-world, MythBusters-type experiment to demonstrate that, unfortunately.



At the very least, though, we now know that market prices can make things happen, like words in an earnings call transcript.



So why not AGI too?



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Brian Armstrong

Busting the myth of efficient markets

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Gold continued to fall but still outperformed BTC last week. Macro conditions softened following the Fed’s less dovish-than-expected tone, which saw most crypto segments fall (with AI the notable exception). Today we dive into recent ETF flow divergences, with SOL positive while BTC and ETH are seeing outflows, and the Solana DEX aggregator landscape shift as Titan and DFlow take share from Jupiter.



<h2 class="wp-block-heading">Indices</h2>



Over the past week, Gold extended its decline (-2.6%) to just above $4,000/oz but still outperformed BTC (-4.2%). Equities remained more resilient to macro weakness, with the S&amp;P 500 up +0.3% and the Nasdaq 100 gaining +1.4%, supported by Big Tech earnings beats.&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1185" height="666" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-4.png?w=1024&amp;h=1024" alt="" class="wp-image-109754" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-4.png?w=1185 1185w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-4.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-4.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-4.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-4.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-4.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-4.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-4.png?w=80 80w" sizes="auto, (max-width: 1185px) 100vw, 1185px" /></figure>



In crypto, AI was the standout, up 20.2% while most segments declined. L1s fell 6.0% and L2s 16.9%, tracking weaker BTC and a 3.7% drop in network REV.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1342" height="749" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-6.png?w=1024&amp;h=1024" alt="" class="wp-image-109756" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-6.png?w=1342 1342w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-6.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-6.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-6.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-6.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-6.png?w=468 468w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-6.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-6.png?w=80 80w" sizes="auto, (max-width: 1342px) 100vw, 1342px" /></figure>



In AI plays, TAO rose 25.6% for the week, supported by Wednesday’s launch of the Bittensor Staked TAO ETP from <a href="https://www.coinspeaker.com/dda-staked-bittensor-etp-ticker-stao/">Deutsche Digital Assets</a> and Safello. Investors also priced Bittensor’s upcoming halving around Dec. 10, which will cut TAO mining rewards by 50%. VIRTUAL gained 40.6%, coinciding with Virtuals’ integration of Coinbase’s x402 protocol to enable stablecoin micropayments between agents and APIs.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1335" height="717" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-5.png?w=1024&amp;h=1024" alt="" class="wp-image-109755" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-5.png?w=1335 1335w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-5.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-5.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-5.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-5.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-5.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-5.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-5.png?w=80 80w" sizes="auto, (max-width: 1335px) 100vw, 1335px" /></figure>



Crypto miners appear to be consolidating after strong quarterly gains, with our index down 5.4% this week. WULF outperformed with an 11.5% gain following the announcement of another HPC colocation <a href="https://investors.terawulf.com/news-events/press-releases/detail/121/terawulf-expands-strategic-partnership-with-fluidstack">deal</a>, while CORZ rose 11.3% after the proposed CoreWeave merger, widely viewed as undervaluing the company, <a href="https://www.cnbc.com/2025/10/30/core-scientific-shareholders-reject-9-billion-coreweave-offer-deal-terminated.html#:~:text=Crypto%20miner%20Core%20Scientific%20on,proxy%20campaigns%20against%20the%20agreement.">fell through</a>.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1337" height="752" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-9.png?w=1024&amp;h=1024" alt="" class="wp-image-109759" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-9.png?w=1337 1337w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-9.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-9.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-9.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-9.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-9.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-9.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-9.png?w=80 80w" sizes="auto, (max-width: 1337px) 100vw, 1337px" /></figure>



<h2 class="wp-block-heading">Charts for the week</h2>



Aggregate crypto ETF flows turned negative last week, dominated by BTC outflows offsetting earlier October inflows that had pushed daily totals above $1 billion. The slowdown reflects cooling demand following a strong early October run-up, compounded by the Fed’s less dovish tone last week despite delivering the anticipated 25bps rate cut.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1124" height="624" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-1.png?w=1024&amp;h=1024" alt="" class="wp-image-109751" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-1.png?w=1124 1124w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-1.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-1.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-1.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-1.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-1.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-1.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-1.png?w=80 80w" sizes="auto, (max-width: 1124px) 100vw, 1124px" /></figure>



The weakness was partly explained by a rising Treasury General Account (TGA) balance as US government spending slowed amid the shutdown. Higher TGA balances drain liquidity and have been a persistent headwind for risk assets in recent months.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1512" height="832" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-2.png?w=1024&amp;h=1024" alt="" class="wp-image-109752" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-2.png?w=1512 1512w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-2.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-2.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-2.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-2.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-2.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-2.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-2.png?w=80 80w" sizes="auto, (max-width: 1512px) 100vw, 1512px" /></figure>



However, SOL ETF flows picked up over the past few days, averaging roughly +0.04% to market cap per day, the strongest inflows relative to market cap last week. The relative pickup likely reflects renewed attention following the launch of Solana ETFs last week, which expanded institutional access to the asset.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1124" height="624" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-3.png?w=1024&amp;h=1024" alt="" class="wp-image-109753" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-3.png?w=1124 1124w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-3.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-3.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-3.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-3.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-3.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-3.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-3.png?w=80 80w" sizes="auto, (max-width: 1124px) 100vw, 1124px" /></figure>



Monthly DEX volume on Solana increased to ~$142 billion in October, up from ~$111 billion in September. The rebound was driven primarily by SOL-stablecoin activity, signaling some renewed momentum across Solana’s DeFi ecosystem.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1124" height="624" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-12.png?w=1024&amp;h=1024" alt="" class="wp-image-109766" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-12.png?w=1124 1124w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-12.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-12.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-12.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-12.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-12.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-12.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-12.png?w=80 80w" sizes="auto, (max-width: 1124px) 100vw, 1124px" /></figure>



Total DEX aggregator volume on Solana reached roughly $86 billion in October, also marking a rebound from summer lows. Jupiter remained dominant, but Titan and DFlow gained material market share, recording $7.2 billion and $7.5 billion, respectively, in monthly volume. The trend reflects increasing competition among Solana’s DEX aggregators as new players capture a larger share of trading activity, with October’s developments indicating Jupiter’s dominance may be under threat.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1124" height="624" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-10.png?w=1024&amp;h=1024" alt="" class="wp-image-109763" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-10.png?w=1124 1124w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-10.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-10.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-10.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-10.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-10.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-10.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-10.png?w=80 80w" sizes="auto, (max-width: 1124px) 100vw, 1124px" /></figure>



Titan <a href="https://x.com/Titan_Exchange/status/1981915467536114088/photo/1">reported</a> a dominant win rate over Jupiter and DFlow throughout October, claiming to execute the majority of trades at the best price. While DFlow’s data feed was discontinued mid-month, Titan’s figures suggest consistent outperformance across most tracked pairs, though independent verification remains limited. Drama emerged in October after both DFlow and Jupiter asked Titan to remove their routers from its meta-aggregator, citing concerns that Titan’s system favored its own quotes while marketing fair competition.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="900" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-8.png?w=1024&amp;h=1024" alt="" class="wp-image-109758" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-8.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-8.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-8.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-8.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-8.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-8.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-8.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-8.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-8.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Balancer suffered a major security breach, with onchain estimates <a href="https://x.com/SuhailKakar/status/1985296236434620554/photo/1">showing over</a> $100 million in assets drained. The attack targeted Balancer’s v2 pools, triggering significant outflows from vaults across several chains. The exploit appears to have stemmed from improper authorization during pool setup, allowing attackers to deploy malicious contracts that manipulated vault calls to drain funds across connected pools.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="701" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-7.png?w=1024&amp;h=1024" alt="" class="wp-image-109757" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-7.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-7.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-7.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-7.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-7.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-7.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-7.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-7.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/11/image-7.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>







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Gold declined but still outperformed BTC last week

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
&nbsp;“A world without bubbles is a world defined by pre-existing limitations.”



— Byrne Hobart
</blockquote>



I had a childhood friend whose arms swung slightly out of sync while running.&nbsp;



Over a short distance, this was unnoticeable. But chase him long enough and there’d inevitably come a moment when his arms swing forward in unison and he’d pitch himself into a faceplant.



Markets work the same way: When investors all start doing the same thing, in unison, there inevitably comes a point when we faceplant.



So I consider my friend a cautionary tale for the companies and investors currently going all-in on AI — but also a hopeful one for the world.



Bubbles are dangerous because they get everyone investing in the same direction.



But they’re beneficial because they get everyone working in the same direction.



That’s the thesis of Byrne Hobart’s <a href="https://www.amazon.com/Boom-Bubbles-Stagnation-Byrne-Hobart/dp/1953953476">Boom: Bubbles and the End of Stagnation</a>, which explains that investing bubbles align financial speculation and technological innovation in a way that makes speculative enthusiasm a force of societal progress.



Investing bubbles are typically equated with financial ruin, but they can also build world-changing things that wouldn’t otherwise be possible — like railroads, the Erie Canal, and the fiber-optic cable network the internet now runs on.



It’s almost certainly happening again.



“We&#8217;re at a fun point in market history,” Hobart <a href="https://www.thediff.co/archive/longreads-open-thread-152/?ref=the-diff-newsletter">wrote</a> in his most recent newsletter, “where more investors than ever and more assets than ever reference a single technological trend.”



This week, the market was sending unmistakable signals that more investors should be referencing the trend of AI.



Nvidia became the first company to be worth $5 trillion.



OpenAI was <a href="https://www.reuters.com/business/openai-lays-groundwork-juggernaut-ipo-up-1-trillion-valuation-2025-10-29/">reported</a> to be planning a $1 trillion IPO.



Microsoft <a href="https://tomtunguz.com/msft-gcp-earnings-2025-10-30/">said</a> it has a $400-billion backlog of orders for its AI infrastructure.



Amazon <a href="https://www.reuters.com/business/retail-consumer/amazon-launches-ai-infrastructure-project-power-anthropics-claude-model-2025-10-29/">announced</a> the opening of an $11 billion datacenter built exclusively for a single chatbot, Claude.



And Microsoft, Alphabet, Meta and Amazon all announced they’re raising capex plans — collectively, they may spend as much as $500 billion on datacenters and GPUs next year.



These kinds of data points will look like the murky warning signs of a bubble to sceptics.



But to companies, entrepreneurs, inventors and intrepid inventors, the message could not be any clearer: Build for AI.



We also had signs this week that the bubble is working as intended.



The semiconductor startup <a href="https://extropic.ai">Extropic</a>, for example, wants to reinvent computing — not with faster transistors, but with probabilities.



This week, it showed off the first working “thermodynamic sampling unit,” or TSU — a chip it says can run AI models using 10,000x less energy than GPUs.



The trick: no more ones and zeros.&nbsp;



Instead, TSUs operate with probabilities, just like AI itself.



It’s a longshot, but the potential payoff of disrupting Nvidia is so large — $5 trillion! — it only needs a small chance of working to make the risk/reward attractive for investors.



Even more ambitiously, the semiconductor-equipment startup <a href="https://substrate.com">Substrate</a> announced this week that it’s developed a fundamentally new way to manufacture semiconductors.



Substrate’s prototype machine uses a particle accelerator (!) to generate x-rays that map nanoscale circuit patterns onto silicon wafers.&nbsp;



If successful, Substrate could leapfrog both ASML and TSMC and bring both semiconductor and semiconductor-equipment manufacturing back to the US.



Substrate founder James Proud <a href="https://stratechery.com/2025/an-interview-with-substrate-ceo-james-proud-about-building-a-disruptive-foundry-in-america/">told</a> Ben Thompson this week that he originally estimated his chance of success at 1%.



His odds are better now that he has a working prototype, but even at 1%, the prize is so large — disrupting TSMC and ASML in one fell swoop — that the risk is worth taking.&nbsp;



Investors gave Substrate <a href="https://www.inc.com/ava-levinson/substrate-raised-100-million-to-produce-computer-chips-its-competing-against-industry-giants/91257154">$100 million</a> this week to try.



It takes a special kind of market to get investors interested in those kinds of bets — the kind where seemingly everyone is chasing a single technological trend.



However that works out for investors, it’s likely to work out well for the world. With luck, it could leave us with cheaper, more-efficient semiconductors, a surplus of energy production and less dependence on three all-important companies: NVIDIA, TSMC, and ASML.



Only a bubble could make it happen.



Let’s check the charts.



Concentrating our bets:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="961" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/top10.png?w=1024&amp;h=1024" alt="" class="wp-image-109743" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/top10.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/top10.png?w=300 300w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



The 10 largest components of the S&amp;P 500 account for a record 42% of the index’s value. Pretty much everyone thinks that’s a surefire sign it’s a bubble. But concentrating our bets is what makes special things like railroads, canals and the world wide web happen.&nbsp;



Record growth:



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1406" height="828" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-199.png?w=1024&amp;h=1024" alt="" class="wp-image-109735" style="width:703px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-199.png?w=1406 1406w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-199.png?w=300 300w" sizes="auto, (max-width: 1406px) 100vw, 1406px" /></figure>



Growth rates for web services at Amazon, Google and Microsoft all ticked up this quarter. Businesses that are already doing tens of billions are not meant to maintain double-digit growth rates, let alone grow faster.



They’re struggling to keep up:



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1406" height="940" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-194.png?w=1024&amp;h=1024" alt="" class="wp-image-109729" style="width:602px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-194.png?w=1406 1406w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-194.png?w=300 300w" sizes="auto, (max-width: 1406px) 100vw, 1406px" /></figure>



The big four hyperscalers are spending $100 billion a quarter on capex and it’s still not enough. “We see the demand as fast as we&#8217;re adding capacity,&#8221; Amazon’s CEO <a href="https://x.com/TheTranscript_/status/1984018632095981884">said</a> this week. “We build some amount of infrastructure to what we think is an aggressive assumption,” Mark Zuckerberg added, “and then we keep on having more demand.”



It’s much more than the Big Four:



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1550" height="842" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-177.png?w=1024&amp;h=1024" alt="" class="wp-image-109697" style="width:816px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-177.png?w=1550 1550w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-177.png?w=300 300w" sizes="auto, (max-width: 1550px) 100vw, 1550px" /></figure>



Coatue <a href="https://drive.google.com/file/d/1Y2CLckBIjfjGClkNikvfOnZ0WyLZhkrT/view">notes</a> that hyperscalers are no longer the best performing AI stocks, trailing software, semis and power by a wide margin year to date.



China ascendent:&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1438" height="828" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-184.png?w=1024&amp;h=1024" alt="" class="wp-image-109714" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-184.png?w=1438 1438w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-184.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-184.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-184.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-184.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-184.png?w=453 453w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-184.png?w=380 380w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-184.png?w=80 80w" sizes="auto, (max-width: 1438px) 100vw, 1438px" /></figure>



24% of global semiconductor production now happens in China, vs. just 11% in the US. Not shown here is that nearly all the highest value ones are made in Taiwan. Only investment in an all-new technology like x-ray lithography could change that.



Something we have in common:



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1438" height="938" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-195.png?w=1024&amp;h=1024" alt="" class="wp-image-109730" style="width:780px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-195.png?w=1438 1438w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-195.png?w=300 300w" sizes="auto, (max-width: 1438px) 100vw, 1438px" /></figure>



<a href="https://x.com/scottlincicome">Scott Lincicome</a> notes that since 2010, China has “deindustrialized&#8221; more than the US has since the mid-1990s.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1438" height="828" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-200.png?w=1024&amp;h=1024" alt="" class="wp-image-109737" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-200.png?w=1438 1438w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-200.png?w=300 300w" sizes="auto, (max-width: 1438px) 100vw, 1438px" /></figure>



By 2030, Substrate estimates it will cost $50 billion to build a semiconductor foundry. A foundry based on x-ray lithography, Substrate says, would cost less than $10 billion.



Of course they do:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1550" height="874" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-183.png?w=1024&amp;h=1024" alt="" class="wp-image-109713" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-183.png?w=1550 1550w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-183.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-183.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-183.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-183.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-183.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-183.png?w=463 463w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-183.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-183.png?w=80 80w" sizes="auto, (max-width: 1550px) 100vw, 1550px" /></figure>



54% of fund managers surveyed by Bank of America Merrill Lynch believe we’re in a bubble.&nbsp;



Let’s hope they’re right.



Have a great weekend, bubble-blowing readers.



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Friday charts: The bull case for bubbles 

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">
“The illusion that one has understood the past feeds the further illusion that one can predict and control the future.”&nbsp;



— Daniel Kahneman
</blockquote>



<a href="https://dune.com/alexmccullough/polymarket-brier-score">Prediction markets are spookily accurate</a>&nbsp;



Professional sports bettors judge themselves not by the outcome of their bets, but by the final betting line: If they placed their bet at better odds than those available immediately before the event, it was a good bet, even if it loses.&nbsp;



But how do you judge the accuracy of the betting market itself?



<a href="https://x.com/alexmccullaaa">Alex McCullough</a> uses “Brier scores” — a statistical method of judging the accuracy of probabilistic predictions.



Applying that methodology to Polymarket, he finds that the bettors there have been spookily good at predicting events.&nbsp;



The Brier score for any given prediction market is the squared difference between the forecasted probability of an event and the event’s actual outcome.



Squaring the difference is instructive because it penalizes overconfidence: Assigning a 90% probability to something that doesn’t happen gives you a high Brier score (0.9^2 = 0.81).&nbsp;



Assigning a 10% probability to something that doesn’t happen gives you a low one (0.1^2 = 0.01).



McCullough finds that Polymarket’s probabilities have a shockingly low Brier score of 0.0581.



To put that into perspective, a market where every probability was 50% would score 0.25, and a market where every probability was always 0% or 100% and always correct would score 0.



So, at 0.0581, Polymarket’s Brier score suggests that its prediction markets are roughly 77% more accurate than a coin flip, and not so far removed from perfect.



McCullough says that puts Polymarket “on par with the best prediction models in existence.”



Might they be too accurate then? Betting markets have to be at least a little inefficient, or else there won’t be any incentive for the superforecasters and insiders that make markets efficient to participate (confusingly circular, I know, but true). 



But McCullough calculates Polymarket’s Brier score using its prices one day before event resolution — the equivalent of using the final betting line for a sporting event.



So, one takeaway from his data is that you might still make money in prediction markets, but only if you can beat the final line.



Sports bettors will tell you that’s not easy to do.



<a href="https://www.amazon.com/Thinking-Bets-Making-Smarter-Decisions-ebook/dp/B074DG9LQF/ref=tmm_kin_swatch_0?_encoding=UTF8&amp;dib_tag=se&amp;dib=eyJ2IjoiMSJ9.j2ZTyyUCeR_xKKs3IWfctmEoCz9gvF4FDWJgKjwID07QdCOgbxMN4zWjvR8QRxVbvfYIQSvM5xPLkzQ_rG4h2BETKvJ8tQwvyed2skOrlxKM8vmnbBdqpbxtzukbfQxoNnLz9-HCe7jeFEfwVEXbTvLi2U75GKCCw3n_PMOWUoQcmR_EdE1pHz3B4Y0HsDHO2xPT7MJtExSGU_L39Uph16H_B4cwSq_g7KtrLINdLCo.uJ9k76mOnP6LIY_Dc2ccRBRWl1WQZRNQpTMv92YEm_A&amp;qid=1761843266&amp;sr=8-2&amp;asin=B074DG9LQF&amp;revisionId=eee2c2a8&amp;format=3&amp;depth=1">Life is poker, not chess</a>



Daniel Kahneman warned of the “pernicious effects” of outcome bias: “It leads observers to assess the quality of a decision not by whether the process was sound, but by whether its outcome was good or bad.”



Poker players like Annie Duke call this “resulting”: changing strategy just because a few hands of Texas hold ‘em went against you.



That is not the way to do it, in poker or in life: “No sober person thinks getting home safely after driving drunk reflects a good decision,” Duke notes.



And yet, in nearly everything other than poker, nearly everyone does this: Ask someone why they think they made a mistake and there’s a near 100% probability they’d point to the outcome.&nbsp;



But life, Duke adds, is poker (probabilities), not chess (outcomes).



So here’s some investing/life advice: Don&#8217;t judge your decisions by their results.



<a href="https://tokenterminal.com/explorer/markets/prediction-markets">Prediction markets are popular</a>



Incredibly, prediction markets are now busier than they were at the peak of the 2024 presidential election when seemingly everyone was at least watching them.&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="722" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-165.png?w=1024&amp;h=1024" alt="" class="wp-image-109681" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-165.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-165.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-165.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-165.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-165.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-165.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-165.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-165.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-165.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



This probably means that prediction markets have evolved from being a once-every-four-years novelty to a constant source of information. Possibly on everything.&nbsp;



Case in point: People bet $1.4 million on a <a href="https://kalshi.com/markets/kxfedmention/fed-mention/kxfedmention-25oct">Kalshi market</a> predicting what Jerome Powell would say in his press conference yesterday.



FOMC press conferences are pretty staid affairs — if people will bet on that, they’ll probably bet on anything.



I suppose that’s a good thing, because even the most obscure bets can be informative.&nbsp;



Alex McCullough found that “the least liquid markets, with under $1K of total trading volume, achieve a good [Brier] score .1226 at time of writing.”



I have no idea how that could possibly be — but I guess it means there really is a <a href="https://polymarket.com/event/major-meteor-strike-10kt-in-2025?tid=1761841257600">7% chance</a> a large meteor will hit earth in the next two months.



(Down from 18% in June, mercifully.)



<a href="https://www.reuters.com/investigations/how-reuters-tallied-trump-organizations-crypto-income-2025-10-28/">Trump family crypto riches</a>



Over 90% of the Trump Organization&#8217;s earnings in the first half of the year came from crypto, Reuters reports.



Counting only realized gains, they conservatively estimate the president’s sprawling corporation earned $802 million from crypto projects in just the first half of the year.



Earnings from everything not related to crypto added up to just $62 million.



Most of it came from just two projects: $463 million from sales of World Liberty Financial tokens, and $336 million from sales (and maybe trading fees?) of the Trump memecoin.



Neither of those tokens has any claim on earnings or assets — WLFI is effectively a non-dilutive equity and TRUMP is a collectible.



So the $802 million was earned without having to give anything up.



Magic internet money, indeed.&nbsp;



<a href="https://open.spotify.com/episode/3zRPB384lRtPxWEtDZsUgh?si=f7bd78bcc4a1472f">Gemini Space Station S-1</a>



After doing a deep dive into Gemini’s S-1, Lee Reiners and Jimmy Lenz question why its stock trades above zero.



“I just don’t see a path to profitability here,” Reiners concludes, “which begs the question why the stock is worth anything at all.”



Lenz agreed: “I cannot figure it out.”&nbsp;



Ouch.



I did my own analysis of the S-1 and discovered that the crypto exchange is incorporated as “Gemini Space Station, Inc.”



So maybe the investors currently assigning it a $2 billion valuation are mixing it up with SpaceX?



Stranger things have happened.



(In crypto, every day.)



<a href="https://www.barrons.com/articles/24-hour-trading-buy-sell-stocks-276ccb3f?mod=djemMoneyBeat_us">The end of closing bells</a>



Barron’s reports that US equities are likely to be trading 24/7 as soon as the second quarter of next year.



If so, I think it’s a terrible idea because nothing good happens after hours.&nbsp;



For many years, trading volumes on US exchanges have gravitated to the first and last five minutes of the trading day, for the simple reason that liquidity seeks liquidity.&nbsp;



Nearly all orders are executed by machines now, and machines, knowing they have no short-term alpha, mostly try to minimize their price impact.&nbsp;



They do that by trading whenever there’s likely to be the most liquidity.&nbsp;&nbsp;



If you don’t have short-term alpha (and you almost certainly don’t), you, too, should trade whenever everyone else is.



That will not be nights and weekends.



Crypto has conditioned people to think trading should happen on nights and weekends because important things sometimes happen on nights and weekends.&nbsp;



But one thing I learned from many years of trading stocks (often before and after market hours), is that you will almost always get a better price by waiting for the market to open.



There are some good reasons for why stocks should be tokenized, but trading them 24/7 is not one of them.



Thinking otherwise is a behavioral-finance illusion.



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Polymarket

Predicting, resulting, zeros, and when not to trade

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Halloween came early, with markets getting spooked. As we wrap up October, it’s fair to say this month has been a rollercoaster of sharp rallies and steep drawdowns. I’ve seen plenty of posts on CT about people wanting to take a break, and honestly, I recommend it, but don’t leave for good.



Take a moment to reflect on the year and where your edge truly lies so that you can stay laser-focused in the months ahead. Opportunities in crypto will always be there, but they reward patience, clarity and conviction.



With that, here are a few weekend reads to keep your mind engaged while the market takes a breather.



<h2 class="wp-block-heading">Indices</h2>



The trend we’ve seen throughout the month continued to play out yesterday, with gold up 1.96% while the Nasdaq, S&amp;P 500, and BTC posted losses of -0.35%, -0.42%, and -1.62%, respectively.&nbsp;



The tech-heavy indices were dragged down by Meta and Microsoft as investors grew <a href="https://www.reuters.com/business/TSVY4EWA2NJ6FH3FS6KFBUYQFU-2025-10-30/">concerned</a> about their relentless AI spending forecasts. Meta’s stock fell -11.3% in a single day, marking its biggest drop in three years. Meanwhile, the Fed’s hawkish tone continues to weigh on markets, with the <a href="https://www.investing.com/central-banks/fed-rate-monitor">odds</a> of a rate cut in December now sitting at 64.8%. Gold bounced strongly after four consecutive sessions of losses, as investors once again turned toward safe-haven assets amid the prolonged US government shutdown.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1172" height="621" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-162.png?w=1024&amp;h=1024" alt="" class="wp-image-109667" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-162.png?w=1172 1172w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-162.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-162.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-162.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-162.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-162.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-162.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-162.png?w=80 80w" sizes="auto, (max-width: 1172px) 100vw, 1172px" /></figure>



It was a difficult session for crypto indices, with all major sectors closing deep in the red. The pattern of crypto equities outperforming even in downturns continued, with Crypto, Equities and Miners down only -0.7% and -1.73%, respectively.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1176" height="621" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-163.png?w=1024&amp;h=1024" alt="" class="wp-image-109668" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-163.png?w=1176 1176w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-163.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-163.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-163.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-163.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-163.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-163.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-163.png?w=80 80w" sizes="auto, (max-width: 1176px) 100vw, 1176px" /></figure>



The weakest performers were L2 and Launchpad, down -8.9% and -8.7%, respectively, on the day. The Launchpad sector was hit hard by Pump, which makes up 56% of the index. It fell -15.8% after strong gains earlier in the week. L2s also struggled, and even exchange coins like MNT, which had shown exceptional strength during the recent run-up, slipped -9% on the day.



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Declines in tech and crypto sectors close out a turbulent October

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Fiat money was invented in colonial America, and to convince people it had value, the colonies that issued it periodically lit their tax revenue on fire.



Paper money dates to 11th-century China, but historian Dror Goldberg <a href="https://www.amazon.com/Easy-Money-American-Invention-Governments/dp/0226825108">argues</a> that fiat — money valued primarily because the state demands it for taxes — was invented by the colony of Massachusetts in 1690.



Colonial Americans didn’t call it money at the time; to them, “real money” was metallic coins like Spanish pieces of eight, and the most-common form of paper their local governments printed was referred to as “bills of credit.”



But (as discussed <a href="https://mail.blockworks.com/p/hard-money-is-bad-money">yesterday</a>) very little “real” money was available in the colonies, so bills of credit circulated as money instead.&nbsp;&nbsp;



Counterintuitively, when the bills circulated back to the government as taxes, they were burned.



This goes against our modern expectation of governments collecting taxes to use for current or future spending.



But at that early stage of monetary history, money-issuing governments knew they had to give people reason to believe the paper they printed in arbitrary amounts had value.



To make the public “cherish” its money, the government had to prove it could make that money scarce.



“Whereas it is of the greatest importance to preserve the credit of the paper currency of this colony,” the Virginia legislature <a href="https://www.nber.org/system/files/working_papers/w21881/w21881.pdf">resolved</a> in 1760, “nothing can contribute more to that end than a due care to satisfy the publick that the paper bills of credit, or treasury-notes, are properly sunk.”



To that end, the legislature appointed a committee to ensure that, “at least twice a year,” all the bills of credit that had been collected in taxes were “burnt and destroyed.”



This bonfire of the taxes was often conducted in public, to make a memorable show of the government’s fiscal responsibility.&nbsp;



“The burning was an event,” Andrew David Edwards <a href="https://press.princeton.edu/books/hardcover/9780691200262/money-and-the-making-of-the-american-revolution?srsltid=AfmBOopW-7e7jNaW2kNTFYRixgbi2l_UOCIedTewKaJUpUYU8N9y3PMs">writes</a>, “advertised in public newspapers and marked in legislative records.”



By making a public display of making money more scarce, the government hoped to maintain its value.



300 years later, that’s still sort of how it works.



Over the past three and half years, the Federal Reserve has “burned” about 2.4 trillion of the bills of credit (aka, dollars) it printed after the pandemic (in the form of bank reserves).



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1596" height="982" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-160.png?w=1024&amp;h=1024" alt="" class="wp-image-109658" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-160.png?w=1596 1596w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-160.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-160.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-160.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-160.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-160.png?w=418 418w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-160.png?w=424 424w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-160.png?w=356 356w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-160.png?w=80 80w" sizes="auto, (max-width: 1596px) 100vw, 1596px" /></figure>



Technically, the Fed makes money more scarce by reducing the amount of debt it holds: US dollars are created when the Fed buys bonds from banks (which adds to banks’ reserves), and destroyed when the Fed lets those bonds mature (reducing bank reserves).&nbsp;



As a demonstration of responsible monetary policy, that’s not quite as dramatic as lighting bills of credit on fire.



Nor is the money destroyed very publicly: The Fed’s role in creating and destroying money did not get a mention in today’s FOMC’s <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20251029a.htm">statement</a>, which announced only its decision on interest rates (a quarter-point cut).



In his press conference, however, Chair Powell additionally announced that the FOMC had decided to “cease run-off” of the debt it holds.



This is a modern way of saying it will not burn any more money.



In fact, it might soon be printing it again.



Reserves “have to be ample,” Powell said in the Q&amp;A, adding that “at a certain point, you want reserves to start gradually growing.”



The Fed grows reserves by buying bonds.



In other words, the Fed will soon be printing money again (by buying bonds), because $6.6 trillion of bank reserves is no longer “ample” in today’s monetary regime.



There are a lot of monetary plumbing reasons for that, most of which are beyond my newsletter-writer understanding.



But the announced change of direction highlights perhaps the biggest difference between burning bills of credit in 1760 and reducing bank reserves today: It was fiscal policy back then and monetary policy now.



“Colonial Americans burned their money because each bill represented a tax debt that had been repaid,” Andrew David Edwards explained.



Of course, that’s not what’s happening now.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1596" height="992" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-161.png?w=1024&amp;h=1024" alt="" class="wp-image-109659" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-161.png?w=1596 1596w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-161.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-161.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-161.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-161.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-161.png?w=413 413w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-161.png?w=420 420w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-161.png?w=352 352w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-161.png?w=80 80w" sizes="auto, (max-width: 1596px) 100vw, 1596px" /></figure>



In the time the Federal Reserve responsibly burned $2.4 trillion of reserves, the federal government somewhat irresponsibly added $6 trillion of debt.



George Washington, who used his farewell address to advise that governments’ “vigorous exertions in time of peace to discharge the debts,” would not approve.



Despite a strong economy, the US has made no effort at all to reduce its debt, and that has gotten people worried about fiat money again.



There’s not much the Fed can do about that, because burning bank reserves will never be as convincing as burning tax receipts.



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Federal Reserve

The dollar needs a new bonfire of the bills

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Markets are recalibrating after the Fed’s second rate cut of the year, with Powell’s comments sparking a sharp shift in expectations. Flows are once again driving returns, as Solana’s new staking ETFs steal the spotlight and put TradFi’s appetite for yield on display. We also explore what it means to stay competitive when the edge in crypto keeps shrinking, and why understanding where to play may matter more than what to trade.



<h2 class="wp-block-heading">Indices</h2>



The Fed delivered its second rate cut of the year yesterday, but it was Jerome Powell’s remarks that rattled markets. He noted that the Fed has not yet made a decision about December and that officials hold strongly differing views on the pace of future cuts. Following his comments, the odds of a December cut <a href="https://www.investing.com/central-banks/fed-rate-monitor">dropped</a> from 90% to 66%, sparking a risk-off reaction.&nbsp;



BTC fell -2.5% and Gold slipped -0.6%, while equities held up relatively well. The S&amp;P 500 dipped -0.02%, and the Nasdaq gained 0.27%, helped by Nvidia, which became the first $5 trillion company amid continued strength in the AI trade and reports that OpenAI is targeting a <a href="https://www.reuters.com/business/openai-lays-groundwork-juggernaut-ipo-up-1-trillion-valuation-2025-10-29/">$1 trillion IPO</a>.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1171" height="625" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-154.png?w=1024&amp;h=1024" alt="" class="wp-image-109649" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-154.png?w=1171 1171w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-154.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-154.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-154.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-154.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-154.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-154.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-154.png?w=80 80w" sizes="auto, (max-width: 1171px) 100vw, 1171px" /></figure>



Looking at crypto-specific sectors, the AI sector mirrored its equity counterparts, rising 1.67% on the day. The other standout was RWA, which gained nearly 1%. The AI index was once again supported by TAO, up 1.8%, while LINK gave a boost to the RWA sector, climbing 1.3%.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1173" height="626" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-159.png?w=1024&amp;h=1024" alt="" class="wp-image-109654" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-159.png?w=1173 1173w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-159.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-159.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-159.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-159.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-159.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-159.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-159.png?w=80 80w" sizes="auto, (max-width: 1173px) 100vw, 1173px" /></figure>



Surprisingly, BTC was the weakest performer overall, weighed down by sharp ETF outflows of -$470.7 million and continued <a href="https://x.com/lookonchain/status/1983378308567011393">profit-taking</a> from early whales. These factors are adding short-term pressure in what remains an already fragile market environment.



<h2 class="wp-block-heading">Market Update</h2>



Returns follow where flows go, and this week all eyes are on Solana. The launch of the Bitwise BSOL ETF has given SOL a major tailwind, pulling in $116 million in inflows within just two days and generating <a href="https://www.theblock.co/post/376839/huge-number-bitwise-solana-etf-crosses-70-million-volume-second-day">$128 million</a> in trading volume. That makes it one of the strongest ETF debuts of the year. Grayscale’s SOL ETF also entered the market, though with a quieter start at $1.4 million in first-day inflows.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="976" height="621" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-155.png" alt="" class="wp-image-109650" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-155.png?w=976 976w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-155.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-155.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-155.png?w=404 404w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-155.png?w=410 410w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-155.png?w=344 344w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-155.png?w=80 80w" sizes="auto, (max-width: 976px) 100vw, 976px" /></figure>



What makes these SOL ETFs stand out is that both include staking rewards, something Ethereum has yet to achieve despite anticipation around its own staked ETF. That could soon change as BlackRock’s ETH staking ETF deadline arrives today. Bitwise partnered with Helius, while Grayscale chose Figment to manage SOL staking. The contrast is clear when compared with the REX/Osprey SOL ETF, which saw just $4.4 million in inflows last week.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="773" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-157.png?w=1024&amp;h=1024" alt="" class="wp-image-109652" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-157.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-157.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-157.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-157.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-157.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-157.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-157.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-157.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-157.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Crypto ETFs are fast becoming <a href="https://www.theblock.co/post/360813/blackrocks-bitcoin-etf-revenue-sp-500-fund-bloomberg">profit engines</a> for their issuers, and the new staked SOL ETFs are no different. Take BSOL for instance: On top of a 0.20% management fee, Bitwise keeps 6% of staking rewards. Assuming a $500 million AUM and a 7% yield, that translates to roughly $2.4 million in annual revenue, pushing the effective fee close to 0.48%.



Now, the race is on. Canary Capital, Franklin Templeton, VanEck, 21Shares and Fidelity have all filed for their own staked SOL ETFs. If inflows and volumes hold up, it’s only a matter of time before BlackRock joins the chase. Whether TradFi has truly bought into the “Solana as a payments chain” story remains to be seen, but with enough momentum, November could be the start of a flow-driven SOL season.



<h2 class="wp-block-heading">Finding edge</h2>



Equities keep ripping higher. Giants like Nvidia are up around 60% YTD, the S&amp;P 500 has gained 16%, and even gold is up 52.5% — on track for its best year since 1979, when US inflation was stuck in double-digits. Meanwhile, of the 17 crypto indices we track, only four are positive YTD, and two of those are equity-related (miners and crypto equities).



This has gotten me, and <a href="https://x.com/thinkingvols">many other traders</a>, asking why are we still trading coins that:



<ul class="wp-block-list">
<li>underperform most equities both in absolute and risk-adjusted terms,</li>



<li>lack transparency, and</li>



<li>offer little to no investor protection (see the case of <a href="https://blockworks.co/news/pump-acquires-padre">Padre</a>).</li>
</ul>



The truth might be uncomfortable. Being a good trader is not only about picking the right tokens or having the right thesis, but also about choosing the right market to compete in.



This reminds me of an article by <a href="https://x.com/therobotjames?lang=en">Robot James</a> that influenced a lot of trading philosophy: “<a href="https://robotwealth.com/stop-trying-to-beat-djokovic-at-tennis/">Stop Trying to Beat Djokovic at Tennis</a>.” The idea behind this centers on markets being an extremely competitive zero-sum game. A retail trader competing is similar to stepping into the ring with Mohammed Ali:



“You don’t want to be trying to outsmart and out-gun other traders in a highly competitive zero-sum game.



You can’t win like that. So don’t just consume a bunch of economic data and expect you’ll figure out macro scenarios better than the market. That ain’t gonna happen. You’re trying to beat Djokovic at macro tennis.”



Rather than trading the S&amp;P 500 against Jane Street and HRT, you want to find an uncompetitive arena. From 2020 to 2022, crypto was exactly that: a massive, unstructured, retail-dominated market that allowed you to compete directly against other individuals in a grand PVP battle. It was probably the most +EV market for anyone to trade in. However, as YTD altcoin performance shows, the landscape has shifted. The arena has become much more competitive, with retail now picked off by extractionary fee structures, deep information asymmetries and constant sell pressure.



That does not mean there are no opportunities left. It means that finding true edge in altcoin picking has become increasingly difficult. More than ever, traders need to be intentional about where they compete, understand the structure of the market they are operating in and consider its advantages and drawbacks. I believe that consistently identifying outperforming altcoins is one of the hardest games to play. It requires&nbsp;



<ul class="wp-block-list">
<li>catching short-lived narratives that often fade within weeks,</li>



<li>forecasting sector rotations and flow dynamics, and&nbsp;</li>



<li>extracting alpha from fundamentals, all while operating in markets where most tokens primarily exist to fund project expenses and team allocations.&nbsp;</li>
</ul>



From that perspective, equities may actually offer a less competitive and more favorable environment.



The one major advantage crypto still has is its community distribution structure and incentives. While traditional finance has mature shareholder rights, crypto has a cultural and often implicit obligation to distribute tokens to early participants. For example, Plasma deposits at a $500 million FDV were up 32x, MegaETH’s raising at $1 billion while being valued around $5 billion pre-market, and Monad is currently distributing to its community. These types of markets are uncompetitive by design, as their incentive mechanisms reward early participation. There have been many similar examples, from Lighter to Plasma to Kinetiq, where being early was the right move, and the downside was limited to opportunity cost.



Looking ahead, one potential opportunity is Polymarket, which raised at a $10 billion valuation and has <a href="https://x.com/Bitcoineo/status/1981723645127922037">confirmed both a token and an airdrop</a>. In 2024, Polymarket processed $8.6 billion in volume, and in 2025 YTD volumes have already reached $12.3 billion.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="900" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-158.png?w=1024&amp;h=1024" alt="" class="wp-image-109653" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-158.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-158.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-158.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-158.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-158.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-158.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-158.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-158.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-158.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



There is no known airdrop methodology, which is exactly where the edge lies. But if you assume that retroactive volume will be rewarded, you can make a strong argument for a highly lucrative airdrop, depending on the total distribution percentage and the final snapshot date.



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1106" height="282" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-156.png?w=1024&amp;h=1024" alt="" class="wp-image-109651" style="width:613px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-156.png?w=1106 1106w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-156.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-156.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-156.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-156.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-156.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-156.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-156.png?w=80 80w" sizes="auto, (max-width: 1106px) 100vw, 1106px" /></figure>



The point here is not to say that the Polymarket airdrop will be the best one to farm. Rather, it is to highlight there are still many ways to gain exposure to new, promising projects while limiting directional risk. Instead of positioning in an altcoin with a 200% bull case and a -70% bear case, you can position for Polymarket upside through delta-neutral strategies where the potential reward is higher and the downside is limited to your time and effort. Whether that means farming HIP-3 markets, leveraged looping tokens like USDai, or participating in liquidity programs depends on how you want to express your view of the market. However, types of opportunities continue to offer asymmetrical returns, even as the broader altcoin market becomes increasingly competitive.



Updated November 3, 2025 at 12:15 am ET: Clarified Bitwise staking fees.



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When the easy trades disappear

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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VC firm 1kx has run the numbers on the crypto economy in a report shared with Blockworks ahead of its release later today.



After analyzing more than 1,200 protocols across 2020 and until Q3 2025, 1kx found that value distribution to token holders has returned to all-time highs, even if total revenues have yet to beat their 2021 tops.



1kx defined value distribution to token holders as the net sum of buybacks, burns and other accruals, minus emissions (validator rewards and so on).&nbsp;



That came to $1.9 billion distributed in Q3 this year, about on par with H2 2021, when fees paid by users had peaked.



“Applications drive most of the distributed value, driven by incentive reductions: top apps cut token incentives from $2.8 billion (90% of their fees) in H2 2021 to less than $0.1 billion in H1 2025, boosting net returns to holders,” the report stated.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="1133" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-152.png?w=1024&amp;h=1024" alt="" class="wp-image-109643" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-152.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-152.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-152.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-152.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-152.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-152.png?w=363 363w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-152.png?w=369 369w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-152.png?w=309 309w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-152.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



Value accrual has gone up and to the right | Source: 1kx



The trend is not uniform across the space, however. Many protocols still distribute net zero value to token holders, particularly newer networks which emit more token incentives than they return to investors, “a common pattern e.g. amongst L1s,” per 1kx.



In total, 1kx placed the size of the crypto economy at an estimated $56 billion for the first half of 2025.



<ul class="wp-block-list">
<li>Onchan fees: $9.7 billion (+41% YoY);</li>



<li>Offchain fees: $23.5 billion (+25% YoY);</li>



<li>Other income: $23.1 billion (+5% YoY).</li>
</ul>



(“Other income” mainly consists of block rewards and the yield earned by stablecoin issuers on T-Bills etc.)



The crypto economy is also much more diversified now than in 2021. Ethereum alone did more than 40% of all onchain fees in that year, now less than 3% year-to-date, according to the report. “Their scaling efforts are a major driver of the 86% decrease of average blockchain transaction fees.”



This has given cover for the app layer to flourish, even if the top 20 protocols (2% of the total) are generating 69% of all onchain fees right now.&nbsp;



“Of 1,000+ protocols analyzed, 71 have exceeded $100 million in onchain ARR, and 32 reached that within a year of launch, a pace comparable only to top AI breakouts like Cursor,” 1kx analysts found. They added that Meta/Facebook took three to four years to achieve $100 million ARR.



While revenues for some examples have since fallen, the firm counted blockchains Base, Filecoin, and Linea, DePIN cloud computing platform Aethir, DeFi apps Ethena, GMX, Virtuals and SushiSwap, wallets and interfaces Axiom, Moonshot and Photon, and consumer apps friend.tech, LooksRare and pump.fun, among others.



And many early surges were propelled by massive incentive programs. LooksRare in particular generated $500 million in fees within its first quarter but emitted the same amount in token rewards during that time, and volumes largely disappeared when those programs ran out.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="1059" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-153.png?w=1024&amp;h=1024" alt="" class="wp-image-109644" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-153.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-153.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-153.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-153.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-153.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-153.png?w=388 388w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-153.png?w=394 394w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-153.png?w=331 331w, https://blockworks-co.imgix.net/wp-content/uploads/2025/10/image-153.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



The onchain economy has expanded far beyond Ethereum mainnet



It all points to an onchain economy that’s changing. User fees are increasingly coalescing around apps and protocols instead of the underlying chains.



But it might be that the market has yet to catch up to the new dynamics (read: the <a href="https://x.com/coinbase/status/1983575664700666181">revenue meta</a>). 1kx highlighted that “DeFi/Finance protocols account for 73% of all fees, though in aggregate their market cap share remains well below 10%.”



As for where it’s all headed, the app layer is tipped to continue growing — the DeFi/Finance sector could see YoY growth of over 50% from here (asset prices willing), with onchain fees exceeding $32 billion next year (+63% YoY).



And what would a crypto newsletter be without bullish predictions? Here’s five about revenues from 1kx:&nbsp;



<ul class="wp-block-list">
<li>Tokenized RWAs will generate $100 million fees (5x YoY):</li>



<li>DePIN protocols will rake in more than $450 million, sustaining triple-digit growth.</li>



<li>Wallets will grow slightly faster than DeFi (50%).</li>



<li>Consumer apps will see roughly a 70% YoY increase in fees.</li>



<li>Middleware will grow by 50% with many protocols about to start or boost monetization (e.g. WalletConnect).</li>
</ul>



TL;DR: We like the apps.



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