Vertical AI

Byron Gilliam

This is a segment from The Breakdown newsletter. To read full 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 money supply is the blood of the economic body; when it flows freely, the economy prospers.”&nbsp;



— Irving Fisher
</blockquote>



In New York City, paying by check first became commonplace in the booming economy of the 1840s.&nbsp;



This was a major financial innovation: Instead of walking out of the bank with a satchel of borrowed cash to pay for, say, a steamer full of Southern cotton at the docks, a merchant could have a loan credited to a checking account and then settle his purchases with a few strokes of the pen.



As banking expanded and commerce sped up, checks offered a safer, faster way to move money through the city.



But the money did still have to be physically moved around.



Unlike today, banks did not unquestionably accept each other’s bank notes at face value.



Instead, payments between banks were settled in “specie” (gold coins, usually), which had to be shuttled back and forth across the city according to who had paid whom.



To do so, each bank employed a porter whose job it was to settle the transactions the bank’s depositors had made with checks.&nbsp;



Every day, the city’s 50 or so bank porters would set out with a ledger book, checks their bank had received and bags of gold coins.



Their job was to visit the city’s 49 other banks, present their checks for payment and collect any checks drawn on their own bank.



If the value of the checks they presented was greater than what they had received, they collected the difference in gold — or paid it out of their bag if the balance went the other way.



This system worked well enough when there were only a handful of banks in the city, but by 1850 there were too many of them for porters to both travel to and settle accounts within a single day.



So New York’s banks agreed to continue exchanging checks daily but to settle accounts in specie only once a week.



Friday mornings, the porters would gather on Wall Street (outdoors) to exchange gold coins and close the books on the week.



As a <a href="https://www.survivorlibrary.com/library/a_century_of_banking_in_new_york_1922.pdf?utm_source=chatgpt.com">history of New York banking</a> later explained with an illustrative example, however, this was no easy task:



“Thomas had left a bag of specie at John&#8217;s bank to settle a balance, which was due from William&#8217;s Bank to Robert&#8217;s; but Robert&#8217;s bank owed twice as much to John&#8217;s. What had become of that? Then Alexander owed Robert also, and William was indebted to Alexander. Peter then said that he had paid Robert by a draft from James, which he, James, had received from Alfred on Alexander&#8217;s account. That, however, had settled only half the debt. A quarter of the remainder was cancelled by a bag of coin, which Samuel had handed over to Joseph, and he had transferred to David.”&nbsp;



“It is entirely safe to say that the Presidents and Cashiers of the banks themselves could not have untangled this medley,” the author concluded.



But not for long: The untangling of said medley was the next great innovation in moving money around.



In 1853, the New York Clearing House was established, after which banks settled their accounts “multilaterally” — each bank settling with the Clearing House instead of with each other.



This is a much better way to do business: fewer messengers, fewer mistakes and far less gold to lug around (and get lost or stolen).&nbsp;



“In one case,” the banking historian noted, “a bank which had debit charges footing up $6,180,000 had to pay merely $167.31.”



At first, that remaining balance would still be settled in specie, so the city’s porters stayed busy.&nbsp;



But this soon changed as banks began leaving their gold on deposit with the Clearing House in return for “specie certificates” — paper receipts backed by gold, which could be used to settle debts without moving the metal itself (an early form of ETF, basically).



This was more than just a way to make life easier for banks, however.&nbsp;



Each innovation in payments — from checks to clearing houses to specie certificates — helped money move faster through the system, accelerating commerce for everyone.



That’s important because when money flows freely, economies prosper — the faster banks settle, the faster they can start lending again.



Checks were faster than cash, clearinghouses were faster than porters and specie certificates were faster than gold coins — and each made the economy run faster, too.&nbsp;



Money has since gotten even faster, of course. Today, innovations like Fedwire and CHIPS move trillions of dollars a day with no gold coins, no bank porters and barely any delay.



But as fast as money moves now, there’s no reason to think it can’t move faster — the history of banking suggests there’s always a better way.



Increasingly, people think that way might be stablecoins. CHIPS and Fedwire allow near-instant settlement, but only within a narrow circle of regulated financial institutions and only during regular US business hours.



Stablecoins have the potential to remove these frictions.



Anyone can move digital dollars — globally, 24/7 and permissionlessly — without waiting for a bank to approve the transaction, a clearinghouse to open or a central bank to update its spreadsheets.



In the US, digital dollars have so far been used mostly to facilitate the 24/7 market in crypto trading, which, on its own, isn’t much of a breakthrough.



But <a href="https://www.wsj.com/finance/banking/walmart-amazon-stablecoin-07de2fdd?st=gUAuRr">news</a> that Walmart and Amazon are both considering issuing store-branded stablecoins hints at something much bigger.



If stablecoins were to gain traction in everyday commerce, it might represent the next evolutionary step in payments: a dollar that not only moves faster than ever before, but moves more often, in more places, by more people.



We’d all stand to benefit — because when money moves faster, everything else does too.



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



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



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The Breakdown Newsletter

Are stablecoins the next great acceleration of money?

Jeff Albus

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



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Solana&#8217;s memecoin season mostly played out on <a href="https://blockworks.co/tag/dexs">DEXs</a> like Raydium and Jupiter, with centralized exchanges, which sometimes only get around to listing new tokens after their popularity has peaked, sitting the party out.



Hard to blame them at the time. Liquidity was scattered, tokens were often unserious and (in earlier political climates) listings seemed sure to attract unwanted scrutiny from the big-bads at the SEC.



But the world has changed, there&#8217;s money to be made, and strategies are now in flux.



Last week, centralized exchange Bybit <a href="https://x.com/byreal_io/status/1934085435212308789">announced</a> a new Solana-based exchange called Byreal. According to the company, it&#8217;s being built from scratch and incubated in-house. Today, the project&#8217;s socials went live with the announcement of a testnet, set for June 30, and a mainnet slated for Q3 this year.



According to the announcement, Byreal will offer a &#8220;hybrid&#8221; model meant to merge centralized liquidity with decentralized execution.&nbsp;



Pitched as an extension of Bybit itself, it will route trades using Request for Quote (RFQ) and Concentrated Liquidity (CLMM) mechanisms, integrate MEV protection and leverage unified liquidity sources. Users get execution from market makers or LPs, depending on the asset and conditions.



There&#8217;s also Revive Vault, a curated yield product designed to deliver real yield on Solana assets like bbSOL, and its own token launchpad, called Reset Launch.



The latter seeks to create a more equitable token distribution by combining a Smart Price Ladder that raises token prices incrementally with a Fairshare Engine that distributes allocations based on participation rather than speed.



And that&#8217;s all well and good, but in a world already full to bursting with competing DEXs, why does Bybit think Solana needs another one?



Well, despite DeFi&#8217;s promise of open, onchain finance, most trading still happens on centralized exchanges. That&#8217;s partly due to liquidity fragmentation, partly due to painful UX, and mostly because DEXs still can&#8217;t compete with CEXs on slippage, speed or price execution.



With its fast finality and low fees, Solana is uniquely positioned to bridge that gap. But its most popular DEXs tend to specialize: Phoenix offers pure order books, Jupiter routes swaps and Raydium hosts memecoin liquidity.



Then there’s the <a href="https://blockworks.co/news/hyperliquid-hype-valued-l1-perps-dex">growing trading juggernaut</a> in Hyperliquid — which uses colocated validators to hit CEX-like performance in a no-KYC DEX environment. It’s obviously a different blockchain with some centralization tradeoffs, but Solana, DEXs, and CEXs could all have a lot to lose if Hyperliquid becomes the retail crypto trading platform of choice.



The Solana market-proper lacks a DEX that combines deep liquidity, fair price discovery and streamlined onboarding into a single package, though.



So that&#8217;s the play for Byreal: balance CEX-grade execution, DeFi transparency and user experience while unifying liquidity into a single trading venue. If it can ship fast and attract real projects, Bybit probably won&#8217;t be the only CEX to script a second act beyond CeFi.



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</ul>

Bybit

Solana gets new hybrid DEX from Bybit

Ben Strack

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



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I enjoyed my time off, but it’s always nice to be back in the loop.



A lot happened on the crypto ETF front while I was away. And perhaps you forgot we’re approaching a very important SEC deadline. But first, checking up on ETF filings — as one does first thing after returning from abroad — I came across Yorkville America Digital’s latest proposal. That would be a Truth Social-branded ETF that this time would hold both BTC and ETH.&nbsp;&nbsp;



Yorkville finalized a <a href="https://link.mail.beehiiv.com/ss/c/u001.ZaVO_gulYIDHwTR9OqetU7Bg8sIaNC2rP34QpXDcW9bROa8OG6u8KUk2Ksj30caIO8AshtUnCCj3JUrnZ9ZnCWV7CvGHxy2bb7uPaVtNfMXc6gMcc8RJw2xgWCOf2bltlDITjHKNajWiaKqEvaqpaUaX8He4h4dqq_IResmS6zJa6F7of0_OsuxdefaxYCDTuNUxevPZB6__p5TvYqQ2g8uOGjxB-L5VxsB4QjfbNeCBbQkG7BZKIDfxgW8uFTMXdkS9h9_7lCT61QPi9U-SGA313Qdrfh2rBYszvJAf2r7Q4-LO2H-IqwpFGDao_B3l1-7B84fIZNTyerPJw6GbeN2GO6z3Rdf-MxGt1VeQWKWtAm0I3zddceOO0KXRj-waO1J5GzQjkDqrkY0fJGIxIw/4h2/W281edT0Tvy2ifMnqMRofw/h10/h001.W5z2fT0ooCNchgCsfv4KC5tlh2Ygj72dV8wIcM-wrHQ">partnership</a> with Truth Social parent company Trump Media and Technology Group in April and previously signaled its plan to launch a bitcoin ETF.



CoinShares, meanwhile, joined the spot solana ETF race, becoming the eighth issuer to do so. The firm declined to comment.&nbsp;



Those filings come after the <a href="https://blockworks.co/news/solana-etf-sec-forms">SEC engaged with issuers</a> about spot SOL products and the subsequent S-1 amendments. You likely saw that covered in Blockworks last week.&nbsp;



A person familiar with the amendments told me today that the exact timeline of an SEC ruling on the solana products remains unknown. But “a flurry of filings” is typically “the best sign” that products are close to approval, the source noted, adding the latest S-1s point to “some sort of push from the SEC to get things organized.”



While those proposal adjustments dealt with the single-asset funds (complete with staking language), let us not forget about crypto index ETFs.



We should know by July 2 whether the SEC is letting the Grayscale Digital Large Cap Fund (GDLC) convert to an ETF. That fund’s holdings are below: <img loading="lazy" decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcaun9C2KV1UUFZEXv4cG6fs3L8u9ppVUPmFWjK0sOqKa8Ac0WHg5f2X6PmbLc82sqPXjljtzY1XjF_Be49KszGMlGAEAriAksWqcGiBS7TMZDEfVcoxFa-SmgSPniNJpMCEbuKbA?key=GRK8bxE7P9eK5pHWpv-e5Q" width="624" height="291"> 



Bloomberg Intelligence analysts expect the agency to let GDLC — and the Bitwise 10 Crypto Index Fund (BITW) — become ETFs.&nbsp;&nbsp;



“Having only small allocations to alternative coins might help their ETF conversion bids even if the SEC hasn’t individually approved each asset for an ETF wrapper,” James Seyffart and Eric Balchunas wrote in a note last week.



Samir Kerbage, CIO of Brazil-based asset manager Hashdex, shared a similar sentiment when we <a href="https://blockworks.co/news/hashdex-crypto-etfs-index-sec-interview">spoke last month</a>. The company filed to allow its existing Nasdaq Crypto Index US ETF (NCIQ) to hold tokens beyond BTC and ETH — like SOL, XRP and others.&nbsp;&nbsp;



Kerbage told me today that he views the solana ETF S-1 amendments as “a positive development toward approving broader crypto index ETF proposals — as BTC, ETH and SOL, combined, constitute more than 90% of the Nasdaq Crypto Index.”



To be clear, the person familiar with the latest ETF filings views the S-1 amendments and upcoming crypto index product deadline as two distinct things.



Still, some think the SEC greenlighting crypto index ETFs could open the floodgates. Take this June 10 X post by Van Buren Capital general partner Scott Johnsson, for example, which appears to allude to the July 2 deadline.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Should be about 3 weeks away from the SEC laying out the playing field for crypto ETFs for the next several years. Expecting the universe of allowable strategies to begin expanding meaningfully.&mdash; Scott Johnsson (@SGJohnsson) <a href="https://twitter.com/SGJohnsson/status/1932433474872565797?ref_src=twsrc%5Etfw">June 10, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



He <a href="https://x.com/SGJohnsson/status/1915619368156762388?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1915619368156762388%7Ctwgr%5E00d4fbd43a5d291f9b959e2f9ff743febce506e2%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fblockworks.co%2Fnews%2Fhashdex-crypto-etfs-index-sec-interview">noted</a> last month that because the index products have a more undefined universe of allocations, the SEC would theoretically adopt a general rule vs. a case-by-case rule application.



“Once the index products are (hopefully) cleared, it should be a simple application of the general rule to the single asset spot products,” Johnsson added at the time.&nbsp;



We’ll be watching this very closely over the next two weeks.



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ETFs

Crypto ETF filings multiply ahead of SEC index fund decision

Kate Irwin

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



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Now that the US regulatory climate around crypto has shifted, some, like a16z’s Miles Jennings, have declared that crypto foundations like those set up in the Cayman Islands are no longer necessary and should be a thing of the past.



Jennings, who is the venture firm’s head of policy and general counsel, <a href="https://a16zcrypto.com/posts/article/end-foundation-era-crypto/">wrote</a> in a recent blog post that foundations became standard initially to increase decentralization. But over time, he argues, foundations’ lack of economic incentives, combined with existing legal and economic constraints, have made it difficult for the nonprofits to be productive or broadly financially successful.



“Most foundation setups require projects to spend upwards of $500,000 and several months working with an army of lawyers and accountants. This not only slows innovation, it’s cost prohibitive for small startups,” Jennings said.&nbsp;



“The situation has gotten so bad that it’s now increasingly difficult to even find attorneys with experience setting up foreign foundation structures, because many have given up their practices. Why? Because they now just collect fees as professional board members on dozens of crypto foundations,” he argued.



Jennings concluded that companies are just better. Foundations have turned into controlling entities, but could evolve into other formats like Decentralized Unincorporated Nonprofit Associations (DUNAs), while developer firms could become Public Benefit Corporations (PBCs).&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">I&#39;ve never been more optimistic about the chances of market structure legislation passing in the U.S. It&#39;s a great time to be building in crypto in America. <a href="https://t.co/ZO8HjVrErS">https://t.co/ZO8HjVrErS</a>&mdash; miles jennings (@milesjennings) <a href="https://twitter.com/milesjennings/status/1932883189443539059?ref_src=twsrc%5Etfw">June 11, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



How do other blockchain attorneys feel about crypto foundations, especially when they have historically been set up to address regulatory and taxation concerns?&nbsp;



&#8220;Foundations for token issuances are neither needed nor would they be particularly effective in instances where there was a concern whether or not the token constitutes a security,” David Otto, managing partner at Marin Davis PLLC who led defense in the <a href="https://www.sec.gov/files/litigation/litreleases/2025/stip26299.pdf">recently-dismissed</a> SEC lawsuit against DragonChain, told me in a message.



“There generally is no longer the perception that one needs to create a foundation (other than for specific jurisdictions that provide for tax benefits) in connection with a token issuance,” Otto added.



Moish Peltz, co-managing partner of Falcon, Rappaport &amp; Berkman&#8217;s <a href="https://frblaw.com/practices/digital-assets/">Digital Assets Group</a>, said that offshore foundations can still have a role in crypto, but “rationale is narrowing as US rules catch up.”



Peltz suggested that US teams should look into starting US-based UNAs or DUNAs instead — or set up an LLC as a for-profit option.&nbsp;



He advises to “only look offshore if (a) a significant share of contributors cannot participate under U.S. securities or tax laws, or (b) the project’s community is already truly global and wants a neutral flag. Even then, they should expect to satisfy disclosure, KYC, and board-independence standards they would face here.”



“The real barrier is the tax,” Peltz continued. “Token treasuries often appreciate before they are spent. If the IRS provides clearer deferral or charitable-like treatment for bona-fide decentralized or public-goods projects, many of the remaining reasons to go offshore will compress.”



Tyler Harttraft, a partner at Bull Blockchain Law, told me that crypto foundations remain essential for US teams launching tokens. He noted that the tax breaks are the main reason crypto has been drawn to Cayman Islands foundations in the past, and this will likely remain the preferred pathway until new US regulation is solidified.



“The current US regulatory landscape offers no clear issuance pathway: Although the SEC is exploring exemptive relief and Congress has proposed measures like the Clarity Act and the Digital Asset Market Structure draft, none have yet created a formal safe-harbor for new token launches. As a result, advising a crypto firm to establish a separate non-US foundation remains the only reliable option for legal and tax certainty,” Harttraft said.



Video streaming- and data storage-focused network Livepeer is one example of a crypto ecosystem that just launched a foundation earlier this month in the current climate.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Today is a big day in the <a href="https://twitter.com/Livepeer?ref_src=twsrc%5Etfw">@Livepeer</a> ecosystem, as we share the launch of the new Livepeer Foundation! 8 years ago, at the dawn of the project, we opted not to take the Foundation path, for many of the reasons that <a href="https://twitter.com/milesjennings?ref_src=twsrc%5Etfw">@milesjennings</a> from A16Z Crypto recently articulated in a… <a href="https://t.co/a99WApcJP3">https://t.co/a99WApcJP3</a>&mdash; Doug Petkanics (@petkanics) <a href="https://twitter.com/petkanics/status/1930642003156435232?ref_src=twsrc%5Etfw">June 5, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“We’re creating something leaner, more focused, and better suited to the actual needs of a mature, multi-entity, decentralized network,” Livepeer cofounder and CEO Doug Petkanics told me in a message. “Many foundations have become bloated intermediaries that exist as a regulatory workaround, and neither accelerate decentralization nor improve execution.”



The current political climate suggests foundations may not be needed for much longer, which would be a drastic change from the status quo of the past decade.&nbsp;



While some foundations serve more of a purpose than others, setting up something leaner or doing away with the model entirely would increase competition and aid scrappy startup builders in the US looking to bring tokenization to their consumer apps. Progress!



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International

Do crypto teams still need offshore foundations?

Donovan Choy

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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World War II’s outcome was fundamentally determined by access to oil.



So depleted was the resource by the final stages of the war that Nazi Germany resorted to extraordinary measures to maintain basic mobility — pulling trucks by oxen, four at a time.



The oil situation for the armies of Imperial Japan was equally dire. In Daniel Yergin’s Pulitzer Prize-winning book The Prize, he documented how the Japanese kamikaze suicide pilots would fill their tanks to only halfway since they were not meant to return from their missions.



The armies of both Nazi Germany and Imperial Japan were defeated not for lack of manpower or armaments, but because they ran out of oil.



Oil’s enduring legacy in the history of the deadliest conflict in human history continues to influence and reverberate throughout contemporary thinking.



For instance, “<a href="https://truthonthemarket.com/2019/10/08/why-data-is-not-the-new-oil/">data is the new oil</a>” is the rally cry of Big Tech critics when they clamor for stronger regulations of tech companies.&nbsp;



Whether they do it unknowingly or not, the metaphor draws a parallel between oil’s historical importance and the emerging value of data in the digital economy.



That analogy too has permeated crypto, evident in our use of words like “gas” and “burn.”



Channeling that meme to the fullest is last week’s “The Bull Case For ETH” report co-authored by top Ethereum stakeholders.



In the report, ETH is projected at a value of $8k per ETH ($1 trillion market cap) in the short term.



The long-term moon math goes even further: ETH at a $85 trillion asset of $706k per ETH — a steal at today’s prices!



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcHACO2f_Raldni6zd72h5ZTPMm8xUJwkGkixyDxfyP9lDXVTpSYWc13ZpJO96z-rsKsA8CPsuSWOaqDcLlMj9EqUxC3s7MbwmKFJ8GMgyXLz_X5IsU1lre_I3LtaBDheSsJ-1wAw?key=7beOlZh4fLlxRGum6-OPxA" alt=""/></figure>



Source: <a href="https://ethdigitaloil.com/">Ethdigitaloil</a>



Part of this valuation model benchmarks ETH against today’s $85 trillion oil market valuation.



But the case for ETH as “digital oil” is more complex than that.



For one, unlike real armies, the heaviest gas guzzlers of ETH have cheaper alternatives.



Ethereum’s largest <a href="https://etherscan.io/gastracker">gas guzzlers</a> have historically been Uniswap and Tether. Both are actively moving their execution onto more gas-optimized environments (Unichain and Plasma).



Though Plasma isn’t live yet, and Unichain is still in its early days, it does considerably weaken the case for ETH as “digital oil.”



What about data availability?



The biggest ETH-denominated bill for L2s is the cost of using Ethereum DA, namely publishing your raw transaction data to the L1.&nbsp;



Before the introduction of blob space with EIP-4844, 1 kB of call data would cost about 16,000 gas, or about $1.44 (assuming ETH at $3000).



That’s a non-trivial 80-90% of a typical L2 fee.



EIP-4844 brought legacy call data costs down by ~99%, yet it is still cheaper by ~20-30x if rollups use an alternative-DA layer like Celestia or EigenDA.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc_leEK2S_w7cCv3UrbbgcTiDJmo1dUmcydr-icsFXuCTvSdrY4X9SXO3AQtXI_I8cqee6IYDcSzKJVTX1L5Fp1zCoFdQ9RKr_eVg_k_zpeDnxGwfRGq4_BOQzgOUS2A3tPhotq?key=7beOlZh4fLlxRGum6-OPxA" alt=""/></figure>



The ETH as “digital oil” thesis crumbles further when you consider that Ethereum itself faces stiff competition from competing L1s.



If Ethereum can claim its native asset as “digital oil,” so can Solana, Sui and every other ecosystem.



Yes, Ethereum is the largest crypto economy and the second largest crypto asset. But the Ethereum economy is not so far ahead of its peers that ETH would have the same overwhelming influence that oil does.



The whole analogy of ETH as “digital oil” rests on shaky premises.



ETH may very well be a global reserve asset, but memeing that into existence would be tough for institutional investors to swallow.



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0xResearch Newsletter

ETH as digital oil is a tough sell

David Canellis

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



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Last week, we <a href="https://blockworks.co/news/bitcoin-faucet">covered a story</a> that might’ve made you feel impossibly late to Bitcoin.



Let’s undo that feeling.&nbsp;



I’m not here to make the case that nation states and multibillion-dollar companies buying bitcoin is not a big deal.



El Salvador adopting BTC as legal tender will go down in history as one of the most significant events in finance, modern or otherwise, regardless of how it ended. Bhutan’s harnessing of its bountiful hydropower capacity to <a href="https://blockworks.co/news/bhutan-btc-mining-operations">mine bitcoin</a> is equally momentous.&nbsp;



So is Michael Saylor and (Micro)Strategy’s toppling of the first corporate domino, when it bought $250 million bitcoin in 2020. Square (now Block) and Tesla quickly followed, then a few firms across Asia, and then a few more in the US. Now, companies are announcing <a href="https://blockworks.co/news/crypto-treasury-companies-alt-season">new treasury strategies</a> every other day.



Almost half a decade later, one portal <a href="https://bitbo.io/treasuries/">counts</a> 74 public stocks with at least some bitcoin on their balance sheets, totaling 764,070 BTC ($86.1 billion), or almost 4% of the circulating supply. (Strategy makes up over three quarters of the whole.)



And then there’s the two-and-a-half dozen ETFs and other funds with 1.39 million BTC ($148.7 billion), or over 6.6% of the coins in existence, most of it belonging to BlackRock, Fidelity and Grayscale.&nbsp;



Obviously, the price of bitcoin has jumped alongside each leap of adoption in the past five years: major corporations, sovereigns, asset managers and then back to corporations of all sizes, including SPACs.



Bitcoin is up almost 10x since Strategy’s first buy, 3x since Nayib Bukele announced the Bitcoin Law, and nearly 2.5x since the SEC approved ETFs for trading.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfOiN6nQrDvOI1Ii7Numjb7G17I49pICdmwOuxOTcLjY44cCdVjoEModDz82cOlu6AKyLBvYAYq7nWSAvi1ETAc7fHbXLoZF9cfmxbxG7E4YGhPVqPWxGufPchsiqdvJvZGney1Qw?key=bpLdakvHr3aDuf5I1h5bXg" alt=""/><figcaption class="wp-element-caption">MetaPlanet has only 1.5% of Strategy&#8217;s stash, but the impact is still clear.</figcaption></figure>



At this point, and however unintuitive, the supply of bitcoin could be more decentralized than it has ever been, even if more of it is owned by centralized entities than ever before.



Wasn’t this meant to make you feel early to Bitcoin?&nbsp;



There are plenty of reasons to be confident about the price of bitcoin. I’ll leave it to others to amplify them, but if your yardstick for “earliness” is based on your entry point to BTC, then I’m afraid it’s all relative. You’re always earlier than some but later than others.



Here’s an alternative view: We’re all early to Bitcoin until the novelty wears off.



First, it was crime. The media loved crypto crime stories — because these soaked up traffic. But on a long enough timeline, all crime <a href="https://blockworks.co/news/crypto-fraud-financial-scam">will be “crypto crime</a>,” and related headlines have been passé for years already.



News of corporate bitcoin treasuries is destined to go the same way. As will word of sovereign funds, governments, <a href="https://x.com/cardano_5pc/status/1932445329074655563">altcoins</a> and pensions buying bitcoin. Maybe religious institutions will come next, or Ivy League universities. Record labels and movie studios, public and private. Elementary schools and mom and pops.



As Bitcoin eats the world, each wave of adoption will feel like a novelty, until it isn’t. Only then will I happily agree that we’re no longer early.



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Bitcoin

You’ll know Bitcoin has won when it’s suddenly boring

Katherine Ross

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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Could we get an alt season after all?



Monarq Asset Management’s Shiliang Tang told <a href="https://blockworks.co/podcast/empire">Empire co-host Jason Yanowitz</a> that there’s a possibility that the popularity of crypto treasury companies sparks an alt season that we haven’t seen before. This one would be focused on tokens deemed “ fundamentally valuable enough for traditional public money and capital” to get involved with.



It’s an interesting take, and one that I haven’t heard before. Especially because there’s a lot of criticism around these vehicles, some of which is warranted due to the entities’ structure.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">In this morning&#39;s spaces that we had I was banging the drum about how I was concerned that these treasury acquisition vehicle companies were fleecing equity holders by being higher up the capital structure and using retail as exit liquidity to dilute and sell into. Here we are. <a href="https://t.co/X0pgBx1FoO">https://t.co/X0pgBx1FoO</a>&mdash; fejau (@fejau_inc) <a href="https://twitter.com/fejau_inc/status/1933274896924356750?ref_src=twsrc%5Etfw">June 12, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Meanwhile, FalconX’s Josh Lim said that the rise of these treasury companies puts crypto — if we’re recycling what we talked about on Friday — in the “early to mid” innings of crypto’s adoption.&nbsp;



 ”There&#8217;s a pretty healthy pipeline of large deals. Like, we think there&#8217;s only going to be a handful of really credible teams like operators and the bankers [and investors]” that participate in these deals, he said.&nbsp;



<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="The State Of Crypto Derivatives" width="1024" height="576" src="https://www.youtube.com/embed/YzMlgm3o_rM?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>
</div></figure>



He noted that there’s generally a “chosen one” in each category, and those are the winners. Take, for example, <a href="https://blockworks.co/tag/microstrategy">Strategy</a> or perhaps SharpLink Gaming. Strategy’s pretty much set itself as the gold standard, and SharpLink <a href="https://blockworks.co/news/bitcoin-treasury-strategies-sharplink-eth">could apply</a> the Strategy playbook to ETH.



Lim noted that he thinks there’ll be four or five “big ones” and then “lots of small ones.” His exact estimate was 50 or so.&nbsp;



But while there’s an appetite now, Lim noted that there are still risks.&nbsp;



 ”The downside risks are basically there could be sort of…fatigue for these like public equity deals and crypto — let&#8217;s say flat lines — and all these things trade at a small discount to NAV,” he noted.&nbsp;



If the risks play out, then Lim says that the market needs to stabilize and wait for “more capital to come in.” He added that there’s precedent for it.&nbsp;



But Yanowitz thinks there’s a different risk on the horizon. He believes that these companies need a good financial engineer and a marketer. And for him, a lot of the smaller ones making the pivot don’t have either.



Look, it’s clear that the treasury companies are here to stay. But the battles for the best is still underway.&nbsp;



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altcoins

Can the rise in crypto treasury companies spark an alt season?

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



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Volatility is back. After rallying to $167 on June 11, SOL <a href="https://blockworks.co/price/sol">reversed</a> sharply below $145 as geopolitical shocks rattled risk markets. Israeli airstrikes on Iran and the ensuing global rush to hard assets <a href="https://x.com/3orovik/status/1849954887469089125">appear to be the trigger</a> here.



Oil surged. Gold <a href="https://www.theguardian.com/business/2025/jun/13/oil-and-gold-prices-soar-after-israel-attacks-on-iran">climbed</a>. Solana and Bitcoin stumbled off a cliff.



Early Friday, we saw BTC <a href="https://blockworks.co/price/btc">dip briefly below $103k</a>, triggering over $400 million in long liquidations before rebounding to ~$105k. Solana dropped around 9.6% with $52 million in liquidations, third only to BTC and ETH.



Despite the correction, Solana&#8217;s <a href="https://app.blockworksresearch.com/analytics/solana">core metrics have held</a>. Daily transaction counts remain around 80 million. Compute throughput is stable. Application revenue is steady at $4-7 million/day.



Solana&#8217;s DEX layer is rotating, with volume down to $2.5-3.5 billion, from over $6 billion in May. Pump.fun continues to dominate meme traffic while SolFi captures SOL-USD pairs. Meta-aggregators like Titan and Kamino Swap are <a href="https://app.blockworksresearch.com/research/solana-meta-aggregators">quietly gaining ground</a>, offering better routing via off-chain sources like Pyth&#8217;s Express Relay, and even as volumes dipped, execution efficiency improved.&nbsp;



Underneath the rabble, <a href="https://app.blockworksresearch.com/analytics/solana?dashboard=131">Solana&#8217;s staking layer is unshaken</a>. The stake rate holds at 65.4%, with net activations still outpacing deactivations. Liquid staking tokens, led by jitoSOL, remain steady near $7 billion. MEV tips from Jito declined post-frenzy, but validator income remains resilient. In other words, no real crisis of confidence is to be seen among active users.



It&#8217;s easy to see why some might worry superficially, what with SOL currently testing $140 support. A breakdown could open moves to $123 or even $110. But if BTC holds above $100k and oil premiums fade, SOL seems likely to stage a recovery.



Like it or not, the technical binary of reclaiming momentum vs. a deeper correction likely hinges a lot on bitcoin’s next move.



It&#8217;s a tough one to predict, given that the macro environment remains so unstable. Fed policy is tight, energy volatility is high, and crypto is once again correlated to equities and oil. That said, the US regulatory backdrop continues to shift positively.



President Trump&#8217;s <a href="https://blockworks.co/news/donald-trump-digital-asset-summit-address">public embrace</a> of dollar-backed stablecoins and federal frameworks adds a long-term bullish undertone, for instance — especially for chains like Solana that anchor stablecoin infrastructure.



The bottom line is, Solana is weathering a macro squall with surprising internal strength. While price remains pinned by risk-off sentiment, the ecosystem&#8217;s throughput, revenue and <a href="https://app.blockworksresearch.com/analytics/solana?dashboard=39">developer momentum</a> are intact.



If the market stabilizes and volatility recedes, Solana could quickly reassert leadership in the next leg up. If not, our real test won&#8217;t be whether the network avoids the downside but how well it builds through it. So it has been, and so (someday, though maybe not today) it shall be.



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Lightspeed Newsletter

Solana slides on macro pressure as oil and gold rally

Casey Wagner

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



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Oil prices surged while global equities faltered Friday morning, on fears that Israel’s attacks on Iranian nuclear facilities could escalate into a broader conflict.&nbsp;



Brent crude, a benchmark for global oil prices, gained more than 8% in the early hours of Friday morning. West Texas Intermediate crude rallied as much as 14% before paring some gains, following <a href="https://www.wsj.com/livecoverage/israel-iran-strike-conflict/card/iran-s-oil-facilities-not-damaged-by-israeli-strikes-mma4B7MvDJPOKACxblQW?gaa_at=eafs&amp;gaa_n=ASWzDAidSyDWPvncLEk3XZUIdfddvMuaoMI05hBctM5nUs1_NTS5h9wEb1w24VihBqQ%3D&amp;gaa_ts=684c4b2b&amp;gaa_sig=1J26WGQjipkVrEQct72Ujf8lnywrX45kNcbXpK4tKrSkVr592IdOSowBBu7uQH5eLxUPAxtqz-olFQ0pZJPEVA%3D%3D">reports from Iran</a> that oil facilities were not damaged by Israeli airstrikes.&nbsp;



Gold approached its all-time high as investors moved toward safe-haven assets.&nbsp;



The S&amp;P 500 and Nasdaq Composite indexes hovered in the red for most of the session, trading 0.8% and 0.9% lower at 2 p.m. ET.&nbsp;



Trading like a risk asset, bitcoin was also in the red on Friday — trading 0.6% lower on the day at 2 p.m. ET to hover around $105,200.&nbsp;



US Treasury yields moved higher Friday morning, signaling investors’ fear that higher oil prices could lead to prolonged elevated inflation. While Treasury prices typically rally on geopolitical uncertainty (remember, prices and yields move inversely), inflationary pressures could impact the Fed’s rate-cutting timeline.&nbsp;



Speaking of the FOMC, this week’s data (more on that below) makes a solid case that while committee members will probably not touch interest rates next week, a cut — or two — before year end may be in the cards. At least that’s what markets were thinking, but geopolitical tensions have given investors reason to pause.&nbsp;



Odds of the first 25 basis point cut coming in September were at 59% on Thursday but dipped to 56% Friday morning, per <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">data</a> from CME Group.&nbsp;



The shift, slight as it is, supports the narrative that traders are selling US Treasurys on fears the Fed may keep interest rates higher should oil prices stay higher.&nbsp;



Early reports suggest that the situation in the Middle East will not be resolved quickly; Iran has vowed “severe” retaliation and has <a href="https://thehill.com/policy/international/5348689-iran-nuclear-deal-talks-suspended/">pulled out</a> of a planned nuclear talk with the US.&nbsp;



President Trump on Friday confirmed to reporters that he knew Israel was planning on attacking Iran, but the Wall Street Journal <a href="https://www.wsj.com/livecoverage/israel-iran-strike-conflict/card/trump-told-netanyahu-on-monday-not-to-attack-iran-WfVmW9ddIPeZZYlpOafE?utm_source=substack&amp;utm_medium=email">reported</a> that earlier in the week, he’d asked Israeli Prime Minister Benjamin Netanyahu to stand down.&nbsp;



This paints an uncertain picture, and investors appreciate certainty. So does the Fed. We’ll be back on Monday with a preview of what to expect from next week’s rate-setting meeting.



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Stocks, cryptos lower following Israel strike on Iran

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



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Coinbase announced a stablecoin payment option on Shopify, as well as an American Express credit card, during yesterday’s State of Crypto Summit.&nbsp;



Buyers making online purchases from an estimated two million businesses using Shopify may soon see <a href="https://www.shopify.com/news/stablecoins-on-shopify">USDC on Base</a> as a payment option when checking out, and will have to approve those payments via a third-party crypto wallet.



Shopify CEO Tobi Lutke said during one talk that what a user sees when buying items through the ecommerce site isn’t the whole story. Clicking the “Pay” button initiates many steps on the backend, and adding a price-volatile crypto token can make that even more complicated.



“Stablecoins are obviously key here,” Lutke said.



That said, Shopify has added different types of crypto payment options before — and even tried out offering bitcoin payments <a href="https://www.coindesk.com/markets/2013/11/09/shopify-officially-integrates-bitcoin-as-a-payment-option-for-its-70000-merchants">way back in 2013</a> when it had about 70,000 online stores using its platform.&nbsp;



Shopify’s <a href="https://help.shopify.com/en/manual/payments/additional-payment-methods/cryptocurrency">site</a> already lists Solana Pay, Crypto.com, Strike, and half a dozen other crypto payment integrations as options for businesses to choose to opt into. It’s just not clear how many Shopify merchants are actually going for these options.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Platforms using <a href="https://twitter.com/stripe?ref_src=twsrc%5Etfw">@Stripe</a> Connect can now offer stablecoin payments to their users! This means businesses can: 🌎 reach more markets 💰 at lower cost First out of the gate is <a href="https://twitter.com/Shopify?ref_src=twsrc%5Etfw">@shopify</a>, enabling millions of their merchants to accept payments in USDC! <a href="https://t.co/SDoABDz5uI">pic.twitter.com/SDoABDz5uI</a>&mdash; Jen (@BackseatVC) <a href="https://twitter.com/BackseatVC/status/1933231262585475143?ref_src=twsrc%5Etfw">June 12, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The USDC on Base payment option is first rolling out in early access, with plans to expand that rollout this year. Lutke <a href="https://x.com/tobi/status/1933237327633265064">said</a> Shopify is also exploring adding 1% cashback, too, as an extra perk.&nbsp;



Stripe’s tech helped make this happen. Merchants can decide whether they want to keep their earnings in USDC or convert it into their native fiat currency.



Both during the livestream and afterwards across different X <a href="https://x.com/ilikesymmetry/status/1933232617991856415">threads</a>, Coinbase execs and staff pointed out that high credit card fees cutting into merchants’ profits are a point of frustration that crypto could solve. They also emphasized that crypto can go across borders to be a truly global payments option.&nbsp;



<h3 class="wp-block-heading">Going premium</h3>



Somewhat ironically, though, Coinbase unveiled its American Express card yesterday.&nbsp;



The Coinbase One Card <a href="https://x.com/coinbase/status/1933237429193806033">uses</a> Amex’s network and isn’t free — but they’re promising 2-4% bitcoin back per purchase. The card will only be available in the US, and will launch sometime this fall. It requires an active Coinbase One Basic ($5 a month or $50 annually) or Coinbase One ($30 a month) subscription in order to apply for the card and keep it valid.



Amex is known for being a premium credit card company with some of the <a href="https://www.fool.com/money/research/average-credit-card-processing-fees-costs-america/">highest fees</a> for merchants.&nbsp;



It’s also known among Amex holders that it can be difficult to find businesses who accept the card outside of the US. (For example, my fiancé and I absolutely struggled earlier this year to find anyone who took Amex during a trip to South Africa. But all shops and restaurants we visited accepted Visa.)&nbsp;



It’s partly in the name: American Express.&nbsp;&nbsp;



American Express sees its brand as increasingly catering to a younger audience <a href="https://www.bloomberg.com/news/articles/2025-06-11/american-express-s-gen-z-customer-spending-grew-by-40-from-2024?srnd=undefined">willing to spend</a> on something that feels like the luxury option. Coinbase also sees itself as a “premium” brand among crypto companies, Coinbase Ventures exec Shan Aggarwal mentioned during the livestream.



I don’t necessarily disagree. Coinbase has long had some of the best user experience product flows and product designs in crypto — though the fallout from a recently-revealed <a href="https://blockworks.co/news/coinbase-breach-fallout-data-exposed">data breach</a> may have eroded some trust in the brand.



For credit card nerds: the Coinbase One card is expected to weigh 17 grams, which is reportedly the same weight as the invite-only Amex Centurion card that costs thousands a year.



<h3 class="wp-block-heading">The audience</h3>



The Coinbase One <a href="https://www.coinbase.com/one">subscription</a> is most ideal for frequent traders who want no-fee Coinbase trades, more staking rewards, and prioritized customer service.



“Amex plays extremely well to Millennials, GenZ, the younger generations,” said Amex SVP of Global Network Services Will Stredwick, who sees crypto as “so obviously becoming mainstream.”&nbsp;



A 2024 PolicyGenius survey <a href="https://www.policygenius.com/life-insurance/2024-financial-planning-survey-millennials-gen-z-money/">found</a> that 22% of Millennials surveyed (now between roughly ages 28 to 43) owned crypto, followed by 20% of GenZ (now between ages 19 and 27).&nbsp;



But just 10% of Gen X and 5% of Boomers said they owned crypto.



The Coinbase One Amex is expected to release this fall. It joins a lineup of other crypto payment cards, including crypto debit cards, credit cards, and others that fall somewhere in-between. This year, we’ve seen a slew of crypto card announcements.&nbsp;



There’s a MetaMask Mastercard, a Gemini bitcoin rewards Mastercard, an <a href="https://blockworks.co/news/avalanche-visa-card-payments">Avalanche Visa</a>, a <a href="https://blockworks.co/news/solayer-launches-crypto-rewards-card">Solayer Visa</a>, and others.



All of these cards beg the question: Was crypto ever trying to get away from the traditional financial system? Or has the industry decided, collectively, that the best way to beat the Visas and Amexes of the world was to join them?



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American Express

Coinbase unveils Amex card, Shopify integration

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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FIFA, Maplestory, Off the Grid, <a href="https://blockworks.co/news/inversion-chain-avalanche">Inversion</a>.



These are among the few high-profile names to have launched (or plan to launch) chains on Avalanche’s tech stack lately.



Why Avalanche and not Ethereum?



The answer starts with Avalanche9000, the network’s largest upgrade that went into effect last December. It was Avalanche’s own version of “<a href="https://blockworks.co/tag/ethereum-merge">The Merge</a>,” which radically overhauled validator economics.



As part of ACP-77, Avalanche validator’s high fixed stake cost requirements (2000 AVAX) were replaced with a low-cost, pay-as-you-go model.



Reduced upfront costs have made it attractive to launch a sovereign Avalanche L1 chain — it’s possibly even cheaper than <a href="https://blockworks.co/analytics/celestia">a Celestia rollup</a> or Cosmos Appchain, based on <a href="https://app.blockworksresearch.com/research/avalanche-an-economic-analysis-of-acp-77">estimates</a> by Blockworks Research’s EffortCapital.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcC5wh5L55_81NokAGe0kLQZiJoTaonqTZlT0DBBRCD4eclbMmnbUOpFEJBQCHnNocOK-DcMBDG18ydkowqKmg5vM4i0UH9z4KAO9c6FAFAM1zziZeVccJUla2zQLkBomrdC_UBZQ?key=G9G16ZCPgEDragXxF7V1VQ" alt=""/></figure>



The cost savings go further.&nbsp;



Teams bootstrapping an Avalanche L1 can leverage what the C-Chain — Avalanche’s liquidity hub — has already built out.



For instance, Avalanche L1s can offer users the convenience of a CEX ramp via the C-Chain without having to pay a hefty percentage of their token supply to integrate directly.



“That&#8217;s one of the core value propositions at Avalanche,” Ava Labs chief strategy officer Luigi D&#8217;Onorio DeMeo told me. “From a go-to-market perspective, it saves teams a lot of time and millions of dollars in integration fees.”



This goes for most standard chain infrastructure that the C-Chain already has, such as oracles, RPCs, indexers, explorers, NFT marketplaces, etc. — all of which can cost up to an <a href="https://x.com/AndreCronjeTech/status/1848795057014399440">estimated</a> $13 million for an independent L1 to bootstrap themselves.



It all hinges on Avalanche’s “Interchain Messaging” (ICM) protocol, which Avalanche L1s use to easily move assets to and from the C-Chain to take advantage of the aforementioned features.



C-Chain to Henesys (Maplestory’s chain) is today the most active back-and-forth route on ICM, facilitating thousands of messages daily.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfXdQOnyE9Bq_JpC81F-g4D_tfRiFu6vfOhdZKJsiSYPI8MzrwFAHFbkjTU9IN15cJyAy8jz7t8zfPvB9MAYM4gTeN8a9J6IloX1P5Sh2Z7nXy_2H5aevaz2LnoyqJhkPJDEwxuwA?key=G9G16ZCPgEDragXxF7V1VQ" alt=""/></figure>



Source: <a href="http://l1beat.io">L1beat.io</a>



Value accrual is another major reason to launch an Avalanche L1.



Avalanche L1s can devise clear value accrual streams to their native tokens by bootstrapping their own validator sets and issuing block rewards (or using their own native token as gas).&nbsp;



Ethereum L2s cannot leverage the same levers and therefore have limited or no value accrual streams to their tokens, outside of governance (there are <a href="https://blockworks.co/news/arbitrum-timeboost-live-dao-revenue">exceptions</a>).



Finally, AvaCloud&#8217;s HyperSDK also grants a high degree of L1 <a href="https://x.com/santiagoroel/status/1913308769875882221">customization</a>, a stark advantage over the <a href="https://blockworks.co/news/commonware-optimized-blockchain-development">constraints</a> L2s face building on today’s rollup tech stacks.



<h2 class="wp-block-heading">AVAX value accrual</h2>



Given the problems of value accrual that have plagued ETH and ATOM, it’s worth looking at how AVAX accrues value.



First, 100% of all C-Chain fees are burned, compared to partial burns for Solana or Ethereum. AVAX burn had a monthly average of about $453k in 2025.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf3tf2Q8EPgPO4DtP3g_ORJvsPgVV5PmRv79JZiDmtp7LqKf2R-bTy_FpoKNWo6j7TEbviCtxCahSJCLyP2dFolHqsYKHM8JkRe3Kb4dN3iQqeVZftw_Uyg9kcNbDkjQTAEKSZE?key=G9G16ZCPgEDragXxF7V1VQ" alt=""/></figure>



Secondly, validators continue to stake AVAX to validate the primary networks — about $8b (360.2m AVAX) is staked today.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfkKBYCiuWhKCulotFp-zbtuePpvl0CTBeP8us7Ys1ZdOub9wemiGCxAe4xuY6PcK8v6aRZZYDA4TwItwayYtqpQybgi2sV572OclENDDl1K_H1uyjjw5KD-UO_c2mho968EdGN6w?key=G9G16ZCPgEDragXxF7V1VQ" alt=""/></figure>



Third, every Avalanche L1 validator pays a small monthly continuous fee in AVAX, as part of ACP-77. Depending on how many validators there are, these fees range from the hundreds to thousands. Blockworks Research’s <a href="https://app.blockworksresearch.com/team/boccaccio">Boccaccio</a> has drawn up some nice <a href="https://app.blockworksresearch.com/research/avax-s-value-capture-problem-and-off-the-grid">estimates</a> here for the Gunzilla chain:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdfgGzV-KgpVbFP6Qh-dLEC5jH73AjuA3_wFOZjt2-jOh8H5CC4BpIEFmtmS4G9-oVzdUuN_8qyOuRpWdKx6q3h17rBjVzuYDcO6q6m2sG1ejA6CvynOfKS-s3ElHi1ckk_cAuh-w?key=G9G16ZCPgEDragXxF7V1VQ" alt=""/></figure>



Finally, there is a minimal, indirect fee on ICM that is burned whenever transactions interact with the C-Chain.



<h2 class="wp-block-heading">Avalanche’s path forward</h2>



When all is said and done, Avalanche’s business strategy rings familiar: Reduce upfront costs to subsidize long-term growth.



Ethereum is doing the same by forfeiting short-term execution fees to L2s in hopes of attracting data availability fees in the long run. <a href="https://blockworks.co/tag/celestia">Celestia</a> is also practically giving DA away for <a href="https://x.com/musalbas/status/1893975544636563736">free</a> now in pursuit of long-term growth.



A popular misconception of Avalanche is that it does not want to be a fast chain, DeMeo told me — which he claims is untrue.



Both ACP-125 and ACP-176 (Octane) introduced reductions in the C-Chain’s minimum base fees and a dynamic fee mechanism to optimize gas fees — both of which have contributed to a 96% fee reduction since the start of 2025.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeZHG5MBymPSlAwrfyEkqoP0AX7YDht_lVeffAo6La9bnZvSXjS4V3eqTePe4q6_o9S5HxbkKQK9a61HuO8bJ_hPQu404R2eGC48oi_QtLFXUITgDNIdTgJ3bUaOn_h_qdjf113?key=G9G16ZCPgEDragXxF7V1VQ" alt=""/></figure>



Fees will continue to go down as part of the network’s plans later this year to implement “asynchronous execution (<a href="https://github.com/avalanche-foundation/ACPs/discussions/196">ACP‑194</a>),” he said.Value accrual to AVAX has not yet occurred on a substantial level, but a clear path lies ahead. With <a href="https://snowpeer.io/">66</a> active L1s in the Avalanche ecosystem and even more onboarding, Avalanche is well positioned to grow a network effect of its own.



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Why are big games building on Avalanche instead of Ethereum?

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



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Bitcoin is hard money, in more ways than one.



The never-ending task of keeping BTC safe might be one of the hardest. There are plenty of options — hardware wallets, software solutions and even multi-sigs can do the trick, depending on how they&#8217;re implemented.



But if you’re legendary Bitcoiner Peter Todd, you might opt for the trusty brain wallet. And luckily for us, he’s told us exactly how he would do it.



(P.S. Catch Peter Todd on stage at <a href="https://blockworks.co/event/permissionless-iv">Permissionless IV</a> in Brooklyn later this month, as he sits down with Pete Rizzo for an intimate chat to kick off Day 1.)



First, a disclaimer: Todd shared his brain wallet process a long time ago, in August 2012, over a year before <a href="https://en.bitcoin.it/wiki/BIP_0039">BIP-39</a> was introduced.&nbsp;



BIP-39 brought mnemonic phrases to Bitcoin and made room for a 25th word to be layered on top, which significantly boosted the level of <a href="https://security.stackexchange.com/questions/6683/password-entropy-in-laymans-terms">entropy</a>, keeping private keys safe from brute force attacks. All that only makes Todd’s process more impressive, even if he might use a different method today. He effectively did what BIP-39 does with his mind (and some help from Bitcoin itself).



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



Here’s how, in Todd’s own <a href="https://bitcointalk.org/index.php?topic=98639.msg1081052#msg1081052">words</a>:



<ol class="wp-block-list">
<li>&#8220;Generate a password that you can remember individually. Personally I use the program pwgen which produces ‘pronounceable passwords.’ I use it in eight-character upper/numerals/symbols mode.</li>



<li>Write that password down. Yes this is heresy; you&#8217;ll securely destroy it later. </li>



<li>Memorize that password. This is a lot easier than you think. I find if I spend five minutes a day memorizing a password I can recall it easily in a week or so, and have probably memorized it pretty much permanently after a month or two. Remember studying in university? Use those techniques. Flashcards are very effective; an important part of memorization is being forced to recall what you are trying to memorize. </li>



<li>Repeat until you have five different passwords memorized. During this process it helps to do something like encrypting different files with the sub-passwords, and practice decrypting them to ensure you don&#8217;t forget the individual parts. This also allows you to avoid having copies of the parts of the password if you&#8217;re paranoid. </li>



<li>Take all five passwords and concatenate them into one big super password: eiS9ui@R + vi4Ug~ee + Aet\ito0 + ohB$oh9w + Roh&#8221;k2ie = eiS9ui@Rvi4Ug~eeAet\ito0ohB$oh9wRoh&#8221;k2ie </li>



<li>Use this password! Eventually you will forget it, although the time it takes to forget it will go down exponentially the longer you use it. For me, I make a point of using my passwords every month or so. Even just recalling it mentally is enough.&#8221;</li>
</ol>



<figure class="wp-block-image size-full is-resized"><img loading="lazy" decoding="async" width="740" height="601" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-2.png" alt="" class="wp-image-103870" style="width:681px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-2.png?w=740 740w, https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-2.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-2.png?w=316 316w, https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-2.png?w=321 321w, https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-2.png?w=270 270w, https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-2.png?w=80 80w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption class="wp-element-caption">As always, <a href="https://imgs.xkcd.com/comics/password_strength.png">a relevant xkcd.</a></figcaption></figure>



Follow those steps and your password would be 49 characters long. Ideally, Todd would like at least 128 bits of entropy to eliminate any risk of brute force. By his own analysis, his optimal configuration for <a href="https://linux.die.net/man/1/pwgen">pwgen</a> would generate 221 bits of entropy — “almost the gold-standard 256-bits level that modern encryption provides.”



In practice, this works by feeding the memorized password to the Bitcoin client’s <a href="https://developer.bitcoin.org/reference/rpc/encryptwallet.html">encryptwallet</a> function. The client would re-encrypt the wallet.dat file using that password as the key.



Any potential thieves — in meatspace or cyberspace — would need to somehow syphon the password from your brain before they could ever get to your bitcoin. Just whatever you do, do not forget the password. “You just gotta trust that you really can learn,” Todd wrote.



“The key is that you don&#8217;t try to memorize the whole thing at once. Split the task up into a few subtasks, IE, sub-passwords, and memorize them one after another. People used to have dozens of phone numbers in their head, memorized one at a time.”



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcvAGF5QOxdkiNCf22QIDPRr1BmtHj7eH9Dua6ljvC0LFa-7Xsr1m01opmV9LgeK-PTUKOUQMJDpyD22qcXYVE4BdrE-3_sWElf8jyJ21_ROtul8Oe7qQKlgF08fD9wK7KcQsOJHg?key=9401tKbxrv6jjpTeDAWkeQ" alt=""/><figcaption class="wp-element-caption">All hail the safe deposit box!</figcaption></figure>



Todd was right to point out that the average Joe isn’t going to do any of this.



And that’s exactly why Peter Todd will forever be a Bitcoin Legend.



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</ul>

How Peter Todd stored bitcoin in his brain wallet

Jack Kubinec

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



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As regulation becomes clearer and the number of national banks rumored to have stablecoin plans grow, it seems like much of America’s financial sector is <a href="https://blockworks.co/news/what-does-stablecoin-summer-look-like">coming to grips</a> with a future involving stables. But compared to these well-heeled and technically-savvy TradFi institutions, local banks and credit unions —&nbsp;where a <a href="https://www.depositaccounts.com/blog/bank-sizes-study-survey.html#:~:text=Generally%20speaking%2C%20consumers%20prefer%20large%20financial%20institutions.,and%2021%%20mostly%20use%20a%20credit%20union.">sizable</a> percentage of Americans do their banking — are almost certain to lag behind in this trend.



To help narrow this gap, Beam and Braid are partnering to offer stablecoin infrastructure to community banks and credit unions in the US, Lightspeed has learned exclusively.



The program will open with seven partner banks across the American northeast and midwest, Beam founder and CEO Dan Mottice told me. At a basic level, Braid offers a set of APIs that allow smaller banks to modernize their product lines — like adding real time payments or new card network capabilities, for instance — and Beam is providing the stablecoin-specific infrastructure.



In exchange for these capabilities, the banks will pay a licensing fee plus transaction fees on the stablecoin flows, a Beam representative said.



Mottice, who was previously product lead for <a href="https://blockworks.co/news/visa-crypto-team">Visa’s crypto arm</a>, founded Beam in 2022. Under the prior SEC regime, the stablecoin company primarily conducted business outside of the United States, in regions where dollar access <a href="https://blockworks.co/news/latin-america-growing-crypto-hotbed">was desirable</a> (like Latin America and Africa).



When the <a href="https://blockworks.co/news/trump-wallet-magic-eden">crypto-friendly</a> Trump administration came to office, Mottice and Co. began trying to pre-empt new US-based market opportunities that might emerge, Mottice told me. One segment that came to mind was community banks, many of which feel like they missed out on the fintech wave of the 2010s and may be keen on becoming early adopters of a newer financial innovation in stablecoins. This is especially important as these banks’ depositor bases age, and as sthey face the task of courting younger, more-online customers.&nbsp;



Banks with under $500 million in assets under management will be given access to a Braid innovation sandbox that unlocks access to faster payouts, cross-border transactions and modern wallet experiences, according to a blog post from Beam that was viewed by Lightspeed.



For banks with more than half a billion in AUM, Beam and Braid can offer more direct integration and the capacity for enterprise-scale stablecoin products. Mottice added that Beam has begun to have conversations about white-label stablecoin issuance on behalf of banks, although those talks are still in their early stages.



The product will primarily run on Solana, Mottice said, which he cast as more of a “backend network choice” than as a pitch to the banks themselves, who primarily care about speed and cost but may not be as in-the-weeds about the benefits of one blockchain over another.&nbsp;



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Banks

Beam and Braid to offer stablecoins to smaller banks

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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Yesterday, <a href="https://blockworks.co/tag/coinbase">Coinbase</a> hosted its annual State of Crypto summit. There were lots of announcements to unpack, especially if we’re talking about consumers.



I want to focus on remarks from a chat between Coinbase’s Brett Tejpaul and BlackRock COO Rob Goldstein, who gave some insight into how the world’s largest asset manager is thinking about crypto. 



While he didn’t give a timeline (other than stating that BlackRock has been studying crypto since roughly 2017), he did say that BlackRock saw “incredible utility with regards to stablecoins.”



“And…we saw a real requirement for the underlying assets to be managed, not sort of like a money market fund, but in a money market fund,” he added.&nbsp;



The other leg of its strategy was all about access, Goldstein said, something that came with <a href="https://blockworks.co/news/blackrock-ibit-etf-net-inflows">IBIT</a>. He noted that IBIT, even before its success, was geared at being a “bridge strategy” designed to allow folks to gain exposure to bitcoin without ever buying bitcoin itself.



“An interesting fact about IBIT that I think is quite remarkable is that of the 25 largest ETFs in the world, the youngest one — aside from IBIT — is 12 years old. IBIT is 18 months old,” he said.



Then you have BUIDL…and, well, it seems like BlackRock’s played their hands right so far when it comes to success as a bridge.&nbsp;



However, Goldstein noted that parts of the financial system are ripe for innovation — a fact I think we can all agree on.



“The frictions that still exist are much more oriented towards funds. There is a legacy ecosystem that&#8217;s been built over the past several decades that just has a lot of cost in it, it&#8217;s slow, it doesn&#8217;t scale that well, and I think that&#8217;s a natural place for innovation and disruption, just through technology and tokenization,” he said.&nbsp;



But it really was Goldstein’s last point that made me realize just how bullish BlackRock is on the space.&nbsp;



“This game is extremely early innings. It is extremely, extremely, extremely early innings. There&#8217;s so much more opportunity here. It&#8217;s barely started,” he said.&nbsp;



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BlackRock

‘There’s so much opportunity’ in crypto: BlackRock COO

Felix Jauvin

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



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Next week is <a href="https://blockworks.co/tag/federal-reserve">the Fed&#8217;s</a> FOMC Day, and it feels like it’s going to be a highly contentious one.



On one hand, you have President Trump pressing Chair Jerome Powell to cut rates by 100bps as soon as possible:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd8eB1ZvxWomBnQCAcNNd6lpxKx5t1qlFqdGlrB0xea0I__ocsww8scEmB9rNOR7jdLHaxoafbfwUWRthCK2vlIq-qQ0qU01mMayMjCBDlQoX3cnLzQEQaugMXvQXfTGeEXZw7y3g?key=4lX2oWRGbtmvLg_xeGNjyQ" alt=""/></figure>



On the other hand, you have the FOMC toeing the line; they’re in a “wait-and-see” mode. This is because they don’t want to react in either a dovish or hawkish direction until they have a better idea of where the tariff policy will net out.



However, doing nothing is also a policy decision.&nbsp;



Currently, there’s a 97% implied probability for the Fed to pause, so there’s almost no expectation for it to cut next week:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfhHOTkWJNBFLnLCKzjJ2lV6rEQ8mf-nOaDSfatdzqhK1OuQgFne7fMM9-XCIl2mq_kDAdBQFsoADa2a-FOhDcrZpUke6f2UV7oVRoPIj_CVwmqj2_SzVpsNpp2fCt5DZEIcOfwfQ?key=4lX2oWRGbtmvLg_xeGNjyQ" alt=""/><figcaption class="wp-element-caption">Source: CME</figcaption></figure>



However, next week will also have a dot plot meeting wherein we’ll receive an update on the Fed’s summary of economic projections (SEP). If the Fed wanted to signal a dovish tilt, the SEP is what will be used to signal that.&nbsp;



To gauge whether that will be the case, let’s take a look at some of the most recent economic data that will drive the FOMC’s thinking next week.



The Fed has insisted on being data-dependent while trying to navigate an inflation rate above its 2% target for multiple years now. Looking at the Taylor Rule — a historically accurate model for gauging how tight or loose monetary policy is based on the Fed’s dual-mandate of maximum employment and stable prices — the Fed should be cutting right now, but isn’t:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeC6z191-A7TVGXyilzYgWeRqShZcz6PiXOD2dQNVC4-t6qGlAMKwo0NtW-VkEMmypQvgH3bCO_v0q0ybzfP0LnKLaVyR2WoQPdQcFyQL61W3rptkcCZmkm8WUwFnrHT0zhKFa2LQ?key=4lX2oWRGbtmvLg_xeGNjyQ" alt=""/></figure>



Labor



This week we saw a huge uptick in continuing jobless claims, emphasizing just how hard it is to get a job when you lose one.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe4fu7mwoxHGK_3tGV-Fk_7up40uPX8oEZ7Jr5nQ_MVi9DlF_7JI5yLu2EGYVSRGosmw6JFDHgxJtUYRR0G7Ej0XGaXagnLCBzYxuv0ARc_srkk3AOs90pV_dRp0EaWlc_kA02asQ?key=4lX2oWRGbtmvLg_xeGNjyQ" alt=""/><figcaption class="wp-element-caption">Source: Augur Infinity</figcaption></figure>



Although we have not seen the same surge in the unemployment rate nor for initial jobless claims, this uptick further validates how little companies are hiring right now. But they’re not at the point of layoffs, either. We are in a regime of attrition right now.



This is a precarious place to be. By the time the labor market deteriorates to the point where we see a surge in the unemployment rate and negative payroll numbers, the Fed will be very behind with respect to a Taylor Rule-like model, as shown earlier.



Inflation



The reason the Fed isn’t pre-emptively cutting rates from the perspective of the labor market is due to a concern about tariffs passing through into higher inflation — thus questioning the Fed’s mandate of stable prices.



This week’s <a href="https://blockworks.co/news/cpi-print-softer-than-expected">CPI data</a>, however, calls into question how large the impact of tariffs will be on inflation.&nbsp;



Core CPI came in at 0.1% month over month, a huge downside miss that not one economist out of the 73 surveyed anticipated:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXemqTnTDHfah9NtUkpsXDC_Tvy8LXInuyJ_3_-yKtppGXZqF7NfmCIm0ge2fs5iTg3monBVyzLUr6c_NvX_BSaz5_6ChnTfRY7Rzz_d15nW5Y5SXFvxmMRGJwFrAbTlRBAQTOaQ?key=4lX2oWRGbtmvLg_xeGNjyQ" alt=""/><figcaption class="wp-element-caption">Source: Bloomberg.</figcaption></figure>



On its own, this would be enough for the Fed to sigh in relief that inflation is on its way to the 2% target.&nbsp;



The issue, however, is inflation expectation in light of surging tariffs:&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd1kP8wtYYGPOy4ODKUIWXTHemr_ckOnTOpoeCoXdh8FUkmLCdh0tSMz-WlIUD6tPMtRvbJr-Dk36KXoYm7inAnVRj9we3AKN9n_y2LxlbMsb0yC9jJSgPjt5drccDLLba2446T4w?key=4lX2oWRGbtmvLg_xeGNjyQ" alt=""/></figure>



After being burned too many times in cutting before it became clear that inflation was on its path to 2%, the Fed does not want to make the same mistake.



Putting it all together, we have a unique situation with a significant risk of a potential policy error.&nbsp;



By sitting on their hands and speculating on future data as opposed to reacting to the data that we are getting today, FOMC members are effectively making an intentional decision to be as late as possible in their reaction function.&nbsp;



That’s not a great place to be in.



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Economy

Is the Fed risking a policy mistake by sitting on their hands?

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



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Eight months after its early access public launch, Off The Grid is preparing to release on Steam.



The game is currently available as a free-to-play title via the Epic Games Store on PC and on latest-gen Xbox and PlayStation consoles’ respective game shops.&nbsp;



We don’t have the exact <a href="https://gunzillagames.com/en/news/64-Off-The-Grid-Is-Coming-To-Steam">Steam launch</a> date yet, but Delphi Ventures Founding Partner Piers Kicks, whose firm <a href="https://delphiventures.io/blog/delphi-ventures-gunzilla-games">invested</a> in Gunzilla Games, <a href="https://x.com/pierskicks/status/1932899404530196732">said</a> yesterday that the shooter is coming to Steam in a “few weeks” (so likely in the last week of June).&nbsp;



The game remains on Epic’s <a href="https://store.epicgames.com/en-US/collection/most-played">list</a> of “Most Played” games, suggesting it’s doing well, and holds a player rating on Epic of 3.9 out of a possible 5.



Gunzilla CEO Vlad Korolev <a href="https://x.com/VladK133/status/1923861721107624374">said</a> last month that Off The Grid has consistently had over 10,000 new players daily since launch.



Off The Grid falls behind its non-crypto shooter peers when it comes to attention on Twitch, however. In the past month, OTG saw <a href="https://sullygnome.com/game/off_The_Grid/30/summary">less than a million</a> total hours watched, with an average of 28 Twitch streamers broadcasting the game at any given time. The game sees a total average of about 1,400 concurrent viewers on Twitch.



Those numbers don’t compare to games like Counter-Strike 2 (over 75 million hours watched, with 105,000 average total viewers in that same period) or Apex Legends (17.3 million hours, with 24,000 average total viewers), though.



That makes OTG the 157th most-watched game on Twitch by total watch hours in the past month.



<h2 class="wp-block-heading">Wallets don’t equal players</h2>



First things first: We don’t have exact Off The Grid player count numbers yet, and it’s not accurate to interpret a wallet count as a player count. This is in part because OTG’s crypto elements are optional, but also because we live in a world where bots and AI agents can control wallets (and users can have more than one wallet).



Still, the number of crypto wallets engaging with Off The Grid has grown (roughly doubled) since the game opened up to the public in October.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc5nPzhCY9TNW_0hjux3YDPhc_QVb0p10yVB-fak4k08FyrVGleuyEKxtzi1Fyt9g8AdSCHhUotkwdScFA-w3KWDuYrVIyUnR4c-e0sst35tycSnbfNQCe7zteSt-c2wq2G6k_jgw?key=bQLVH2apuyKfhys2Z-X9dA" alt=""/><figcaption class="wp-element-caption">Image: OTG wallet <a href="https://flipsidecrypto.xyz/Ali3N/avalanche-otg-l1-gunz-dashboard-6j5GNj">data</a> showing initial surge in new addresses at launch.</figcaption></figure>



DappRadar data suggests Off The Grid saw between roughly <a href="https://naavik.co/digest/off-the-grid-takes-on-the-shooter-market/">40,000 and 170,000</a> daily UAWs engaging with its crypto elements in its first month of launch. Today, eight months later, it’s seeing around <a href="https://dappradar.com/dapp/off-the-grid/?range-ds=24h&amp;chains-ds=gunz%2Cgunz-testnet%2Cavalanche">200,000 daily UAWs</a>.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdWg4VVAtrTwwOVgF5AfYWWswh_kgLh6dYx3NZPcRkwx4EExa17YWsMBhGpW3nM8_lGy8LHI8O36XBLzoi0A1sHSqqPngx0Ik7DsMLWLImiMqIoV3I680HWDfTSmVF166W11P8BPg?key=bQLVH2apuyKfhys2Z-X9dA" alt=""/><figcaption class="wp-element-caption">Image: Off The Grid UAWs (white) and txns (cyan) over time, from DappRadar, including Gunz testnet, mainnet, and Avalanche C-chain.</figcaption></figure>



The vast majority of OTG-related blockchain activity remains on Off The Grid’s testnet, not its mainnet, indicating the ecosystem hasn’t fully switched over just yet.



<h2 class="wp-block-heading">One player’s story</h2>



Aside from the crypto gaming die-hards, how well is Off The Grid retaining new players? A snapshot <a href="https://x.com/TheodoreAgranat/status/1932856053395566833">lauded</a> by Gunzilla’s Web3 director Theodore Agranat paints one person’s perspective. A pseudonymous Off The Grid fan <a href="https://x.com/meatportmusic/status/1932718595437482366">did a test</a> with a new account to get a slice of how many new players are still playing the shooter game — and shared findings in a thread with roughly 12,000 views so far.&nbsp;



He tracked other new OTG accounts to see how many were still playing the game three weeks later.



He found that across 152 accounts and four matches, 40% of those player accounts were “inactive” just three weeks later. A little over 48% were still active after that period, while the rest were “semi-active.”&nbsp;



The conclusion: OTG has “significant” player retention.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcvluNEXbYyb_kDxNvoVi5ZqxQ6HmfIRIidyqhLwQo9VDw7xvONG7R0TKO2lBCa-JnYkG4XL12CpU5XCrL0P7QPM2thtuSrOM5uWCmSOyzWf9Ftnixbp0ixwBjsXn-UxqFvxKs9?key=bQLVH2apuyKfhys2Z-X9dA" alt=""/><figcaption class="wp-element-caption">Image: @meatportmusic on X.</figcaption></figure>



To me, this isn’t enough data to draw firm conclusions about the whole game. We also don’t know how many of these are alt accounts, for instance, which could impact those numbers.



<h2 class="wp-block-heading">Retention expectations</h2>



Player dropoff is, of course, normal for all video games — even the most successful ones. And what one game considers a “successful” retention rate could be considered abysmal to another.&nbsp;



There isn’t a lot of public data on what’s widely considered a good retention rate for PC games. Spanish software firm Barbary <a href="https://featureupvote.com/blog/game-retention/#:~:text=Day%201%20retention%3A%2035%2D40%25%20is%20considered%20good,%3A%205%2D10%25%20is%20strong">suggests</a> a 20% retention rate is good for games a week after launch, while anywhere from a 5-10% retention rate is “strong” for PC games after the game has been out for a month.



Data software firm Solsten, however, has <a href="https://solsten.io/blog/d1-d7-d30-retention-in-gaming">found</a> that retention rates higher than this are becoming “the new standard,” because it’s costing developers more money to acquire users now than it did a few years ago. Overall, this makes the gaming industry more competitive.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfQDxJW8zNWqDN2exMxCJd4l902YeDgfrcB9tM2OLjwyCazIXezoV-CzeS7Kj5Y0DYJSGzCjfrDNDInlHm3nV2BgBmr3P0E3zt3olbHi22Ntrki5AKfVNqhbBJWYfFtfXAEoMVLrA?key=bQLVH2apuyKfhys2Z-X9dA" alt=""/><figcaption class="wp-element-caption">Image: Kevuru Games.</figcaption></figure>



Ambitious, higher-budget live-ops games do need more retention than other types of games, however — especially if they’re free-to-play titles where gamers don’t fork out cash upfront.



I think that over time, Gunzilla will have to either keep spending to add substantial updates that bring gamers back from Fortnite and CoD — or focus more on its pro-crypto core base.



Gunzilla didn’t respond to my request for player count data.



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