Vita Inu

Kate Irwin

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



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Wyoming’s Stable Token Commission is launching its yield-bearing state stablecoin, FRNT, across seven blockchains using LayerZero’s tech.



The “Frontier” stablecoin, which is backed by US dollars and short-term US Treasurys and won’t have a fixed supply, is being deployed on Ethereum, Solana, Base, Arbitrum, Optimism, Polygon and Avalanche.&nbsp;



It’s a first for any US state — and a sign that you can just do things.&nbsp;



It has taken a few years, though: The Wyoming Stable Token Act passed in March 2023, which established the Commission and set all this in motion.



“When I heard that a state was doing this, I was like, okay, like, that’s kind of crazy. Clearly very forward-thinking and innovative,” LayerZero CEO Bryan Pellegrino told me in an interview.



“Wyoming has done this with their banking regulation around crypto, with all of the DAO structure. They&#8217;ve been really, really progressive on that side,” he added. “They had the vision of like, hey, we have a competitive advantage here that no central issuer has, right?”&nbsp;



Some of the profits from FRNT interest will be paid to the Wyoming School Foundation to fund state-level education (the <a href="https://www.wyoleg.gov/Legislation/2023/SF0127">Stable Token Act</a> states that after operational costs are deducted, some profits will be kept as savings for future expenses).&nbsp;



The Commission says the stablecoin facilitates “secure, transparent, and efficient digital transactions” and is intended for people and businesses around the world. Like all crypto transactions, FRNT transactions in theory let users avoid middlemen payment providers, but users will still have to pay a nominal fee every time.



Besides funding education, the move puts Wyoming on the global stage yet again as a key crypto player — and destination.



<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, Commission Chairman &amp; <a href="https://twitter.com/GovernorGordon?ref_src=twsrc%5Etfw">@GovernorGordon</a> announced the mainnet launch of the Frontier Stable Token (FRNT). This historic move marks Wyoming as the first public entity in the United States to issue a blockchain-based stable token. FRNT is designed to provide secure&#8230;&mdash; Wyoming Stable Token Commission (@wyostable) <a href="https://twitter.com/wyostable/status/1957767185415245891?ref_src=twsrc%5Etfw">August 19, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Pellegrino predicts FRNT will see adoption from emerging markets looking to gain access to the US Dollar and economy.



“Getting exposure to it will become easier and easier as it’s adopted in more places,” he said.



Wyoming Stable Token Commission Executive Director Anthony Apollo explained in a statement that using LayerZero’s tech allows them to adhere to state guidance to take a “multi-chain, technology-neutral” approach.&nbsp;



The stablecoin on Solana will be available on Kraken “in the coming days,” according to a <a href="https://content.govdelivery.com/accounts/WYGOV/bulletins/3ee734a">release</a> from Wyoming Governor Mark Gordon.



FRNT will also be available to spend via a Visa <a href="https://www.rain.xyz/resources/frontier-stable-token-frnt-debuts-rain-issued-card-on-avalanche-for-everyday-stablecoin-spending">card</a> from payments firm Rain.



The governor’s office and the Stable Token Commission are expected to make another announcement when FRNT becomes more publicly available.



Based on a <a href="https://stabletoken.wyo.gov/pages/about-us">timeline</a> from the Stable Token Commission, that may be as soon as next month.



“Everything’s just like a really great bellwether for the industry as a whole,” Pellegrino said. “Just shows the US leaning in in a way that they were not a couple of years ago.”



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kraken

Wyoming FRNT stablecoin on Solana to go live on Kraken

Donovan Choy

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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The decentralized wireless company Helium is planning to funnel 100% of Helium mobile subscriber revenues to HNT token burns, co-founder and CEO Amir Haleem <a href="https://x.com/amirhaleem/status/1957200674539581521">tweeted</a> yesterday.



It’s not clear if Helium plans to buy HNT on the open market or simply burn tokens from its treasury, but the initiative is going into effect “this week, barring any weird logistics,” he <a href="https://x.com/amirhaleem/status/1957214730344624605">said</a>.



In any case, that’s an <a href="https://app.blockworksresearch.com/flashnotes/helium-halving-tailwinds">estimated</a> $2.3 million in monthly gross revenues offchain that otherwise would have gone to Helium’s parent company, Nova Labs, now being redirected to HNT token holders.



HNT is Helium’s native SPL token, which migrated to Solana from its own L1 appchain in April 2023.



When users pay USD to use Helium’s network, it’s swapped under the hood to HNT, which is then burned for a consumable fixed-price token of $0.00001 known as “Data Credits.”



Today, Helium has about <a href="https://world.helium.com/en/network/mobile">1.1 million</a> daily users across 108,850 hotspots.



The majority of Helium’s revenues is driven primarily by WiFi carrier offload, rather than its own mobile virtual network operator (MVNO).&nbsp;



When users of big telcos like AT&amp;T or T-Mobile are near a Helium WiFi spot, they can shift that data onto Helium’s network automatically and pay Helium on a per-demand basis.



This way, major carriers avoid additional CapEx while still managing to improve coverage for customers in hard-to-serve or obscure locations.



Earlier this month, Helium also went through its biennial emission halving, halving annual HNT emissions from 15 million to 7.5 million.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXehCb3TC7b1tPlN4mCnp1nz9rbFuYoKbLj1q3V5pwGT4ge0_YBpqmyaz-fgctD4RW-OLhjO82YBENqd6vYl35HA3eFcxmpqaJElcqmngTOvZwF7OyJy_VaMZI09Ivun7fs-QgR9?key=F1UcsFQTLvYx0-0eewtjyQ" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.blockworksresearch.com/flashnotes/helium-halving-tailwinds#top-idea">Blockworks Research</a></figcaption></figure>



Both mechanics in tandem — an emission halving and circulating supply burn — could create a net deflationary effect for the HNT token.



Blockworks’ Nick Carpinito told me: &#8220;Amir&#8217;s announcement creates immediate deflationary pressure on HNT by burning tokens equivalent to Helium Mobile&#8217;s subscriber revenue, which could accelerate the timeline for HNT to become net-deflationary sooner than expected.”&nbsp;



“While we don&#8217;t yet know the specific mechanics (whether Nova Labs will burn from its treasury or make open market purchases, or whether this applies to gross vs. net revenue), this represents a significant step toward integrating Nova Labs&#8217; offchain revenue streams directly into HNT&#8217;s tokenomics as we anticipated in our July analysis.&#8221;



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DePIN

Helium eyes a potential path to deflationary tokenomics

Macauley Peterson

Ether treasury company BTCS is leaning into its “Ethereum-first” identity with a one-time blockchain dividend: a $0.05 per-share payout in ETH, plus an optional cash alternative for investors who don’t opt in.&nbsp;



The company also unveiled a $0.35 per-share loyalty payment — payable only in ETH — for holders who move shares to book entry with its transfer agent and keep them there through Jan. 26, 2026. Instead of your shares being held at your broker, they’re recorded in your name on the company’s official shareholder register.&nbsp;



Framed as both a reward and a balance-sheet signal, the move arrives while BTCS trades below its asset base. Management points to a $4.41 share price on August 15 against roughly $6.65 per share in cash and digital assets. That valuation gap also shows up in Blockworks Research’s mNAV (enterprise value / net asset value) tracker of Ethereum-treasury peers.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdnPSIUZtIaAVGfpYrsrezJFjbsSOFHZ-f3gYwwp9-v7PJGXa9JjCqaUPw87n2LmDR5bN1dLnhPk1Y0rfFQEblKUJjoQC9VCSJbAU_uLYefbAPXQ3gt0PIG4iNcsfJvISKoVaOlrw?key=LR3gLDoIhpkH5qeVLviMHA" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.blockworksresearch.com/analytics/treasury-companies?dashboard=366">Blockworks Research</a></figcaption></figure>



As of Aug. 18, BTCS sat near the low end at ~0.75×, compared with SBET ~1.08×, GAME ~1.20×, and BMNR/BTBT ~1.40–1.45×; only DYNX was lower. In other words, the market is still assigning BTCS a below-peer multiple on its balance sheet.



CEO Charles Allen cast the program as both shareholder alignment and a shot across the bow against short sellers.



“As the largest shareholder of BTCS, let me be perfectly clear: my goal is to grow our market cap primarily through share price appreciation, not toxic dilution,” he <a href="https://x.com/Charles_BTCS/status/1957397105661657378">wrote</a> on X, adding that concentrating shares at the transfer agent is intended to make them harder to borrow for shorting.



Operationally, investors who want ETH must complete an opt-in at bividend.com and transfer shares to Equity Stock Transfer before the record date; otherwise, they’ll receive $0.05 in cash. The loyalty payment is paid after 120 days to those who keep shares in book entry for the full window.



Whether this closes BTCS’s valuation gap is the open question. The persistent mNAV discount suggests investors are still pricing execution risk around the company’s DeFi/TradFi “accretion flywheel,” ETH-denominated revenue exposure, and liquidity dynamics.



Still, paying out effectively a share dividend in ether is novel. If the program meaningfully shrinks lendable float and builds a stickier base, the multiple could drift toward peers. If not, BTCS will still have delivered a crypto-native distribution that puts real ETH in loyal holders’ wallets but, considering its shares have fallen about –40% over the past month, while ETH is up 20%, that may be a small consolation.



The record date for the “bividend” is Sept. 26, 2025. To qualify, you’d need to own shares by the close on Wed, Sept. 24 (or earlier).



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Ethereum

BTCS rolls out Ethereum ‘bividend’ as NAV discount lingers

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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We’ve all seen the USDe chart as of late. It’s up and to the right, now crossing $11.4 billion in circulating supply. There are a few key reasons behind this, which aren’t fully reconciled with sUSDe’s 6-9% APY.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeY-F7ogqwEGtQU_TCQW0XaDsvtDq5jlHg47d0WJaylU5iddj3KbSoh_0DgCVuraxzVkoZJinC8PrQjJ-NXS_kbSpbqJWOZNfBWzKGyq5TEY38qD_W5MwPg_Y1UafC_aqxXS0NCTQ?key=pcjPED5ZQ4NjfOmnFZGasA" alt=""/></figure>



Looking under the hood, the USDe market on Pendle for the September maturity now accounts for over $3.4 billion in USDe, 30% of USDe’s circulating supply.&nbsp;



Unlike sUSDe, USDe itself is not natively yield-bearing, and is intended to represent the value of $1. On this Pendle market, however, USDe liquidity receives a 70x sats boost from Ethena’s points campaign, and the YT buyers on this market are pricing the value of these sats at an implied APY of ~14%, a steep premium to the underlying APY of 0% and the benchmark yields provided by sUSDe or USDC supplied on Aave. As the price of ENA has risen from $0.25 at the start of July to $0.67 today, the expected value of ENA distributions from sats has risen along with this.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdPEkkLqyLut9wfwiuaT1SbOKCD1-3snltVJGSudZMb7CVgo1HYolaaF6yhV3zBYUF963iR5uSznhPE0JE7TcfAxaxGQLp8F2nGQ_wT3kPP6XUMCyRIQjjSvCS-VdLE0Z0RSDcX?key=pcjPED5ZQ4NjfOmnFZGasA" alt=""/></figure>



Herein lies the flywheel-points farming. Spend on growth with “points”, making USDe more attractive on Pendle. The USDe supply grows, accelerating top line metrics for Ethena. The growth in the top line leads the liquid markets to price ENA higher, raising the expected value of ENA distributions through points. As the market raises the implied valuation on points, the USDe supply continues to grow to crowd out this now 14%-16% implied yield, continuing the flywheel. Over $1 billion of USDe has been added to this market since last week.



Going one level further — as the market raises the implied valuation of the points, the fixed yield on the USDe-type PTs is lifted as well, making them more attractive for looping. As discussed last week, these instruments have shown profound utilization rates on Aave, which now holds over $4 billion in PTs, with borrow capacity and LTVs completely maxed out. As leverage across these instruments is continually dialed up, risks of an unwind continue to amplify.&nbsp;



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0xResearch Newsletter

Peeling back the onion on USDe’s growth

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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Crypto is tribal. That’s one of its best qualities. Think about it: What would this space even be without purity tests?&nbsp;



Notice that I used the word “space” and not “industry,” “asset class” or “sector.”&nbsp;



Crypto has always had intense rivalries, but the nuances are mostly lost on those on the outside. It’s not their fault — the regulatory war that raged in the US over the past few years united otherwise squabbling camps against a common enemy (Gary Gensler). An “<a href="https://blockworks.co/news/sec-ripple-gary-gensler">enemy of my enemy is our enemy</a>” situation.



The thermal effect of that chumminess has largely worn off, however, and things are only destined to get uglier from here, especially if/when the market rolls over.



<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">can CT even survive another bear market lmao&mdash; VanEck (@vaneck_us) <a href="https://twitter.com/vaneck_us/status/1957568763236073831?ref_src=twsrc%5Etfw">August 18, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



For sure, there is a crypto industry. And there is a crypto asset class. And a crypto sector. But they’re not filled with the same stuff.



With Gensler gone and the SEC headed by someone more agreeable, it’s easy to forget that a lot was hinging on the Ripple verdict, for reasons that don’t feel as pertinent now.&nbsp;



The question of what exactly a so-called “crypto security” is ultimately mattered to every single person working in and around crypto, in a very different way than the <a href="https://blockworks.co/news/roman-storm-guilty-one-count">Roman Storm verdict</a> and the Samourai Wallet guilty pleas were important.&nbsp;



Let’s run through a hypothetical: Pretend we believe that — even if XRP was not a security when sold to institutional backers — there exist many tokens that are clearly as centralized as XRP, or even more so. Some are more centralized in very different ways. In that case, the long-term viability of any coins we hold directly depends on whether the underlying tech (and the broader ecosystem) is truly decentralized. And for that, we need purity tests.



<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">Ethereum vs. Solana is not the vibe Ethereum/Solana vs. Ripple, Stellar, Hedera, and all of this other centralized drek that are looking for institutional and regulatory capture, is the vibe Faster both communities realize this the better imo&mdash; _gabrielShapir0 (@lex_node) <a href="https://twitter.com/lex_node/status/1868677562681217471?ref_src=twsrc%5Etfw">December 16, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Perhaps we will get regulatory clarity (read: a state-sanctioned purity test) from the SEC about what makes a token a “security,” in such a way that plainly dictates what is and what isn’t a sufficiently decentralized asset on blockchain rails.&nbsp;



It might even come out in the wash of the XRP and Solana ETF applications — but if regulation by enforcement was bad, then don’t be surprised if regulation by ETF application is worse.



If I had to pinpoint the vibe right now, I’d say it’s that there is an unconscious understanding that this is destined to come to a head.&nbsp;



After all, why is it that institutions are gravitating towards Ethereum as they migrate onchain, rather than Solana? Could it have something to do with a perceived degree of centralization in and around Solana, one which just isn’t there with Ethereum?&nbsp;



Hammer out the differences between the two networks and you’ll have devised your own purity test. Although, perhaps it has nothing to do with home validators at all.



<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">the level of social coordination amongst Solana stakeholders is second to none. whatever they are “waging war” against is what people need to double down on. centralized block production decentralized block validation always has been <a href="https://t.co/Et95qEno3G">https://t.co/Et95qEno3G</a>&mdash; namik // mega-chef Σ: (@NamikMuduroglu) <a href="https://twitter.com/NamikMuduroglu/status/1950119561258230247?ref_src=twsrc%5Etfw">July 29, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Alongside this tension, stress has bubbled through the proof-of-work side of the crypto space. But decentralization is much easier to prove in that world. All that really matters, at a bedrock level, is whether the hash rate is distributed enough so that the blockchain can withstand a 51% attack. Anything less is centralization.



Monero has just passed such a test — but only barely. You probably saw that AI project Qubic attempted to 51% attack Monero by incentivizing its users to mine XMR. Qubic only got as far as about 28%, according to one <a href="https://shai-deshe.gitbook.io/parallel-thoughts/proof-of-work/the-qubic-minority-report">analysis</a> (up to 35% if considering selfish mining).



“The elephant in the room is not what this means for Qubic, but what this means for Monero,”



Independent researcher Shai Wyborski wrote. “Monero brands itself as a provider of military grade security, suited for sensitive, high-profile applications. They aspire to become part of the global economic infrastructure designed to provide reliability and robustness. Having been disrupted to such a thorough extent by an overall niche movement should considerably undermine their ability to do so.”



Monero is largely an old head Tornado Cash or Samourai Wallet: a network you jump in and out of to muddy the provenance for your coins, hypothetically speaking. But would the disappearance of any of those three really impact the crypto “industry,” “asset class,” or “sector”? I’d argue not; in fact, it might even be really good for business.



That said, losing those platforms and protocols and others like them would be absolutely detrimental to the “crypto space.”&nbsp;



There we go again, another purity test.



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Empire Newsletter

Why crypto is headed for straight PvP

Byron Gilliam

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



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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“The effect of liberty to individuals is that they may do what they please; we ought to see what it will please them to do before we risk congratulations.”



— Edmund Burke
</blockquote>



When Queen Victoria sent President Buchanan a 98-word message over the first transatlantic telegraph cable, it crossed the ocean in just 16 hours.



This technological feat inspired The New York Times to describe the invention of telegraphic communication “full of hopeful prognostics for the future of mankind.&#8221;



Some even foresaw the end of disinformation.



“The infallible Telegraph will contradict their falsehoods as fast as they can publish them,” a contemporary journalist <a href="https://www.amazon.com/Information-History-Theory-Flood/dp/1400096235">predicted</a>.



Telegraph signals were spoken of as an invisible current carrying the truth itself — a technical channel free of human bias that would broadcast news from a single, trusted source (the Associated Press).



It didn’t work out that way.



Another journalist soon noticed that “intelligence thus hastily gathered and transmitted has also its drawbacks, and is not so trustworthy as the news which starts later and travels slower.&#8221;



Instead of re-broadcasting a canonical version of the truth, local newspapers put their biased spin on news arriving via telegraph — and the speed of transmission amplified mistakes and misinformation.&nbsp;



100 odd years later, however, people had similarly high hopes for the internet.



In 1996, cyberlibertarian John Perry Barlow confidently <a href="https://www.eff.org/cyberspace-independence">predicted</a> that cyberspace would be shaped and defined by “ethics, enlightened self-interest and the commonweal.”



By freeing information from government control, many believed the internet would topple dictators and return power to the people.



In 2007, Al Gore assured us this hope was being realized: “Broadband interconnection is supporting decentralized processes that reinvigorate democracy,” he <a href="https://cyberlaw.stanford.edu/blog/2007/05/assault-reason/">wrote</a> in The Assault on Reason. “Networked democracy is taking hold. You can feel it.”



If you’ve been on social media recently, you’re probably not feeling it.



But that was only the first iteration of the internet.&nbsp;



The internet’s second act — Web3, aka crypto — comes with similarly high hopes: What the telegraph promised to do for information, blockchains really will do for money.



“Bitcoin is a tool for freeing humanity from oligarchs and tyrants,” Naval Ravikant promised.



“Follow the protocol,” The Declaration of Bitcoin’s Independence <a href="https://bitcoinmagazine.com/culture/declaration-bitcoins-independence">urged</a>. “It has anarchistic implications&#8230;Bitcoin undermines governments and disrupts institutions because bitcoin is fundamentally humanitarian.”



But anarchy is not generally conducive to humanitarianism.&nbsp;



The French Revolution, for example, promised liberté, égalité and fraternité, but delivered famine, terror and dictatorship.



There are risks to crypto’s idealist visions, too, like North Korea exploiting mixers, pig-butchering scams enabled by stablecoins and corporations re-centralizing everything.



I don’t expect any of those external villains to precipitate a crypto reign of terror.



But the biggest risk may come from within: insiders extracting value from the very retail investors crypto was intended to empower — because the decentralization of finance increasingly seems to be centralizing wealth in the hands of a few.



Low-float, high-FDV token launches make the system feel rigged. Memecoin launches really are rigged. Giant insider unlocks flood the market with supply. Holders of public tokens often find themselves subservient to holders of private equity. Sniper bots and sandwich attacks are an invisible tax on retail.



The latest example is digital asset treasury companies, where insiders invest at or below NAV in private raises while everyone else invests at a fat premium on public exchanges.&nbsp;



In many cases, retail investors are getting stuck with the bill for paying bankers, asset managers and stock — the very things that crypto was meant to disintermediate.&nbsp;



In other cases, they’re providing exit liquidity for executives of failed shell companies.



In a few cases, as Andrew Keys explains <a href="https://youtu.be/KHGEZf0TnzY?si=eyQitqf1cAG8_MyA&amp;t=828">here</a>, they&#8217;re creating a “honeypot for class action lawsuits.”



This all seems dangerously contrary to the spirit of an industry that started with the fair launch of Bitcoin and the Ethereum ICO, open to all for 42 days.



The original high-minded ideals of that era still stand as a counterweight to the scams, grifts and insider games we’re currently suffering.&nbsp;



These ideals can still prove transformational — just as the telegraph did, in its own way, even while falling short of its promise to end misinformation.



&#8220;Professor Morse&#8217;s telegraph is not only an era in the transmission of intelligence,” The New York Herald opined in 1842, “but it has originated in the mind an entirely new class of ideas, a new species of consciousness.&#8221;



Crypto is similarly meant to be an entirely new class of money and new species of investment — one that can not only democratize investing, but change the world.



These are high-minded ideas, worthy of pursuit.&nbsp;



But, to paraphrase Edmund Burke, we might want to see what people do with their new financial freedom before we risk congratulations.



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



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



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



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



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

The Breakdown Newsletter

Decentralization in progress: High ideals and hard realities

Casey Wagner

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



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Investors seemed to be looking for direction during Monday’s session. Major indexes traded sideways all morning and into the early afternoon, flipping between the mildest of gains and losses ahead of what may turn into a volatile week.&nbsp;



First, geopolitical tensions will take center stage as the world waits for updates from Ukrainian President Zelensky’s White House visit Monday. The meeting comes after Trump’s Friday trip to Alaska, where he met with Russian President Putin.&nbsp;



Trump and Zelensky started speaking with reporters in the Oval Office right as we were finalizing today’s newsletter. Trump said he thinks he can arrange a Putin-Zelensky meeting. Zelensky said he was open to this possibility and wanted to find a diplomatic way to end the war.&nbsp;



Later this week we’ll see the minutes from the FOMC’s July meeting (out Thursday). It’s the first look we’ll get into what went down last month when two Fed governors <a href="https://blockworks.co/news/powell-resolute-amid-rate-dissents">dissented the decision</a> to hold rates.&nbsp;



The Jackson Hole Economic Symposium (the Kansas City Fed’s annual conference) kicks off Thursday. Fed Chair Jerome Powell will speak on Friday morning. As of Monday, markets were pricing in an 83% chance of a 25 basis points interest rate cut in September — up from a month ago (56%), but down slightly from a week ago (86%), per CME Group <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">data</a>.&nbsp;



Powell’s speech is the main event of the week. Historically, his Jackson Hole remarks tend to be followed by a mild boost. The S&amp;P 500 has had a median increase of 0.4% on the day of Powell’s Wyoming address between 2018 and 2024, according to data from MarketWatch.&nbsp;



2022 was an exception, when the S&amp;P 500 slid 3% the day after Powell took a more hawkish stance in his comments.&nbsp;



Powell effectively claimed victory over price stability last year, noting in his <a href="https://www.federalreserve.gov/newsevents/speech/powell20240823a.htm">speech</a> that his “confidence has grown that inflation is on a sustainable path back to 2%.” Weeks later, the Fed made its first cut in more than four years and slashed interest rates by 50 bps.&nbsp;



This time around, the data isn’t looking as promising. Plus, there’s significant pressure from the White House (although, as we’ve written before, given that Powell knows he’s on <a href="https://blockworks.co/news/fomc-june-powell-term-end">the way out</a>, we doubt he’s taking the president’s thoughts into consideration).&nbsp;



The Fed has held off on cutting so far this year because officials wanted to wait and see how tariffs impact inflation. July’s US wholesale price data, as measured by the producer price index, came in much hotter than expected at 0.9%. That was the largest jump in more than three years. The concern now is if (or when) producers pass on higher prices to consumers.&nbsp;



The labor market is also looking weaker. Unemployment for July was unchanged at 4.2%, but payroll growth over the last three months averaged 35,000 — levels not seen since the pandemic.&nbsp;



Finally, earnings season comes to a close with big box retailers including Target, Walmart and Lowe’s set to report this week. We’ll be listening for any comments about tariffs and consumer prices.



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



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



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



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



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



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



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

Economy

Stocks trade sideways ahead of political updates, Jackson Hole

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



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Yuga Labs wants its “Otherside” game to be like the Roblox or Fortnite of crypto — and isn’t giving up, despite the ongoing blockchain gaming lull.&nbsp;



Part digital social space, part video game with the goal of making user-generated content a massive part of the experience, Otherside is arguably the most ambitious crypto metaverse project still in development.&nbsp;



“This cycle is very different. I feel like every crypto cycle is a little bit like a revenge on the excesses of the last one,” Yuga Labs CEO and cofounder <a href="https://blockworks.co/news/yuga-labs-ceo-bayc">Greg “Garga” Solano</a> said in a recent <a href="https://x.com/RealJonahBlake/status/1955700364071858277">interview</a>.&nbsp;



“It’s a weird cycle in that, like, the quote-unquote ‘consumer-crypto’ part of things is actually insanely quiet. Whereas North America is coming onchain via treasury companies, ETFs. And then it’s like just the Zoomers that are coming onchain via like memecoins and pump.fun,” Solano said.



Things certainly are much quieter on the gaming front. DappRadar <a href="https://dappradar.com/blog/state-of-blockchain-gaming-in-q2-2025">reported</a> last month that crypto gaming funding is down 93% year-over-year, and user activity is on the decline as well.



Yuga saw over <a href="https://decrypt.co/99156/yuga-labs-sees-561-million-in-otherside-ethereum-nft-sales-within-24-hours">half a billion</a> dollars in “Otherdeed” virtual land NFT sales in less than a single day during the 2022 NFT boom — after raising <a href="https://blockworks.co/news/bored-ape-yacht-club-creator-secures-whopping-450m-seed">$450 million</a> in funding.&nbsp;



If you ask me, if anyone has the dough to actually ship an expansive crypto game, it’s Yuga. But that also comes with a lot of pressure.



“The core Otherside holders don’t actually overlap a ton with Web3 gaming. It is a very collector-minded audience. And I think that’s also being taken into account,” Solano said of the decision to give Otherside a large social component.



On the development side, Solano said the Otherside team is “shipping at a faster cadence than we ever have.”



When asked whether Otherside has enough funding for another two to three years of development, Solano told crypto investor Jonah Blake:&nbsp;



“Yes. Hands down. We can do that just with cash without ever even touching any crypto assets that we own.”



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



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



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



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



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

The Drop newsletter

Yuga Labs CEO on crypto market: ‘This cycle is different’

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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When do buybacks make sense?



According to the wisdom of TradFi, buybacks have typically been motivated by three reasons: when growth opportunities are scarce and revenues cannot be increased further, when a stock trades below its intrinsic value, or as a tax-efficient way to return dividends to investors.



From this viewpoint, the dozens of crypto companies spending multimillion-dollar budgets on token buybacks seem to be doing something grossly wrong.



The growth opportunities to launch an adjacent product in crypto are vast (forking open-source code is free), plus most tokens have not been around long enough to establish any kind of fair market value.



But buybacks in crypto serve a uniquely different purpose of marketing. Specifically, buybacks signal legitimacy in a token market plagued by what has been called crypto’s <a href="https://youtu.be/99XsVSN_doQ">lemon market problem</a>.



So if you’re doing buybacks, you may want to put the pedal to the metal and go all in.



That’s the plan of “Heaven,” the latest memecoin launchpad to open its pearly gates on Solana.



Backed by the Solana Foundation’s Colosseum accelerator/hackathon, Heaven is purportedly committing 100% of its protocol revenues to buybacks of its native token, LIGHT. And the buybacks aren’t for a period; but<a href="https://x.com/heavendex/status/1956106489732420069"> forever</a>.&nbsp;



That’s nuts! This is a team that only raised $27 million in an ICO two weeks ago.



About<a href="https://dune.com/adam_tehc/heaven-dex"> $1.4 million</a> in lifetime revenues (by “lifetime,” I mean one week) has been spent on buyback-and-burns for 2% of its total token supply — what the team terms its “God Flywheel.” The result is a six-day-old token that has traded up 225% to a $64 million market cap as of today.



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcrk-EY_jaavwfh4DQma9TGjCftVKOSSvvZcke7fnSVYMDtOdM2YNsTTZkKYmqhuMJWkmDq4MrNxF0v8Jg4d1F3Mi8aoSdlXwT8NbM5wJYZv0F90h9Xh_osDcD1utSc7yPQYLe76Q?key=0y5Dimtew96e8fjdrGIxrg" alt="" style="width:784px;height:auto"/><figcaption class="wp-element-caption">Source: Trading View</figcaption></figure>



You can see Heaven’s traction based on the corner blot of black on the chart below. Yesterday saw Heaven deploy 3,865 tokens, or about 15% of launchpad market share.



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeMlbPE52opD-EFjWuFF8ufBWxrC2u-XjGF3QvMGyYGEYtKfJmWpYEGGCzo2HQFMC-N86Vmtcy4jkdDMhqclO9ACSUdMdnPnIL-EZoqAYleP-te5O39a4pgU6pTF1wb_dFeyTSuEA?key=0y5Dimtew96e8fjdrGIxrg" alt="" style="width:686px;height:auto"/><figcaption class="wp-element-caption">Source: Dune</figcaption></figure>



Pump still has the lead, but Heaven’s revenue buyback gimmick has garnered it enough attention to put it ahead of launchpads like LetsBonk, Moonshot and Jup Studio, all of which have been around for a while.



Heaven’s memecoin launchpad is tightly integrated with its own AMM DEX, which launches tokens exclusively from its own launchpad from the second one.



This vertically integrated design eschews the standard bonding curve design of memecoin launchpads in pursuit of two key objectives.&nbsp;



One, it lets Heaven customize stricter parameters around fee collection.



Heaven-launched tokens are manually gated by the team and categorized under one of three categories. Tokens<a href="https://docs.heaven.xyz/permissioned"> flagged</a> under the &#8220;Creator&#8221; (i.e., serious) label can claim 1% of fees for themselves, those under the “Community” (i.e., non-serious) label are entitled to only 0.1%, while “Blocked” tokens are entitled to none.



In the founder’s<a href="https://x.com/peacefuldecay/status/1945573113196155338"> words</a>: “&#8230;When you trade a token and see Heaven as the DEX, you know that it&#8217;s gone through the heaven gauntlet.”



All<a href="https://docs.heaven.xyz/fees"> protocol fees</a> from token trading on the DEX go directly to buying back and burning LIGHT.



Second, the design lets the team protect token launches with anti-MEV mechanisms. Heaven implements a linearly-decaying six-second “sniper tax” for new tokens.&nbsp;



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeZ3F68NRy-Tdmd_jfINuYyrPVpav0_YxBgp-9N_7dOdWr3EJrmp93OQMexYevc7jPGXrR_eaDQCF6zmfVqzY4z410UoLRla3rLoqRZrP3J3Pr6TV1hg8b7Q2X2-LuWn071eaFZCg?key=0y5Dimtew96e8fjdrGIxrg" alt="" style="width:519px;height:auto"/></figure>



These features seem to create something of a theoretical moat around the Heaven product, one that the average launchpad lacks.



Yet Heaven’s closed surface design may create liquidity silos from DEX aggregators if Heaven’s pools aren’t well integrated or economically competitive in routers. How much routing it wins remains to be seen.



Updated August 18, 2025 at 4:21 pm ET: Modified headline for clarity. 



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



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

Solana memecoin launchpad burns 100% of its revenues

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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We know there’s an obvious disconnect between the average retail investor and the whales with enough size to really influence markets.



Perhaps the most extreme gap is between, say, someone who holds a few thousand dollars’ worth of coins they’ve bought on an exchange, and a VC fund that holds the exact same tokens. The VC fund very likely acquired those coins for much, much cheaper. By orders of magnitude, even. In fact, it was never possible for the retail investor to have bought the tokens at the same price, considering the VC bought them for a flat price years before they were ever listed on an exchange.



Over the past year or two, liquid funds have become increasingly common in crypto markets. These operate similarly to traditional hedge funds in that they freely buy and sell publicly-tradable tokens according to their mandate.&nbsp;



In many cases, liquid funds trade via the same spot markets utilized by retail traders and market makers, although often with more sophisticated trading systems for more precise execution, with liquidity sourced via OTC desks, and so on.



“What is your mandate, Seth?” Yano asked Seth Ginns, Managing Partner and Head of Liquid Investments at CoinFund, on today&#8217;s Empire podcast episode.



“Our mandate is, as an investment firm, to find the best, fundamentally driven opportunities on the venture and liquid side. And then [on] the liquid side, we drive absolute return strategies,” Ginns said.&nbsp;



“So we’re investing in secular growth opportunities where we think that the addressable market is very large, the team is fantastic, and there&#8217;s the opportunity to have a large return based on a fundamental underwrite over a multi-year period.”



Ask a retail investor what their mandate is and they’d probably tell you something similar, albeit with less jargon: find the least risky coins with the most potential to go up, and buy that.



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/QX6jxGQlM-w?si=mxChyLkfoXldLOje" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







Cosmo Jiang, General Partner and Portfolio Manager at Pantera Capital, distilled his firm’s strategy into generating outperformance — which generally means beating bitcoin’s returns by picking tokens.&nbsp;



Both Jiang’s and Ginns’ funds hold between 10 and 20 or so different coins right now.&nbsp;



Jiang said: “The edge of other managers is going to be around perhaps the acquisition part of the token, and others might be around the execution side — that’ll be the market-neutral guys, the market makers and things like that.



“But on the far end where I&#8217;m on, I believe the vast majority of our performance, if I were to do performance attribution, comes from token selection and less so the actual execution.”



He explained that Pantera uses a variety of options, primarily spot trading with some derivatives to access liquidity elsewhere. Pantera’s fund is domiciled in the US, which means it cannot trade on international exchanges.



As for how these funds actually pick their coins, Ginns had this to say:



“It’s an environment where if you do the work, if you have the connectivity, if you&#8217;re going to the developer conferences, if you can see where the tech is going, you can actually drive really good returns like that.”



He continued: “That was the biggest frustration over the last few years: You could do the work, but you weren&#8217;t seeing those positive fundamentals reflected in the token valuations. And there&#8217;ve been some really big changes that have happened, so it&#8217;s not just the change in [US] administration that&#8217;s been a catalyst.”



Catch the full episode (which includes insight into both portfolios) on <a href="https://www.youtube.com/@empirepod">YouTube</a>, <a href="https://open.spotify.com/show/4UTePv1CR3APdKOiosR3Iq">Spotify</a>, <a href="https://podcasts.apple.com/us/podcast/empire/id1554930038">Apple Podcasts</a> and <a href="https://x.com/theempirepod">X</a>.



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



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



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



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



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

altcoins

How liquid funds thrive in spot crypto markets

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">
&#8220;100% of the information you have about any business reflects the past, and 100% of the value of that business depends on the future.”&nbsp;



— Bill Miller
</blockquote>



Are markets still forward-looking?



A core tenet of investing theory is that asset prices are driven by the market’s best (and sometimes worst) guesses about the future.



This is why stocks are valued on forward earnings multiples, not trailing ones. And bonds are priced on what the economy is expected to do, not what it’s already done.



It doesn’t feel like that’s what’s happening just now.



This week’s data showed inflation ticking back up again, and every week’s data shows the federal deficit exploding. But Treasury yields are flat on the week and down on the year.



Meanwhile, the US economy seems headed into recession, but stocks keep making new highs.



There are two possible explanations.



One is offered by valuation expert Aswath Damodaran, who <a href="https://pca.st/episode/5916b67a-b936-40eb-89f2-e553872470f7?t=955">thinks</a> the market has given up on being a “predicting machine.”



After years of forecasters missing the mark, he says, the market has shifted into “reactive” mode, where he expects it will stay “until we figure out a better predictive mechanism.”



In other words, investors are living in the moment and not worrying about tomorrow.



The second possible explanation is the opposite: that the stock market is still in prediction mode; it’s simply predicting that things will be good.



That may seem hard to square with the constant drumbeat of worrying headlines: a weak jobs market, the president at war with the Fed, a politicized Bureau of Labor Statistics.&nbsp;



But the market might be looking through all that and seeing its favorite thing: easy money.



The FOMC is expected to start cutting interest rates at its next meeting and might be bullied by the president into cutting more, and faster, than it probably should.



And a federal court may be on the verge of repealing the president’s tariffs, at the cost of higher deficits and the benefit of higher earnings.



Lower interest rates, bigger budget deficits and higher earnings is a surefire recipe for higher stocks.



But investors may be even more forward-looking than that.



With the stock market valuations nearing all-time highs, it’s easy to think investors must be blind to the risks we see in the headlines every day.&nbsp;



But <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5127501">recent research</a> suggests investors don’t think in terms of risk, as textbooks assume, but in terms of fear: “Fear provides an alternative explanation for the magnitude of the excess return realized [by stocks] historically.”



Could anything be more fear-inducing than the AI boom?



Chief AI doomer Eliezer Yudkowsky, for example, <a href="https://futurism.com/the-byte/ai-destroy-humankind-yudkowsky">warns</a> that artificial general intelligence could lead to human extinction in as little as two years. On a longer timeline, he generously gives us a “shred of a chance” to survive.



For investors, though, the truly existential risk is in missing out.



That may turn out to be less hyperbolic than it sounds because even reasonable people can fear that superintelligent AIs (should they choose to let us live) might take all the jobs.



If so, the only way to make money will be from investments — and you’ll need to make those investments before the AIs take over, which could be any time now. Personally, I think there will always be plenty for humans to do, so I’m not as pessimistic as that.



But record-high stocks might be a prediction that I should be.



Let’s check the charts.



There’s more money:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf2wkUE1KaUpYMN05dR0zfy6twUk-JSvBRFltKWtHRdtzOh83y1fzqUujC_D4FMeI54RbcimghYMHlcHygU3Yy60aL24iGS0Js7ovu-o6MlJPgIiKw75ooU94FxMzPCm9D_guV6lw?key=8QFttY5ASmmE069NR2oSqw" alt=""/></figure>



M2 money supply is growing again, thanks to increased bank lending and deficit spending (I think). There should be a lot more of both to come. The FT <a href="https://www.ft.com/content/efe1e350-62c6-4aa0-a833-f6da01265473">writes</a> that the AI boom has created “a race among private capital providers to offer more and larger loans” to build data centers.



The capex race:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdvFwaTA0Oh6ezmEUMC6kp9RgiPK5LWZzdpoCv6Mvwa-ZExWU2vj7mCIg62G-PGEesLdo25q38XLSdc6rB9ZoHpGubF1oFvi22hoTtN0Kz3YjkN5bUaPDKYxm-pf8xlHZo5DSvA?key=8QFttY5ASmmE069NR2oSqw" alt=""/></figure>



ChatGPT fired the starting gun and the race seems to be just getting going. The big four hyperscalers are expected to spend $350 billion on data centers in 2025, and another $400 billion in 2026.&nbsp;



Cash flows won’t cover it:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe3_XRttNpiuufovWYr26gEqKpARXrm6jHr0rWQUYTqKGZZbs_PbTfLThm_t7GCCqaXrVn3SRJPN3FrNMq63fXSm0bp0ix8TcatMoxyNGsk7CsZ2w3TQyK0cOV_mEBZf9uHmJL5fA?key=8QFttY5ASmmE069NR2oSqw" alt=""/></figure>



Morgan Stanley forecasts that the hyperscalers will spend $2.9 trillion on data centers over just four years, and that their cash flow will cover less than half of it.&nbsp;



Don’t forget the little guys:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf_pg93sEwPtmqpzain5u94-e4gE3MtBT47v9dpAgYh6PaDRogUDpAR3zakhYBqHknGFPLoKPTMjApo49D3nh_5ptkIX0cpjZ3wJgHU8E85r4pNhX5w1Nt0FA4FJnIMZEllCZhH7w?key=8QFttY5ASmmE069NR2oSqw" alt=""/></figure>



Based on the surging number of new businesses, Torsten Slok says “the US remains the most dynamic economy in the world.” Thanks to AI, some of these might soon be <a href="https://www.economist.com/business/2025/08/11/how-ai-could-create-the-first-one-person-unicorn">one-person unicorns</a> (i.e., $1 billion companies with a single employee).



Transitory?



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfPkdMZQmA0PrTzVHc4tzkr5GLhN4rGYZBabGEw3pZaEdhOmSch8cZYKDJbRGD4y98bEoGvUlUSrAjmNSy2egxVdWjYO0aApyY5HTmJ6bUTR7BKa1RRR31z76y2jtSmqk8o1T40zQ?key=8QFttY5ASmmE069NR2oSqw" alt=""/></figure>



Producer prices were sharply higher in July, suggesting that companies are starting to pass the cost of tariffs through to consumers. Economists at Goldman Sachs estimate that consumers absorbed just 22% of tariff costs through June, with businesses absorbing the other two-thirds (through lower margins). Goldman expects those numbers to flip-flop by October, with consumers bearing two-thirds of tariff costs.



What tariffs?



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcfw8wbpB8_ZCvumbJKgVnTUJXWg02d_LqNS1_6S5ohmMvLwt-dlF7PK8f4fTE86q7b3ZLwffJz79WFSO-OS8RzpijwUlJzi6ygwx_TJLukN1piYZr9TF7XaLAm9vYQHlqKZy3s?key=8QFttY5ASmmE069NR2oSqw" alt=""/></figure>



Brad Setser <a href="https://x.com/Brad_Setser/status/1955813263033131152">notes</a> China’s trade surplus in goods (exports minus imports) continues to rise despite the trade war with its largest customer.



Time to renegotiate the rent:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf1qPQpACTnf5_pdQcZaswbpOW-sX2N_WORjhzM3GOQtTn8Vn0Jleci1j0jSZ0DdfUFvbzcMkO_BAl-tDcFFFIOYqvPd3gLp9402l1gOEqJ6JSejpmazy9LA1cTy2YyaR6oyLKHcQ?key=8QFttY5ASmmE069NR2oSqw" alt=""/></figure>



Data from the Cleveland Fed shows an unprecedented collapse in the cost of renting, as measured by new rental agreements. Jeff Weniger <a href="https://x.com/JeffWeniger/status/1955264056559862151">speculates</a> it’s the result of non-citizen residents “<a href="https://x.com/JeffWeniger/status/1955264056559862151">self-deporting</a>.”



End of an era?



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfKMneElssmPwKnKoyXhFL0LWJElCMQG9bEZX-GJQs7JRSAUjNGBKWic8Be0aLVHQsf_rJSDT95HmdPYbO4E6n5WvPKD4_1Zj19uJ5mNJM-o-uwYP-M8nnc1FwolsTr0FPCTsRzfA?key=8QFttY5ASmmE069NR2oSqw" alt=""/></figure>



The rate of wage growth for low-income workers has dropped below the rate for high-income workers for the first time in 10 years. “The era of big raises for low-paid workers is over,” <a href="https://www.wsj.com/economy/jobs/low-wage-employees-pay-growth-cdf3cd36?st=EmRNsY">according</a> to the Wall Street Journal. If so, it was an excellent run.



FOMO valuations:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdEu11o4O7y8Of-mG9abmdBwzTXDY3Vnum941y5KsVn88TqnhH82t6fKXs1KSwm-D_TFD3MzcbfeqnR6MbD3tQClxGNlGhLyut8ReVXZLoxU_OhLVmyoZ0IKSW6pjxdMeLCDw-w-Q?key=8QFttY5ASmmE069NR2oSqw" alt=""/></figure>



27.2% of stocks in the S&amp;P 100 trade at a P/E of at least 50. Just one trades 10x.



All-time greatest FOMO?



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd8rVafhAalP4a5TNPitVrEFvRAIUT77GYVbi2YAIm52EwdL80YTu3Kdn05DM-1QW4RbcBguWblQJCPhWj2E6aDDwhpumRsaoWwneG_0drYNZUTlnnLjUlLlSfYffeui9j81Qjd?key=8QFttY5ASmmE069NR2oSqw" alt=""/></figure>



At nearly 100x next year’s sales, The Economist <a href="https://www.economist.com/finance-and-economics/2025/08/12/palantir-might-be-the-most-overvalued-firm-of-all-time#">says</a> Palantir might be the most overvalued stock of all time.



Are markets still in the prediction business then? I think they are — and I think they’re predicting good things.



For investors, at least.



Have a great weekend, predictive readers.



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Friday charts: Investor’s crystal ball, cloudy with a chance of FOMO

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



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



We learned this week that Stripe and Circle are planning to launch their <a href="https://blockworks.co/news/stripe-circle-l1s-solana">own L1 chains</a>.



Ethereum community members were quick to <a href="https://x.com/ryanberckmans/status/1955289483345113471">question</a> why corporations shouldn&#8217;t launch L2s instead.



Ethan Buchman has a simple <a href="https://blockworks.co/news/circle-l1-impact-ethereum">explanation</a>: Vertical integration is profitable.



Christian Catalini of Lightspark <a href="https://www.forbes.com/sites/christiancatalini/2025/08/11/stripe-is-building-a-blockchain-can-openness-survive-branded-rails/">echoes</a> this view in Forbes:



“&#8230; stablecoin issuers have strong incentives either to commoditize the rails — by issuing on multiple networks and positioning themselves at the center of interoperability across them — or to nudge most activity to a network they control. Either strategy gives them a shot at becoming massive global fintech leaders and capturing most of the value the technology creates.”



Circle/Stripe is doing simply what’s best for them. But that means these new chains aren’t contributing to Ethereum data availability fees, which does not elevate the bags of ETH token holders.



The team behind Phantom wallet faced similar “chain alignment” questions upon announcing its integration of Hyperliquid perps.



This as opposed to a perps DEX built on Solana like Drift or Jupiter.



Reasoning from a viewpoint of chain tribalism is pretty standard fare in this industry. But from an outsider’s perspective, it’s probably a very weird mental model to make decisions from. Builders should simply do whatever’s best for business.



Brandon Millman, CEO of Phantom, puts it plainly on this week’s Lightspeed <a href="https://youtu.be/ogdTMLHMRy8">podcast</a>:&nbsp;



“In the world of trading and perps, how do we get the best prices for users? If you just look at the objective numbers, price, execution, liquidity…all of that is an order of magnitude greater on Hyperliquid. And so by completely ignoring that, I think we would&#8217;ve been doing a pretty big disservice to users.”



To put it another way, Hyperliquid processed $371 billion in volumes over the last 30 days. Solana&#8217;s two largest perp DEXs, Jupiter and Drift, processed a collective $52 billion over the same time.



That’s roughly 7.1x more addressable volume, which should lead to a pretty straightforward business decision.



From my time speaking to application developers in the industry, most pursue a multichain strategy simply because it’s best for business.



Aave for instance, is deployed on something like 15 chains. This multichain strategy is proving unprofitable on several L2s like Soneium, Celo, Linea, ZKsync and Scroll. So they won’t do it <a href="https://x.com/DefiIgnas/status/1951238740526993611/photo/1">anymore</a>. Another simple straightforward decision!



<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">We reached an L2 saturation point: Aave deployed on 16 chains, but the new deployments are operating at a loss (Soneium, Celo, Linea, zkSync, Scroll). As a result, Aave is unlikely to deploy on Bob BTC L2, even though it passed the temp check vote. Now, a proposal on the Curve… <a href="https://t.co/jl6FKICbOk">pic.twitter.com/jl6FKICbOk</a>&mdash; Ignas | DeFi (@DefiIgnas) <a href="https://twitter.com/DefiIgnas/status/1951238740526993611?ref_src=twsrc%5Etfw">August 1, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



It would be nice for businesses to show cultural loyalty or be altruistic.



But as the economist-philosopher Adam Smith taught us, it’s not from the benevolence of the butcher, baker or brewer that we expect our dinner from, but from a regard to their own self-interest.



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Circle

Corporations don’t care about your blockchain

Ben Strack

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



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It’s worth taking another look at those corporations hoarding crypto — particularly as we see momentum around the ones accumulating ETH.&nbsp;



You may know them as crypto treasury companies or, as <a href="https://www.blockworksresearch.com">Blockworks Research</a>’s Dan Smith calls them, DATs, or digital asset treasuries. 



But no matter the label, they’ve grown big enough for many to notice — and we’re not just talking about <a href="https://blockworks.co/tag/michael-saylor">Michael Saylor</a>’s Strategy.  



Though Strategy (holding 628,946 BTC) has historically dominated trading volumes in this segment of companies, we saw BitMine Immersion (BMNR) eclipse the firm on that metric a few times this week.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeQGAW-FTFm--xLQrgBOpu4J8C3H90cUtcLCaDKYFbcp2wwuUr2iK-yNFSS3QBfoOFFyuQrYXSr_f8o2JBSX40i7CN2QoxavnjMxmaHX_eVC8YH0HrnWA0EG3NQX4GzdPCjnAHmiw?key=yr74Q2nUOtE3n6BBNbnCUg" alt=""/></figure>



BitMine said Monday it held $4.96 billion worth of ether. That means that roughly five weeks after revealing its ETH accumulation plans, the company has the world’s largest corporate ether treasury. BitMine’s stated goal is to own 5% of the ETH supply.&nbsp;



Blockworks’ Smith previously addressed BMNR’s rising daily volumes within a broader “flywheel”:



<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">&gt; smash the bid over the weekend &gt; open higher on monday &gt; increased volatilty = more volume &gt; more volume = raise more cash via ATM &gt; more cash = buy more ETH The Real Flywheel <a href="https://t.co/A0xDy8G7iW">https://t.co/A0xDy8G7iW</a> <a href="https://t.co/85xNMPpW3z">pic.twitter.com/85xNMPpW3z</a>&mdash; Dan Smith (@smyyguy) <a href="https://twitter.com/smyyguy/status/1954227040816603186?ref_src=twsrc%5Etfw">August 9, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Another big crypto treasury firm <a href="https://blockworks.co/news/bitcoin-treasury-strategies-sharplink-eth">focused on ether</a> is SharpLink Gaming. That’s the one with Ethereum co-founder Joseph Lubin as its board chair.



ETH treasury companies now hold nearly 2% of all <a href="https://blockworks.co/price/eth">ETH</a> — up from about 0.5% a month ago. Not quite the percentage bitcoin treasury companies (mostly MSTR) hold, but getting closer:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcaJF2uZ1jno3pcUZKcsPW1dOEEa4pIMDOVgRsondMOwXCAr0MFA1u0PrHDDYpJ_C0r-sPpwqr0JkPSNyCPOW8Zpp6xCCM7KG2OyKXIHn0hjWjchVrvBaNPbJ06s9X9PRuldLT5kQ?key=yr74Q2nUOtE3n6BBNbnCUg" alt=""/></figure>



To be clear, the market cap of companies building ETH treasuries is only about 11% of those with BTC-buying strategies ($107.6 billion to $12.7 billion).&nbsp;



Benchmark analyst Mark Palmer said he views the recent volume surge for ETH treasury-focused companies as “largely a new-entrant phenomenon.”



“We would expect treasury company launches focused on other cryptocurrencies to see similar surges in trading volume as they start to deploy the capital they have raised and attract investor attention,” he told me.



We’ve mentioned in this newsletter before about the firms looking to hoard crypto assets beyond BTC and ETH (i.e. SOL, BNB, SUI and HYPE). 



The <a href="https://blockworks.co/analytics/treasury-companies">growing number</a> of these types of firms has spurred some skepticism. Not all will last, some say — particularly any copycats with no differentiation, or those targeting less tested assets. Felix <a href="https://www.youtube.com/watch?v=1bIw1Pqa7Kg">discussed</a> this universe of companies on stage with industry executives at Permissionless IV, and the Empire podcast crew has also weighed in on the space plenty (see <a href="https://blockworks.co/news/appetite-for-dats">here</a> and <a href="https://www.youtube.com/watch?v=KHGEZf0TnzY">here</a>).



The ongoing emergence of these models doesn’t necessarily make the segment a bubble (at least in the classic sense), Palmer argued.&nbsp;&nbsp;



“Unlike the dot-com era, when companies chased the same market with similar offerings, crypto treasury firms are taking siloed approaches in which a given firm focuses on a specific cryptocurrency and a single jurisdiction,” he explained. “Or it has a differentiated approach such as a franchise-based model aimed at accelerated token accumulation.”



I’ll be most interested to see the market cap growth of those focused on ETH (and other altcoins) relative to the BTC ones. Compared to Strategy, this segment’s companies are rather young and small. We don’t have to rush to judgment.&nbsp;



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DAT-a crunch: Momentum builds around ETH treasury companies

Ronin, the gaming chain launched by <a href="https://blockworks.co/tag/sky-mavis">Sky Mavis</a>, is making its way back into the Ethereum fold.&nbsp;



Today, the team announced that Ronin will migrate from a standalone sidechain to a full Ethereum layer-2 rollup.



Scheduled for Q1-Q2 2026, the shift aligns Ronin with Ethereum’s settlement layer while retaining <a href="https://blockworks.co/price/ron">RON</a> as the chain’s native gas token. Users won’t pay ETH directly, but transaction data will be posted to Ethereum, and the chain will inherit Ethereum’s security guarantees.



For <a href="https://blockworks.co/tag/ronin">Ronin</a>, this marks <a href="https://blog.roninchain.com/p/ronins-homecoming-to-ethereum">a kind of homecoming</a> — not just technically, but economically and strategically. Its next evolution involves new tokenomics, with “Proof of Distribution” rewarding builders rather than just validators or liquidity providers. It’s a classic layer-2 model: Preserve the ecosystem’s internal coherence while plugging into Ethereum’s shared infrastructure.



But Ronin’s return to <a href="https://blockworks.co/tag/ethereum">Ethereum</a> also highlights an increasingly relevant design question: if Ethereum is the center of gravity, how should aligned systems connect to it? Should app-specific ecosystems become <a href="https://blockworks.co/tag/rollups">rollups</a> with their own sequencers? Or should they integrate more deeply, adopting shared sequencing via Ethereum validators — so-called “based” architectures?



Ronin is choosing to keep sequencing local. Control over order flow, fee logic and transaction inclusion will remain with the chain’s own operators. But not everyone sees this as the optimal path forward.



<h2 class="wp-block-heading">Based and beyond</h2>



Take Taiko, the self-described “first <a href="https://blockworks.co/news/unpacking-the-based-rollups-debate">based rollup</a>,” which just shipped a major milestone: <a href="https://blockworks.co/podcast/bellcurve/0345b516-eb15-11ee-854f-cbb5ba1433a1">preconfirmations</a> live on Ethereum mainnet. The rollout made <a href="https://blockworks.co/price/taiko">Taiko</a> the first production implementation of a rollup that outsources sequencing directly to Ethereum proposers. Instead of running its own centralized sequencer, Taiko uses Ethereum block proposers to order transactions, preserving decentralization and aligning incentives with the base layer.



Preconfirmations fill a key gap: While Ethereum validators publish blocks every 12 seconds, apps need to give users faster feedback — sometimes known as “soft confirmation.” Taiko’s preconf system introduces a fast path — about two seconds — for users to get confirmation that their transaction will be included. It doesn’t feel instant, but it’s a breakthrough for systems that refuse to compromise on decentralization in exchange for speed.



An adoption hurdle for Taiko has been that its design made transactions consistently more expensive than its rollup rivals. But that’s changing, according to Lin Oshitani, protocol researcher at Nethermind.



“At some point, being a based rollup becomes more cost-efficient than having a centralized sequencer, and it can provide these composability guarantees and all that,” <a href="https://x.com/i/spaces/1RDxlzAXLnRGL">he said</a> in an X space Friday. “Blob aggregation is the first step.”



Taiko’s milestone was the first time preconfirmations went live on a mainnet-based rollup. But it won’t be the last.



Puffer Labs <a href="https://x.com/puffer_unifi/status/1956013582027460733">just launched</a> the second testnet of its UniFi stack, another based architecture that pushes the model even further. Puffer is building infrastructure for application-specific chains that use Ethereum’s validator set for sequencing and settlement. They call them “based appchains.”



UniFi’s differentiator is speed. While Taiko targets two-second preconf times, Puffer claims sub-10 millisecond latency on testnet, which is approaching Web2 performance territory. That’s enabled through a preconfirmation AVS (Actively Validated Service) built on <a href="https://blockworks.co/tag/eigenlayer">EigenLayer</a>, which restakes ETH to back a distributed set of preconfirmers. Add in a multi-TEE (trusted execution environment) prover setup spanning both Intel TDX and AMD SEV, and Puffer is trying to minimize trust assumptions while maximizing responsiveness.



Puffer opts for the TEE route, for now, because current zk-provers lack real-time proving — a prerequisite to achieving synchronous composability — according to Amir Forouzani, a contributor at Puffer.



“As ZK technology matures, we are gradually transitioning toward fully trustless real-time proving, while continuing to use TEEs as a safeguard to catch potential bugs in the zk-circuits, ensuring maximum safety,” Forouzani told Blockworks.



Unlike Taiko, UniFi shares <a href="https://blockworks.co/tag/mev">MEV</a> and congestion rewards across all parties, including the Ethereum Validators and Rollup owners. So there is no longer the tradeoff of giving up MEV or priority fee to become based. Unlike most rollups — and of course L1’s like <a href="https://blockworks.co/news/circle-l1-impact-ethereum">Circle&#8217;s planned Arc chain</a> — UniFi appchains don’t need to centralize sequencer logic or fee capture. They get the sovereignty of an appchain with the alignment and finality guarantees of Ethereum.



If Taiko is the “proof of concept” for based rollups in production, Puffer can be seen as a forward-looking blueprint with different tradeoffs. It’s more configurable, faster and has a clearer path toward institutional use cases. Its second testnet introduces <a href="https://eip7702.io/">EIP-7702</a>-based atomic withdrawals, custom gas token logic and optional privacy features, making it attractive to both permissionless builders and enterprise clients.



Taiko offers a simpler, fully live architecture with no reliance on trusted hardware or external AVS networks, prioritizing neutrality and <a href="https://blockworks.co/tag/decentralization">decentralization</a> today.



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



What’s emerging is a spectrum of Ethereum-aligned architectures. At one end, you have Ronin joining the status quo of rollups, with its own sequencer and token logic, drawing security from Ethereum but keeping execution local. In the middle, you have based rollups like Taiko, which rely entirely on Ethereum’s validator set to handle transaction ordering. And on the far end, Puffer proposes sovereign appchains that share sequencing and economic alignment with Ethereum while maintaining full control over execution environments.



Like Ronin, Circle’s Arc is built for a specific use case with a custom gas token. But unlike Ronin, it’s not trying to be part of the Ethereum stack at all.



All are responses to Ethereum’s current limitations: latency, throughput, cost or governance overhead. But they diverge on the question of how deeply to plug into Ethereum (via shared sequencing), partially (via settlement), or not at all.



Beyond the battle between rollups and L1s, it’s a tussle over who controls order flow, who earns MEV, and where economic gravity pulls. For developers and users alike, the trade-offs are getting sharper: faster UX vs deeper alignment, composability vs. sovereignty, local revenue vs. shared security.



Ronin’s return to Ethereum as an L2 shows that the mainstream rollup-centric roadmap playbook still holds weight. But Taiko and Puffer suggest a new one is being written, where Ethereum’s broad base of validators have a more direct role in the execution of everything that builds on top.



Updated Aug. 15, 2025 at 3:20 pm ET: Added comment from Puffer. Updated Aug. 16, 2025 at 7:36 am ET: Clarified how UniFi handles MEV.



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



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



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



<li><a href="https://blockworks.co/newsletter/supply-shock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
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Ronin rejoins Ethereum as rollup strategies diverge

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



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Winklevoss twins-backed exchange Gemini launched a wallet product yesterday, presumably to better compete with rivals like Coinbase and Kraken in the consumer market.



So how does it hold up — and where does it fit into the increasingly competitive wallet landscape?



The Gemini Wallet is a self-custody solution that also ties into a web-based dashboard, dubbed “<a href="https://onchain.gemini.com/portfolio">Onchain</a>,” which essentially offers a bigger screen to examine your crypto portfolio and make trades.



As of right now, this experience is on the web — there’s no standalone Gemini Wallet mobile app (yet). It’s not a Chrome browser extension either, though that could change at some point. Instead, some browser pop-ups will help you navigate the wallet sign-up and settings.



The onboarding process is a little different from what we’ve seen before. There are no Gmail single-sign on (SSO) flows, no passwords and no visible seed phrases. It doesn’t ask for any personal information, unlike onboarding with Gemini via an exchange account, which involves KYC.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfVpxvbvj_WX6BTyKd8p8Oz52iS1uP_y55GYBb02OCbiic1a80rqpyNF0gI6b1caNGqjNvW8n-B6kdKqx_qQqBVxr2ilaadoDNnhplSgwvDkWDfNrT34PwOLpMb3nmccYdzYSspEg?key=4wtK2839eBZvCsEpeak85Q" alt=""/></figure>



Instead, it takes about two seconds to generate a wallet via your device’s passkey tech. After you pick a .gemini.eth username, you’re ready to roll.



Essentially, the username is a free ENS name attached to your Gemini Wallet, which is a nice perk.&nbsp;



After running through the setup flow myself, I was impressed and surprised by how speedy and smooth the onboarding process was. It was easier than MetaMask, Coinbase, Phantom, and Ronin Wallet, all of which I’ve used before (but whose UX has improved with time).&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf3e8XAmDuwSQ4PG2Wbta6z-qjFxCz71YMlUDxh5QmsznncRqGbldyOAbiWFpVJtM4F_fu2UDQcNR58p3VtffI7NnO0WkgKvLWoduLvJkvCNVzcI3dSmxcDGKHxZ-KjXFlN3Lp0Ww?key=4wtK2839eBZvCsEpeak85Q" alt=""/></figure>



So far, the main embedded feature on Gemini Onchain, besides making basic crypto trades, is access to Gemini’s “vaults.” Traders can choose from the “Prime” vault (lower-risk) or the “Core” vault (higher-risk).&nbsp;



A pop-out explanation of the vaults describes them as a way to “invest and receive returns on your holdings by matching you directly with borrowers at better rates than traditional lending protocols.”&nbsp;



Gemini is <a href="https://www.gemini.com/blog/launching-the-gemini-wallet-a-simple-and-secure-way-to-go-onchain?utm_source=thedrop.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=sink-or-swim">covering gas fees</a> for “key actions,” though it’s unclear for how long that gas sponsorship might last. The wallet currently supports Ethereum’s mainnet, plus ecosystem extensions Optimism, Polygon, Base, and Arbitrum.



The Gemini Onchain experience feels like a soft landing spot for total newbs to DeFi. Maybe it’s for people who come from a non-technical field, or the crypto-curious who have never touched it before. The wallet is not intimidating, but it’ll feel too simple for some traders.



One thing about the “Onchain” hub is that it’s not much of a hub as it stands right now, besides being a way to manage your own wallet via buys, sells and swaps, plus access to those vaults and some educational resources. The buttons to other trading tools like Uniswap link out to the external site without keeping you logged into your Gemini Wallet over there.



Maybe the team will add onto and build out this hub over time so it can feel more like a crypto destination.&nbsp;



I’m glad the Gemini Wallet exists — it’s one of the nicest onboarding processes I’ve encountered.



But because it could still use more functionality, I probably wouldn’t switch from my other existing wallets if given the choice.



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



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Gemini

Winklevoss twins’ crypto exchange launches Gemini Wallet

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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“The miracle of compounding returns is overwhelmed by the tyranny of compounding costs.”&nbsp;



— John Bogle



<a href="https://www.economist.com/business/2025/08/06/how-loyalty-programmes-are-keeping-americas-airlines-aloft">Could stablecoins kill the airlines?</a>​​



The Economist writes that the four biggest US airlines would all have made a loss last year if not for their side hustle selling loyalty points.



Delta, for example, made an operating profit of $6 billion on the year, $7 billion of which came from selling loyalty points to credit card companies.&nbsp;



Incredibly, Delta says 1% of America’s GDP is spent through its co-branded cards.



In total, US consumers paid $187 billion in credit card interchange fees last year, which always seems ripe for disruption.



But The Economist points out that roughly three-quarters of interchange fees are returned to customers as rewards or rebates.



People love their rewards, especially the airline rewards that make travel feel like it’s free. This could be a defensive moat for the credit card companies that stablecoin issuers are hoping to disrupt.



Understandably, the airlines would like the card companies to maintain that moat — so much so that they lobbied against an amendment to the GENIUS Act that would have lowered interchange fees.



In a <a href="https://www.digitaltransactions.net/opposition-mounts-to-the-durbin-marshall-amendment/?utm_source=chatgpt.com">letter</a> to Congress, the airline industry warned that the legislation would “lead to significantly fewer passengers and flights.”



The amendment was dropped, but if stablecoins really catch on, it could have the same effect: fewer flights and higher ticket prices.



But what if stablecoins offer points, too?&nbsp;



The New York Times <a href="https://www.nytimes.com/2025/08/13/business/wall-street-banks-crypto-stablecoins.html">reported</a> this morning that big US banks planning to issue stablecoins also “plan to operate rewards programs, similar to existing credit card promotions, to woo customers to their own coins.”



<a href="https://www.wsj.com/finance/currencies/trump-family-crypto-1e7ab14a?gaa_at=eafs&amp;gaa_n=ASWzDAi8AHEWU5AffhZBSv_TQbcTnUofOrvKWrD2LDnjVPiUPUopD2VUdx7lmQIqyKQ%3D&amp;gaa_ts=689cfe24&amp;gaa_sig=Of7yLxXiom12TAQLQTXDx1x7fG8CZhe2xrGRkEyM2ozPTIWhlZbOAZYs8_QD2FXa_OxhUqBdMYcgIFsrUAD5sg%3D%3D">PancakeSwap diplomacy</a>



The Wall Street Journal <a href="https://www.wsj.com/finance/currencies/trump-family-crypto-1e7ab14a?gaa_at=eafs&amp;gaa_n=ASWzDAiQ5e0ijjCRuKB28f0bK_cN-PmNcO3Dyy02yWmbP9s183aOIDOA0m1-a4bbJgE%3D&amp;gaa_ts=689e03f8&amp;gaa_sig=3K9u0zdaSpLfTwXipkjvw7rHnBrH0tIRlcEJWoLgejOE9AE3oTMfO_0XBeVBIGyjfT96cOUq-MiqwWHb9zLXrA%3D%3D">reports</a> that Binance is making a concerted effort to promote World Liberty Financial’s USD1 stablecoin, presumably to curry favor with President Trump.



Amusingly, much of it is happening on PancakeSwap.



90% of the trading in USD1 happens on the breakfast-themed decentralized exchange, where volumes exploded over the last two months.



The reason? “Crypto investors were chasing prizes worth up to $1 million for generating as much USD1 trading as possible as part of a ‘Liquidity Drive.’” (I’m guessing paid by Binance.)



Popular USD1 pairs include Torch of Liberty and Eagles Landing — memecoins launched with the explicit goal of getting people to use the president’s stablecoin.



Despite the America-first branding, most of the activity happens in China: “Traders, mostly writing in Chinese, gather in groups on the Telegram messaging app to talk about competing for rewards paid out to top users of USD1 and advertised by PancakeSwap.”



Recent events have left many <a href="https://www.dw.com/en/why-is-trump-being-so-generous-to-china/a-73594826">wondering</a> why Trump is being so nice to China.



Could it have anything to do with a Chinese crypto exchange paying Chinese traders to use a US president’s stablecoin, to trade US-themed memecoins, on a US-breakfast-themed exchange?



I mean, it’s only natural to feel more generous toward someone that’s making you a lot of money.



Improbably, I know. The US-China détente is probably not about PancakeSwap.&nbsp;



But we can’t rule it out!



Which is wild.



If memecoin traders on PancakeSwap ease tension between China and the US, it will all have been worth it.



<a href="https://blog.bitmex.com/treasury-company-advisory-agreements/">DATs are more expensive than you think</a>



BitMEX Research details the hidden costs of investing in digital asset treasury companies.



Many DATs pay an outside asset manager just to hold on to their crypto for them.



The Solana DAT Upexi, for example, pays an annual fee of 1.75% of its assets to custody its SOL tokens.



Verb Technologies, a Toncoin DAT, pays an annual “advisory fee” equal to 2% of its market capitalization (every year!) to the investment firm Kingsway Capital Partners.&nbsp;



How much there is to advise on with a DAT is unclear — you just buy the token, right?



And paying your advisor as a percent of market capitalization instead of NAV seems particularly egregious.



MEI Pharma, the Litecoin DAT, pays 0.75% a year to an advisor and 1.75% a year to an asset manager.



ATNF, the latest ETH DAT, pays an asset manager 2% assets for custody, with a hefty annual minimum of $1 million.



ATNF is up 113% this week, so you can see why investors might not care just at the moment.



But they should because the “tyranny of compounding costs” is inescapable over time.



Most of these new DATs issue warrants and/or options to their advisors as well, which will dilute shareholders when exercised.



BNC, the BNB coin DAT currently trading at $28, has granted options to its advisor at an exercise price of $0.00001 per share.



“In some cases,” BitMEX adds, “there is often an incentive or payment linked to the market capitalization or premium to mNAV.”



You can also throw in the cost of the C-suite incentives, payroll, legal advice, banker advice, auditor fees, exchange-listing fees…&nbsp;



All of which must add up to multiple percentage points of NAV per year. Every year.



Or you could hold an ETF for an all-in annual fee of 0.2%.



Or hold the crypto yourself for a fee of 0.00%.



“The end game here is that many of these companies eventually trade at a significant discount to mNAV and become zombies once again,” BitMEX concludes, “potentially still paying significant fees.” Emphasis added to make John Bogle roll over in his grave.



<a href="https://www.globenewswire.com/news-release/2025/08/11/3130918/0/en/Safety-Shot-Announces-Strategic-Alliance-with-Bonk-Founding-Contributors-Initiating-BONK-Treasury-Strategy.html">Bonk treasury strategy</a>



Markets have a knack for chasing any profitable strategy right up to its breaking point — and for DATs, they may have hit it this week.&nbsp;



Could a Bonk treasury company be to DATs what Pets.com was to e-commerce — a cartoon mascot that ends up discrediting the whole category?&nbsp;



Maybe. The token dropped 5% after the announcement.



<a href="https://stargate.discourse.group/t/layerzero-foundation-acquisition-of-stargate-stg/682">Merger arbitrage comes to crypto</a>



The financial blogger Mojo <a href="https://mojo3324106.substack.com/p/the-factory-that-makes-investment">explains</a> why “merger arbitrage” is the best way to learn about markets.



Speculating on whether a company with a pending takeover offer will ultimately be bought and at what price requires deep knowledge of both bidder and target, the industry it’s in, antitrust law, how the regulatory bodies work and much more.



It also makes you think harder about investing: “Merger arbitrage forces systematic thinking and mastery of process in ways that picking growth stocks never could,” Mojo writes.



Unlike most investing, merger arb generally requires you to be right for the right reason — being carried along by momentum or catching a narrative won’t save you from lazy decision making.



I’d argue that being right for the wrong reason is especially prevalent in crypto.&nbsp;



If so, the merger-arb situation announced this week might be especially educational.&nbsp;



On Monday, the LayerZero Foundation, which develops the LayerZero messaging protocol, proposed the acquisition of Stargate, a bridge protocol that uses LayerZero.&nbsp;



Just like a stock-based deal, the foundation’s offer was $0.1675 per token, paid in ZRO at a ratio of 1 STG to 0.08634 ZRO.



To know whether that presents an opportunity for arbitrage (by buying STG and shorting ZRO), you’ll need a deep understanding of DAO governance, how both protocols work, who the stakeholders in each community are, the crypto borrow-and-lend market&#8230;



There’s a lot more to it than, say, guessing how much the market will overpay for a DAT.&nbsp;



“Merger arbitrage strips investing down to its essential elements,” Mojo sums up.



Crypto investing could use some of that, I think.



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Get the news in your inbox. Explore Blockworks newsletters:



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



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



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



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



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



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



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

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