VPS Ai

Katherine Ross

As part of a larger investigation into TD Bank’s transactions and adherence to anti-money laundering laws, a FinCEN investigation found that the traditional finance bank failed to disclose “suspicious activity” regarding crypto.



A consent order alleges that the bank processed transactions for “Customer Group C,” which is an unknown entity, “including the facilitation of over $420 million to a financial institution offering cryptocurrency services in the high-risk jurisdiction of Colombia.”



There was a pattern, FinCEN <a href="https://www.fincen.gov/sites/default/files/enforcement_action/2024-10-10/FinCEN-TD-Bank-Consent-Order-508FINAL.pdf">said</a>, of Customer Group C doing over $100 million in wire transfers a month, “most of which facilitated apparent third-party cryptocurrency trading and involved high-risk industries and jurisdictions, including Colombia, China and countries in the Middle East.”



Read more: <a href="https://blockworks.co/news/fincen-hearing-crypto-illegal-financing">House hearing on FinCEN oversight turns into crypto debate&nbsp;</a>



Customer Group C saw transactions top $1 billion in a period of time from July 2023 to April 2024, the order found. Ninety percent of that came from an unnamed crypto exchange, though this one was UK-based. Sixty percent of the outgoing transactions went to a Colombian financial institution — again unnamed.&nbsp;



The group was also tied to an “international cryptocurrency exchange platform,” the order states, and received over $650 million from it. However, it’s not clear which platform <a href="https://blockworks.co/tag/fincen">FinCEN</a> is referring to.&nbsp;



“TD Bank processed these transactions on behalf of Customer Group C, due in part to a lack of clear controls applicable to customers dealing in cryptocurrency: the limited high level written policies the Bank had in place relating to virtual assets alluded to the requirements for certain additional controls and monitoring,” the order claims.



Read more from our opinion section: <a href="https://blockworks.co/news/crypto-innovation-suffering-inside-closed-networks">Crypto is becoming the same broken system it promised to fix</a>



“However, there is no evidence any enhanced controls were ever applied to Customer Group C’s extensive transactions with virtual asset service providers.”



The bank failed to report the activity until it received “multiple law enforcement inquiries” about the unnamed entity.



Last week, TD Bank pleaded guilty to <a href="https://blockworks.co/tag/aml">AML</a> violations, paying a hefty fine of $3 billion in penalties. Of that sum, $1.3 billion went to FinCEN according to the order filed with the government office.



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TD Bank failed to disclose ‘suspicious’ crypto transactions tied to unnamed customer group 

David Canellis

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



I think we can all agree that NFTs won’t undergo the same explosion we saw last cycle.&nbsp;



That’s not, of course, to say that NFTs can’t make a comeback of any sort. But it looks like we won’t see CryptoPunk #5822 fetch another $23 million (8,000 ETH at the time) like it did a few years ago.&nbsp;



(For reference, in the past 24 hours, CryptoPunk #8135 sold for a cool 29 ETH, or $71,000, per CryptoSlam.)



OpenSea CEO Devin Finzer <a href="https://blockworks.co/event/permissionless-iii/recordings">told me at Permissionless</a> that this time will be a little different. And part of that, he said, is the utility behind NFTs.&nbsp;



“The technology has just been getting better and better,” since the last boom, he said on a panel.&nbsp;



The previous cycle caused some <a href="https://www.theatlantic.com/ideas/archive/2021/04/nfts-werent-supposed-end-like/618488/">issues</a>, even with the demand. Gas fees, among other things, were pain points for consumers who wanted to simply purchase an NFT. Finzer said that they’ve “solved” a lot of those problems since 2021.&nbsp;



“Now you can build all of the cool stuff that we’ve always dreamed of building because…scaling is here on Ethereum, for example,” he explained. Though OpenSea continues to work on onboarding and user experience, he said.



Admittedly, it seems already that any sort of NFT comeback is going to appear vastly removed from what we saw in 2021. Not just anyone is going to be able to create and successfully sell off an NFT.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfvJU1H4_fHYwDH1OvB2FYoSWZYQHn_GE_oFl4asiEhSqo4Q1oUiTDSqtMuK4yAwlq9hXX5B5EVwLMsh8hhZYq6vLD8Fcoicrl2Zpqgo4hHVVQ6A9qFL-DbD9eMQGZ3ebOTGIskrPRKcbSA4tNhRveAXgtc?key=lBKbl17C1g4q2pGnkOLNZQ" alt=""/><figcaption class="wp-element-caption">Source: CryptoSlam!</figcaption></figure>



Finzer said that he’s looking at transaction and user counts to monitor momentum, putting transaction volume to the side. Overall, Finzer said the space is showing a lot of “momentum.”



For example, three <a href="https://blockworks.co/news/7-nft-use-cases">use cases</a> are becoming abundantly clear this time around: gaming, physical collectibles tied to a digital collectible, and tokenizing real-life objects (like Galaxy <a href="https://investor.galaxy.com/news/news-details/2024/Galaxy-Announces-Tokenization-of-the-1708-Stradivarius-Violin-Empress-Caterina/default.aspx">tokenizing</a> a famous violin).



“Gaming’s probably the [use case] I’m most bullish on,” Finzer told the crowd at Permissionless. In a close follow-up, Finzer said he’s keeping an eye on physical assets, which encompasses both tokenized real-life items and digitizing certain things such as tickets.



Ubisoft’s announcement of a crypto game — Champions Tactics — that’ll launch later this month shows that perhaps gaming, a segment that didn’t flourish when Bored Apes were selling for millions, shows how demand has shifted. The <a href="https://championstactics.ubisoft.com/">page</a> for the game notes that 75,000 playable characters, or Champions, have been minted.



Not to mention that Off the Grid, another crypto game, which climbed to the top of the charts in the Epic Games store.&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">10 months later &#8211; most popular free game on the Epic Games Store &#8211; #1 trending game on Epic &#8211; 150k Twitch streamers on Friday was more than League of Legends &#8211; partnership with Ninja &#8211; has an Avalanche L1 for token, marketplace, and NFTs Onchain gaming has arrived. <a href="https://t.co/A3uPMVTKxH">https://t.co/A3uPMVTKxH</a>&mdash; Yano 🟪 (@JasonYanowitz) <a href="https://twitter.com/JasonYanowitz/status/1845621334237155785?ref_src=twsrc%5Etfw">October 14, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



But there’s one other storm cloud over NFTs right now, and that’s the Securities and Exchange Commission, which <a href="https://blockworks.co/news/sec-issues-wells-notice-opensea-nfts">sent OpenSea a Wells notice</a> a few months ago, though <a href="https://blockworks.co/news/what-an-sec-lawsuit-against-opeansea-could-look-like">no lawsuit’s been filed yet</a>.



Finzer hopes that the momentum isn’t stymied by any potential regulatory action, given that OpenSea, among others, is “ready to go and fight if push comes to shove.”



“No news on that,” Finzer told me when I asked if they’d heard from the regulator since the notice.



As for where we end up over the mid-term, Finzer said that he expects a “wild” few years. “In five years, I think we’ll all be living in the metaverse potentially,” he said.&nbsp;



If that’s the case, I just hope my mortgage is cheaper.



— Katherine Ross



<h2 class="wp-block-heading">Data Center</h2>



<ul class="wp-block-list">
<li>BTC and ETH have broken upwards this morning, climbing over 3% to monthly highs of $64,800 and $2,530 apiece.</li>



<li>SUI set a new price record of $2.35 on Sunday evening, having gained 15% in the past week. It has since retraced slightly to $2.24 (mcap: $6.19 billion).</li>



<li>Base transaction counts have also hit a new peak, per <a href="https://app.blockworksresearch.com/analytics/base?dashboard=base-onchain-activity&amp;interval=weekly">Blockworks Research</a> data: 40.82 million in the past week, up over 17% from the previous period. Trading bots including Banana Gun are leading gas consumption on the network, alongside AMM Aerodrome.</li>



<li>Base’s TVL has hit a new <a href="https://defillama.com/chains">record</a> of $2.455 billion, up 54% in the past month.</li>



<li>Bitcoin is the second-most popular <a href="https://www.cryptoslam.io/blockchains">venue</a> for NFT trading in the past month after Ethereum: $67.2 million volume vs. $107.8 million.</li>
</ul>



<h2 class="wp-block-heading">Off the Grid, on the chain</h2>



Off the Grid — one of the first true AAA games infused with crypto — is a ballsy experiment worthy of your attention.



I spent the weekend (and some of this morning) blasting through as many rounds as I could, earning what appears to be a stand-in tester cryptocurrency for every kill.&nbsp;



And yes, it’s actually fun.



The third-person shooter, from Ukrainian-German studio Gunzilla Games, throws the player into a battle royale set in a world ripped straight from dystopian action thrillers Elysium, Chappie and District 9.&nbsp;



Which is to be expected: Director Neill Blomkamp co-founded the studio and serves as its creative chief.



It’s a cool twist on the genre made big by PUBG, Fortnite and Warzone. The lore goes that players have their limbs surgically removed to compete on the hyper-violent <a href="https://gameoffthegrid.com/">Teardrop Island</a> — to be replaced by mechanized arms and legs fitted with all sorts of weaponry, from swords and shields to drones and poison gas.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeofdex5GrzuWd8WxVysCMPKXoI2gxHda_jeZp1HZIBpdQ7vsv3XOdzeOU0vBm3YkcOL8efkk0A3lCoB5giShB5pNzw_r5yr7i0Rg5a5wIR1INCM9xaiCjBlVBBWLZYaIbBc376VsUMbo6pFSB461BwTLs?key=lBKbl17C1g4q2pGnkOLNZQ" alt=""/><figcaption class="wp-element-caption">Always dressed for crypto summer</figcaption></figure>



Freedom of movement is where Off the Grid really shines. Jetpacks are standard — so lots of zooming between buildings, cranes and other climbables — while legs can come loaded with ultra-speed or mega-jump capabilities.&nbsp;



It’s super fast-paced and smooth, although the PS5 beta does suffer from some optimization issues in the current version.



As for the crypto stuff: It’s not totally live just yet.



Weapons and other items like skins and clothing can be optionally minted NFTs and traded on the in-game marketplace for a native token, GUN. Just like a crypto version of the Steam marketplace.



Those mechanics run on an Avalanche subnet (through which transactions don’t eventually settle via the main Avalanche chain, as is the case with Ethereum rollups and mainnet).



Avalanche’s Blizzard Fund <a href="https://gunzillagames.com/en/news/55-Gunzilla-Games-Announces----M-in-Funding-Co-Led-by-CoinFund-and-Avalanche">co-led</a> a $30 million funding round in March for Gunzilla Games, alongside CoinFund.



And you can indeed earn GUN for killing enemies, ranking highly in matches and extracting what’s known as HEX cubes — loot boxes that you can then sell for more GUN. Above average items go for around 80 to 100 GUN at the moment.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc5mzZzLaLB162oxJUbxEVQBX8qTWhoVF9m2afCOnT8BaohpjLXVncich_wGzTW-1CL9d097DENqKAvhQur6aASgC98kLN0JPiNQT7CP1M6P0DCuXbJOBKSx6fy-FI5fiiPRQ7Xk_0bb_YPZ_42ieGKHnEP?key=lBKbl17C1g4q2pGnkOLNZQ" alt=""/><figcaption class="wp-element-caption">Three kills earned me 0.3 GUN, with an additional 1.2 GUN coming from the monthly battle pass subscription </figcaption></figure>



For now, the GUN token payouts and NFT minting appear to still be occurring on a testnet version of Gunzilla Games’ subnet, GUNZ, although all early access progress is set to carry over to the full release. I reached out to the team to confirm and I’ll drop a note in a future edition with their answer.&nbsp;



Either way, the <a href="https://scan.gunztoken.io/">testnet</a> has seen over three million transactions per day for the past three days running with 5.5 million wallet addresses — positively humming along. And in the future, items will be <a href="https://gunzillagames.com/en/news/56-Gunzilla-Games-Announces-Integration-of-its-GUNZ-Blockchain-Into-OpenSea-Marketplace">tradable</a> as NFTs on OpenSea, denominated in the GUN token, which the team previously <a href="https://decrypt.co/207849/district-9-director-avalanche-shooter-off-grid-launches-mobile-game-subnet-rollout">said</a> it plans to list on centralized crypto exchanges.



Aside from maintaining Twitch <a href="https://twitchtracker.com/games/983841243">attention</a>, the real keys to success will be whether Off the Grid can stave off cheaters while maintaining balance in its crypto-economy as it ramps up.



In the meantime, who can argue with pwning noobs to earn crypto.



— David Canellis



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



<ul class="wp-block-list">
<li>Avalanche Foundation struck a <a href="https://www.theblock.co/post/320833/avalanche-foundation-to-repurchase-tokens-sold-to-terras-lfg-in-2022-deal-pending-court-approval?utm_source=rss&amp;utm_medium=rss">deal</a> to repurchase nearly two million tokens sold to Terra’s Luna Foundation Guard, pending court approval.</li>



<li>Arkham Intelligence is <a href="https://www.bloomberg.com/news/articles/2024-10-11/crypto-firm-arkham-backed-by-openai-s-altman-to-launch-derivatives-exchange?utm_source=telegram&amp;utm_content=crypto&amp;utm_medium=social">reportedly</a> plotting to launch a derivatives exchange.</li>



<li>Samara Asset Holdings is <a href="https://www.coindesk.com/markets/2024/10/14/samara-asset-group-plans-up-to-328m-bond-to-expand-bitcoin-holdings/?utm_medium=referral&amp;utm_source=rss&amp;utm_campaign=headlines">planning</a> to issue a $30 million bond to buy up some bitcoin. </li>



<li>Copper <a href="https://www.coindesk.com/business/2024/10/14/crypto-custodian-copper-appoints-former-sec-advisor-amar-kuchinad-as-new-global-ceo/?utm_medium=referral&amp;utm_source=rss&amp;utm_campaign=headlines">tapped</a> former Goldman Sachs and SEC employee Amar Kuchinad as its new CEO.</li>



<li>Horst Jicha, a German national <a href="https://www.cnbc.com/2024/10/11/horst-jicha-skips-bail-new-york-cryptocurrency-fraud-fugitive.html">accused</a> of running a $150 million crypto scam, went poof from his New York City home while on a $5 million bond.</li>
</ul>



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



Q: Are gamers coming around to crypto?



Off the Grid will be the best test of that to date.



To be clear, the game is very much still in beta. But there are already a slew of <a href="https://www.reddit.com/r/OffTheGridGame/comments/1g2hn64/anyone_else_having_trouble_with_purchases_fml/">posts</a> <a href="https://www.reddit.com/r/OffTheGridGame/comments/1g31wnh/failed_transactions/">complaining</a> about failed transactions for in-game stuff, and blockchain is, apparently, still very easy to blame.



One Redditor wrote:



“Why the hell does it take 15 tries of 15 different items before I can purchase anything on marketplace. Right now I can even buy anything on there like I been locked out by moderators for interfering on their stupid cryptocurrency scam they got going. Like what do u get by holding onto all the rarest items and preventing others from buying them. Only a handful of market gate holders have a majority of the valuable items and what does that get then at the end of the day a couple thousand dollars worth of savings in a video game they likely don&#8217;t even play. Fricken vultures man why don&#8217;t they just not use our market place to make crypto pennies and leave the gaming to gamers …”



Make of that what you will.



— David Canellis



It’s too early to tell.&nbsp;



I don’t think gamers necessarily have anything really against crypto (though, understandably, I think a lot of game developers have a bad taste in their mouth from previous iterations, but that’s a whole other can of worms).



The over-monetization of games can easily burn folks out. Remember back in 2017-2018 when loot boxes became more widely used, and therefore, controversial? I think folks just want to avoid that.&nbsp;



I’ll be honest with you, I’m an avid Sims player so I’m well aware of how much it sucks to continually sink money into a game. And I think it’s a fair concern for games with NFT functionality. But I hope that we’ve finally struck a fair balance.&nbsp;



No one’s gonna care if it’s a crypto game as long as it’s good, and doesn’t require you to drain your bank account to have a fun time.&nbsp;



Let’s be real, at the end of the day, the gameplay is what really matters.



— Katherine Ross



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A wave of new games could prove NFTs aren’t dead after all

Donovan Choy

Karate Combat announced the launch of its upcoming layer-2 blockchain, UP, built on the Hedera layer-1 network.



The first professional striking league governed by its own KARATE token, the project allows over 100,000 users to earn tokens by accurately predicting fight outcomes using its Up Only Gaming software.



Through the use of the Up Only Gaming software stack, more than 100,000 users on the platform can earn KARATE tokens by correctly predicting fight outcomes.



The UP layer-2 is set to be launched in Q1 2025. Its own $UP token is planned to be launched within the same year, with up to 30% of the token going to KARATE stakers.



Read more: <a href="https://blockworks.co/news/permissionless-day-two-vibes">Politics and memecoins drive the conversation on day 2 of Permissionless</a>



“Karate Combat is already massively incentivized to spread its Up Only Gaming technology to other sports, esports, fantasy sports, crypto projects and more,” onlylarping, Karate Combat’s pseudonymous co-founder, said. “UP is the enabling technology to not only allow us to provide all the tech for free, but to give grants and our user base to early partners.”



Karate Combat’s latest combat sporting event <a href="https://www.universe.com/events/karate-combat-50-permissionless-tickets-NP6T1Z">KC 50</a> is being held at <a href="https://blockworks.co/event/permissionless-iii">Permissionless III</a> in Salt Lake City, UT. It will feature a fight between David Hoffman, co-founder of Bankless, and Kain Warwick, co-founder of Infinex.



Read more: <a href="https://blockworks.co/news/permissionless-iii-day-three-defi">Permissionless III: DeFi phoenix looms as OG builders forecast next phase</a>



<h2 class="wp-block-heading">Polemos partners with Buff</h2>



On Wednesday, the blockchain <a href="https://blockworks.co/tag/gaming">gaming</a> asset management platform Polemos announced a partnership with Buff.game — a gaming company that runs a loyalty program for over 15 million players across games like Dota 2, Fortnite, League of Legends, Valorant and more.



The partnership is leveraging Polemos&#8217; asset management wallet and non-collateralized lending solution to let gamers trade, lend, borrow and access in-game items without the need for players to make an upfront investment.



Carl Wilgenbus, CEO of Polemos, said of the partnership: &#8220;This collaboration with Buff.game represents a pivotal moment in the evolution of gaming. By combining our Web3 expertise with Buff&#8217;s massive player base, we&#8217;re set to catalyze widespread adoption of blockchain gaming technologies.&#8221;



<h2 class="wp-block-heading">One interesting stat:</h2>



<ul class="wp-block-list">
<li>Pudgy Penguin <a href="https://x.com/pudgypenguins/status/1841878248101196078">GIFs</a> on Giphy have seen more than 30 billion views. </li>
</ul>



<h2 class="wp-block-heading">Also of note:</h2>



<ul class="wp-block-list">
<li>ENS domain names are now <a href="https://x.com/nalin/status/1843750140332650851">searchable</a> on Google.</li>



<li>The CryptoKitties NFT project is <a href="https://x.com/CryptoKitties/status/1841206455153934824?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1841206455153934824%7Ctwgr%5Ef0beffe8b1d8a196bee0ddfc0667d6d00ce86b14%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fopensea.io%2Fblog%2Farticles%2Fopensea-digest-october-10-2024">launching</a> “All the Zen,” a new monster breeding game on the Telegram messaging platform.</li>



<li>The Avalanche-based battle royale shooter Off the Grid from Gunzilla Games went <a href="https://x.com/playoffthegrid/status/1843685237546725748?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1843685237546725748%7Ctwgr%5Ef0beffe8b1d8a196bee0ddfc0667d6d00ce86b14%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fopensea.io%2Fblog%2Farticles%2Fopensea-digest-october-10-2024">live</a> on PlayStation 5, Xbox and PC, making it the first ever blockchain game on PlayStation 5.</li>
</ul>



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Web3 Watch: Karate Combat announces the launch of its UP L2

Ben Strack

Casey Wagner

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<h2 class="wp-block-heading">The state of crypto ETFs: Permissionless edition</h2>



We’ve already noted there has been plenty of <a href="https://blockworks.co/news/empire-newsletter-permissionless-crypto-regulation">regulatory talk</a> at Permissionless.&nbsp;



ETFs were also a major point of discussion following the milestone launches of US spot <a href="https://blockworks.co/news/sec-approves-bitcoin-etf">bitcoin</a> and <a href="https://blockworks.co/news/ether-etfs-approved-for-us-exchange-july-23">ether</a> funds in January and July, respectively.&nbsp;



The bitcoin ETF chatter focused, in part, on the buyers driving the so-far $18.6 billion of net flows into the segment.



“The industry had an expectation that was summed up by: ‘Here come the boomers,’” Bianco Research’s Jim Bianco said during a panel discussion. “I don’t think it’s really been that at all.”



Rather, he and fellow panelist Bloomberg Intelligence analyst James Seyffart, noted that a large <a href="https://x.com/biancoresearch/status/1802764031415271586">chunk</a> of that money has come from existing digital wallets.



Indeed, Samara Cohen, BlackRock’s CIO of ETF and index investments, noted that 75% of buyers of the iShares Bitcoin Trust (IBIT) had never bought an iShares product before — signaling many IBIT holders are more crypto native investors.&nbsp;



While a number of wealth managers have <a href="https://blockworks.co/news/advisers-bitcoin-etfs-client-portfolios">jumped into</a> these products, many more remain on the sidelines. Morgan Stanley has <a href="https://blockworks.co/news/on-the-margin-newsletter-morgan-stanley-bitcoin-adoption">allowed</a> its financial advisers to offer the BlackRock and/or Fidelity bitcoin ETFs to certain clients, but other wirehouses have not yet followed suit.



“Really what they want to look at is who are the right investors, what’s the right level of liquidity needs, risk tolerance…and what’s the role bitcoin might play in a portfolio so they can recommend an appropriate allocation,” Cohen said. “That’s not a trivial exercise with relatively limited trading data and a pretty interesting market backdrop over the last few years.”&nbsp;&nbsp;&nbsp;&nbsp;



Seemingly more involved than wealth managers in bitcoin ETFs right now are hedge funds that are executing basis trades, Permissionless speakers have noted. That means they are taking positions in both the BTC spot and futures markets in a bid to profit from price differences.



As for the spot ether ETFs, Seyffart acknowledged his flow estimate for those funds (at between 15% and 25% those of the BTC funds, in the first year) appears to have been “way too bullish.”



Those US ETH products have so far seen net outflows amounting to $548 million.



A few reasons for this include the product launches occurring during the summer “doldrums,” ETH’s <a href="https://blockworks.co/news/tough-ethereum-vibes">price trajectory</a> around the launch and the need for <a href="https://blockworks.co/news/education-required-to-spur-eth-etf-outflows">more education</a> around the asset.&nbsp;



And, of course, the ETFs can not yet <a href="https://blockworks.co/news/proposed-ether-etfs-not-staking-eth">stake</a> the ETH that they hold.&nbsp;



“People who understand this and are staking their ETH would never go to an Ethereum ETF because you’re giving up that 3% or 4% yield,” Seyffart said. “You lose more utility by taking Ethereum and putting it in an ETF wrapper than you do taking bitcoin and putting it into an ETF wrapper.”



— Ben Strack



<h3 class="wp-block-heading">13.75%</h3>



The amount MicroStrategy shares were up on Friday, as of 2:15 pm ET. The business intelligence firm’s stock price is now at a 52-week high.



The run-up comes as MicroStrategy founder Michael Saylor announced plans to launch a bitcoin bank during a recent interview with research firm Bernstein. MicroStrategy currently holds 252,220 BTC.



<h2 class="wp-block-heading">Did You Notice</h2>



Happy Friday! Inflation data this week came in above expectations, painting an uncertain picture as investors and analysts continue to <a href="https://blockworks.co/news/btc-uptober-market-odds">speculate</a> about what we might see from the Fed in November. Here are the highlights:&nbsp;



<ul class="wp-block-list">
<li>Thursday’s CPI report came in hotter than expected. As Felix said <a href="https://blockworks.co/news/forward-guidance-newsletter-hot-inflation-data">yesterday</a>, the report wasn’t smoking hot, but left much to be desired. We’ll call it warm. Core CPI rose 0.3% month over month, vs. the 0.2% that analysts expected. Annually, core CPI came in at 3.3%, just above the forecasted 3.2%. Same with headline CPI, which was up 0.2% from the prior month and 2.4% year over year, compared with 0.1% and 2.3% expected, respectively. </li>



<li>Friday’s PPI report showed core PPI inflation rose to 2.8% annually. Analysts had called for 2.7%. The monthly increase for the core index showed a 0.2% increase in line with forecasts. Neither the PPI nor the CPI are the Fed’s top inflationary gauge, but they are still important data points to note. </li>



<li>The University of Michigan published its Survey of Consumers on Friday, showing sentiment dropped 1.7% from September to October. At the same time, near-term inflation expectations increased to 2.9%. It’s the highest inflation expectation we’ve seen since the summer. </li>
</ul>



— Casey Wagner



<h2 class="wp-block-heading">Bulletin Board&nbsp;</h2>



<ul class="wp-block-list">
<li>Coinbase Chief Policy Officer Faryar Shirzad said during a Permissionless panel that Donald Trump is “very committed to the crypto issue” and that the Harris campaign “has done a really good job in beginning to talk to us.” We asked the executive about some other things; check <a href="http://blockworks.co">Blockworks.co</a> next week for our full interview with Shirzad.</li>



<li>Bitcoin’s price surged above $62,900 by 2 pm ET — up more than 4% from 24 hours prior.  </li>



<li>After notching $245 million of net inflows on Monday, the US-listed spot BTC funds endured three straight days of outflows this week (amounting to a combined $140 million), Farside Investors <a href="https://farside.co.uk/bitcoin-etf-flow-all-data/">data</a> shows. <a href="https://farside.co.uk/ethereum-etf-flow-all-data/">Flows</a> into the US ETH products have been roughly flat since Monday. </li>



<li>Permissionless is wrapping up today, but Blockworks’ DAS is coming back to NYC from March 18-20, 2025! Early bird tickets are <a href="https://blockworks.co/event/digital-asset-summit-2025-new-york">available now</a>.</li>
</ul>



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Crypto ETF takes from the Permissionless stage

Macauley Peterson

DeFi is getting top billing on day three of Permissionless III, with a high-profile main stage session and its own <a href="https://blockworks.co/permissionless#agenda">breakout track</a>.



After lying in wait during recent years, DeFi is on the brink of a renaissance, according to panelists who discussed the category’s future role in crypto on Friday morning. Kain Warwick, Stani Kulechov and Sam Kazemian delved into the maturation of DeFi, the prospects for new innovations, a shift from experimentation to consolidation, the next phase of scaling and competing with centralized services.



Moderator David Hoffman kicked off the session with the observation that we haven’t seen much evolution since the heady days post-DeFi summer. Warwick, the founder of Synthetix credited with creating the concept of yield farming, suggested that innovation in DeFi typically stems from combining new technologies.



Read more: <a href="https://blockworks.co/news/permissionless-day-two-vibes">Politics and memecoins drive the conversation on day 2 of Permissionless</a>



“We’re sort of waiting for that next thing to combine,” Warwick said, noting that <a href="https://blockworks.co/podcast/empire/3bcc1a58-8768-11ee-bb69-9b6b85d39f7e">Synthetix spin-off</a> Infinex was built to integrate newer primitives that improve user experience and help those technologies gain distribution. He believes the DeFi market still holds immense potential, particularly among users currently “trapped” in centralized services.



Kulechov cited the shift away from experimentation and towards profitability as indicative of DeFi protocols reaching a stage of maturity, with select DAOs leading the charge. The next phase of DeFi&#8217;s growth will focus on building trust, network effects and brand value, positioning DeFi as a serious alternative to centralized exchanges, Kulechov said. That’s already happened with centralized lending, largely supplanted by non-custodial alternatives, the <a href="https://blockworks.co/tag/aave">Aave</a> founder added.



Read more: <a href="https://blockworks.co/news/0xresearch-newsletter-trump-world-liberty-financial-aave">Trump’s World Liberty Financial is using Aave</a>



Kazemian of <a href="https://blockworks.co/tag/frax">Frax Finance</a> praised the growing number of decentralized chains. He referenced <a href="https://blockworks.co/news/0xresearch-newsletter-uniswap-layer-2">Uniswap’s launch of Unichain</a> yesterday as a vindication of Frax’s earlier decision to launch its own chain, Fraxtal. He envisions a future where most computation occurs on decentralized chains rather than centralized servers. This shift, according to Kazemian, will blur the lines between centralized and decentralized services, further enhancing interoperability.



The group noted the trend of centralized exchanges launching or closely affiliating themselves with their own chains, with varying degrees of decentralization. While these went unnamed, chief examples are Binance and BNB Chain, Coinbase and Base, Bybit and Mantle, OKX and X-layer, Crypto.com and Cronos.



In some respects, exchanges were the first cross-chain interoperability solutions, Kazemian said. DeFi has historically catered to fervent enthusiasts and “decentralization maxis,” Warwick pointed out, a strategy that has limited mainstream adoption. The focus must now shift toward simplifying user experience and expanding market access.



Read more: <a href="https://blockworks.co/news/empire-newsletter-permissionless-crypto-regulation">A16z’s Chris Dixon pushes for bipartisan legislation at Permissionless III</a>



“We can’t keep doing the same thing over and over — we’re not breaking through this enthusiast wall,” he said.



So, what are centralized services weak points, asked Blockworks co-founder Michael Ippolito. Unichain is also a hallmark of a trend towards vertical integration in DeFi, he said. That’s a departure from how we’ve viewed dapp development in years past. As applications move into various layers of the stack, such as Uniswap, “it looks like they are just trying to own the entire thing,” in an attempt to mimic a centralized experience, Ippolito said.



There’s an inevitability to this, Warwick said, even at the cost of some censorship resistance. “If we can’t get through the problems in our own backyard, we’re not going to be credible in saying we’re going to take down banks,” he said. It doesn’t matter that Unichain may directly compete with Infinex — that’s fine, argued Warwick. “We’re all competing against Binance.”



Kazemian said the script has now flipped from “why do you need a chain” to “why don’t you need a chain?”



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



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Permissionless III: DeFi phoenix looms as OG builders forecast next phase

Today, enjoy the 0xResearch newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/research">Subscribe to the 0xResearch newsletter</a>. 



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



The notion that a (former) president of the United States would throw his support behind a DeFi project would’ve been inconceivable just a few years ago, but <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-family-defi-venture">it’s happening</a>.



The Trump-backed World Liberty Financial (WLF) project <a href="https://governance.aave.com/t/temp-check-world-liberty-financial-aave-v3-instance-on-ethereum-mainnet-proposal/19383">submitted</a> on the Aave governance forums a proposal to deploy an Aave v3 instance on Wednesday.



WLF is not technically a fork of Aave’s code, as confirmed by Aave founder Stani Kulechov on the Chopping Block <a href="https://youtu.be/gZyn9R_hBIc">podcast</a>.&nbsp;



On the backend, WLF seems to be a segregated instance of its own “Aave” from the main Aave protocol. WLF’s users are then serviced from its own separate <a href="https://blockworks.co/news/world-liberty-financial-kyc-starts">KYC’d front-end</a>, where it will presumably charge a trading fee.



That makes it very much a “DeFi” project, insofar as World Liberty Financial is running on the largest smart contract compatible public blockchain and leveraging core DeFi primitives.



Yet it’s also not quite “DeFi,” given its strict KYC measures for global users and how it’s presently limited to only accredited investors in the US.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd3U24H8ZS257qXT9Hvwhd4CNlOhRsf_dk2y4ovh-2IKO-Q1vZSO7qk9o8j9mf05Wf240MIPaE9Eyb43h6ZE-yCYEcKsJuvdpmtTl8XwDhigVG2VrzPNOlmlslKlcITB8iWge1otfQ-P3TUMKOvlfBZqz5k?key=JQMVYvq9Jhk3rOrcyxUrZg" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://www.worldlibertyfinancial.com/">World Liberty Financial</a></figcaption></figure>



In exchange for using Aave, WLF is offering 20% of its protocol fees and 7% of its WLFI governance token supply to Aave.



Part of the allocated WLFI token supply is explicitly for liquidity mining rewards on Aave, despite previous claims from a <a href="https://www.coindesk.com/business/2024/09/03/inside-the-trump-crypto-project-linked-to-a-2m-defi-hack-and-former-pick-up-artist/">leaked draft</a> of World Liberty’s plans that the token will be non-transferable.



USDC, USDT, ETH and WBTC are four of the assets to be initially listed on WLF for lending and borrowing.&nbsp;



The proposal has received the verbal <a href="https://governance.aave.com/t/temp-check-world-liberty-financial-aave-v3-instance-on-ethereum-mainnet-proposal/19383/4">approval</a> of Aave-chan Initiative (ACI) founder Marc Zeller, who “welcomes the alignment between the WLF and the Aave ecosystem.” However, other DAO members are <a href="https://governance.aave.com/t/temp-check-world-liberty-financial-aave-v3-instance-on-ethereum-mainnet-proposal/19383/9">questioning</a> the strategy of saddling Aave with the baggage of <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-crypto-promises">Trump’s politics</a>.



Though the Trump family’s names are attached to the project, it’s hard to believe that it goes beyond much more than a brand name association.



<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">.<a href="https://twitter.com/worldlibertyfi?ref_src=twsrc%5Etfw">@worldlibertyfi</a> <a href="https://t.co/mwhVIzPJyq">pic.twitter.com/mwhVIzPJyq</a>&mdash; Donald J. Trump (@realDonaldTrump) <a href="https://twitter.com/realDonaldTrump/status/1829141447087648796?ref_src=twsrc%5Etfw">August 29, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The people behind WLF are clearly crypto natives. From the precise selection of Aave, and the strategy to incentivize liquidity providers with its own native token, to the linguistic nuances of its governance proposal, WLF has all the trappings of a team that understands how things are done in this business.



Who knows how it will end —&nbsp;stay tuned, as they say.&nbsp;



<h2 class="wp-block-heading">Chart of the Day</h2>



Optimism Collective generates $911 million in monthly revenues:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXes5oaGYzL4yu5BVrVawekIcM1CLBfUtqIwvyqnWet2tdkrPr2mgyHBiw9y4JApTkCI1jpbtjQy-GKL_UVnF8vtXPJ624F5B9SuKKkie6OODx8s9ChzXsHd2SlykEqtiCihk9_7J6qGO-uc5ARW71Crng_Y?key=JQMVYvq9Jhk3rOrcyxUrZg" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.blockworksresearch.com/analytics/superchain">Blockworks Research</a></figcaption></figure>



Uniswap announced its own <a href="https://blockworks.co/news/0xresearch-newsletter-uniswap-layer-2">Unichain L2</a> yesterday as part of the Optimism Collective/Superchain. One revenue-sharing <a href="https://base.mirror.xyz/aBwt4flT1WAKJGQTj2AXBpH_8Qd3umQ-ZECLAJoO_nE">criteria</a> of being an L2 chain within the Optimism Collective is to share 2.5% of your total sequencing revenues, or 15% of your gas fee profits (after deducting data availability costs) — whichever is higher.



In the month of September, the Optimism Collective raked in $911 million in total revenue. Optimism mainnet and Base make up the two largest revenue contributors, at $646 million and $263 million, respectively.



Note that the Blast L2 is left out of the above chart. Though L2s may be built with the Optimism’s OP Stack developmental kit, that does not make them necessarily committed to the Optimism Collective.



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Trump’s World Liberty Financial is using Aave

Today is day three of <a href="https://blockworks.co/event/permissionless-iii">Permissionless III</a> — have fun staying richly informed and entertained to all the attendees headed to the event this morning.



Keep reading for the inside scoop on where the crypto vibes are headed from Katherine, reporting from Salt Lake City. Catch you next week!



<h2 class="wp-block-heading">App revolution</h2>



It’s looking like crypto is ready to transcend to its next major phase.&nbsp;



Apps, not infrastructure.



There have been calls to renew focus on funding and building apps for a while now. Not “crypto apps,” like perps DEXs and lending protocols, but more genpop apps that regular people really want to use at scale — that would just so happen to run on blockchain rails.



With good reason. Infrastructure plays dominate the market. I spent the morning cataloging the top-200 cryptocurrencies by capitalization — which represents 96% of the entire market — per CoinGecko into three top-level categories: infrastructure, currency and apps.



Within each of those headline items were subcategories. Under infrastructure there’s layer-1 tokens like ether, SOL and TON, layer-2s arbitrum, mantle and optimism and pure-play infra assets including chainlink, PYTH and EIGEN.&nbsp;



Under currency there are stablecoins, memecoins and tokens derived from wrapping, staking or bridging other assets, like wrapped bitcoin and lido staked ETH.&nbsp;



App categories include exchange tokens — both DEX and CEX — as well as ones for metaverses, wallets and compute marketplaces like Akash, and DeFi platforms such as sky (formerly maker), pendle and aave.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1513" height="1600" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/10/image.png" alt="" class="wp-image-93002" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/10/image.png?w=1513 1513w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/image.png?w=284 284w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/image.png?w=968 968w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/image.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/image.png?w=1452 1452w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/image.png?w=243 243w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/image.png?w=247 247w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/image.png?w=207 207w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/image.png?w=76 76w" sizes="(max-width: 1513px) 100vw, 1513px" /><figcaption class="wp-element-caption">Appcoins are in purple, with exchanges and DeFi tokens the most common</figcaption></figure>



It obviously took some value judgments: Are liquid staking platforms Jupiter and Lido “apps” or “DeFi”? Probably the former. You use your crypto through the platform and immediately receive something else in return — in those cases a liquid staking token. DeFi apps would otherwise generate potential rewards over time.



Bitcoin was labeled a “currency,” and not a layer-1 under infrastructure. Those are mostly smart contract-native platforms on which apps can be deployed: coins that aim to offer ownership, exposure and utility to the underlying architecture of Web3.



All told, infrastructure coins, when sorted this way, represent $660.5 billion out of the $973.2 billion that remains of crypto after excluding bitcoin — 68% of the whole.



Appcoins are worth just $45.3 billion, or less than 5% of the total. Currencies other than bitcoin meanwhile make up over 27%.



Of course, the next wave of consumer apps, like the ones crypto-forward TradFi titan VanEck is looking to back with its <a href="https://blockworks.co/news/forward-guidance-newsletter-vaneck-vc-fund">new fund</a>, might not even have their own token. The blockchain and crypto elements could be buried underneath slick UX, so that users are none-the-wiser that they’ve landed in Web3.&nbsp;



Polymarket, for instance, doesn’t have its own coin but is one of this cycle’s most successful apps within the broader zeitgeist.



Still, there’s obviously room for growth within the app space. It’s difficult to say how big the explosion in adoption could be.&nbsp;



Despite the example of Polymarket, I suspect that token launches — specifically ones that prioritize access to the general public — will need to be central to those projects. Perhaps the shift to the applayer will bring about the return of initial coin offerings.&nbsp;



After all, it could be that infrastructure tokens are only so dominant because they offer exposure to potential growth within those ecosystems, through their native coins.



App projects may do well in following that formula — as long as they can stomach a potential visit from a trigger-happy SEC.&nbsp;



With that in mind, whatever success is destined for the applayer rests on how well <a href="https://blockworks.co/news/forward-guidance-newsletter-sec-ripple-inflation">Coinbase</a>, <a href="https://blockworks.co/news/uniswap-at-center-of-us-war-on-crypto">Uniswap Labs</a> and now <a href="https://blockworks.co/news/sec-charges-cumberland-unregistered-dealer">Cumberland DRW</a> fairs against the regulator in court. Joy.



— David Canellis



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



We’re bringing you something a little different this week.



Instead of just sitting down and absorbing what Blockworks co-founder — and Empire host — Jason Yanowitz said on the podcast this week, I tracked him down at Permissionless.



“The biggest takeaway from me is that the energy online is very different online from the energy in person,” Yanowitz told me.&nbsp;



“There [are] like three stages of companies from 2017-2020, which was the CeFi infrastructure people (like Fireblocks, BitGo, Anchorage), 2020 to 2024 was infrastructure and now I think we’re entering this application era,” Yanowitz said. “Every panel ends up talking about applications in some way, which we’ve never seen at a conference before.”



“I think all signs are actually pointing to 2025 being [the year that all applications] are funded,” he explained.&nbsp;



So the bullish vibes really are real.For Yanowitz, the energy felt “rejuvenating.” He thinks bitcoin could carve out fresh all-time highs in November or December, setting the stage for a (potentially) bullish start to 2025.



And now you know.



<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">Day 2 at <a href="https://twitter.com/Permissionless?ref_src=twsrc%5Etfw">@Permissionless</a> was awesome. -Favorite talk was on macro by <a href="https://twitter.com/JanvanEck3?ref_src=twsrc%5Etfw">@JanvanEck3</a> and others, TLDR bullish setup for crypto. -Way too many bullish on memecoins and bearish alts. Short term basis in my opinion. Alts are just memecoins with fundamentals. Memecoins will trend… <a href="https://t.co/mCrrj3wxYQ">pic.twitter.com/mCrrj3wxYQ</a>&mdash; Jesse Eckel (@Jesseeckel) <a href="https://twitter.com/Jesseeckel/status/1844590367829786665?ref_src=twsrc%5Etfw">October 11, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



&#8220;Despite (SEC) Chairman (Gary) Gensler’s call to just &#8216;come in and register,&#8217; Cumberland has for years been expressly prohibited from using its now-dormant registered broker-dealer for crypto asset activity. We cannot comply with rules that do not exist or a framework that regulators are interpreting to prohibit trading in natively issued crypto assets,” Cumberland said.



While it may look like next year is potentially bullish, the Securities and Exchange Commission continues to target companies in the crypto space.&nbsp;



Yesterday, it was Cumberland.&nbsp;



“We are not making any changes to our business operations or the assets in which we provide liquidity as a result of this action by the SEC,” Cumberland said in a statement.



“Despite frequent protestations by the industry that sales of crypto assets are all akin to sales of commodities, our complaint alleges that Cumberland, the respective issuers, and objective investors treated the offer and sale of the crypto assets at issue in this case as investments in securities, and Cumberland profited from its dealer activity in these assets without providing investors and the market with the important protections afforded by registration,” Jorge G. Tenreiro, acting chief of the agency’s crypto assets and cyber unit, alleged.



It’s one of those cases that could have lasting effects on the crypto space, but first, we need to see how it plays out.



— Katherine Ross



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



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Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



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Crypto set for a new era of apps over infrastructure

Jack Kubinec

Crypto conference panel titles are like little time capsules that give a sense of what the crypto world was interested in at a certain moment in time (at least in the eyes of conference organizers).



So here’s one telling example I found: A year ago at Permissionless II, a host of Solana founders sat on a panel called “Solana DeFi: A Phoenix Rises from the Ashes.”&nbsp;



This year, the main stage saw a talk called “DeFi: A Phoenix Rises from the Ashes,” but the panel was populated with Ethereum DeFi founders instead.



During that 2023 panel, SOL was trading at around $18. Today, it&#8217;s around $140. This week, the fees and tips being <a href="https://app.blockworksresearch.com/analytics/sol?dashboard=sol-financial&amp;interval=weekly">processed</a> by the Solana blockchain are roughly 70 times what they were during the last Permissionless.



Read more: <a href="https://blockworks.co/news/permissionless-day-two-vibes">Politics and memecoins drive the conversation on day 2 of Permissionless</a>



In brief, it appears that the phoenix has risen from the ashes.&nbsp;



This year’s Permissionless conference fell less than a month after Solana’s flagship conference in Singapore, so it was a light week as far as bombshell <a href="https://blockworks.co/tag/solana">Solana</a> announcements went. Instead, the Solana content was a bit of a heady brew.&nbsp;



Read more: <a href="https://blockworks.co/news/lightspeed-newsletter-solana-breakpoint-2024">These 3 questions remain after Solana Breakpoint</a>



Eugene Chen from Ellipsis Labs <a href="https://x.com/whosknave/status/1844104857437049207">said</a> that “fighting [maximal extractible value] is almost like fighting gravity” due to the inevitable economic force to pack blocks tightly. DRiP’s Vibhu Norby said that memecoins can be better thought of as commerce than as investment during a live taping of the Lightspeed podcast. And someone I chatted with near the coffee station said decentralized physical infrastructure (<a href="https://blockworks.co/tag/depin">DePIN</a>) projects where the infrastructure’s supply comes from the same place as its demand are the most likely to succeed (think of a shared computing network where users offer and also use computing power, as an easy example).



As attendees chugged water and generously applied chapstick to battle the Salt Lake City dryness, it became clear to me that Solana has become, for lack of a better word, cool. The Solana breakout track was reasonably full, and a Solana Foundation-sponsored founder summit had to turn around its fair share of curious interlopers.&nbsp;



For Solana founders I heard from, the plaudits feel good, especially given how some in crypto tabbed Solana a lost cause following FTX’s unraveling.&nbsp;



But it’s also uncharted territory for Solana, which has always felt like a contrarian bet against the much-larger Ethereum. Today, Solana is <a href="https://blockworks.co/news/lightspeed-newsletter-solana-defi-activity-expanding">much closer to Ethereum</a> in key usage metrics, and professional investors seem to be <a href="https://blockworks.co/news/lightspeed-newsletter-sol-strategies-rebrand">taking a liking to SOL</a>.&nbsp;



The question I was struck by during the conference is how Solana can adjust to a world where it’s not quite the contrarian underdog anymore. What if new chains come to fruition that are faster, cheaper, more impious to crypto’s high priests?



Crypto fans tend to not be fans of social consensus, and being more of a consensus blockchain could prove to be disadvantageous. Solana has certainly risen from the ashes over the past year. It’s now a question of whether the phoenix can also fly.



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Permissionless III dispatch: What a difference a year makes for Solana

Binance executive Tigran Gambaryan was denied bail at a Nigerian hearing on Friday.



The executive’s been detained since February when he visited the country to meet with Nigerian officials on behalf of Binance. He’s facing money laundering charges.&nbsp;



Gambaryan’s also suffering from health issues yet is still imprisoned at the Kuje Prison. And I wish I could report that there was, well, more to report. But unfortunately, at this point, there’s not.&nbsp;



&#8220;We all know that Tigran was <a href="https://blockworks.co/news/binance-detained-exec-charges-dropped-nigeria">never a decision-maker at Binance</a> and that he is entirely innocent but I am not surprised by this decision. It is completely unjust to deny someone in Tigran’s condition the opportunity to seek appropriate medical help and I just pray that when he is finally released that the damage he is suffering is not permanent. I am exhausted and deeply disappointed, but I will continue fighting for my husband’s rightful freedom,” his wife, Yuki Gambaryan, said in a statement.



Read more: ​​<a href="https://blockworks.co/news/continued-detainment-binance-executive-outrageous">Rep. Hill calls continued detainment of Binance executive ‘outrageous’</a>



<a href="https://blockworks.co/tag/binance">Binance</a> echoed her thoughts, with a spokesperson telling Blockworks that the company is “deeply disappointed by the court’s decision to deny Tigran bail, particularly given his deteriorating health. He has been unlawfully detained for over 220 days.”&nbsp;



“We are committed to working with the Nigerian government to resolve issues,” they added.&nbsp;



Gambaryan has a long and storied history with crypto. Prior to joining Binance, he worked as an IRS agent with a focus on digital currency.&nbsp;



He <a href="https://blockworks.co/news/empire-newsletter-binance-exec-silk-road-arrests">served as a special agent</a> involved in taking down former Drug Enforcement Administration agent Mark Force and former Secret Service agent Shaun Bridges, who were both involved in the Silk Road.&nbsp;



Gambaryan wrote that the two “abused their positions” as federal agents in a <a href="https://www.justice.gov/sites/default/files/opa/press-releases/attachments/2015/03/30/criminal_complaint_force.pdf">2015 affidavit</a>. When detailing his experience, he said that he “developed a specialty in cyber and digital currency crimes.”



Wired’s Andy Greenberg — who wrote the book Tracers in the Dark: The Global Hunt for the Crime Lords of Cryptocurrency with Gambaryan as the protagonist — called the former IRS agent “kind of a legendary figure in the crypto crime investigation world.”



Earlier this month, Yuki Gambaryan did an interview with Illicit Edge’s new podcast “Designated” about his imprisonment.&nbsp;



“Tigran is innocent, he didn’t do anything wrong,” she told host Yaya Jata Fanusie. She also pushed for more “decisive actions” from the US government.&nbsp;&nbsp;



“I am having this constant fear of losing Tigran,” Yuki went on to say.



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Binance exec Tigran Gambaryan denied bail in Nigeria

The mix of retail and institutional, DeFi and TradFi, suits and T-shirts has been a staple at Permissionless since the inaugural event in 2022. Crypto influencers and US senators find themselves under the same roof this year for three days in Utah.&nbsp;



But the circumstances this year are special. When Permissionless III wraps on Friday, there will be 26 days left until the 2024 presidential election. This reality has crept into almost every discussion, both on stage and on the expo floor.&nbsp;


<div class="wp-block-image">
<figure class="alignright size-large is-resized"><img loading="lazy" decoding="async" width="1200" height="800" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/10/20241010_Permissionless_3966.jpg?w=1024&amp;h=1024" alt="" class="wp-image-92981" style="width:557px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/10/20241010_Permissionless_3966.jpg?w=1200 1200w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/20241010_Permissionless_3966.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/20241010_Permissionless_3966.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/20241010_Permissionless_3966.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/20241010_Permissionless_3966.jpg?w=386 386w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/20241010_Permissionless_3966.jpg?w=392 392w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/20241010_Permissionless_3966.jpg?w=329 329w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/20241010_Permissionless_3966.jpg?w=80 80w" sizes="(max-width: 1200px) 100vw, 1200px" /><figcaption class="wp-element-caption">Source: Mike Lawrence for Blockworks</figcaption></figure></div>


“I think it is bullish if Trump wins, and it&#8217;s probably negative for a little bit if [Harris] wins,” Dan Tapiero, founder of 1Roundtable Partners and 10T Holdings, said during a Thursday panel discussion. “But the reality is that this move toward putting all value on a blockchain is bigger than one election.”&nbsp;



Read more: <a href="https://blockworks.co/news/permissionless-3-day-one-vibes">Axe throws and crypto wizards: Permissionless III is underway</a>



The comments contrast a widely accepted narrative from many industry players — and certain politicians — that a second Donald Trump presidency will lead to a more friendly environment for crypto in the US.&nbsp;



“He’s evolved on this issue to the point where he’s going to advocate for it,” House Majority Whip <a href="https://blockworks.co/news/forward-guidance-newsletter-vaneck-vc-fund">Tom Emmer told Blockworks</a> of Trump’s crypto stance and the about-face he’s done in recent months.&nbsp;



“[<a href="https://blockworks.co/tag/kamala-harris">Harris</a>] doesn’t know what she’s talking about,” he added.&nbsp;



Couple the looming election with increasingly uncertain macroeconomic conditions and a crypto market that just can’t seem to take off again, and you paint a somewhat bleak picture. Still, the speakers in Salt Lake City managed to bring some levity to the situation: Focus on the memes.&nbsp;



“I don&#8217;t want to wax too philosophical here, but partially because the transparency of mobile phones, trust in US institutions has really gone down,” <a href="https://blockworks.co/tag/vaneck">VanEck</a> CEO Jan van Eck said on stage.&nbsp;



“Trust in Congress, trust in academia, trust in mainstream media has basically disappeared,” van Eck added. “The fact that some of the memecoins make fun of some of that, I think, is great. It&#8217;s a joyful response, a social response.”&nbsp;



Read more from our opinion section: <a href="https://blockworks.co/news/political-candidates-cannot-ignore-crypto-voters">Political candidates can no longer ignore crypto voters</a>



Aside from politics and memecoins, it just wouldn’t be a crypto conference if people didn’t talk about price action. Even as bitcoin dipped below $59,000 Thursday, the bulls were unphased.&nbsp;



Tapiero said he expects BTC to hit between $150,000 and $180,000 in two years or so.&nbsp;



Pantera Capital CEO Dan Morehead threw out a number too: $117,000 by August 2025. Van Eck didn’t share a specific price expectation, but added with a smile: “I think we’re all bulls on this stage.”



Ben Strack contributed reporting.



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Politics and memecoins drive the conversation on day 2 of Permissionless

Felix Jauvin

Today, enjoy the Forward Guidance newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/forwardguidance">Subscribe to the Forward Guidance newsletter</a>.



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



<h2 class="wp-block-heading">Structural sticky inflation is here&nbsp;</h2>



Today’s inflation data tells a story of sticky prices that are going to have a lot of trouble coming down and getting us back to the 2% target.&nbsp;



Off the top, the key data points vs. expectations:



<ul class="wp-block-list">
<li>Core CPI MoM: 0.3% actual, 0.2% expected</li>



<li>Core CPI YoY: 3.3% actual, 3.2% expected</li>



<li>Headline CPI MoM: 0.2% actual, 0.1% expected</li>



<li>Headline CPI YoY: 2.4% actual, 2.3% expected</li>
</ul>



As we can see, the CPI print was hot. Not smoking hot, and also not because any major outliers drove it higher. What we’re seeing is really just a broad-based inability for inflation data points to meaningfully move lower.



Before digging into the hot points, let’s quickly run through what accounts for 55% of this month’s inflation: shelter.



Following a rebound last month, owner-equivalent-rent and primary rents both continued their trajectory lower, leading to shelter inflation coming in at 0.22% MoM vs. expected 0.46%. By all accounts, this was a positive outcome for disinflation.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdt7ccAM23USZ7WS3MDujDSesbV1kt6R84kh93rvFctWoErOd42OGkBLB1saG5cU6CPKWNGVcK0Hl9C7Lm7FIDyu5pCQu3Jz7OL5kuQknS9XW_Pl2sYnWcMm9a8mS1x5SCypfBbL9P-DcAwCVLN-3d1Xqvw?key=0JUZeaMwPbST8WRCQEVVkA" alt=""/></figure>



That’s about as far as we can go in terms of positive data points in today’s print.



The big red flag is that core goods rebounded higher at 0.17% vs. the anticipated 0.02%. Goods MoM deflation has been the core driver of the disinflation story we’ve seen this year and which has allowed the Fed to cut with confidence. So if we’re beginning to see a rebound in goods inflation, that will be a concern.



Overall, today’s CPI print paints a picture of sticky inflation, but not re-acceleration. I think this print will still allow the Fed to cut by 25 basis points in November, but 50bps is surely off the table at this point.



— Felix Jauvin



<h3 class="wp-block-heading">$24&nbsp;</h3>



The price target (in CAD) for Galaxy Digital, according to a Thursday note from HC Wainwright &amp; Co., which started covering the stock. The company’s share price closed at $17.73 CAD on Wednesday.&nbsp;



Galaxy is one of just two diversified crypto-focused public companies (outside of the bitcoin miners) with a market cap of more than $1 billion, the analysts wrote. And an expected sharp crypto rally starting in Q4 could be the single biggest driver of a Galaxy stock price increase.



The HC Wainwright &amp; Co pros added: “Further, institutional understanding and adoption of digital assets has never <a href="https://blockworks.co/news/on-the-margin-newsletter-inevitable-institutional-digital-assets-involvement">been greater</a>, and we see a wave of incremental <a href="https://blockworks.co/news/forward-guidance-newsletter-vaneck-vc-fund">institutional capital </a>pouring into the space in the coming years, further amplifying the upcoming bull market.”&nbsp;



<h2 class="wp-block-heading">On the ground at Permissionless&nbsp;</h2>



Day two of Blockworks’ Permissionless was in progress when this newsletter went out, but let’s take a look at some of what people were talking about on day one.&nbsp;



There seems to be a calm before the storm. And we’re not talking about Hurricane Milton (our thoughts are with everyone in the affected areas and their loved ones), but rather the seeming holding pattern as we await the Nov. 5 <a href="https://blockworks.co/news/political-candidates-cannot-ignore-crypto-voters">presidential election</a>.&nbsp;



The need for regulatory clarity was mentioned a lot. That’s not really new, but it is even more highlighted given we’re now just 26 days from the big day.&nbsp;



Casey <a href="https://blockworks.co/news/forward-guidance-newsletter-vaneck-vc-fund">mentioned</a> some of House Majority Whip Tom Emmer’s thoughts yesterday about how the presidential election could impact the crypto industry’s trajectory.



Coinbase CLO Paul Grewal said during the same panel that he’s looking beyond just the Donald Trump-Kamala Harris match-up. “Congress is going to matter a lot here, regardless of who’s elected as president,” he said.&nbsp;&nbsp;&nbsp;



During a session later in the day, Lumida CEO Ram Ahluwalia argued that Harris — who he called the “presumptive leader of the Democratic party today” — could terminate SEC Chair Gary Gensler before the election if she wanted to.&nbsp;



But he expects to see “status quo” if Harris is elected, implying no quick change in SEC leadership would be made.



While Donald Trump has vowed to <a href="https://blockworks.co/news/donald-trump-speaks-bitcoin-2024">fire Gensler</a>, Harris has shared some <a href="https://blockworks.co/news/kamala-harris-crypto-policy-reset-outlook">pro-crypto comments </a>without noting how she might address the agency’s current leadership.&nbsp;



Clearing out the leaders with negative views of the industry should be positive for an agency that overall realizes the crypto industry’s value to capital markets and American innovation, said Bitwise’s Juan Leon.



But, he added in a panel alongside Ahluwalia: “I don’t think it’s as black and white as people in this industry seem to be thinking. Really what matters is the <a href="https://blockworks.co/news/house-passes-act-fit21-with-bipartisan-support">bipartisan support</a>, which is there.”



While regulation was mentioned in some shape or form in nearly every panel I listened in on, some other points worth noting strayed from strict policy.



In a panel on the future of bitcoin mining, Marathon Digital CEO Fred Thiel seemed to question the strategy of industry rival Core Scientific, which this year has <a href="https://investors.corescientific.com/news-events/press-releases/detail/78/core-scientific-announces-new-contract-with-coreweave-for-delivery-of-approximately-70-mw-of-additional-infrastructure-to-host-high-performance-computing-operations">inked</a> high-performance computing (HPC) <a href="https://blockworks.co/news/post-bitcoin-halving-mining-strategies">hosting contracts</a> with cloud-computing firm CoreWeave.



Core Scientific has said it projects more than $4.7 billion in cumulative revenue over the 12-year timeline of the CoreWeave contracts.



But Thiel argued: “That’s a race to zero,” noting that competition in the arena of renting rack space will ultimately hurt margins.&nbsp;



And we can’t not mention the world’s largest asset manager being in the building.&nbsp;



Samara Cohen, BlackRock’s CIO of ETF and index investments, said we are in “act one” in terms of institutional crypto adoption. This theater analogy came in lieu of the baseball-focused “early innings” line you typically hear (though Let’s Go Mets, am I right?).&nbsp;



While hedge funds and other asset managers have been jumping in, there remains “a fair amount of plumbing” needed to unlock others’ ability to buy bitcoin (namely pensions and endowments).&nbsp;



Outside of regulation, investment guidelines consideration and board approval are other hurdles to clear for those asset allocators.&nbsp;&nbsp;



“These things take a longer period of time…and this is a process that is underway,” Cohen said.



— Ben Strack&nbsp;



<h2 class="wp-block-heading">Bulletin Board&nbsp;</h2>



<ul class="wp-block-list">
<li>The SEC on Thursday charged crypto market maker Cumberland DRW with acting as an <a href="https://blockworks.co/news/sec-charges-cumberland-unregistered-dealer">unregistered dealer</a>. Regulators <a href="https://www.sec.gov/files/litigation/complaints/2024/comp-pr2024-168.pdf">allege</a> the Chicago-based firm has been “operating as an unregistered dealer in more than $2 billion of crypto assets offered and sold as securities.” In a statement posted on X, Cumberland expressed frustration with being the SEC’s “latest target” and pledged to defend itself “against overzealous regulators.” </li>



<li>Initial jobless <a href="https://www.dol.gov/ui/data.pdf">claims</a> released Thursday showed 258,000 first-time filers for the week ended Oct. 5, marking the highest weekly initial claims since August 2023. Analysts had expected 230,000. </li>



<li>Permissionless III continues! Check out the day one recap from Blockworks editor Katherine Ross <a href="https://blockworks.co/news/permissionless-3-day-one-vibes">here</a>, and keep an eye on Blockworks.co for the latest updates. </li>
</ul>



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Latest inflation data comes in hotter than expected, led by housing costs

Michael McSweeney

The US Securities and Exchange Commission has charged the crypto market-maker Cumberland DRW with acting as an unregistered dealer.



The agency, which revealed the charges Thursday, alleged that the Chicago-based firm has been “operating as an unregistered dealer in more than $2 billion of crypto assets offered and sold as securities.”



“Despite frequent protestations by the industry that sales of crypto assets are all akin to sales of commodities, our complaint alleges that Cumberland, the respective issuers, and objective investors treated the offer and sale of the crypto assets at issue in this case as investments in securities, and Cumberland profited from its dealer activity in these assets without providing investors and the market with the important protections afforded by registration,” Jorge G. Tenreiro, acting chief of the agency&#8217;s crypto assets and cyber unit, said in a <a href="https://www.sec.gov/newsroom/press-releases/2024-169">statement</a>.&nbsp;



In the <a href="https://www.sec.gov/files/litigation/complaints/2024/comp-pr2024-168.pdf">complaint</a>, the SEC alleged that the firm “has made available for trading many crypto assets offered or sold as investment contracts and, therefore, as securities.” The agency cited POL (formerly MATIC), SOL, FIL, ALGO and ATOM.&nbsp;



Read more: <a href="https://blockworks.co/news/lightspeed-newsletter-mango-markets-sol">SEC’s Mango settlement reiterates its case that SOL is a security</a>



Such inclusions are likely to spur further criticism of the agency, given the SEC’s <a href="https://blockworks.co/news/sec-wrong-about-crypto-asset-securities">recent step back</a> from the use of the term “crypto asset securities” in some of its more high-profile court cases. The SEC’s critics have accused the agency of specifically targeting the crypto sector.



Cumberland echoed those complaints in a <a href="https://x.com/CumberlandSays/status/1844424478660624806">statement</a> published Thursday, in which the market maker pledged to defend itself. The firm said it had become “the latest target of the <a href="https://blockworks.co/tag/sec">SEC</a>’s <a href="https://blockworks.co/news/sec-crippling-digital-assets">enforcement-first approach</a> to stifling innovation and preventing legitimate companies from engaging in digital assets.”



“We are not making any changes to our business operations or the assets in which we provide liquidity as a result of this action by the SEC,” Cumberland said. “We are confident in our strong compliance framework and disciplined adherence to all known rules and regulations — even as they have been a moving target (it wasn’t long ago ETH was <a href="https://blockworks.co/news/consensys-files-lawsuit-against-sec">claimed to be a security</a>).”



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SEC files lawsuit against crypto market-maker Cumberland DRW

<a href="https://trondao.org/">TRON DAO</a> was proud to host the TRON Builder Tour at Columbia University with <a href="https://blockchainatcolumbia.org/">Blockchain at Columbia</a> and <a href="https://www.bublockchain.xyz/">Boston University Blockchain</a> on October 5. The TRON Builder Tour merges hands-on workshops with enriching discussions, connecting students, developers and mentors. Previously, TRON DAO has organized successful TRON Builder Tour events at prestigious institutions like MIT, Cornell, Princeton, and Harvard, fostering deeper connections and advancing blockchain knowledge within academic communities. 



<h3 class="wp-block-heading">TRON Builder Tour: Columbia Stop</h3>



The TRON Builder Tour hosted a hackathon at Columbia University on October 5, co-hosted by <a href="https://blockchainatcolumbia.org/">Blockchain at Columbia</a> and <a href="https://www.bublockchain.xyz/">Boston University Blockchain</a>. The 12-hour event attracted over 120 sign-ups from students all eager to build on the TRON blockchain. Attendees included individuals from prestigious institutions such as Harvard, Boston University, NYU, Berkeley, Columbia, University of Waterloo, and Princeton. Longtime developers and early builders in the TRON community flew in from all over the U.S. to help students with their projects. Among the mentors were Dwayne Gordon, founder of a TRON community project, Eder Teixeira, a TRON Super Representative and Wes Jorgensen from Boston University Blockchain.Their collective experience provided students with invaluable insights and guidance, reinforcing TRON&#8217;s commitment to fostering innovation and education within the blockchain space. Throughout the hackathon, students developed decentralized applications (dApps) across four tracks: DeFi, Artistry, Integration, and Web3. The top three projects from each track were awarded their respective share of the grand prize pool.



<h3 class="wp-block-heading">Judge-Selected Winners</h3>



DeFi Track Showcasing projects that transform finance through decentralization, empowering individuals with transparent, accessible, and inclusive protocols for asset management. The winners of the DeFi track are as follows: 1. <a href="https://forum.trondao.org/t/stakecess-learn2earn/27716">Stakecess</a> by Stakecess 



2. <a href="https://forum.trondao.org/t/teamdr-by-team-d-pok-it-starts-with-an-idea/27718">TEAMDR</a> by Team D-POK 



3. <a href="https://forum.trondao.org/t/prisoncoin-by-teampc/27858">PrisonCoin</a> by TeamPC&nbsp;



Artistry Track Where entertainment meets blockchain technology. The artistry track spotlights creative prowess in visual projects that embrace GameFi, NFTs, assets, and ventures related to the Metaverse. The winners of the Artistry track are as follows: 1. <a href="https://forum.trondao.org/t/monkey-lotto-buy-lottery-tickets-and-win-as-quick-as-popping-a-balloon/27720">Monkey Lotto</a> by Monkey Lotto 



2. <a href="https://forum.trondao.org/t/nocapmaps-earn-nfts-by-exploring-national-parks-in-us/27738">NoCapMaps</a> by NoCapMaps&nbsp;



3. <a href="https://forum.trondao.org/t/metaforge-unlocking-creative-power-in-the-artistry-metaverse/27725">MetaForge</a> by MetaForge Team&nbsp;



Integration Track 



The Integration track prompts participants to integrate advanced protocols into the TRON ecosystem, urging them to incorporate existing protocols, dapps, or services on TRON/BTTC into their applications. Participants create impactful features/tools for enhancing applications within the TRON/BTTC ecosystems. The winners of the Integration track are as follows: 1. <a href="https://forum.trondao.org/t/tronfundyou-fund-me-fund-you/27715">TRONFundYou</a> by NYBO 



2. <a href="https://forum.trondao.org/t/swap-squad-decentralized-marketplace/27737">Swap Squad</a> by BU Blockchain RKJ 



Web3 Track The Web3 category aims to honor teams that usher along the transition of Web 2.0 to Web 3.0 by introducing next-gen DAO tools, SocialFi, blockchain/web infrastructure, SDKs, and other dapps. The winner of the Web3 track is below: 1. <a href="https://forum.trondao.org/t/tron-support-ai/27717">AI Bot</a> by TRON Support AI



<h3 class="wp-block-heading">HackaTRON Season 7</h3>



In tandem with the TRON Builder Tour, TRON DAO continues to push the envelope with HackaTRON Season 7, a competition that challenges innovators across multiple tracks to create solutions that leverage the TRON blockchain.



Stay updated and get involved by following TRON DAO on <a href="https://x.com/trondao">X</a> and visiting the<a href="https://trondao.org/hackatron/"> HackaTRON official page</a> for the latest news and participation opportunities!



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TRON DAO hosted the TRON Builder Tour at Columbia University with Blockchain at Columbia and Boston University Blockchain

Following <a href="https://blockworks.co/news/stripe-to-bring-back-crypto-payments">months of build-up</a>, the fintech giant Stripe officially brought back crypto payments in the US, a product lead announced yesterday via X.&nbsp;



Customers can pay merchants in USDC or USDP on Ethereum, Solana, and Polygon, while US-based merchants are paid in dollars. Stripe takes 1.5% of the transaction amount, which is lower than the 2.9% plus $0.30 fee it typically <a href="https://stripe.com/pricing">charges</a> on card payments. The move comes nearly seven years after Stripe <a href="https://stripe.com/blog/ending-Bitcoin-support">discontinued</a> its first crypto experiment amid the growing realization that bitcoin would not become a blockchain optimized for payments. Stripe <a href="https://stripe.com/blog/bitcoin-the-stripe-perspective">began</a> its foray into crypto in 2014.&nbsp;



The check-out flow, which you can mess around with <a href="https://t.co/g1ryr2ZvZv">here</a>, involves connecting a crypto wallet and signing a transaction from Stripe before paying with your stablecoin of choice. Interestingly, fees appear to be abstracted away from the user, so Solana isn’t really given a chance to flex its cheap fees relative to Ethereum’s.



On one hand, it’s a big deal for crypto adoption that Stripe is dipping its toes back into crypto. Most of anyone who has paid for things on the internet has interacted with Stripe’s payment flows.&nbsp;



Stripe’s stablecoin usage can make it easier for US merchants to sell to international customers, since the fintech firm <a href="https://stripe.com/pricing">charges</a> an extra 150 bips for international cards. In its first 24 hours of crypto reintegration, customers from more than 70 countries paid with stablecoins on Stripe, <a href="https://x.com/BackseatVC/status/1844074052576821445">according</a> to another Stripe employee.&nbsp;



But still, cards are certain to account for a large majority of US internet payments for the foreseeable future. Crypto payments solutions like Stripe’s (<a href="https://blockworks.co/news/helio-upgrades-solana-pay-plugin-for-shopify">and Shopify’s before it</a>) have a bit of a discoverability problem: a minority of people use crypto wallets, and there’s no central repository of merchants for crypto users to find crypto-friendly merchants. (I learned this firsthand while <a href="https://blockworks.co/news/lightspeed-newsletter-solana-stablecoin-purchases">trying to pay for things</a> with stablecoins this summer).



There may also be structural forces getting in the way of Stripe’s crypto payment solution catching on as currently conceived. In a blog <a href="https://substack.com/home/post/p-150031096?source=queue">post</a>, Nico Pei from Sky Lab characterized Stripe’s payment solution — which relies on wallets and their sometimes-onerous requirements — as “useful for crypto-natives” but “unintuitive” for everyone else.&nbsp;



Pei also characterized the 1.5% fee, which is already 50% cheaper than current alternatives, as “predatory” given how little crypto payments actually cost Stripe.&nbsp;



And for crypto payments to actually compete with the credit card giants, Pei says, they’ll need to compete with the sprawling ecosystem of cash back, travel points, and loyalty rewards that incentivize customers to make use of credit cards.&nbsp;



Stripe reintegrating crypto is certainly an encouraging sign for the uptake of crypto payments — something I’m always intrigued by for Lightspeed, given Solana’s focus on payments use cases.



But for the time being, I tend to agree with Pei that this current iteration is likely to tickle a small group of crypto enthusiasts, and leave much of the rest of the payments world untouched.



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Stripe reintegrates crypto payments in the US

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Uniswap Labs is launching its own L2 chain, Unichain.



Unichain will be built on Optimism’s interconnected network of rollups, <a href="https://blockworks.co/news/optimism-interoperability-layer-superchain">dubbed the Superchain</a>.



Why Unichain? Uniswap Labs claims block times will see an initial speed of one second, after which they will fall to 200-250 millisecond block times — a vast improvement over the 12-second block time on Ethereum mainnet.



As part of the Optimism Superchain, users on the new Unichain will also enjoy native cross-chain interoperability of assets across the Superchain’s network of blockchains.



For L2s outside of Optimism’s Superchain, Uniswap Labs plans to leverage <a href="https://www.erc7683.org/">ERC-7683</a>, a cross-chain intent standard co-developed with <a href="https://app.blockworksresearch.com/unlocked/across-protocol-based-on-intents">Across Protocol</a>, that will effectively enable users’ trading orders to be fulfilled by intermediary relayers/solvers regardless of what chain they’re on.



This potentially obviates the need for Uniswap to “port” its massive pool of liquidity it enjoys on the Ethereum L1 to Unichain, and thereby abstract away the hurdles of moving its existing user base to a different chain.



Hayden Adams, CEO of Uniswap Labs, said of the launch: “Unichain will deliver the speed and cost savings already enabled by L2s, but with better access to liquidity across chains and more decentralization.”



Unichain will also leverage new technical innovations, like a trusted execution environment (TEE) for block building, and a “community validation network.” Both features are developed with Flashbots.



Unichain’s validation network will be open to any node operators staking UNI, but only a “limited number of validators with the highest UNI stake-weight will be considered the active set,” according to the Unichain <a href="https://docs.unichain.org/whitepaper.pdf">white paper</a>. It suggests that the largest UNI token holders, such as the Uniswap Foundation and early investors, will likely be the only initial validators on the network.



Ethereum’s largest DEX moving to an L2 can be taken as a great or terrible piece of news, depending on whether you <a href="https://blockworks.co/news/0xresearch-newsletter-eip-7977">approve of Ethereum’s roadmap</a>.



For Ethereum-aligned users who are onboard with its rollup-centric roadmap, Unichain makes perfect sense. From Uniswap’s perspective, this is a win-win for both the protocol and its users: Uniswap retains its MEV, and users enjoy cheaper gas fees.



From Ethereum’s perspective, that was obviously always part of the plan.



On the flip side, this looks to accelerate the ongoing <a href="https://blockworks.co/podcast/bellcurve/60051c06-6bd0-11ef-bcc2-e76505f9d524">complaints</a> about Ethereum L2s being “parasitic” to the L1, and the lack of value accrual to ETH (the asset).



Uniswap is the largest gas guzzler on the Ethereum L1 today (see below), which means that ETH spent as gas fees on the L1 is contributing to a non-trivial portion of ETH burn and value accrual to ETH, thanks to <a href="https://consensys.io/blog/what-is-eip-1559-how-will-it-change-ethereum">EIP-1559</a>. 



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcFBbb0qGww9D7HnE7ZAZrgoRfvLcEpfJwOz0ldW0grQK_jF3bPrCAgNtLP9Cgwgz_IPaGuzPkMtA_jj1F82UIGoRivSoInKGf7sGd8GooP0ITK7wRZLmphBJq3Ki1-dNdPxPa0AH5998weqbiNEGnGVOY?key=CnMrFVTVSBnOOas2r63roA" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://etherscan.io/gastracker">Etherscan</a></figcaption></figure>



Additionally, MEV that’s accruing to the Ethereum L1 will now be “leaked” to the Unichain L2 in the form of sequencer revenues —&nbsp;further reducing ETH’s value accrual.



A reversal of fortune for Ethereum largely depends on the “<a href="https://www.youtube.com/watch?v=yvP39-EOADU">induced demand</a>” its core developers believe would eventually emerge from having a multitude of cheaper L2 execution environments. The idea is that faster blockchain speeds would significantly drive more transactions on L2s, which in turn would increase settlement fees paid to the L1. So far, that hasn’t happened yet.



The UNI token has rallied 11.9% in the last 24 hours, according to <a href="https://www.coingecko.com/en/coins/uniswap">CoinGecko</a>.



<h2 class="wp-block-heading">Chart of the Day</h2>



There’s a tsuinami coming:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcNNW7MQjRPX1WgLZfuzADo6ZYhmsVx78fv3zNRUFRroszlu5hRvWhC-WCsA12Iv7Uq7LWBc0yDo9xuVzjHyGaT1a42sVgBkKSV7MHkBTfWo5GzRAukjSweJJIn5OQmI95egRTxc_2YGO1bMxurU7wgrzk?key=CnMrFVTVSBnOOas2r63roA" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.artemisanalytics.com/chains">Artemis</a></figcaption></figure>



The MoveVM-based L1 blockchain Sui briefly flipped Solana in daily transactions earlier this week. Sui saw 41.8 million transactions against Solana’s 40.1 million on Monday, though it has since fallen back down. Just as Solana once posed itself as an “ETH killer,” Sui looks to do the same to Solana.



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Uniswap announces Unichain L2

Amanda Tuminelli

Jake Chervinsky

The Securities and Exchange Commission has finally admitted what we’ve known all along: “Crypto asset security” was a made-up term with no legal basis. After years of misleading the courts and the public, the agency’s quiet abandonment of the term signals a major retreat in its regulation by enforcement campaign against the digital asset industry.



Rather than putting out proactive or helpful guidance in recent years, the SEC has been suing industry participants in a thinly veiled attempt to kill crypto. So far, it isn’t going well. If there was any doubt that the SEC’s approach is destined for failure, the recent shattering of the myth behind “crypto asset security” should put it to rest.



Read more: <a href="https://blockworks.co/news/lawmakers-frustrated-with-sec-crypto-approach">Rep. Torres: SEC invented ‘crypto asset security’ out of thin air</a>



Last year, the SEC filed enforcement actions against many of the major centralized exchanges, and is currently fighting in different courts against Binance, Coinbase and Kraken. Two weeks ago, the SEC <a href="https://storage.courtlistener.com/recap/gov.uscourts.dcd.256060/gov.uscourts.dcd.256060.273.1.pdf">moved to amend its complaint</a> in the Binance case. Buried in a footnote on page 24 of the motion, the SEC gave a stunning apology:



“As this Court noted and as the SEC reiterates, with its use of the term ‘crypto asset securities,’ the SEC is not referring to the crypto asset itself as the security; rather, as the SEC has consistently maintained since [Telegram], the term is a shorthand…. Nevertheless, to avoid any confusion, the [amended complaint] no longer uses the shorthand term, and the SEC regrets any confusion it may have invited in this regard.”



Rarely in history has a single footnote scrambled the minds of so many expert lawyers at once. Coinbase Chief Legal Officer Paul Grewal <a href="https://x.com/iampaulgrewal/status/1834455724631736428">described it</a> as “shameless.” Uniswap Labs CLO Katherine Minarik <a href="https://x.com/MinarikLaw/status/1834630275008963022">said</a> “no government agency should work this way.” Ripple Labs CLO Stuart Alderoty <a href="https://x.com/s_alderoty/status/1834464168399044842">suggested</a> the SEC “admit it has become a twisted pretzel of contradictions.”



Why react so strongly? There are at least three reasons.



First, the footnote is demonstrably false. Far from having “consistently maintained” that it “is not referring to the crypto asset itself as the security,” the SEC has relentlessly propagated the myth that tokens themselves are securities.



The SEC declared that view as early as 2017 in its <a href="https://www.sec.gov/files/litigation/admin/2017/33-10445.pdf">settlement with Munchee</a>, where it said that “digital assets may be securities” and that “MUN tokens were securities…because they were investment contracts.” The SEC has consistently reiterated that view in the years since. For example, in its 2018 <a href="https://www.sec.gov/files/dlt-framework.pdf">ICO framework</a>, the SEC analyzed “whether a digital asset is offered or sold as an investment contract and, therefore, is a security.” In its 2020 <a href="https://www.courtlistener.com/docket/19857399/4/securities-and-exchange-commission-v-ripple-labs-inc/">complaint against Ripple Labs</a>, the SEC alleged that “XRP was an investment contract and therefore a security[.]” And in its 2023 <a href="https://storage.courtlistener.com/recap/gov.uscourts.nysd.599908/gov.uscourts.nysd.599908.1.0_1.pdf">complaint against Coinbase</a>, the SEC accused Coinbase of making “available for trading crypto assets that are investment contracts under the Howey test[.]”



Even the SEC’s reference to Telegram in its footnote seems insincere. The SEC cites the Telegram case as if to show through its own statements that it has a history of “consistently maintaining” that tokens themselves are not securities. But the citation itself doesn’t reference a statement by the SEC — it quotes the court holding that tokens are “little more than alphanumeric cryptographic sequence[.]” In reality, the SEC alleged in its 2019 <a href="https://storage.courtlistener.com/recap/gov.uscourts.nysd.524448/gov.uscourts.nysd.524448.1.0_3.pdf">complaint against Telegram</a> that “Grams are securities” because “Grams are investment contracts.”



This isn’t even the first time the SEC has made misrepresentations to the court this year. In an enforcement action against Debt Box, where the SEC lied to the court in order to get the relief it was seeking against defendants, the court took the rare step of imposing <a href="https://assets.ctfassets.net/c5bd0wqjc7v0/1u6cDaFa3REg8wHUc6onZ8/e1257f64a80ca440d887f67821f872fe/Debt_Box_Order.pdf">sanctions</a> against the SEC because its “pervasive misconduct…demonstrate[d] a pattern of organizational bad faith and broadly implicate[d] the Commission itself—not just isolated individuals.” In an 80-page opinion using the term “bad faith” 46 times, the court stated that the SEC’s conduct “constitute[d] a gross abuse of the power entrusted to it by Congress and substantially undermined the integrity of [the] proceedings and the judicial process.”



Read more: <a href="https://blockworks.co/news/sec-commissioner-hearing-debt-box">Gensler says DEBT Box case ‘not well handled’ by SEC</a>



Second, the footnote signals an SEC in disarray. As a federal agency with extraordinary power to regulate the US economy, we expect — and administrative law requires — that the SEC will maintain consistent positions within and across its divisions. In other words, the left hand ought to know what the right hand is doing.



Yet, on the exact same day that the enforcement division half-heartedly apologized in the Binance case for the confusion it caused by using the term “crypto asset securities,” the same division used that term eight times in its <a href="https://www.sec.gov/files/litigation/admin/2024/34-101001.pdf">settlement with eToro</a>, and the SEC’s X account posted an <a href="https://x.com/SECGov/status/1834340017897979934">investor alert</a> from the Office of Investor Education and Advocacy using the term five times. These blatant inconsistencies call into question how entrepreneurs and investors are supposed to understand the law, or the SEC’s interpretation of the law, when the agency itself can’t even decide what language to use in describing it.



Third, the footnote betrays the SEC knowing its view of the law is wrong and how it’s taking different advocacy positions simply to win its enforcement cases. The argument that tokens themselves are securities is central to the SEC’s enforcement actions against centralized exchanges — the SEC hung its hat on that argument in the Binance case, claiming that tokens are “the embodiment of the investment contract” and therefore subject to the securities laws as they trade in secondary markets. The court explicitly called out the SEC’s inconsistency in its use of the term “crypto asset securities” and <a href="https://www.courtlistener.com/docket/67474542/248/securities-and-exchange-commission-v-binance-holdings-limited/">rejected that argument</a>, holding that it “is not enough, standing alone, to bring secondary sales” of specific tokens under the SEC’s jurisdiction.



As a neutral regulator meant to serve the interests of justice, the SEC isn’t supposed to take different positions in different cases just because it wants to win them. Instead, the SEC should be presenting a consistent view of the law — assuming it has one. This footnote proves it does not. And that means defendants will have a renewed opportunity to assert a fair notice defense against SEC enforcement, arguing that the law is so vague, a person of “common intelligence” can’t determine its meaning.



The SEC’s sudden abandonment of the term “crypto asset securities” isn’t just semantics, much as they would like to handwave and say so. If the SEC can’t characterize tokens as securities, it will have a hard time convincing courts that it has authority over secondary markets for digital assets. The crux of the securities laws is a registration regime for securities — but if the tokens themselves aren’t securities, then it’s unclear what exactly should be registered in the first place.



Crypto lawyers aren’t the only ones to notice the SEC’s retreat from the term “crypto asset securities.” In recent Congress hearings, members on both sides of the aisle — from <a href="https://x.com/RepRitchie/status/1836814099394764934">Ritchie Torres</a> to <a href="https://x.com/GOPMajorityWhip/status/1838616037945716999">Tom Emmer</a> — remarked on how the SEC made up the term despite having no basis in federal law, only to later retract it and apologize for its use. Now that the myth of “crypto asset security” has been exposed, the SEC will have to confront the reality of its weakness in both the courts and Congress.



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