Wrapped HLP

Ben Strack

“Nothing further from the defense,” attorney Brian Klein told Judge Katherine Polk Failla yesterday afternoon at Manhattan’s Thurgood Marshall courthouse.



The team representing Tornado Cash co-founder Roman Storm had cycled through what remained of its witness list, and Storm chose not to take the stand.&nbsp;



A reminder that Storm is being charged with conspiracy to commit money laundering, conspiracy to commit sanctions violations, and conspiracy to operate an unlicensed money transmitting business.



His defense (and advocates of the privacy protocol) argue Storm isn’t criminally responsible for<a href="https://blockworks.co/news/treasurys-tornado-cash-sanctions-have-companies-stepping-back-from-users"> bad actors using</a> something he helped create.&nbsp;



Closing arguments were scheduled to begin at 9 a.m. “sharp” Wednesday — meaning in a matter of minutes (if you’re reading this when it publishes).&nbsp;



In the meantime, let’s go through Tuesday’s witnesses and some of the more memorable moments:



<h2 class="wp-block-heading">Guy Wuollet, partner at a16z crypto</h2>



Tuesday’s first witness, Wuollet had evaluated whether Andreessen Horowitz’s crypto/Web3 unit would invest in Tornado Cash in 2021.&nbsp;



In an email to Storm at the time, Wuollet wrote he was “impressed by the strength of the privacy” of Tornado Cash and “excited about the next iteration of the protocol.”



The reason a16z didn’t invest? Wuollet said the firm didn’t know if Tornado Cash would be profitable. “We will continue to be fans of Tornado Cash and to track its adoption onchain,” Wuollet added in the email.&nbsp;&nbsp;



When asked to acknowledge that crimes are committed on the blockchain, Wuollet paused before saying he thinks of it differently. “If someone robbed a store, I wouldn’t say the store was used in the crime.”



An attendee sitting to my left started laughing. The prosecution ended the cross-examination there.&nbsp;&nbsp;



<h2 class="wp-block-heading">Omid Malekan, Columbia Business School professor&nbsp;</h2>



Not on the stand long, Malekan said he used Tornado Cash in 2021 to purchase an Ethereum Name Service (ENS) name.&nbsp;



He used the protocol because he “didn’t want to put a bullseye on my back.”&nbsp;



The prosecution’s Ben Arad shouted out an objection. Failla asked Klein to control his witness.&nbsp;



<h2 class="wp-block-heading">Dr. Stephanie Hurder, founding economist of Prysm Group&nbsp;</h2>



We found out the defense has so far paid Hurder $120,000 for her time analyzing this case and being an expert witness. She reviewed Tornado Cash DAO proposals, TORN token price data, transactions on Etherscan, etc.&nbsp;



She countered several points previously brought up by the government about Tornado Cash’s supposed lack of decentralization. Hurder noted the protocol’s DAO was “well-designed and active” (55% of TORN tokens initially went to the DAO treasury) and that Tornado Cash founders did not have (or always use) their voting power on proposals.



She added that the founders did not have a direct hand in selecting entities on Tornado Cash’s relayer registry.



The government’s exchanges with Hurder were heated, with prosecutors getting her to acknowledge that bad actors have apparently used Tornado Cash to hide criminal proceeds. As we know, the case against Storm is more nuanced than that.&nbsp;



And in a reference to the vesting schedule for founders’ TORN tokens, a prosecutor asked: “Tornado Cash became less decentralized over time, right?”



Despite the government wanting only yes or no answers, Hurder got out: “The distribution of tokens became less decentralized. Yes.”



<h2 class="wp-block-heading">Dr. Matthew Green, computer science professor at Johns Hopkins University</h2>



Green, who helped create the <a href="https://www.researchgate.net/publication/286668243_Zerocash_Decentralized_Anonymous_Payments_from_Bitcoin">Zerocash</a> protocol, was brought in to emphasize the value of privacy.&nbsp;



Though he was intrigued with crypto and blockchain technology essentially from its outset, Green called the lack of privacy (i.e. public transactions) “a huge bug.”



He talked about the value of VPNs and credit-card tokenization in protecting individuals and institutions. At one point, I caught a juror dozing.



The Tornado Cash pools were immutable, Green confirmed — preventing hackers or founders from making changes there.&nbsp;&nbsp;



During the cross-examination, Arad asked Green whether the Tornado Cash website, user interface and relay registry could be changed. “Yes” to all three.



Also of note was Klein wanting Green to address the feasibility of a hypothetical user registry that one of the government’s witnesses, AnChain.AI’s Philip Werlau,<a href="https://blockworks.co/news/roman-storm-government-may-rest-case"> brought up last week</a>.&nbsp;



Green’s initial hesitation to respond and a subsequent sidebar with the judge meant that the question went unanswered.



But as this case winds down and the jury is charged, we’ll have other, more critical answers soon.&nbsp;



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Roman Storm

Roman Storm trial: Witnesses play up Tornado Cash privacy, decentralization

Byron Gilliam

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



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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“An economist says to a physicist: ‘Sure, this equation works in practice. But does it work in theory?’”



— Overheard in the faculty lounge
</blockquote>



For those fortunate enough never to have learned the mechanics of special purpose acquisition vehicles, here’s all you really need to know: If you don’t like the company a SPAC finds to buy, you can get your money back.&nbsp;



There are lots of important details, of course — PIPEs, warrants, fees, the price you paid — but the differentiating factor is the redemption mechanism.



SPACs raise capital by issuing shares at $10 and then looking for a company to buy.



If you like the one they find, you stay invested. If not, they’ll give you your $10 back.



In theory, this democratizes the IPO process.



As a retail investor, you won’t be getting into the next Goldman IPO at the offer price — banks reserve IPO allocations for their top institutional customers.



With SPACs, however, retail investors can typically buy in at or near the standard $10 offering price.



You won’t know what company the SPAC will become, which isn’t ideal, but when you do find out, you’ll have the option to redeem at $10.



In theory, that lets you participate in the IPO process at something close to the same terms of institutional investors.



In practice, however, it rarely works out.



Citing data from ListingTrack, the Financial Times <a href="https://www.ft.com/content/6da2f475-dd6a-4de4-abac-9e62f808bd41">reported</a> that “the median return from [SPACs] that have completed mergers with target companies is minus 83% since 2020.”



Minus 83%! Yikes.



In hindsight, though, it’s not hard to see why.



Here are some of the dubious businesses that were brought to the stock market in the last SPAC boom: electric-scooter sharing, hydroponic farms in Kentucky, cell towers in outer space, a music-streaming service with no paying users, an EV truck company that couldn’t make trucks, bitcoin ATMs, Playboy Inc. and BuzzFeed, to name just a few of the notorious ones.



(Partial disclosure: I may or may not have invested in the cell-towers-in-outer-space one.)&nbsp;&nbsp;&nbsp;



Even so, there was still a lot of money to be made — just not by retail.&nbsp;



One <a href="https://site.warrington.ufl.edu/ritter/files/SPACs.pdf">academic study</a> found that SPAC sponsors —&nbsp; the bankers who list the SPAC and go hunting for a deal — do extremely well: “The average annualized sponsor return, over approximately 2.5 years, was 113%.”



The institutions that invest in those SPACs via private funding rounds also did fine, earning an average one-year return of 9.3%.



But the public shareholders who invested in the exact same deals made an average loss of 19.8%.



And yet, SPACs have been wildly popular at times.



In 2021, a series of SPACs sponsored by Chamath Palihapitiya traded 50% to 80% above their $10 issue price before investors even knew what company they were investing in.



Most egregiously, a SPAC sponsored by star banker Michael Klein traded up 550% in anticipation of a merger with Lucid Motors (thought, at the time, to be the next Tesla).



It’s hard to overstate how irrational those prices were.



With his $10 SPAC trading at $65, the market was implying that Michael Klein could negotiate a deal that would instantly make a 6.5x return for his investors.



There are only two ways he could have made that happen: 1) by finding a company willing to sell itself for far less than its worth, or 2) finding a business that’s worth far more on the stock exchange than it is as a private company.



Either way, it turned out to be a poor assumption to make: Lucid Group now trades at $2.60.



That is an extreme example, but it illustrates the point that paying well above $10 for a SPAC doesn’t make much sense.



A skilled banker like Klein might buy a company for 10% or 20% below what it’s worth on the stock market, which would justify paying $11 or $12 for a SPAC, but not much more.&nbsp;



But what if the SPAC buys crypto?



As we’ve learned from MicroStrategy, the stock market routinely values crypto at double what it’s worth on a crypto exchange. Or more.



So it makes sense that a SPAC that uses $10 of investor money to buy $10 of crypto could be worth $20 or more.



In theory.



In practice, it’s not working.



SPACs that have recently announced deals to become digital asset treasury companies (let’s call them DAT SPACs) are mostly trading around $11 per share.



This seems pointless.



An $11 SPAC price implies that the new company will be valued at 1.1x NAV — and what’s the point of a digital asset company that trades at 1.1x NAV? The core value proposition of DATs is that they can grow their stack of crypto by selling shares above NAV: MicroStrategy, for example, has been growing its “bitcoin per share” by exchanging $10 of equity for $20 of crypto.



But exchanging $11 of equity for $10 of crypto? That hardly seems worth the trouble.



Weirdly, DATs that have gone public by merging with a shell company have been doing much better.



The shares of VAPE, SBET and TRON, for example, are all up 5-10x since announcing their conversion into digital asset companies (buying BNB, ETH and TRON, respectively).



Even the Litecoin one, MEIP, has doubled in price.



There’s no obvious reason why a digital asset company that started as a shell company should be any more valuable than one that started as a SPAC.



But most DAT SPACs — including high-profile ones like CEPO, led by Adam Back, and CCCM, led by Anthony Pompliano — are only up about 10%.&nbsp;



This doesn’t make much sense, in theory.



But it might make sense in practice: SPAC investors have learned that paying a big premium to NAV rarely works out.



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The Breakdown Newsletter

The practice and theory of DAT SPACs

Jack Kubinec

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



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Orca has released Wavebreak, a “human-first” Solana token launchpad.



The launchpad, which I <a href="https://x.com/whosknave/status/1945463174943138117">first</a> caught wind of earlier this month, integrates CAPTCHA with an onchain permission structure to keep bots and snipers from crowding out real humans, Orca CEO Nathan Davis told me. The move comes amid a raft of Solana DEXs releasing token launchpads — or vice versa — to compete in the memecoin-focused Solana DeFi market.



Outside of the onchain CAPTCHA, Wavebreak looks pretty similar to other launchpads on offer, with a few tweaks. One carrot Orca’s offering is daily rewards where users can earn rakebacks from a prize pool based on how much volume they trade.



Orca was launched on Solana by two Tokyo-based builders in 2021, according to the DEX’s docs. The DEX is also live on the SVM-based blockchain Eclipse.&nbsp;



During the doldrums of 2022 and 2023, <a href="https://app.blockworksresearch.com/flashnotes/orca-breaching-in-rough-seas">Orca was</a> Solana’s dominant DEX. Its market share would then come under siege by Raydium, which catapulted in usage in 2024 partly due <a href="https://blockworks.co/news/lightspeed-newsletter-raydium-volume-growth">to its popularity</a> among memecoin traders and partnership with Pump.fun.&nbsp;



Today, <a href="https://blockworks.co/analytics/solana/solana-dex-activity-2-0">Solana’s DEX sector</a> is more competitive than ever — and most of the top players, which include PumpSwap, Raydium, SolFi and Meteora, alongside Orca, have some connection to a memecoin launchpad, if they haven’t already developed one in-house.



The issue with existing memecoin launchpads, says Orca, is the proliferation of bots which buy up tokens as quickly as possible in hopes of selling at a profit. Earlier this year, one research outlet <a href="https://x.com/PineAnalytics/status/1914301091337953734">found</a> more than 50% of new Pump.fun tokens were being sniped, or purchased in the same block they were created. Such trades were profitable the vast majority of the time.



Whether this behavior is strictly bad is a matter of perspective (blockspace can be for bots, too), but it certainly does disadvantage human users.



“It&#8217;s not necessarily that other platforms themselves are intentionally malicious; many are also trying to combat this problem,” Davis explained.



There have been prior attempts to thwart snipers and bots from buying up memecoins, from anti-bot taxes to dutch auctions.&nbsp;



But Davis claims that “[o]ther implementations are exploitable by malicious users. We believe our implementation will be the first to mechanically prevent sniping, bundling, sandwiching and wash trading from being possible.”



Orca plans to host project fundraises on Wavebreak as well. DeFiTuna’s TUNA token will go live on the platform tomorrow, Davis said.



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DEXs

Orca releases Wavebreak launchpad for Solana tokens

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



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Crypto investment products have raked in record monthly flows in July, putting a spotlight on the institutional demand for ETH.&nbsp;



How much interest coins will see from investors further down the curve remains an open question.



The aforementioned flows record had extended to $11.2 billion by July 26, CoinShares data shows. That’s well above the prior monthly high of $7.6 billion seen in December 2024.&nbsp;&nbsp;



While bitcoin products have historically carried the crypto pack from a flows perspective, those have tallied only about half the segment’s flows this month.&nbsp;



ETH offerings attracted most of the rest:&nbsp;



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd70pfkURfWv2Fvew7xAmOeHOHbdU7XFlf2D8ooWe4XbEDNx_TiuNArr_26raBuN5DhW7BfBUvgGxaYN-Op7-LJBaK-lMjDd_wij8aKhrs22YcPq9wIz2cOQpJKgb_vzKaTMogd?key=peWoWZmYrygpJv74KCLAQA" alt="" style="width:645px;height:auto"/></figure>



Ether products clearly saw the most attention last week as money trickled out of bitcoin vehicles. US ETH ETFs brought in another $157 million on Monday.



It seems to be the <a href="https://blockworks.co/news/year-old-us-ether-etfs">institutional demand progression</a> we’ve heard about for years. BTC has the largest market cap. It gets the headlines. The narrative around BTC is a bit simpler and intuitive, attracting capital. It’s digital gold, yada yada.&nbsp;&nbsp;



But Ethereum has become hard to ignore, particularly after<a href="https://blockworks.co/news/trump-signs-genius-law"> </a>the <a href="https://blockworks.co/news/trump-signs-genius-law">GENIUS Act became law</a>.&nbsp;



Competition among institutions that now have a path to issue stablecoins (by registering with the OCC) is set to speed up adoption in the US, noted ZX Squared Capital co-founder CK Zheng. That will disrupt the existing payment infrastructure with faster and cheaper processes built on blockchain technology.&nbsp;



“Given most of the stablecoins are built on [Ethereum], the demand from the institutional investors for ETH will grow exponentially for the foreseeable future,” Zheng told me. “We expect ETH price to hit $10,000 during this bull market run.”



ETH was trading around $3,750 at 1 p.m. ET Tuesday — up 54% from a month ago.&nbsp;



Even with the narrative for ETH (as the platform for stablecoins) being stronger than ever, it remains “a catch-up trade.” For those keeping score at home, BTC has the edge over ETH on YTD returns, +26% to +12.5%.&nbsp;



As the chart further up shows, $860 million has flowed into solana and XRP products this month as well.&nbsp;



Whether or not we’re entering an “<a href="https://blockworks.co/news/crypto-treasury-companies-alt-season">altcoin season</a>” is a question with an “inconclusive” answer, according to CoinShares research head James Butterfill.



“These altcoin inflows may be driven less by broad-based enthusiasm and more by anticipation surrounding potential US ETF launches,” Butterfill<a href="https://blog.coinshares.com/volume-244-digital-asset-fund-flows-weekly-report-c9432f2cd3b1"> wrote</a>.



It’s worth noting too that, on the corporate crypto treasury strategy front, some are buying altcoins directly.&nbsp;



Mill City Ventures revealed a $450 million private placement on Monday to kick off efforts to make SUI — the native token of the layer-1 Sui blockchain — its primary treasury reserve asset.&nbsp;&nbsp;



London-based hedge fund Karatage Opportunities and Sui Foundation were the biggest investors. The company intends to use ~98% of the proceeds to buy SUI and ~2% to fund its short-term lending business.&nbsp;



Also on Monday, CEA Industries said it looks to build the world’s largest publicly listed BNB Chain treasury strategy. BNB’s market cap of ~$115 billion is the fifth-largest among cryptos.



The current lack of US ETFs holding altcoins boosts interest in these companies to access token exposure in a traditional brokerage account, said Grayscale research head Zach Pandl.&nbsp;&nbsp;



As <a href="https://blockworks.co/news/crypto-etf-launch-timelines-sec">more crypto ETPs</a> become available, he told me, demand for altcoin treasury companies may diminish. He expects those ETP launches later this year.&nbsp;



“Regardless of the product wrapper, institutional investors are likely to focus on the altcoins with sustainable revenue,” Pandl added. “In traditional finance, the ‘revenue meta’ never goes away.”



Zheng noted that it could take years before institutional investors get comfortable to take risks in this space — beyond BTC and ETH.&nbsp;&nbsp;



“It may require regulatory clarity around the entire crypto ecosystem as well as a clear narrative for a specific coin that has an eye-catching application with strong fundamentals,” he explained.&nbsp;



While we expect more clarity, the market will decide what applications catch their eye. As with most things, time will tell.



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altcoins

Record crypto product inflows in July brings ETH demand into focus

Casey Wagner

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



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It’s Fed Decision Day Eve, and while we’re all but certain interest rates will remain unchanged, tomorrow’s FOMC statement and Chair Powell’s press conference have potential to move markets.&nbsp;



Investors are hoping for a September rate cut, and right now, they’re decently confident that’s what we’ll get. Markers are currently pricing in a 62% chance of a 25bps cut in September, per <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">data</a> from CME Group.&nbsp;



What kind of language in tomorrow’s statement would assure markets that FOMC members are feeling dovish? For starters: any indication that <a href="https://blockworks.co/news/economic-strains-for-growth-outlook">tariff-related</a> <a href="https://blockworks.co/newsletter/daily/issue/post_d73eda3f-a46d-4b1e-84fc-d50b5685d944">inflationary fears</a> are easing.&nbsp;



We know uncertainty around trade relations has central bankers worried that there could be a relapse in inflation, and that has been a key reason why the Fed hasn’t cut rates so far this year. So if tomorrow’s statement notes that inflation is “easing,” that would be a positive sign for a September rate cut.&nbsp;



What else? Markets would like to see language suggesting that committee members are less concerned about economic uncertainty.&nbsp;



In June, <a href="https://blockworks.co/news/june-fomc-meeting-takeaways">the FOMC wrote</a> the following: “Uncertainty about the economic outlook has diminished but remains elevated.”&nbsp;



If tomorrow’s statement cuts those last three words, it would be a very dovish signal.&nbsp;



We know Powell is going to be asked about when the committee will cut rates, and we know he’s going to be evasive. But should he express confidence in the direction of inflation and the labor market, expect equities to rally. 



We’ll be watching tomorrow, and Forward Guidance podcast host Felix Jauvin will be breaking down the statement and Powell’s comments live. Be sure to <a href="https://x.com/ForwardGuidance">tune in on X</a> around 3:30 p.m. ET.



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Federal Reserve

What would a dovish Fed look like?

Macauley Peterson

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



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Linea, the layer-2 built by <a href="https://blockworks.co/tag/consensys">Consensys</a>, is making a play to become Ethereum’s most aligned rollup. In an updated roadmap announced Tuesday, the network committed to three headline features: native staking for bridged ETH, a protocol-level ETH burn equal to 20% of net fees, and an 85% token allocation to builders and users. Together, the features aim to make ETH on Linea not just more productive, but a scarcer asset.



If the idea of ETH yield as a layer-2 core feature sounds familiar, it’s because Linea is drawing clear lessons from Blast’s rise and fall. That network drew $2 billion in TVL by routing ETH into stETH and streaming yield back to depositors, only to see liquidity vanish after its June 2024 airdrop. Without any coherent follow-up to its initial marketing blast, Blast’s user base cratered — along with its narrative.



Linea, by contrast, looks to keep ETH native while promising fast withdrawals alongside ETH staking… eventually. While the July press release previews staking yield by October 2025, the canonical bridge’s yield feature was already discussed in a January roadmap post and flagged for rollout first on Status L2, not <a href="https://blockworks.co/news/linea-mainnet-ethereum">Linea Mainnet</a>.



While often referred to as a single network, Linea is also a modular rollup stack — much like the <a href="https://blockworks.co/tag/optimism">Optimism</a> OP Stack or <a href="https://blockworks.co/tag/polygon">Polygon</a>-developed <a href="https://blockworks.co/news/espresso-polygon-partnership-rollup-interoperability">AggLayer</a> CDK — that can be used to deploy independent <a href="https://blockworks.co/tag/zero-knowledge-rollup">zkEVM rollups</a>. Status L2 is one such chain: a separate layer-2 built on the Linea codebase, operated by the <a href="https://status.app/blog/linea-partnership-status-network">Status Network</a>, and focused on gasless transactions and native ETH yield. Though both chains share infrastructure and ETH-centric design goals, they operate independently, with distinct tokens, deployment schedules and governance structures.



Still, there is fresh clarity today: Linea head Declan Fox told us ETH deposited via the canonical bridge “will be staked natively through institutional-grade validators, with a noncustodial vault set-up,” with further technical details to come.



Linea also <a href="https://blockworks.co/news/polygon-katana-defi-focused-chain-agglayer">shares similar concepts with Katana</a>, the rollup incubated by Polygon Labs and GSR that launched last month. Both networks use ETH as their sole gas token and emphasize “productive capital,” but Katana routes fees to curated DeFi apps via VaultBridge. Linea goes further: Every transaction burns ETH on mainnet and LINEA on L2. That creates a visible value loop to <a href="https://blockworks.co/tag/ethereum">Ethereum</a> — at least in theory.



But theory runs into friction while the sequencer is still permissioned. According to the same January roadmap, Linea planned to move from Clique to QBFT consensus in Q2 and begin transitioning to a permissioned validator set in the second half of 2025. Full permissionless DPoS isn&#8217;t slated until “2027+.” Fox referred us to the roadmap timeline, which means all ETH burn mechanics still rely on operator goodwill for now.



Token utility remains another open thread. LINEA can now be used to pay gas, thanks to an ERC-20 payment feature that launched earlier this year, but it holds no formal governance power and no claim on revenue. Katana sidestepped that issue by stripping its token of any voting rights. Linea will eventually need to clarify whether burn and fee utility are enough to sustain long-term demand for its token.



Then there’s the regulatory question. A token that captures protocol fees and is permanently bought-and-burned resembles a corporate buyback loop — something US regulators have flagged in other contexts. Neither the roadmap nor the new announcement addressed the legal implications of the model.



For now, Linea has bought itself a strong narrative: a chain where ETH gets yield, ETH gets burned, and builders get the bulk of the token supply. If the staking bridge launches on time and the ecosystem fund is deployed with transparency, it could be a compelling alternative to L2s that extract more than they give back. But the hard parts — decentralization, custody design, token value — are still in the delivery phase.



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0xResearch Newsletter

Linea previews ETH-first roadmap

Katherine Ross

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



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



Core VC’s David Roos is still pretty excited about all of the attention stablecoins are getting.&nbsp;



And he’s clearly not alone, based on Bitwise data. 



<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">Stablecoins are going parabolic. <a href="https://t.co/Fwj8b0Hhwg">pic.twitter.com/Fwj8b0Hhwg</a>&mdash; Bitwise (@BitwiseInvest) <a href="https://twitter.com/BitwiseInvest/status/1949871459570008553?ref_src=twsrc%5Etfw">July 28, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“You&#8217;re seeing that this is an innovation that really has legs,” Roos added. Conduit, a stablecoin infrastructure firm, is one of Core’s portfolio companies.&nbsp;



I asked him if he thought that everyone and their mother would launch stablecoins post-GENIUS, because we’ve already heard from a slew of interested firms, <a href="https://www.reuters.com/legal/government/interactive-brokers-considers-launching-new-stablecoin-customers-2025-07-28/">including Interactive Brokers</a>.



“It&#8217;s not going to be like thousands of stablecoins out there, but I do think there will be — call it a dozen — and it&#8217;ll be led by massive organizations that have the power to do so,” he said. Not every company has the brand power to launch its own stablecoin, he added.&nbsp;



He doesn’t think we’ll see something like Zelle but for stablecoins, “in terms of banks just kind of taking over the one use case.”



“I think we&#8217;ve seen, between Walmart and Amazon, you know, some Fortune 500’s that are looking at the ability to create this kind of closed-loop financial payment system in a way they weren&#8217;t able to do previously, and it gives them a lot of benefits to bypass the system and save a lot of dollars that they&#8217;re spending in interchange,” he continued.&nbsp;



This, Roos noted, makes a great case for digital wallets as well, which makes projects building wallets compelling.&nbsp;



“I think there still is a lack of consumer-friendly user interfaces in the crypto world…There is consumer education that&#8217;s typically needed in order to use digital wallets, and so I&#8217;m still in search of digital wallet unit interfaces that have usability and have friendly interfaces for the non-crypto-native users, because at the end of the day, the mass market will struggle to use what is currently the infrastructure that we built out today,” he said.&nbsp;



But he’s also interested in digital identity because, “as more and more companies [benefit from] your data, you want to be able to control what is in your wallet, and there needs to be more security around the identity of your wallet. And so I think there will be a platform that exists and a protocol that exists that creates this consumer-centric identity,” Roos added.&nbsp;



And there’s your food for thought today.



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Empire Newsletter

Not every firm has the brand power to launch a stablecoin: Core VC

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



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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“It&#8217;s like heroin: You do a little and you want a little bit more.”&nbsp;



— Jim Sinegal on the danger of raising prices
</blockquote>



The Monday after meeting Jim Sinegal for coffee in 2001, Jeff Bezos informed his top executives that, going forward, Amazon would model itself on the price-obsessed retailer that Sinegal had built: Costco.&nbsp;



Like Costco, Amazon had always promised low prices, but unlike Costco, it hadn&#8217;t always delivered. There were plenty of deals to be had at Amazon.com, but they weren’t always the best deals.



After meeting Sinegal, Bezos made it his mission to change that.&nbsp;



“There are two kinds of companies,” he told his executive team, “those that work to try to charge more and those that work to charge less. We will be the second.”



Bezos found Sinegal inspirational because keeping prices low at Costco had become, in Charlie Munger’s words, “almost a religious duty.”



“When other companies find ways to save money, they turn it into profit,” Munger explained. But when Costco finds ways to save money, they pass it on to customers.



Another prominent Costco investor, Nick Sleep, described this as “scale efficiencies shared.”&nbsp;



“Savings achieved through purchasing or scale are returned to the customer in the form of lower prices, which in turn encourages growth and extends scale advantages.”



Or, as Sam Walton put it, “keep costs low and pass the savings on to customers.”



It’s not charity, of course. “You can generate far more [profit] at a cheaper retail price than you would have by attempting to sell the item at a higher price,” Walton explained.



This philosophy of passing all savings on to customers is what turned Costco and Walmart into what Nick Sleep called “retail’s version of a perpetual motion machine.”



It takes a near obsession with low prices to become that.



Sinegal was so committed to keeping prices low that when a new CEO suggested raising the $1.50 price of Costco’s hot dog and soda combo (which was being sold at a loss), Sinegal shot back: “If you raise the effing hot dog, I will kill you. Figure it out.”



They did figure it out — by building a factory to make the hot dogs themselves.



As a result, the price of a hot dog and soda at Costco hasn’t changed since 1984.



Bezos was similarly obsessed with prices.



Soon after his meeting with Sinegal, Amazon began scraping competitors’ websites in search of any product offered anywhere for less than it was on Amazon.com.



When it found one, Amazon’s website automatically matched it.



If that meant selling something for less than it cost them to procure it, so be it.&nbsp;



Amazon not only passed efficiency gains and cost savings on to customers, it sold products at a loss to force itself to get more efficient and find more cost savings.



It’s not the only way to run a business, of course.



Luxury goods makers like <a href="https://www.google.com/search?client=safari&amp;sca_esv=97ba584d5f1b9119&amp;rls=en&amp;q=Herm%C3%A8s&amp;si=AMgyJEv4SzCgky5yjH-2ngoVwLJNIjQ20h2ebpIlCJ5wxSO-Qx_2EPeWqq0TYK-Xm1muFNvu1f6ywfB6ehtxTtb715Q2lvCODiVz61pzQ_Be_Axg4xTi0jMmUdQ38421Ng70QptUnA9x&amp;sa=X&amp;ved=2ahUKEwjW3MPlkeCOAxUzJNAFHUuoM_IQ_coHegQIGhAE&amp;ictx=0">Hermès</a> keep prices artificially high to create a sense of exclusivity, for example, and Nvidia prioritizes sky-high profit margins so it can plow the profits back into R&amp;D.



It isn’t always a good way to run a business, either.



Companies like WebVan and MoviePass prioritized low prices, but failed because they couldn&#8217;t find enough efficiencies or cost savings to make the prices sustainable.



(MoviePass is now trying again with higher prices.)



Even McDonald’s, famous for its meal deals, has <a href="https://www.wsj.com/business/mcdonalds-value-inflation-fast-food-38611481?gaa_at=eafs&amp;gaa_n=ASWzDAhGtk_GbUniCuqsA1L_pwpFtFDgIvJXEkpnWcail_XP0UJWFhGwCbzvIsPz_nY%3D&amp;gaa_ts=68877bd6&amp;gaa_sig=rwDgMCmFJp4Nz-Jy4IDBdvsR0XcyFhaAKPFSqwY2kcUVgGHWwI1RWQ74ebX3tJv1yFHgMyrj-VaPhcevl6bfcQ%3D%3D">recently struggled</a> to keep prices low enough to maintain its reputation for value.&nbsp;



One way to frame this dynamic is that some companies choose to have low margins (as part of a business strategy), while others are forced to have low margins (because they&#8217;re in a bad business).



As a rule of thumb, you want to invest in companies that have low margins by choice and not by necessity.



That might be a good way to think about layer-one blockchains, as well.



<h2 class="wp-block-heading">If you raise the effing MEV…</h2>



It’s not particularly expensive to create blockspace, so there’s no obvious reason why blockchains should have pricing power.



Kyle Samani, for example, <a href="https://youtu.be/qZq6bxfVQBE?si=ZcEuIjrVC-7JtUvC&amp;utm_source=mail.blockworks.com&amp;utm_medium=referral&amp;utm_campaign=crypto-s-enduring-mystery-why-l1-blockchains-have-value">thinks</a> blockchain fees will ultimately be close enough to zero that maximal extractable value (MEV) will become the sole reason layer-1 blockchain tokens have value.



MEV is the profit earned by validators who have the right to order the transactions in any given block, and on Solana, virtually all MEV is captured with software that’s created by Jito Labs.



Validators run Jito’s software to optimize MEV extraction and to share those profits with the SOL holders who’ve staked their tokens with them.



Now, however, a new Jito processing system — the Block Assembly Marketplace (or BAM) — will shift some MEV capture from the Solana blockchain to the applications running on top of it.



To me, this sounds a lot like Costco choosing to forgo profits in order to pass efficiency gains through to customers.



“BAM could lead to a reduction in topline revenue for the Jito DAO and SOL token holders,” <a href="https://x.com/0xcarlosg">Carlos Gonzalez Campo</a> wrote in a <a href="https://app.blockworksresearch.com/flashnotes/jito-bam-near-term-headwinds-for-sol-and-jto">recent report</a> for Blockworks Research.



Even in an asset class that doesn’t worry much about revenue, this should probably give token holders pause: “The shift to app-specific sequencing,” the report continues, “raises questions about the economics of the network.”



But Campo believes this is ultimately for the best: “By enabling apps to internalize transaction sequencing, Jito is acting as a good steward for the [Solana] network, despite forgoing meaningful incremental revenue in the short- to medium-term.”



He still expects Solana’s revenue to rise over the next year because “the increase in aggregate demand” should offset lower fees per transaction.



But this appears to be a defensive measure: “A significant motivator behind BAM is that Solana is losing the perps race to Hyperliquid.”



Sinegal might not be impressed. Adopting the Costco model would mean relentlessly pursuing efficiencies and then passing the savings through to customers as a matter of course, not just in response to a new competitive threat.



Sam Walton preached “everyday low prices,” regardless of what the competition was doing.



But if lowering fees at the expense of short-term profits becomes part of Solana’s culture, it could work out well for token holders. An investment portfolio of just Walmart, Costco and Amazon would have outperformed just about everything over the past 30 years or so.



Their “shared efficiencies” business model is not for everyone, however, because selling hot dog combos for $1.50 is a tough business.



And what’s made Costco great isn’t just that it’s managed it — it’s that it chose to.



If Solana is also a business, is it the kind that can choose to sacrifice profitability?&nbsp;



Or is it the kind that has to?



We might soon find out.



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What blockchain investors can learn from Costco

Jeff Albus

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



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



For some time now, Solana&#8217;s pitch <a href="https://www.solanaroadmap.com">has hinged</a> on the levers of bandwidth and latency.



However, as we&#8217;ve seen from the limitations of high-frequency trading systems and the often uneven performance of existing onchain order books, high throughput and sub-second finality alone are likely insufficient to support the future of global markets.



While that may sound counterintuitive for a chain built on speed, it&#8217;s now emerging as the core thesis of a new, community-authored roadmap that lays out how Solana can become the backbone for internet capital markets.



Released last week, this <a href="https://www.anza.xyz/blog/the-internet-capital-markets-roadmap">new roadmap</a> was co-authored by Anatoly Yakovenko (Solana Labs), Max Resnick (Anza), Lucas Bruder (Jito Labs), Austin Federa (DoubleZero), Chris Heaney (Drift) and Kyle Samani (Multicoin Capital).



They argue that in addition to solving for bandwidth and latency, the network <a href="https://x.com/solana/status/1948432399333044621">must also account </a>for market microstructure.



Solana wants to be the best place to build — not just for liquidity and scale, but for custom markets themselves. To do that, it needs to let applications control the rules of their own transaction sequencing.



The roadmap <a href="https://x.com/anza_xyz/status/1948408290112889240">proposes</a> a shift toward application-controlled execution (ACE), a model that would give smart contracts granular control over how trades are ordered and settled.



ACE breaks with the single-leader norm in favor of programmable execution environments and multiple concurrent validators.



Combined with infrastructure upgrades like <a href="https://blockworks.co/news/jito-upgrade-block-assembly-marketplace">Jito&#8217;s Block Assembly Marketplace</a> (BAM), the <a href="https://blockworks.co/news/solana-exec-founds-internet-depin">DoubleZero</a> fiber network and the upcoming <a href="https://blockworks.co/news/solana-alpenglow-next-gen-consensus-layer-speed">Alpenglow consensus engine</a>, Solana apps will soon be able to define bespoke order-matching rules designed to rival Wall Street systems.



BAM, rolling out in late July, <a href="https://x.com/jito_sol/status/1947293546182025551">enables</a> apps to integrate custom sequencing logic — effectively delivering ACE today via a decentralized, TEE-powered network. It turns Solana blockspace into a programmable sandbox where developers can ship tailored order flow logic without forking clients or cutting BD deals with validators.



DoubleZero, currently <a href="https://x.com/doublezero/status/1947730722380227061">live on testnet</a> with over 100 validators and 3% of mainnet stake, reduces latency and jitter across the network by replacing the public internet with a multicast fiber backbone. It&#8217;s expected to go live on mainnet in mid-September.



Alpenglow, currently slated for late 2025 or early 2026, <a href="https://x.com/anza_xyz/status/1924491939040133515">finalizes</a> blocks in ~150ms and simplifies Solana&#8217;s consensus logic to support faster execution and future features, such as MCL and async program execution (APE).



By these <a href="https://www.youtube.com/watch?v=_F6YKiC1MI4">powers combined</a> — along with MCL, which introduces multiple simultaneous leaders — developers will be able to build high-performance markets without relying on good validator behavior or suffering from the single-leader bottleneck.



If successfully executed, the post’s authors believe that Solana apps will offer fairer, faster and more transparent trading, closer to a CEX experience but without compromising decentralization. Devs will unlock permissionless experimentation with tools like speed bumps, quote protection and order privacy. And for institutions, it will open the door to globally synchronized, composable liquidity onchain.



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blockchain

Solana roadmap targets market microstructure with ACE

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



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Friday’s the deadline for most countries to negotiate new trade agreements with the US.



President Trump on Sunday reached a deal with the European Union that would establish a 15% levy on imports to the US. It’s less than the original rate proposed on Liberation Day (20%) and half of what Trump threatened the EU with earlier this month (30%).&nbsp;



The rate is higher than the 10% baseline most imports to the US have had since the spring, when the White House first said it would delay higher rates.&nbsp;



Additionally, the EU will purchase $750 billion in US energy and invest $600 billion in the US by 2028, the White House added in a Monday statement. The feasibility of the investment, however, is being <a href="https://www.politico.eu/article/eus-600bn-us-investment-will-come-exclusively-from-private-sector/">questioned</a>.&nbsp;



Investor reaction to the deal was subdued, but still positive. Futures moved higher on Sunday night, and the S&amp;P 500 and Nasdaq Composite indexes were trading in the green for the first half of Monday’s session. Both had dipped lower by 2 p.m. ET.&nbsp;



Economists largely agree that the deal is a good thing — or, at the very least, it’s better than nothing. An all-out trade war between the US and EU would have been a true worst-case scenario, so the agreement brings a sense of relief to both sides. That said, the details are not exactly being universally celebrated. Plus, the details are still a bit murky.



Some “strategic products” are exempt from the 15% tax (i.e. aircrafts, select chemicals and agricultural products and other raw materials). What’s currently not exempt? Luxury goods. LVMH shares were trading 2% lower at the time of writing.



European Commission President Ursula von der Leyen said Monday that more items could be added to the exemption list should negotiations continue.&nbsp;



The White House called the agreement a &#8220;colossal deal” that helps “liberate America from unfair trade practices.” Other countries involved are less enthused. Just ask French Prime Minister François Bayrou.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcKLFLoA8yv-8XGjgSoKk4KI-4dOASWvmut2o963PN2ctez3hU0hI0u3_6h0Nr-V6KfrzBPJ7bIAab44r-FSJjHB-qTT_ZiIyq91u3rfAM-vxJHVHlnFVfiR9w-zdp_UfngCI1f?key=ht3xDkP_szEI-Tjka4S--w" alt=""/></figure>



It’s a busy day for the president, and not just because of tariffs. He’s currently in Scotland meeting with British Prime Minister Keir Starmer.&nbsp;



The two are discussing trade and the humanitarian crisis in Gaza, per the White House. Trump told reporters Monday morning that the US will offer aid to Gaza, saying there is “real starvation” in the region.&nbsp;



And let’s not forget about China. Officials have a little longer to ink a deal, but not much. Higher tariffs on both Chinese and American goods will go into effect on Aug. 12.&nbsp;



Chinese and American officials are meeting in Sweden today to discuss how to proceed. More on that (and future trade developments) later this week.&nbsp;



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Donald Trump

US inks trade deal with EU days before deadline

Donovan Choy

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



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The last time Zora was in the <a href="https://blockworks-research.beehiiv.com/p/vitalik-s-new-l1-scaling-plan-456481d76685267c">limelight</a>, the protocol was seeing an all time-high of 20-25k tokens created daily.



That was in April, just before the ZORA token-generation event — launching a “<a href="https://support.zora.co/en/articles/4796161">for fun only</a>” token that was universally panned by the Crypto Twitter commentariat.



The ZORA token dumped immediately on launch, daily tokens created cratered to less than 5k, and price had largely stagnated until last week.&nbsp;



Now it’s back. ZORA is today trading 227% up on the week, and its mobile app is <a href="https://x.com/js_horne/status/1949570371285315677">climbing</a> ranks on the iOS App Store.



Nearly 40k tokens were created yesterday, the highest in the protocol’s history. About 15-50% of the tokens (denoted in blue below) are coming from Base App, Coinbase’s newly rebranded wallet app.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdzj-ZxXpfV5FyQ_euqvhAKuja2UcuaC9xRLXZGhz2b9PsOcJ7VBWCgzqqdjLzY-EkERBH8czbrS0S0JDuBL1UmgzBJyk2Lz3B2_X8SVuNwLaAqPNXoLqhHUZmzFo69ie6DoV2GjA?key=MktSgORwkkHHEzwd57U5Fw" alt=""/></figure>



<h2 class="wp-block-heading">The economics of Zora</h2>



Zora is not a difficult product to understand.



It’s pump.fun with a social network. Or think Instagram, but tokenized into oblivion.



Here’s roughly how it works:



You are a social media influencer, and you post cool stuff on Zora. Each of your posts are tokenized as an ERC-20 token with a 1 billion supply. You receive 1% (10 million).



People think your post will go viral, so they buy it (via Uniswap under the hood), and you earn a 1% cut of the trading fee paid in ZORA. That’s the first revenue stream for creators.



These trades are paired against your “<a href="https://support.zora.co/en/articles/6338497">Creator Coin</a>,” which is basically your profile tokenized when you sign up on Zora. Your username is the ticker.



Every Creator Coin has a 1 billion supply, 50% of which is immediately tradable.&nbsp;



The other half vests linearly to you over five years. But here’s the catch: It only pays out to you when someone really likes you and trades your Creator Coin. That’s the second revenue stream for creators.



You quickly see how the incentives line up.&nbsp;



Make cool content, people buy your tokenized posts, you earn 1% trading fees. Become super popular, people speculate on your Creator Coin, your market cap grows, you get paid out more.



Most Zora trading volume is coming from Creator Coins — about $33 million yesterday.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc_ctetBNrrIMrPlYZXRjDABvK3h7Sa0XJ6MRsdzblT-qxzWF2SNmQ0TGStzh-ocAXRZFGhVG4m-2wWbYzet2MUk7pYRWyw5xr8F6jlB_AblHSoTUo2CBlS9Jtwje7flN3Au8NNdA?key=MktSgORwkkHHEzwd57U5Fw" alt=""/></figure>



I imagine that is quite lucrative for content creators.



Consider <a href="https://dexscreener.com/base/0x80a46421e3edbd8a25d623859ea875c344ca4427eb87605eae626bcf8a03a413">JACOB</a>, the Creator Coin of Zora co-founder Jacob Horne. It’s the second-largest Creator Coin, with a $6.2 million market cap today.



At a linear vesting rate of 500 million tokens over five years, that’s 273,973 tokens vested a day. Or about $3,397 in daily value at a $6.2 million market cap.



Contrast that with a typical Instagram creator who takes years to build a 50k following, and gets paid something like $100-$500 for a sponsored post, based on <a href="https://www.shopify.com/sg/blog/influencer-pricing#">Shopify’s</a> estimates.



Zora draws a lot of <a href="https://x.com/aeyakovenko/status/1949535075118494008">comparisons</a> to Pump for the way that it both attracts speculators to trade on low-cap tokens.



The key distinction is that Zora is attempting to anchor this activity to a native social network, betting that a durable network effect will sustain engagement.&nbsp;



(Pump appears to be moving in a similar direction with Twitch‑style livestreaming.)



That may explain Zora’s decision to deploy on Base, despite having already developed its own OP-stack L2 chain in 2023.



Zora’s revenue-sharing tokenomics is undoubtedly superior to traditional social networks. But without a genuinely organic social graph — and that is the most daunting task of them all — it’s hard to see Zora maintaining its momentum.



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Breaking down Zora’s latest ‘Content Coin’ fad

The cloud computing space is dominated by centralized giants like AWS, Google Cloud, and Azure, but Fluence is breaking the mold with a decentralized, enterprise-grade alternative. Offering a cost-efficient and open compute platform, Fluence eliminates the need for proprietary cloud providers, providing businesses with enhanced flexibility and resilience.



Fluence has onboarded customers which it has saved over $2 million compared to the centralized cloud, rewarded compute providers with over $1million in ARR (in USDC and FLT) and has a pipeline of 90 companies comprising $7.5mm in ARR. This early traction bodes very well for the growth of Fluence and shows the potential for the platform to be a significant player in the critical compute ecosystem by providing a viable alternative to the centralized clouds.



By shaping the Cloudless future, Fluence leverages DePIN (Decentralized Physical Infrastructure Networks) to offer affordable, high-performance compute solutions. As these solutions scale, the platform offers attractive opportunity for investors to earn yield by securing the network.



Fluence’s innovative staking and reward system is designed to attract institutional compute providers with predictable returns in exchange for their hardware contributions. Simultaneously, it appeals to individual and institutional investors who can stake its native token, FLT, to help secure the platform and earn rewards.



In this guide, we’ll explore Fluence staking, why it presents an attractive opportunity for investors, and what sets it apart from typical staking models.



<h2 class="wp-block-heading">The Fluence Platform: A Decentralized Compute Marketplace</h2>



Fluence is a decentralized marketplace that connects businesses requiring enterprise-grade computing power with professional infrastructure providers such as PiKNiK, Nebula,and Kabat, all of which operate from top-tier (Tier IV) data centers.



In stark contrast to centralized giants like AWS, Google Cloud, and Azure, Fluence’s open network offers significant cost savings, often up to 75% cheaper. Fluence&#8217;s infrastructure runs on the same Tier IV data centers used by leading Web2 businesses, ensuring a high level of reliability. Its lower cost provides a viable alternative to traditional cloud providers, reducing the risks of rising costs, censorship, and inefficient cross-platform data sharing.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Fluence has architected its platform to enable a large, low cost and resilient network. To be successful, the platform requires an economic model that provides trust and attracts institutional providers who look for stable returns. Resources provided to the network should be easily discoverable, provably accounted, efficiently utilized, and fairly compensated, and customers should receive high quality and predicable service at a significantly lower price than comparable cloud platforms. The network should be resistant to misbehavior and dishonest actors, ensuring they are penalized for incomplete work.” &#8211; <a href="https://www.fluence.network/blog/flt-staking-for-compute-resources/?utm_source=blockworks">The Fluence DAO</a>
</blockquote>



<h3 class="wp-block-heading">Key Components of the Fluence Platform</h3>



<ol class="wp-block-list">
<li>Compute Providers Fluence’s decentralized compute marketplace features providers that commit their hardware resources for rent. Providers earn FLT tokens when their hardware proves availability and USDC their hardware is rented by customers. </li>



<li>Proof of Capacity (PoC) Mechanism Fluence ensures providers meet their commitments through a Proof of Capacity (PoC) system. Compute capacity is measured in Compute Units (CUs), which consist of 1 core, 4GB RAM. This mechanism ensures transparency and provable capacity dedicated to the network. </li>



<li>Continuous Readiness and Rewards Providers submit cryptographic proofs to the Fluence blockchain to demonstrate their capacity and readiness. They receive FLT rewards for idle CUs every epoch, which is currently set as a 24-hour period. In order to be able to participate in the reward protocol, FLT stake is required to activate the providers’ capacity. </li>



<li>Stakers Stakers collateralize FLT tokens to activate compute providers’ capacity, ensuring network reliability. In return, stakers earn FLT rewards or USDC for helping to secure and decentralize Fluence’s platform. The Fluence protocol allows and supports delegated staking including liquidity pools. </li>



<li>Customers Customers rent compute services using stablecoins (USDC), making transactions predictable for themselves as well as providers by reducing the volatility typically encountered in cryptocurrency-based systems.</li>
</ol>



<h2 class="wp-block-heading">Staking with Fluence</h2>



Unlike most compute networks, which require the compute provider to stake tokens, Fluence enables delegated staking that allows any FLT holder to stake and secure the network. Furthermore, it allows innovative projects, like Parasial, to offer capital efficient liquid staking pools. Fluence believes that institutional hardware providers prefer to focus on hardware operation rather than managing tokens, while the universe of investors seeking yield is much larger. By allowing any FLT holder to stake, Fluence lowers costs for compute providers and encourages community and institutional participation.



The Fluence&nbsp; staking model is unique in that it is based on a fixed USD value, not an arbitrary number of tokens. This fixed value ensures that the stake is adequate to build trust while maintaining predictable regardless of bull or bear markets.



Rewards are paid in FLT, but are adjusted daily to target $10 per core, or $600 per month for a 64-core CPU. When a customer rents capacity, payments are made in USDC rather than FLT.



<figure class="wp-block-table"><table class="has-fixed-layout"><tbody><tr><td>Stake per 64-core CPU</td><td>$12,000</td></tr><tr><td>Annual reward for staker (assuming 20% reward share)</td><td>$1,440&nbsp;</td></tr><tr><td>Stake yield&nbsp;</td><td>12% USD-based</td></tr></tbody></table></figure>



<h2 class="wp-block-heading">From Staking To Compute Rentals</h2>



Investors stake FLT to activate provider hardware and ensure that the network operates reliably. Hence, staking aligns compute providers with customers. If a provider fails to deliver on its commitments, they forfeit revenue, lose unvested rewards and risk having the (delegated) stake slashed.



With FLT staked to activate hardware committed to the network, providers create and submit proofs to confirm compute unit availability, forming an on-chain Capacity Commitment listed on the Compute Marketplace. Now, customers can browse the marketplace, publish their compute requirements and negotiate a price.



Once a match aligning a customer’s requirements with a provider’s capabilities is made, a smart contract, aka a deal, is created and funded by the customer.&nbsp; In order to make the contracted compute available to the customer, the contracted compute capacity transitions from proving its availability to serving the customers workload.&nbsp;



Providers and stakers continue earning for the duration of the deal.&nbsp;



While deal revenue is paid out to compute providers and to stakers upon the completion of the contract, staking rewards for proving capacity are vested over six months, with 1/182 of the rewards unlocked each day to encourage long-term participation.



For more information on Fluence staking mechanisms, including reward calculations and claiming rewards, consult the <a href="https://www.fluence.network/blog/flt-staking-faq-2/?utm_source=blockworks">FLT Staking FAQ blog.</a>



<h2 class="wp-block-heading">Staker Rewards</h2>



Provider rewards target $10 per month per compute unit, or $600 per month for a 64-core CPU (deducting for four cores lost to overhead). These rewards are shared as determined by the provider and published on the marketplace. For example, a provider may propose to reward a staker with 20% of the server income.



<h2 class="wp-block-heading">Empowering Community Involvement</h2>



In most compute and storage DePIN projects, staking is typically limited to hardware providers, leaving little opportunity for the broader community and investors to actively participate.



Fluence, however, takes a different approach with delegated staking enabling full community participation. This not only allows investors to engage directly but also enhances the security and reliability of the platform&#8217;s compute marketplace. It also enables third party projects to innovate and create solutions on top of the underlying mechanics which should drive more use for FLT and exchange staking capital efficiency.&nbsp;



Furthering its commitment to community participation, Fluence governance is managed by the Fluence DAO, a Swiss-based association designed to give token holders real decision-making power while protecting participants from legal liability.&nbsp;



Through on-chain voting, the DAO allows the community to propose and approve governance changes. Additionally, the DAO elects a Governance Committee to safeguard the integrity of the process, ensuring decisions are made transparently and fairly, free from the risk of malicious or rogue voting.



<h2 class="wp-block-heading">Why Stake with Fluence? An Investor’s Perspective</h2>



Institutional investors are increasingly seeking innovative, reliable opportunities in decentralized infrastructure. Fluence’s staking model checks all the boxes:



<ul class="wp-block-list">
<li>Predictable USD-Denominated Rewards: FLT rewards are adjusted daily to maintain the USD-equivalent value of around $10 per core per month. </li>



<li>Institutional-Grade Security and Trust: Each compute job is secured through proofs, replacing reliance on centralized providers with verifiable, on-chain guarantees. Slashing mechanisms penalize non-performance, ensuring reliability. </li>



<li>Sustainable Growth: Rewards are vested over six months, ensuring long-term engagement from providers and stakers alike.</li>
</ul>



<h2 class="wp-block-heading">How to begin staking</h2>



To begin staking, head to the <a href="https://stake.fluence.network/?ref=fluence.network/?utm_source=blockworks">Fluence staking app</a>, where you can track and manage your staked positions, monitor the status of Capacity Commitments and withdraw FLT rewards.



For those who might find the typical staking requirements (between $6,000 to $12,000 in FLT) prohibitive, Fluence has partnered with Parasail, a leading DePIN staking solution, to offer smaller investors an easier entry point by providing liquid staking pools, with more innovative pools to come. Learn more <a href="https://docs.parasail.network/delegation-guides/guide-for-fluence-stakers/?ref=fluence.network/?utm_source=blockworks">about liquid staking</a>.



<h2 class="wp-block-heading">The Future of Fluence and FLT Demand</h2>



FLT is the backbone that secures harmony between compute providers and stakers, upholding a staking model designed to drive long-term utility and demand for the token by:



<ul class="wp-block-list">
<li>Locking FLT into staking commitments, reducing circulating supply</li>



<li>Creating a direct correlation between network expansion and FLT staking requirements</li>



<li>Encouraging long-term holding through structured reward vesting</li>



<li>Supporting a stable economic model that avoids inflationary token rewards common in other staking models</li>
</ul>



The protocol targets $200 of FLT stake per compute unit, meaning that every increase in compute capacity directly drives a proportional rise in FLT staking demand. For context, at launch in March 2024, Fluence had a waitlist of over 600,000 CPU cores, representing a potential $170M in FLT staking demand. However, Fluence is only onboarding capacity in alignment with customer demand, scaling the network as needed. This approach ensures a sustainable token economy, with fresh capital flowing into the ecosystem to access the real-world benefits of compute power.



Furthermore, unlike inflationary staking models, Fluence&#8217;s staking mechanism encourages long-term holding through structured reward vesting. This prevents excessive token emissions, ensuring sustained network participation and maintaining long-term stability.



<h2 class="wp-block-heading">Customers: Third Party Node Provider Sector</h2>



Fluenc’s initial customers and pipeline consists of companies in the large and growing third party node provider sector. The third party node provider sector is comprised of hundreds of companies that provide services to blockchains, to individuals and to enterprise customers that outsource the effort and complexity of running blockchain nodes.&nbsp; Because most of the companies in this sector are private and the service is usually included in the broad category of cloud services, projections of the industry size range significantly from $500 million to $2 billion.&nbsp; Regardless of the current size, it is clear that the industry is growing very quickly with estimates of 30-40% annual growth. Even taking the low end of the market size of $500 million presents a substantial market opportunity for Fluence.&nbsp;



Compute comprises 40-50% of third party node provider’s cost structure which make this industry particularly interested in lower cost compute. A fifty percent savings on compute has a substantial impact on their margins. and as providers adopt Fluence and lower their cost structure, any provider that doesn’t adjust its cost profile will be at a disadvantage. Third party node providers also understand the benefit of decentralization which is a priority for some of their customer base such as blockchains.



We think this sector is a terrific initial customer base that is well suited to adopt the Fluence platform and as customers onboard, Fluence will grow quickly in this substantial market, positioning it to add additional sectors.&nbsp;



<h2 class="wp-block-heading">A New Era in Decentralized Compute</h2>



Fluence is setting the stage for the future of decentralized computing by combining security, accessibility, and innovation. Through its staking model, the platform empowers participants to play an active role in shaping the future of computing—whether by securing resources, earning rewards, or contributing to the broader Web3 ecosystem.



For institutional investors, Fluence offers a stable and predictable opportunity to align with decentralized infrastructure. For individuals, it provides a chance to participate in a movement that’s transforming how computing resources are accessed and used.



As Fluence continues to pioneer advancements in DePIN, its DePIN staking mechanism stands as a beacon of innovation—representing not just an investment in a network but in a vision for a more secure, equitable, and efficient technological future. To participate in securing the most innovative compute DePIN, head to the <a href="https://stake.fluence.network/?ref=fluence.network/?utm_source=blockworks">Fluence dApp</a>; to experience the Fluence Cloudless solution, <a href="https://www.fluence.network/virtual-machines/?utm_source=blockworks">test-drive a Fluence virtual private server (VPS)</a>. To learn about Fluence, visit <a href="https://www.fluence.network/?utm_source=blockworks">our website</a>. To stay up to date on all Fluence news, follow Fluence on <a href="https://x.com/fluence_project">X</a> and join the community on the <a href="https://fluence.chat/?ref=fluence.network/?utm_source=blockworks">Discord</a> and <a href="https://t.me/fluence_project?ref=fluence.network/?utm_source=blockworks">Telegram</a> channels.



This content is sponsored and does not serve as an endorsement by Blockworks. The veracity of this content has not been verified and should not serve as financial advice. We encourage readers to conduct their own research before making financial decisions.



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Revolutionary DePIN staking on Fluence: An investor’s guide

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



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



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“I don&#8217;t know what&#8217;s going to happen tomorrow and I can&#8217;t relive yesterday, but I live in the moment if I can.”&nbsp;



— Ozzy Osbourne
</blockquote>



Stock markets made new highs again this week, but the mood is hardly celebratory — possibly because it feels like investing is about to get much harder.



How do you invest for the long term when 1) AI might change everything and 2) the US government is $38 trillion in debt (and counting)?



This week, Jim Cramer said the ballooning national debt made him “worried for his kids” — so much so that he took the unthinkable step of recommending bitcoin as a hedge against monetary debasement.



Quite the reversal for someone who said as recently as 2022 that he “would not touch crypto in a million years.”



(Note: 2022 was three years ago.)



I get it, though.



Watching yesterday’s <a href="https://x.com/JustinWolfers/status/1948519156661583974">surreal exchange</a> between President Trump and Fed Chair Powell, both in hard hats, made me despair for the long-term health of my investment portfolio.&nbsp;



What investments can you rest easy with when the world’s only risk-free asset — US Treasurys — no longer seem free of risk?



You could buy gold, of course, and that has been working lately: The original inflation hedge is up 40% over the past year.



But an inflation hedge is all gold usually is: Over the last 2,000 years, its real, inflation-adjusted return is approximately 0%.



That will maintain your purchasing power, which is nice, but it won’t help you retire.



Also, you don’t want to be hiding in gold when they start mining it <a href="https://www.astroforge.com">from asteroids</a> or creating it in <a href="https://www.ft.com/content/06f91e0d-3007-40bd-b785-86fef4890809">fusion reactors</a>.



Is bitcoin a better hiding place then?



That, too, has been working: The newest inflation hedge is up 80% over the past year, cementing its reputation as digital gold.



But it’s hard to have a 50-year view on such a new asset.



On that kind of timeline, people as smart as Cliff Asness and Matt Levine can <a href="https://www.youtube.com/watch?v=lhCL4R3JFOc">think</a> that “most of the probability” for bitcoin is “zero.”



Finding investments where most of the probability is not zero is not as easy as it used to be.



Land has been a reliable safe haven over the centuries — they’re not making more of it, as they say.



But in an age of demographic collapse, we might need less of it.



It’s <a href="https://www.2oceansvibe.com/2025/06/18/japan-now-has-over-9-million-empty-homes-due-to-declining-population/">estimated</a> that by the year 2038, one-third of the homes in Japan will be abandoned for lack of anyone to live in them.



I’m not sure land will hold its value when the entire developed world looks like Japan a decade or two from now.



Still, if we’re headed toward monetary debasement in this decade, a portfolio of gold, bitcoin and land is probably a good bet.



But what if this decade turns out to be surprisingly good?



If the real story over the next 10 years or so turns out to be an AI-driven boom in productivity, a portfolio of gold, bitcoin and land might doom you to decades of underperformance (and declining purchasing power).



That is what the researchers at Epoch AI expect: They <a href="https://epoch.ai/gradient-updates/ai-and-explosive-growth-redux">estimate</a> that “even when AIs have only automated 30% of all economically useful tasks, economic growth rates may exceed 20%.”



20%!!!



It’s hard to fathom a world of 20% GDP growth — the US government might even manage to balance its budget in that scenario.&nbsp;



But even that unthinkable outcome may be understating the upside.



The Economist <a href="https://www.economist.com/briefing/2025/07/24/what-if-ai-made-the-worlds-economic-growth-explode">noted</a> this week that growth theorists who attempt to model the progress of technology “have long posited that if ideas beget more ideas with sufficient velocity, growth should increase without limit.” (Emphasis added.)



Sam Altman seems to think that’s where we’re headed: He <a href="https://blog.samaltman.com/the-gentle-singularity">believes</a> AIs will be capable of begetting ideas as soon as next year, and that “2027 may see the arrival of robots that can do tasks in the real world.”



That would put markets on a crazy train to who knows where.



If investors sense that labor will soon be automated out of existence, there will be a mad scramble to secure the largest possible share of the post-labor economy.



“What should you do if you think an explosion in economic growth is coming?” <a href="https://www.economist.com/briefing/2025/07/24/what-if-ai-made-the-worlds-economic-growth-explode">The Economist asks</a>. “The advice that leaps out from the models is simple: own capital, the returns to which are going to skyrocket.”



But not just any capital.



20% growth would likely mean 20% interest rates too, which would destroy the value of your gold, bitcoin, land and any stocks not directly involved in the AI productivity boom.



You’ll have to choose carefully, and maybe sooner than you’d expect.



It’s exhausting to think about. And maybe we shouldn’t.



This week, Anthropic <a href="https://www.perplexity.ai/page/anthropic-research-reveals-ai-nTyemJTvTTGRYTnTHxe4EQ">publicized</a> its findings that AI models suffer from “inverse scaling” — which is to say an AI model that’s given more time to think tends to produce worse results.



AIs think pretty much like humans do, so we too probably suffer from inverse scaling.



If so, now may be the time to follow Ozzy’s advice — in investing and everything else — and try our best to live in the moment.



Let’s check the charts.



AI automation and GDP growth:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfH2qmLItgtT8ZklT3rIsjlFdp35eVT0O-lkzSSMYBS2I7XrU4uTxV8sPpUUuZNgDIgDJNxnUip3IE-MnAdq2g1nK_h20xr0fcaUhPw5eLdT2UirXj80i3-fjufzZOTkJNt1UR4?key=SJg8csv72Yn-2Se_zRC_RA" alt=""/></figure>



Pick your level of AI automation (the X-axis) and this chart from Epoch AI will tell you what level of GDP growth to expect. The TL;DR is that “the fraction of labor tasks automated by AI doesn’t need to be very high to yield very large growth impacts.” Per the chart, if only 20% of tasks are automated, they expect GDP to grow at an unfathomable 10% per year.



Revenge of the dorks:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfGzs_Ic4PfCblfwVv2SLk3uV4cIPaGGE4ei6wziu9zZK_SjTVmQghVjyiKh_4TtgAj8wtybkg6d6g0eRjYztldPjxYH-2d8iIwcYJ6Vith216yVykjVubWuskRh99xhwXiuQAYzQ?key=SJg8csv72Yn-2Se_zRC_RA" alt=""/></figure>



The Reddit gang is back and this time they’re betting on Dunkin Donuts, Opendoor, Rocket Companies and Kohl’s. Why those four? I doubt even an all-knowing AI could make sense of it. But if you think AI is about to take all the jobs, rolling the dice one last time in memestocks may be less irrational than it seems.



There’s a lot of dice rolling right now:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdWzt4H0_qOfRJGkr6CkkdJDnJfWvm2cRInRL9AtvyPArZMWC47l4zFZo1aFxKjJGhPvXrMqXz7AnbOMLYregsxhDQ6tJcWmY1uZG5VQ9456Tl1TXyCIlW3AGzuY9W88VimZ8yf6w?key=SJg8csv72Yn-2Se_zRC_RA" alt=""/></figure>



Data from Goldman Sachs shows that, as a percentage of overall activity, trading volumes in the most speculative stocks have rarely been higher than now. As an <a href="https://x.com/MikeZaccardi/status/1948765446322172298">indicator</a>, that is generally bullish before it’s bearish.



Tariffs have not slowed China’s export boom:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdLvt7-Iqe_f0v83nFvtwV-HwUJ1R2BWhUY5HqMe-W74jliMvScOVBs_wja66Iz2l05DBNcc4mFYuV9ZvzCbQF7StYPmSDXf_-Y5qW7VqkN937GceeQcZI5PApLhILS4Mjh5pPa8g?key=SJg8csv72Yn-2Se_zRC_RA" alt=""/></figure>



The more obvious reason for equities being at all-time highs is that the Liberation Day tariffs were not nearly as disruptive to the global economy as generally feared. China’s exports, for example, continue to boom. That show of strength may be why President Trump is <a href="https://www.wsj.com/economy/trade/trump-china-trade-dealmaking-995d7717?gaa_at=eafs&amp;gaa_n=ASWzDAhRbI_gSMPUJ4LK_077KY05Ndu0WoHsiR_tr4kaKml2BGZmEvt5uTk7io0POT0%3D&amp;gaa_ts=6883d7f6&amp;gaa_sig=8VwkSZsudBXfFLAQLPJkSajI1AzfeEKgEBriqIeolX2rtJOToF1-2UxGGazaL6AtHTMFNkzVFDXK3T7B5Mg6Ug%3D%3D">reportedly</a> more willing to make concessions to get a deal done.



China is flooding the world with cars:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdKA_ht_E1oXcF8sMBRoxpOuezEYJWo0ygYhbC_E9C6-2sy-NDo3uQsHVZH4c3EJP6AvEMbkXbIg1uBzSSPk7v4K8DAMd3y3T1cbFxkux2OMgIPNfxAVh-LfAJfDkZN_KcP8jjZ5w?key=SJg8csv72Yn-2Se_zRC_RA" alt=""/></figure>



I’m glad we still have an auto industry in the US, but if I could buy a high quality EV for <a href="https://insideevs.com/features/761423/byd-seagull-drive-in-china/">$8,000</a>, I would.



Humans remain in demand:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcBRV7lZ8T_Sg7JLVy_rIQtdcxKSXk_Ce5TVIWNxHjdyKGMgHHKy7bhLHQnrbilY8L1MYXpKVvP3_oJaGoll43kMGwB8Fg-dDUyVQtUqDdT_KXQLxkuxf52lZdBv3BJnmOR4SON?key=SJg8csv72Yn-2Se_zRC_RA" alt=""/></figure>



The Atlanta Fed’s wage tracker shows US wages growing at 4.2% — still well in excess of inflation (however measured).



Robots are not taking the jobs yet:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeqxst8YNwHavnhnns88ZaE7j4y2lz08bCbio_WyK3p0Ul9nu93_IHZHMY01g3T7aM0-Fw13veA1DdQk0X8l-NelrPFL_RwaoIpdSxUebApwneEnGDojrSPiVXNRNZCegmG8in-gw?key=SJg8csv72Yn-2Se_zRC_RA" alt=""/></figure>



Against the popular narrative, the FT’s data analysts find that “US jobs at high risk from generative AI have not been more likely to shed young workers since ChatGPT launched.” (So far.)



False alarm:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcUqoOL8gQ7qgbUVpI1AMTmH7P9Vw4JMxAtbh5obXms-ErqsHFiSinS0ow3wciQ3FRO-O1M5pyAWRIC5HFswa-1NkpIoFjJSqhzGcQEMcXSvCjuL96b7eZYNjc9B7dr2FRE0en_Ug?key=SJg8csv72Yn-2Se_zRC_RA" alt=""/></figure>



<a href="https://polymarket.com/event/us-recession-in-2025?tid=1753471341405">Polymarket</a> bettors believe that the odds of the US going into recession this year are down to just 18%.



Comfortably familiar:&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfHu7g8HZ3b3lZYDVnKEp7ddjh17Gyolke0O8x0TVaNaatyqFlR7eB1y0qBGuO47g2RBPcrnpSkEvzgkLDN9nVi0VUE4rLuS0ZsDuZWvvC9diO1lOZ2gyth_BvD4BaTlWw_Wm-RTQ?key=SJg8csv72Yn-2Se_zRC_RA" alt=""/></figure>



The US economy is on pace to grow 2.4% in Q3.&nbsp;



Could we soon be growing at 10x that?



It’s thinkable — but a long way from predictable.



Have a great weekend, productive readers.



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Friday charts: Crazy train investing

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



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Given the recent GENIUS Act signing and certain firms soon reporting Q2 earnings, it’s as good a time as any for a crypto stock update.&nbsp;



After the stablecoin-focused bill became law, Compass Point analysts downgraded Circle stock from neutral to sell.



Their CRCL price target declined from $205 to $130, according to a Monday note.&nbsp;&nbsp;



Analysts Ed Engel and Abdullah Dilawar anticipated the rally leading up to the <a href="https://blockworks.co/news/genius-act-passes-house">GENIUS Act signing</a>, but predicted the “sell-the-news” drop that came. Shares of CRCL were trading around $195 at 1:30 p.m. ET — down 14% in the last five days.



Competing stablecoins products from traditional banks and fintechs will also put pressure on CRCL’s premium valuation, they argued.&nbsp;



While CRCL&#8217;s $53 billion market cap (when the note was published) implied long-term expectations of ~25% market share and ~30% EBITDA margins, the $130 price target assumes 15% longer-term market share and 20% EBITDA margins.



Circle is set to report its second quarter earnings during an Aug. 12 webcast.



Moving on, Jefferies kicked off its coverage of Galaxy Digital on Tuesday with a buy rating and a $35 price target. I missed this while in court at the <a href="https://blockworks.co/news/roman-storm-government-may-rest-case">Roman Storm trial</a>.



GLXY’s stock price was just above $30 at 1:30 p.m. ET — up about 12% this week.&nbsp;&nbsp;



Being a “comprehensive provider for institutions seeking digital asset exposure” gives Galaxy an edge over more specialized peers like prime brokerage FalconX, liquidity provider Cumberland, market maker Wintermute and bitcoin-focused firm NYDIG, Jefferies analysts argue.&nbsp;



The GENIUS Act could open up new stablecoin-related business opportunities (like custody or issuance partnerships), they added. <a href="https://blockworks.co/news/us-house-passes-clarity-act">The CLARITY Act</a> would likely contribute to “incremental” revenue opps as institutional players enter the segment.



Beyond that, roughly two-thirds of Galaxy’s enterprise value stems from its data center business, according to Jefferies. The company bought Argo Blockchain’s Helios mining facility in 2022 and is hosting CoreWeave AI and HPC operations there.



We’ll be listening to what Mike Novogratz has to say during Galaxy’s Aug. 5 earnings call.&nbsp;



Before Circle and Galaxy report their earnings next month, Coinbase will share its Q2 results on July 31.&nbsp;



Compass Point analysts, in a July 16 note, increased their Coinbase price target from $195 to $330 (COIN shares traded for ~$395 this afternoon). But it reiterated its neutral rating, rather than opting for “buy.”



Headwinds for the crypto exchange include US trading activity moving toward US ETFs, CME futures and decentralized exchanges. Monthly data from competitors like Robinhood and Exodus affirms weak Q2 trends to that end. 



<img loading="lazy" decoding="async" width="624" height="321" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdFahGeN_g-af1h7aDPB_19dbDWe4Q0Y8_jK2pMIbNrIcSHdgL7qLbLLhRPpdk6CudaYGu26OGYr9Cdruyy-5G6LEOL6r6f1xVtKCc0HI2psZCas-B2-02kh4isBcqbXTN1r8CzwA?key=MFFChMm_9dlxyWTwVrYrqw">



Compass Point analysts estimate that Coinbase’s transaction revenue decreased 45% quarter over quarter.



“We&#8217;re hesitant toward shorting COIN during a crypto bull market and potential for Fed rate cuts — either from Powell or his successor,” Engel and Dilawar wrote. “However, if rate cuts and CLARITY act are postponed beyond 3Q25, this could pressure COIN&#8217;s valuation amid deteriorating fundamentals.”



Before you go enjoy your weekend (after reading the rest of this newsletter, of course), I’ll mention one other crypto-linked stock that just turned heads with its latest hire.&nbsp;



Nasdaq-listed SharpLink Gaming today <a href="https://x.com/ethereumJoseph/status/1948720039370092831">named</a> Joseph Chalom, BlackRock’s former head of digital asset strategy, as its co-CEO.&nbsp;



You might recognize the SharpLink name. It’s that <a href="https://blockworks.co/news/bitcoin-treasury-strategies-sharplink-eth">Joe Lubin-led company</a> that all of a sudden got really into Ethereum. It held 360,807 ETH, as of July 20. (For more on crypto treasury strategies, consider reading <a href="https://blockworks.co/news/companies-holding-crypto-phase-one">this</a>).&nbsp;&nbsp;



Sharplink’s stock is up about 110% from a month ago, but has dropped roughly 30% in the last week. Crypto equities remain a segment we’ll be watching closely.&nbsp;



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Circle

Crypto stock outlooks fluctuate after GENIUS, ahead of Q2 reports

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



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From BOB’s breakthrough hybrid rollup design to VeChain’s TradFi-powered comeback, this week brought a wave of architectural pivots and regulatory advances.



<h2 class="wp-block-heading">1. BOB rules</h2>



BOB (Build on Bitcoin) just <a href="https://bob.build/blog/hybrid-zk-rollup">deployed</a> a first-of-its-kind rollup that uses zero-knowledge proofs for fraud resolution within an optimistic rollup framework.&nbsp;



Built with <a href="https://risczero.com/blog/RISC-Zero-OP-Kailua">OP Kailua</a>, a new OP Stack extension by RISC Zero and <a href="https://blockworks.co/news/risc-zero-launches-boundless-testnet-base">Boundless</a>, the system enables cheaper, faster fraud challenges — finalized in minutes rather than days.



This novel approach could catapult BOB to Stage 1 and Stage 2 status on <a href="https://l2beat.com/scaling/summary">L2Beat</a>, setting a new bar for trust-minimized <a href="https://blockworks.co/news/unlocking-bitcoin-defi-potential">Bitcoin DeFi</a>. Anyone can challenge a transaction with just 0.5 ETH, drastically lowering the entry point for rollup participation. It’s a breakthrough that combines zk finality with the accessibility of optimistic design.



<h2 class="wp-block-heading">2. Summer Optimism</h2>



Optimism’s Upgrade 16 just went live — and not a moment too soon.&nbsp;



L2Beat is <a href="https://x.com/l2beat/status/1935615549809054043">preparing</a> to downgrade any rollup lacking robust fraud-proof governance back to Stage 0 status. The <a href="https://gov.optimism.io/t/successful-upgrade-superchain-upgrade-16-optimism-mainnet/8673">upgrade</a> enables native cross-chain messaging and new bridge contracts, plus a higher gas ceiling (from 200m to 500m) to accommodate rising demand. With chains like <a href="https://blockworks.co/tag/base">Base</a> and <a href="https://blockworks.co/news/kraken-ethereum-layer-2-superchain">Ink</a> relying on the OP Stack, preserving Stage 1 classification is critical.&nbsp;



If Superchain wants to lead, decentralization can’t remain theoretical. It has to get real.



<h2 class="wp-block-heading">3. Much OS, very zk</h2>



In truly-the-funniest-outcome news, Dogecoin devs are <a href="https://github.com/dogecoin/dogecoin/discussions/3869">floating</a> a radical idea: integrate zero-knowledge cryptography directly into the base chain via a system dubbed DogeOS. The goal is to make Dogecoin more than a meme by enabling verifiable computation and smart contract-style capabilities.&nbsp;



If adopted, DogeOS would be one of the first native zk enhancements on a major proof-of-work chain, bringing new utility to a network historically known more for vibes than engineering prowess.



The proposal’s still in early stages, but it marks a notable shift toward tech seriousness in the Doge ecosystem.



<h2 class="wp-block-heading">4. Stablecoin alliance</h2>



<a href="https://blockworks.co/tag/anchorage-digital">Anchorage Digital</a> and <a href="https://blockworks.co/podcast/0xresearch/ea8714c8-1c84-11f0-b77f-a3c6884d9409">Ethena Labs</a> are <a href="https://www.anchorage.com/blog/anchorage-digital-partners-with-ethena-labs">teaming up</a> to launch the first stablecoin built specifically for the US under the <a href="https://blockworks.co/news/genius-act-passes-house">new GENIUS Act</a>. USDtb, currently issued offshore, will now be minted by Anchorage’s federally chartered crypto bank.



Anchorage’s stablecoin platform is designed for institutional-grade compliance and programmability, and Ethena’s USDe has already become the <a href="https://defillama.com/stablecoins">third-largest</a> stablecoin in DeFi by TVL. With this move, USDtb becomes a vehicle for mainstream financial integration, in addition to its DeFi-native appeal.



<h2 class="wp-block-heading">5. Expanding the polycule</h2>



Polymarket acquired <a href="https://blockworks.co/news/polymarket-qcex-acquisition">QCEX</a>, a CFTC-registered exchange, effectively clearing a regulatory path into the US market. For longtime observers, this was inevitable.&nbsp;



“Prediction markets are gradually reshaping how people engage with real-world events,” Chiliz’ Max Rabinovitch told Blockworks.&nbsp;



Sports betting is a huge opportunity for the onchain prediction market, particularly after <a href="https://www.nytimes.com/athletic/6481190/2025/07/10/sports-betting-trump-bill-tax/">provisions</a> in the giant <a href="https://blockworks.co/news/crypto-bills-in-congress">spending bill</a> nicknamed the “One Big Beautiful Bill Act” stand to neuter professional sports gambling. As regulatory clarity improves, Polymarket and others could bridge traditional markets with decentralized prediction infrastructure.



<h2 class="wp-block-heading">6. The cross-chain&nbsp;spin cycle</h2>



Centrifuge just <a href="https://centrifuge.io/blog/centrifuge-v3-multichain-launch">launched</a> v3 across six chains (Ethereum, Base, Arbitrum, Avalanche, Plume and BNB Chain), creating the most interoperable RWA infrastructure to date. Powered by <a href="https://blockworks.co/tag/wormhole">Wormhole</a>, this version enables fund managers, DAOs and fintechs to launch fully customizable onchain products with native chain abstraction. The platform has already <a href="https://blockworks.co/news/janus-henderson-clo-token-1b">secured</a> a $1b allocation from Janus Henderson via Grove. With v3, Centrifuge is bridging DeFi-native capital and institutional-grade financial products in one unified stack.



<h2 class="wp-block-heading">7. Might as well Jump</h2>



<a href="https://blockworks.co/news/solana-chain-running-pure-firedancer">A new L1</a> from ex-Citadel and Jump traders has gone live with a 40ms block time and a fully integrated trading stack.&nbsp;



Built on SVM with enshrined dapps like Ambient and Fluxbeam, Fogo positions itself as a performance-maximized, Hyperliquid-style platform — but ostensibly without sacrificing decentralization.&nbsp;



While the tech stack is fresh, the competitive field is anything but empty. Newcomers like Lighter, <a href="https://blockworks.co/news/ostium-dex-points-rwa-arbitrum">Ostium</a>, Reya and Main.Exchange all want a piece of the perps pie. Fogo’s bet? That TradFi-grade latency and native infra will pull top traders into its orbit.



<h2 class="wp-block-heading">8. VeChain staking program </h2>



2017-era ICO darling VeChain is reintroducing itself to the world with a $15m <a href="https://www.prnewswire.com/news-releases/vechain-launches-15m-stargate-staking-program-following-sec-crypto-guidance-302186226.html">staking program</a> and a suite of TradFi partnerships. <a href="https://blockworks.co/tag/bitgo">BitGo</a> is onboard for custody, <a href="https://blockworks.co/tag/franklin-templeton">Franklin Templeton</a> is <a href="https://cointelegraph.com/news/franklin-templeton-benji-vechain-enterprise-payments">integrating</a> BENJI and validator management now includes <a href="https://blockworks.co/news/keyrock-launches-us-entity">Keyrock</a>.&nbsp;



The newly launched StarGate staking system uses NFTs to simplify compliance and reward participation — right as the SEC is pondering staking clarity. It’s all part of VeChain’s “Renaissance” <a href="https://x.com/vechainofficial/status/1877403277564014950?lang=en">upgrade</a> aimed at modernizing tokenomics, improving developer UX and getting institutions back onchain.&nbsp;



Can a legacy L1 regain relevance in the age of limitless appchains and well-funded competitors? Watch this space.



<h2 class="wp-block-heading">9. Going Ape</h2>



GameSquare (Nasdaq: $GAME) has <a href="https://www.prnewswire.com/news-releases/gamesquare-acquires-iconic-cowboy-ape-cryptopunk-from-defi-pioneer-robert-leshner-302513150.html">acquired</a> CryptoPunk #5577 — <a href="https://cryptopunks.app/cryptopunks/details/5577">the “Cowboy Ape”</a> — from Robert Leshner in a $5.15 million equity deal. It’s the first NFT-for-equity treasury play by a public company, and part of GameSquare’s larger strategy is to integrate digital assets across brand, treasury and yield products.&nbsp;



Leshner, meanwhile, has recently attempted a contested takeover of Liquor House (LQR), which <a href="https://www.reuters.com/markets/deals/liqour-house-adopts-poison-pill-defend-against-robert-leshner-bid-2025-06-14/">stalled</a> after a poison pill defense.&nbsp;



With this move, he exits one of the most iconic Punks and joins GameSquare’s cap table instead.



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ZK breakthroughs, onchain comebacks and stablecoin shakeups

David Canellis

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



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Bitcoin news (and crypto news more broadly) has clearly defined tropes. But they aren’t static.&nbsp;



Tropey headlines tend to play on our base instincts. Fraud stories were historically a go-to for legacy and mainstream outlets looking for a quick hit about crypto — “Bitcoin Thief Allegedly Bought Royalty Rights to Rap Songs, Has Middling Taste” from <a href="https://www.vice.com/en/article/bitcoin-thief-allegedly-bought-royalty-rights-to-rap-songs-has-middling-taste/">VICE</a> in 2019 is a prime example.&nbsp;



That story, and others like it, had <a href="https://blockworks.co/news/crypto-fraud-financial-scam">less to do with Bitcoin</a> and more to do with crime, but the crime itself wasn’t particularly interesting. Bitcoin brought the novelty factor to an otherwise-dull low-level crime. Consider your click harvested!



Over time, those types of stories have given way to a trope more relevant to bitcoin holders: “Old whale moves coins for the first time in ages.”



The most recent iteration has played out this month. Across two weeks, an address dormant since 2011 transferred a total of 80,009 BTC ($9.3 billion) to Galaxy Digital.&nbsp;



Come this morning, Galaxy had directed more than 10,000 BTC ($1.2 billion) to a number of exchanges across an eight-hour period.&nbsp;



The price of bitcoin slid nearly 2.5%, from about $118,000 to under $115,300, before recovering slightly.



<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">Update:<a href="https://twitter.com/hashtag/GalaxyDigital?src=hash&amp;ref_src=twsrc%5Etfw">#GalaxyDigital</a> has transferred nearly 30,000 <a href="https://twitter.com/search?q=%24BTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$BTC</a>($3.5B) out today, most of which went directly to exchanges and were sold. Then <a href="https://twitter.com/hashtag/GalaxyDigital?src=hash&amp;ref_src=twsrc%5Etfw">#GalaxyDigital</a> withdrew 1.15B <a href="https://twitter.com/search?q=%24USDT&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$USDT</a> from exchanges.<a href="https://twitter.com/hashtag/GalaxyDigital?src=hash&amp;ref_src=twsrc%5Etfw">#GalaxyDigital</a> still holds 18,504 <a href="https://twitter.com/search?q=%24BTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$BTC</a>($2.14B).<a href="https://t.co/bVtNwP2iXI">https://t.co/bVtNwP2iXI</a> <a href="https://t.co/Wv1cD3aHbf">pic.twitter.com/Wv1cD3aHbf</a>&mdash; Lookonchain (@lookonchain) <a href="https://twitter.com/lookonchain/status/1948665986573631687?ref_src=twsrc%5Etfw">July 25, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Around the same time, a separate whale awoke to <a href="https://news.bitcoin.com/2011-bitcoin-whale-wakes-after-14-years-moves-470m-but-why-now/">move</a> almost 3,963 BTC ($462.5 million) between addresses, although at this point it doesn’t appear to have made it to any exchanges.



We don’t usually get any closure when these types of transfers happen. In the past five years or so, there have been at least a dozen other instances of dormant Bitcoiners awakening to shuffle coins amounting to over 195,400 BTC ($22.8 billion) when combined, by my very quick count.



Of that dozen, only three are believed to have led to coins actually being sold on exchanges, including this morning’s situation with Galaxy. The possibility does exist that each of the others were peer-to-peer, over-the-counter sales, but we’ll never know for sure.



Still, the “dormant whale moves bitcoin” trope is the perfect blend of feel-good and abject terror.&nbsp;



We’ve all heard the horror stories about <a href="https://www.bbc.com/news/articles/c74zel3ng1vo">lost private keys</a> to bitcoin fortunes, and maybe even lived a few of them ourselves. Hearing about old coins being accessed for the first time in a&nbsp; decade is the great antidote.



Meanwhile, the notion that the 30% of all coins which haven’t <a href="https://cryptoquant.com/asset/btc/chart/network-indicator/utxo-age-bands-percent?window=DAY&amp;priceScale=log&amp;metricScale=linear">moved</a> in at least five years — almost six million BTC, worth $696 billion — might one day be suddenly sold is a little scary, depending on how heavy one’s bags are.



Which makes for perfect clickbait, no matter how scant the details.



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