NFT Worlds

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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New forms of bitcoin liquidity are finding their way into emerging blockchain ecosystems, with recent integrations of Lombard’s LBTC and Stacks’ sBTC expanding opportunities for BTC holders in cross-chain DeFi.



On Starknet, a new <a href="https://x.com/Starknet/status/1922623296001946012">partnership</a> between the Starknet Foundation and Lombard Protocol will introduce LBTC, a fully <a href="https://blockworks-research.beehiiv.com/p/navigating-stbtc-maze">bitcoin-backed liquidity token</a>. LBTC maintains a 1:1 backing by native BTC reserves, which is bridged into Starknet DeFi.



Lombard, a protocol built on top of <a href="https://blockworks.co/news/babylon-genesis-launch-l1-bitcoin-liquidity">Babylon</a>, receives BTC deposits, stakes them via Babylon and issues LBTC as a liquid representation of staked BTC. LBTC is intended to be multichain: available on Ethereum, Arbitrum, Sui, Genesis (Babylon) and others.



Led by <a href="https://blockworks.co/tag/starkware">Starkware</a> CEO Eli Ben-Sasson, Starknet has positioned itself as a performant execution layer for Bitcoin, in addition to Ethereum. &#8220;Moves like this invigorate a whole new class of builders and users — people who want the credibility of Bitcoin and the creativity of DeFi,” he said.



The phased rollout of LBTC will initially focus on bridging and liquidity provisioning, followed by the introduction of staking options in Lombard-powered vaults. These vaults will enable LBTC holders to generate yield without surrendering custody of their underlying bitcoin.



While Babylon’s BTC staking is trust-minimized, LBTC introduces additional trust assumptions tied to how Lombard mints and manages tokens and bridges, according to Cubist co-founder Riad Wahby. Cubist provides threshold signature tooling for Lombard and other Babylon ecosystem participants.



Having said that, Wahby added, “I feel more comfortable with LBTC, but that’s because we know a lot about their security.”



Meanwhile, <a href="https://blockworks.co/tag/sui">Sui</a> is preparing <a href="https://x.com/Stacks/status/1917866976829145156">to integrate</a> sBTC, the bitcoin-backed token native to the <a href="https://blockworks.co/tag/stacks">Stacks</a> ecosystem.



The token uses a threshold-signature multisig secured by a set of 15 reputable institutional signers, with plans to gradually decentralize by integrating directly into Stacks&#8217; consensus mechanism.



The expansion will enable new opportunities for lending, borrowing and trading without compromising Bitcoin’s decentralization, according to Stacks founder Muneeb Ali.



Bypassing centralized custodians, “sBTC will be bridged to Sui via a trust-minimized, non-custodial process that preserves Bitcoin’s native security,” Ali told Blockworks.



“This collaboration lets us bring bitcoin to where the people are, and introduce more users to the growing bitcoin economy,” he said. Holders of sBTC on Sui will benefit from dual-yield opportunities: a base ~5% BTC reward merely for minting and holding sBTC, plus additional incentives from deploying the asset in Sui DeFi protocols.



The decision to integrate sBTC positions Sui as a new alternative hub for institutional BTCfi use cases — the network is already capturing significant bitcoin liquidity, with over 10% of Sui’s total TVL now originating from Bitcoin-derived assets, according to the Sui Foundation.



Both integrations signal a growing trend toward major L1s and L2s actively competing to onboard BTC liquidity to enrich their homegrown DeFi offerings. They are part of a trend shifting away from bitcoin derivatives relying on centralized custodians in cross-chain deployments. This should appeal to a subset of bitcoin holders who want to maintain self-custody while reaching for yield.



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



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



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



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



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



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

0xResearch Newsletter

Bitcoin derivatives hit Starknet and Sui

Michael McSweeney

Blockworks is excited to announce a major step forward in the evolution of two of the most trusted names in crypto and macro content. <a href="https://blockworks.co/podcast/thebreakdown">The Breakdown podcast</a> and the <a href="https://blockworks.co/newsletter/thebreakdown">Blockworks Daily newsletter</a> are coming together under a single unified identity: The Breakdown.



This rebrand is more than a new name — it’s a powerful convergence of formats, voices and audiences. Following the <a href="https://blockworks.co/news/blockworks-acquisition-the-breakdown">acquisition of The Breakdown podcast</a> by Blockworks, this move reflects a broader vision: to deliver high-level, insightful crypto macro content under one cohesive banner.



For years, both the podcast and the <a href="https://blockworks.co/newsletter/thebreakdown">newsletter</a> have built loyal, engaged communities who turn to them for clear perspectives and curious analysis. Now, with their strengths combined, The Breakdown is becoming more than just a podcast or an email update — it’s becoming the central hub for smart, daily crypto macro insights.



<h2 class="wp-block-heading">What’s changing — and what’s not:</h2>



<ul class="wp-block-list">
<li>One unified brand: The podcast and newsletter will now share the same name — The Breakdown — creating a stronger, more recognizable identity across platforms.</li>



<li>Same trusted focus: Expect the same daily, high-quality crypto and macro coverage you know and rely on.</li>



<li>Evolving formats: While the core mission stays the same, we’re refreshing how we deliver stories — from inbox to audio to YouTube.</li>



<li>Bigger, better reach: Whether you’re a longtime listener, a daily reader, or both, we’re meeting you where you are.</li>



<li>New energy, same depth: The podcast is entering a new era with fresh perspectives and potential new voices — while still honoring its foundation.</li>
</ul>



This is just the beginning. As we unify <a href="https://blockworks.co/newsletter/thebreakdown">The Breakdown</a> into a single, powerful brand, we’re building something even more dynamic — a trusted destination where curious minds come to understand the financial world of tomorrow.



Stay tuned. Big things ahead.



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



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



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



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



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



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



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
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Blockworks

The Breakdown just got bigger: Podcast and newsletter unite under 1 name

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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We’re still early when it comes to crypto, that much is clear.



Some are just earlier than others. That goes for investors, users and, if we’re being generous,&nbsp;blockchain networks themselves.



Today’s newsletter remembers one of the most expensive bets in Bitcoin history, at least only counting bets made outside of trading and investment contexts.



Seven years ago, Bitcoiner Jimmy Song and Ethereum co-founder Joe Lubin made their famous <a href="https://www.forbes.com/sites/astanley/2018/08/28/remember-that-joe-lubin-jimmy-song-bet-from-consensus-were-still-waiting-on-the-specifics/">gambit</a> on whether Ethereum apps would gain a certain amount of traction over the next half-decade (with an end date of May 2023).



All things considered, Lubin would’ve lost. Has anything changed in the last two years?



<h2 class="wp-block-heading">On This Day</h2>



The bet went like this:



If a handful of Ethereum apps had an amount of active users on par with a mildly popular iPhone app, then Song would have to pay $500,000 ETH to Lubin.



Otherwise, Lubin would need to pay an equivalent amount of bitcoin to Song.



For Lubin to win, at least five Ethereum “dapps” would need to reach 10,000 daily active users and at least 100,000 active users per calendar month, for at least six calendar months in any one 12-month stretch.



Nobody really uses the term “dapp” anymore, though, so we’ll just call them apps. The real kicker was that the prize money was meant to be pegged to the prices of ETH and BTC at the time of the bet, in May 2018.&nbsp;



So, Song would’ve had to put up 810.8 ETH, worth more than $2.1 million right now, while Lubin had to pledge 69.74 BTC, or $7.25 million in today’s money.



Granted, there’s no real way to determine how many active users any blockchain app really has, Ethereum or otherwise, due to <a href="https://blockworks.co/news/0xresearch-newsletter-evaluating-blockchain-metrics">how unreliable</a> the active addresses metric is.&nbsp;



As <a href="https://x.com/blockworksres/status/1838992475249414501">Blockworks Research puts it</a>, active address counts are not a measure of user growth, so the bet was really doomed from the start.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeG1Pl789pK--oRBzCeHu58fQznQDHeaCrbvCOUtj0QZkNiJeCsf4a6Dgn6vihPTTwxstrv7atWZkt34BpdFkqHH2XJTSbLBkUuYJY4Rjt1CwHwzhGdSEsZZDm0EJDAYBefiMUj6w?key=lJ4-Y5qIYYaPaRNpWLX8yQ" alt=""/><figcaption class="wp-element-caption">These lines plot the value of both bets over the past seven years. BTC in orange, ETH in purple.</figcaption></figure>



Still, let’s suspend the disbelief to see how the bet would’ve played out had Song and Lubin actually followed through, arbitrator and all.



We already know that Lubin would’ve probably lost. <a href="https://www.coindesk.com/tech/2023/05/31/5-years-after-the-500000-ethereum-wager-between-joe-lubin-and-jimmy-song-who-won">CoinDesk</a> found there were indeed five applications on Ethereum that had the required level of usage at the time: Circle, OpenSea, Tether, Uniswap and wrapped ETH.



Are Circle, Tether and wrapped ETH really “dapps”? Not really, so it was safe to say that Song was the winner, which would’ve put Lubin millions of dollars in the hole.&nbsp;



Then again, the bet was never officially on to begin with. Sad!



As for whether Song would’ve won if the bet spanned seven years instead of five: not really. Uniswap still meets the minimum threshold, but apps like Banana Gun, 1inch and MetaMask aren’t yet maintaining above the 10,000 active address minimum to qualify, per <a href="https://app.artemisanalytics.com/application-activity/ethereum/">Artemis</a> data.



Not to mention, Ethereum layer-2s such as Base, Optimism and Arbitrum were not around in 2018, so perhaps the bet would look different if it were made today.&nbsp;



In any case, Song’s original thesis was that if a popular app were to exist on Ethereum, then eventually, a similar app on a more centralized platform (“cheaper, faster, more scalable, more maintainable and upgradable”) would come along and steal those users.



Seven years later, those threats still exist, even if the pie that’s up for grabs is much larger.



Updated May 14, 2025 at 12:30 pm ET: Corrected value of bet. 



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Ethereum

7 years after the Lubin-Song bet, is Ethereum doing better?

Casey Wagner

Commodity Futures Trading Commission commissioner Summer Mersinger is joining the Blockchain Association as its new CEO.&nbsp;



Her last day at the CFTC will be May 30, and she’ll start at the lead crypto trade organization on June 2.&nbsp;



“We are absolutely thrilled to welcome Commissioner Mersinger as Blockchain Association’s new CEO,” Marta Belcher, president of the board of Blockchain Association, said in a statement Wednesday. “This is a pivotal moment for crypto policy, and we are confident that she is the ideal leader to take Blockchain Association, and the industry, to new heights.”



Mersinger, who has served on the CFTC since 2022, has long been seen as one of the more crypto-friendly commissioners. In 2024, she issued a <a href="https://blockworks.co/news/cftc-uniswap-settlement-dissenting-opinion">dissenting opinion</a> after the agency entered into a settlement agreement with Uniswap Labs, a move Mersinger called “regulation by enforcement.”&nbsp;



The Uniswap settlement ultimately made “sweeping statements” about the broader crypto industry and inappropriately employed “legal theories” outside of a courtroom setting, Mersinger added.&nbsp;



In 2023, speaking at an industry event, Mersinger said crypto can only exist in the US if Congress passes policy.&nbsp;



“Until we offer some sort of clarity, we’re going to see this activity…move away from the US,” she said. “We could lose out on a lot of innovation and opportunities in our financial markets.”&nbsp;



Before being nominated to the CFTC by President Biden, Mersinger served as a top aide to current Senate Majority Leader John Thune.&nbsp;



Sen. Thune earlier this month voted not to advance the stablecoin-focused GENIUS Act through a key procedural vote, but said he did so in order to allow Senators to revisit the bill at a later date.&nbsp;



“Stablecoins should be made in the USA,” he added.&nbsp;



Current Blockchain Association CEO Kristin Smith will be departing the agency on Friday after almost seven years leading the advocacy group. Smith will join as the president of the new Solana Policy Institute later this month.



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



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

Blockchain Association

CFTC’s Summer Mersinger to take helm of Blockchain Association

Katherine Ross

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



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Squads, which <a href="https://blockworks.co/news/lightspeed-newsletter-squads-smart-accounts">developed</a> a multisig protocol on Solana, has a fun announcement: They’re launching Altitude. Basically, it’s a stablecoin-native account that allows companies to open and fund a dollar account without having to rely on traditional banks or a US entity.&nbsp;



Squads CEO Stepan Simkin thinks of stablecoin-native as an account that exists “on a decentralized blockchain, and as long as the blockchain is running the program, the protocol will continue running. And so that gives you very different guarantees, where it&#8217;s true ownership, it&#8217;s true programmability, and it&#8217;s real transparency.”



As part of the unveiling, Altitude also received a strategic investment from Haun Ventures, though Simkin declined to give me exact figures.&nbsp;



However, this isn’t just a new development, and the team isn’t just looking to capitalize on how hot <a href="https://blockworks.co/tag/stablecoins">stablecoins</a> are right now (though, it’s an added bonus that they’re launching Altitude at this time).&nbsp;



Simkin told me that he initially met Haun’s Chris Ahn two years ago, but they started to mull the concept of Altitude roughly a year ago.&nbsp;



With the launch out of the way, where does Simkin see Altitude in a year?



“I think in a year, I would like us to have a consistent user base of real businesses that rely on Altitude to manage their financial operations,” he said.



“It&#8217;s very achievable, particularly in the way things are progressing today, both in terms of things we&#8217;re able to build, partners we&#8217;re able to work with, but also what we talked about before, right? We’re a tech firm, and the [adoption of stablecoins] around the world is happening right now.”



The goal for Simkin — outside of Altitude — is to “shift the conversation towards figuring out how we can make general-purpose blockchains work for institutions and work for payments as opposed to [launching on special purpose] chains […] and then have this segregated system.”



This post was updated at 10:30 a.m. ET with corrections to transcribed audio.



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



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Empire Newsletter

Exclusive: Squads unveils stablecoin account for businesses

In the early days of crypto, wallets were the gateway to freedom. Today, they often feel like a hurdle: endless popups, constant transaction approvals, and fragmented experiences. Every action demands user input. Every transaction risks becoming a bottleneck.



The explosion of onchain applications has stretched this friction to the breaking point. If we are serious about scaling blockchain adoption beyond the crypto-native crowd—to institutions, enterprises, and billions of retail users—we need a fundamental shift.



At WalletConnect, we believe that shift is here. It’s called&nbsp;Smart Sessions, a new standard designed for the AI-powered future of the internet. With the rise of intelligent agents, Smart Sessions are poised to ignite the next phase of growth for our network and ecosystem.



<h3 class="wp-block-heading">Less Wallets. More AI.</h3>



Smart Sessions redefine the onchain experience. Instead of endless wallet popups, users connect once, set clear rules, and delegate permission to an app or, increasingly, to an&nbsp;AI agent&nbsp;to transact on their behalf within secure, predefined guardrails.



In practice, it means:



<ul class="wp-block-list">
<li>Automated trading strategies (like DCA, arbitrage bots)</li>



<li>Fully autonomous onchain games</li>



<li>Subscription payments that work like Stripe, but onchain</li>



<li>AI agents managing assets and strategies in real time</li>
</ul>



Imagine replacing &#8220;App → Wallet → Blockchain&#8221; with &#8220;App → AI → Wallet → Blockchain.&#8221;



Agents become first-class citizens in this model. They operate within parameters you define, combining the security of crypto with the usability of Web2.



Smart Sessions create the foundation for a seamless, intelligent onchain world.



<h3 class="wp-block-heading">A New Layer of Protocol Utility: $WCT</h3>



Smart Sessions aren&#8217;t just a UX upgrade. They fundamentally reshape the economic dynamics of WalletConnect.



Each Smart Session represents a new stream of onchain activity. As sessions proliferate, powered by AI agents in apps, wallets, and custodial solutions,&nbsp;transaction volume is expected to grow exponentially.



Looking ahead, we envision a model where&nbsp;transaction fees&nbsp;will be introduced, creating a new revenue layer for the network.



Importantly, these future fees are designed to be paid using $WCT, WalletConnect&#8217;s native token.



This would bring a new dimension to $WCT’s utility. It’s not just a governance token; it becomes critical infrastructure, capturing real economic value as Smart Sessions scale across the network.



The more autonomous agents transact, the greater the anticipated demand for $WCT.



<h3 class="wp-block-heading">Institutions Are Already Building</h3>



WalletConnect isn&#8217;t just consumer-facing. We power the experiences custodial wallets deliver to institutions worldwide.



Smart Sessions will transform these environments, upgrading today&#8217;s basic custody flows into&nbsp;onchain-native AI investment agents.



Institutions are seeking:



<ul class="wp-block-list">
<li>Better security (delegated permissions reduce key risk)</li>



<li>Higher automation (24/7 onchain execution)</li>



<li>Lower friction (eliminating endless human approvals)</li>
</ul>



With Smart Sessions, custodial wallets can offer a future-proof solution: secure, automated, and built for the era of AI-driven crypto investing.



<h3 class="wp-block-heading">Mobile Is Unlocking New Growth</h3>



Recent changes to Apple’s App Store policies mark a turning point for mobile crypto adoption. For the first time, apps and wallets will have more freedom to guide users toward decentralized payment options, external wallets, and onchain transactions.



WalletConnect pioneered the original standard that enabled&nbsp;secure connections between mobile apps and wallets. Now, with regulatory and platform barriers easing,&nbsp;mobile-first crypto experiences&nbsp;can finally scale to their full potential.



Smart Sessions — or what we increasingly see as&nbsp;Permissioned Sessions&nbsp;— will be critical in this mobile world, enabling seamless, trusted interactions between users, apps, and autonomous agents.



As mobile access expands, WalletConnect is uniquely positioned to power the next generation of decentralized, AI-driven applications — everywhere users are.



<h3 class="wp-block-heading">The Future: An Onchain Internet, Powered by Sessions</h3>



We are standing at the beginning of a profound shift:



<ul class="wp-block-list">
<li>Users will expect wallets that &#8220;just work&#8221; in the background.</li>



<li>Apps will integrate AI agents by default.</li>



<li>Sessions will replace manual transactions as the dominant mode of onchain interaction.</li>



<li>$WCT will sit at the heart of this new transaction economy.</li>
</ul>



Smart Sessions aren&#8217;t just a feature. They are a new primitive for an AI-powered, mobile-native, onchain world.



This is a future where you don’t work to be onchain. Onchain works for you.



Enabled by wallets.



Empowered by AI.



Built with Smart Sessions.



WalletConnect is making it real. The next wave of growth is just getting started.



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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</ul>

WalletConnect bets big on AI and mobile adoption to power next phase of protocol’s growth

Byron Gilliam

This is a segment from the Blockworks Daily newsletter. To read full editions, <a href="https://blockworks.co/newsletter/daily">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">
“Half of the troubles of this life can be traced to saying yes too quickly and not saying no soon enough.”



— Josh Billings
</blockquote>



If you’ve ever tried meditation, you’ll know that doing nothing for more than about 10 seconds is weirdly difficult.



If you haven’t, you might not realize just how much the human mind rebels against inactivity — an evolutionary inheritance from when doing nothing meant starving on the savannah (or getting eaten), I guess.



These days, our bias for taking action is nowhere more evident than in financial markets, where the headlines are always imploring investors to take action: Something is happening, they tell us, and we’d better do something about it — now.



Only the most stoic among us can resist for long — traders, investors, gamblers and even business people are constantly reacting to events and placing bets on their consequences.



But events are rarely as consequential as we expect.



One measure of investors’ propensity to overreact to events is options pricing: An academic <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=375784">study</a> from 2003 found that traders so overpaid for put options on the S&amp;P 500 that they’d need equities to experience a 1987-sized crash once every nine months just to break even.



That hasn’t worked out so well: 22 years later, there has still only ever been one 1987-sized market crash.&nbsp;



(Mercifully, Black Monday’s vertiginous drop of 22.6% remains the biggest of all time.)



Another measure of our tendency to overestimate the probability of unlikely outcomes is found at the horse track.



Two researchers studying the “favorite-longshot bias” <a href="https://eriksnowberg.com/papers/Snowberg-Wolfers%20Risk%20Love%20or%20Decision%20Weights-NBER.pdf">concluded</a> that “longshots are overbet, while favorites are underbet.”



Betting on horses with odds of 100:1 or greater, they found, resulted in losses of 61% — far greater than the 23% loss that bettors would have incurred by placing their bets randomly.



A <a href="https://eprints.qut.edu.au/218538/1/EJ2012.pdf">study</a> of prediction markets similarly found a “long-shot bias” among bettors causes high-likelihood events to be underpriced and low-likelihood events to be overpriced.



The long shots do sometimes hit, of course.&nbsp;



When Leicester City won the English Premier League in 2016, for example, it turned <a href="https://www.espn.com/chalk/story/_/id/15447052/chalk-tales-bettors-bet-leicester-city-win-premier-league-season">one fan’s £5 bet</a> into a £25,000 payout — at 5:000:1, it was probably the longest-odds bet on a single sporting event ever to hit.



(Other 5,000:1 bets available at UK bookies implied that Leicester City winning the league was exactly as likely as Elvis being found alive or Barack Obama playing cricket for England.)



It’s fun to bet on something like that happening — it scratches our itch to believe that 1) extraordinary things happen more frequently than they do and 2) we have an ability to anticipate them.



Most of the time, though, you want to bet against things happening.



For example: One <a href="https://x.com/Polymarket/status/1911874780678009202?t=zN2GJ2pb0J3bupm5GnaFiA&amp;s=19">Polymarket bettor</a> recently made about $2.1 million betting “no” on seemingly everything.



When you look at some of the bets on offer, you can see why that might be a profitable strategy: Polymarket betting implies there’s a <a href="https://polymarket.com/event/will-canada-join-us-as-51st-state-in-2025?tid=1747153630203">4% chance</a> that Canada will be the 51st US state by the end of 2025 and that there’s a <a href="https://polymarket.com/event/what-will-happen-before-gta-vi?tid=1747153869987">13% chance</a> that Jesus will return before the release of Grand Theft Auto VI.



I imagine the people betting “yes” on those are doing it just for laughs (surely Grand Theft Auto won’t take that long).



But these “yes” bettors could be doing us a favor by illustrating the power of betting “no.”



Prediction markets show that people bet in anticipation of things happening far too often.



Horse racing shows that people anticipate extraordinary things far more frequently than they occur.



And financial markets show that, even when extraordinary things do occur, they’re typically less consequential than we expect — how else to explain US equities being unchanged on the year despite all the unprecedentedly dramatic news on tariffs?



Liberation Day turned out to be far less consequential than feared — not quite a nothing burger, but seemingly unimportant for long-term investors.



In the meantime, traders betting that the dramatic tariff headlines were inconsequential — betting as if nothing would happen — would have cleaned up.



This is not unique to tariffs — there have been enough such instances that “nothing ever happens” has become a modestly viral <a href="https://knowyourmeme.com/memes/nothing-ever-happens">meme</a>.&nbsp;



“Nothing ever happens” isn’t meant literally; it captures the idea that despite a non-stop drumbeat of headlines about dramatic events, markets (and life) often stay surprisingly stable.



Polymarket even lets you bet on it: As it defines it, the probability of “nothing” happening in May has risen to <a href="https://polymarket.com/event/nothing-ever-happens-may?tid=1747154136094">78%</a>.



Even at those odds, it might still be a good bet because people so optimistically overestimate their ability to predict what will happen.&nbsp;&nbsp;&nbsp;



This “optimism bias” is a good thing for society — if founders correctly assessed their chances of success, no companies would ever be founded.



But their success rate might improve if they spent less time thinking about what’s going to happen and more time thinking about what won’t happen.&nbsp;



Jeff Bezos notes that he frequently gets the question, “What&#8217;s going to change in the next 10 years?” and “almost never” gets the question: “What&#8217;s not going to change in the next 10 years?”



That’s unfortunate because the second question, he says, “is actually the more important of the two.”



Bezos says founders and business executives should think more about what won’t change because it’s easier to build a business around “things that are stable in time” (like Amazon customers wanting low prices and fast delivery, for example) than it is around things that will be different in time.



But investors, too, should probably spend more time thinking about what’s not likely to change — effectively betting “no” on the constant drumbeat of predictions about what’s going to happen — and how that will change everything.



It’s a better bet than we’re hardwired to think.



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The Breakdown Newsletter

Why investors should say ‘no’ more often

Jack Kubinec

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



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Investors are going to have to wait a bit longer for a Solana ETF.



In a <a href="https://www.sec.gov/files/rules/sro/nysearca/2025/34-103030.pdf">filing</a> earlier today, the SEC said it had not “reached any conclusions” on the NYSE’s 19b-4 filing to list Grayscale’s spot SOL ETF. This was an expected outcome: The SEC has 240 days from when it first acknowledges a 19b-4 filing to reach a final decision. In Grayscale’s case, that would <a href="https://x.com/JSeyff/status/1887623038918660290">set</a> a final deadline sometime in October.



Like anyone with a deadline, the SEC appears likely to get closer to the due date before finishing its work.



The Polymarket odds for spot Solana ETFs’ approval in 2025 fell from 89% to 80% a little before 8:00 am ET. Interestingly, this trading swing came several hours before news aggregators started posting about the SEC filing. The ETF approval odds were back up to 82% at the time of publication.&nbsp;



SOL was unaffected by the news and is up 5% on the day.



Spot Solana ETF filings began emerging in the waning months of the Biden presidency, where a Gary Gensler-led SEC <a href="https://www.theblock.co/post/312031/the-sec-rejected-cboes-19b-4-filings-for-solana-etfs-source">reportedly</a> rejected 19b-4 filings, which are filed by exchanges. Analysts <a href="https://x.com/EricBalchunas/status/1887623284692271554">portrayed</a> the fact that Trump’s SEC acknowledged the filing for an ETF containing Solana — which the prior regime called a security — as newsworthy.



Trump has promised to <a href="https://blockworks.co/news/donald-trump-digital-asset-summit-address">make America</a> the “crypto capital of the world.” Many believe a Solana ETF fits squarely into that vision — and SEC approval is only a matter of time.



The bigger question now, I suppose, is how popular spot SOL ETFs will wind up being. The Solana investment vehicle du jour is currently treasury plays like DeFi Development Corporation, which has already <a href="https://www.globenewswire.com/news-release/2025/05/12/3079065/0/en/DeFi-Development-Corp-Purchases-Record-172-670-SOL-Surpasses-100M-in-Treasury-Holdings.html">purchased</a> more than $100 million in SOL a few weeks after launching.&nbsp;



When I <a href="https://blockworks.co/news/janover-to-receive-kraken-staked-sol">interviewed its new executives</a>, the publicly-traded real estate software company that now buys a ton of Solana said it sees the Strategy-like play as superior to ETFs. That’s partly because even if staked SOL ETFs gain regulatory approval — which is <a href="https://blockworks.co/news/us-sol-etfs-unlikely-to-be-approved-soon">no guarantee</a> — they would likely not be able to stake their entire balance and may also have to pay Coinbase validator fees.&nbsp;



Multiple other companies have now followed <a href="https://blockworks.co/news/sol-strategies-is-solanas-microstrategy">Sol Strategies’ lead</a> in trying to capture Michael Saylor’s bitcoin magic on Solana.



So while the SEC takes its time on deciding whether Solana ETFs should trade in the US, the investment landscape may be shifting beneath its feet.



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ETFs

SEC not ready to decide on Grayscale Solana ETF

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



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The consumer price index for April rose 0.2% over the month and 2.3% over the year — marking the lowest annual inflation rate in more than four years. Core CPI (excludes food and fuel prices) also increased 0.2% in April, coming in at 2.8% annually.&nbsp;



If you’re wondering how April’s inflation figures could have been so tame in the wake of new tariff policies, there are a few reasons.&nbsp;



First, there historically has been a lag between tariff implementation and inflation rising. In May 2019, tariffs on $200 billion of Chinese imports were raised from 10% to 25%. A quick note that the increase was supposed to start in January 2019, but was delayed five months. Something to keep in mind as we try to predict what will happen today.&nbsp;



The May 2019 headline CPI report came in 0.1% higher month over month, compared with a 0.3% increase the month prior. Not too bad. The June 2019 core CPI, however, came in 0.3% higher on the month — the largest monthly increase since January 2018. Used car and truck prices — a decent proxy for tariff impact — increased 1.6% over the month in June 2019.&nbsp;



The anticipation of higher tariffs also had businesses stocking up their inventories in recent months, which could help delay any price increases passed on to consumers. How long that delay may last, though, is anyone’s guess.&nbsp;



Plus, a tariff-related decrease in consumer confidence and retail spending likely also contributed to lower prices.&nbsp;



Markets are still anticipating that the Fed will hold interest rates at its next meeting in June. That indicates traders expect the other “tariff shoe,” if you will, to drop. 



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Economy

Inflation in April rose less than expected, but tariff impact remains to be seen

Ben Strack

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



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A day after the SEC’s tokenization-focused roundtable, an asset manager launched its first tokenized fund. We just saw stablecoin-related M&amp;A, too.



First, SEC Chair Paul Atkins reiterated Monday that SEC policymaking “will no longer result from ad hoc enforcement actions.” (Yes, the agency italicized “ad hoc” in the transcript.)



On tokenization, he likened securities moving onchain to the transition of audio recordings from vinyl records to cassette tapes to digital software.



“Blockchain technology holds the promise to allow for a broad swath of novel use cases for securities, fostering new kinds of market activities that many of the commission’s legacy rules and regulations do not contemplate today,” Atkins said.&nbsp;



But SEC Commissioner Caroline Crenshaw — <a href="https://blockworks.co/news/industry-opinions-on-sec-commissioner-crenshaw">not exactly known</a> for her crypto support — essentially told everyone to proceed with caution.&nbsp;



She questioned how great instant settlement actually is, noting the delay between trade execution and settlement provides for “core market functionalities and protection mechanisms.”



Crenshaw also asked why the SEC — a “tech-neutral regulator” — would focus on blockchain over other types of distributed ledger technologies?&nbsp;



“And we seem to be doing so before the technology has even been demonstrated as fit for purpose,” she added.



On that point, Crenshaw’s colleague Hester Peirce last week <a href="https://www.sec.gov/newsroom/speeches-statements/peirce-iismgd-050825#_ftn2">noted</a> the SEC crypto task force is considering an exemptive order to let firms issue, trade and settle eligible tokenized securities. So-called sandboxes “can help regulators think about how existing rules could be adapted to accommodate trading tokenized securities at scale,” Peirce explained.



Franklin Templeton’s Sandy Kaul urged “practical sandboxes” that don’t just test what the tech can do (we know that already) — but that inform legislation/regulations. She stressed too that “consumer opportunity” is as important as consumer protection.&nbsp;&nbsp;&nbsp;



Kaul joined execs from BlackRock, Nasdaq, Fidelity and others. A second panel included some smaller, DeFi-centric players.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXde_hrGBxwBD8jvc5FHvXSdcIoWgejLCCzj4fNr6sH8Pih9yuvY3sTrPWC6mpF-DvPPiSSAoj92eZBiwhC6NsFI21vRWcRGVG78mXk0xvKQ06xMB0Ke3p8kG1wf9tolu0B-s1phhQ?key=hmUspgZPRMV_GCM1SWKGJg" alt=""/></figure>



Philipp Pieper, co-founder of RWA protocol Swarm, said in an email that while the SEC’s engagement with TradFi titans validates this segment’s potential, DeFi founders must advocate for permissionless protocols and programmable assets to ensure regulations don’t sideline startups.



“We must prove RWAs’ value with tangible use cases, such as fractional ownership and liquid supply chain assets, to win over regulators and users,” Pieper said. “The sector must build compelling RWA platforms which demonstrate clear cost savings and liquidity solutions.”&nbsp;



<h2 class="wp-block-heading">Anchorage, VanEck making moves</h2>



Anchorage Digital CEO Nathan McCauley (after the news his company would buy Mountain Protocol) said: “Stablecoins are becoming the backbone of the digital economy.”



If stablecoins (with a $230 billion market cap) are like checking accounts (as Tokenized Asset Coalition executive director Johnny Reinsch put it during the roundtable), yield-bearing tokenized money market funds are like savings accounts.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc4ABPKNgKoX2Bnw_m7cAjoT1Krl7mrGdjkanwv0VRCdWea1fApd7wcYpd2r5IPx-gpdUu5ucBHb0KsMpWf5TigLP93Jl-MANglTEURuSjBXi8QfC0qKOZ-cHg_mNg1ozunwGtu?key=hmUspgZPRMV_GCM1SWKGJg" alt=""/></figure>



Speaking of which, VanEck is the latest to offer onchain access to US Treasury-backed assets via its new VBILL fund. Available across the Avalanche, BNB Chain, Ethereum, and Solana blockchains, VBILL facilitates atomic liquidity via Agora’s USD stablecoin (AUSD).



BlackRock’s BUIDL is perhaps the best known tokenized yield fund now. Its assets under management (as you see above) make up roughly 40% of the nearly $7 billion tokenized Treasury space, <a href="http://rwa.xyz">rwa.xyz</a> data shows.&nbsp;



Then there’s the <a href="https://blockworks.co/news/tokenized-rwa-segments-will-boom-next">opportunity to tokenize</a> public stocks, as well as private equities and credit.



Though stablecoin bill progress has <a href="https://blockworks.co/news/legislative-speed-bumps-genius-act-sec">hit a snag</a> in the US, these ongoing SEC talks — even if not Earth-shattering — signal the industry is getting closer to clarity.&nbsp;



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Forward Guidance

Crypto players eye more tokenization tests after latest SEC talk

Kate Irwin

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



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Sugartown — the “GameFi” platform that began its development while part of Zynga for years — is <a href="https://x.com/visitsugartown/status/1920571069942972795">launching</a> another NFT collection.



Zynga is the mobile gaming studio behind games like FarmVille and Words With Friends. The studio <a href="https://www.gamedeveloper.com/business/zynga-sells-off-web3-game-sugartown-to-d20-labs">sold off</a> Sugartown to startup D20 Labs in a <a href="https://x.com/visitsugartown/status/1829605016883155174?lang=en">move</a> that was reportedly part of a <a href="https://x.com/CashBowie/status/1921959690252206301">spinout</a> last year. Zynga’s crypto-focused staff also moved to D20 Labs.&nbsp;



Now, Sugartown’s latest drop is underway.&nbsp;



The 9,999 “Cores,” which will live on the Abstract blockchain, resemble scientific tubes filled with a mysterious liquid substance. They’ll cost 0.069 ETH (about $175) each to mint.&nbsp;



The team says Cores will give holders access to Sugartown’s Abstract minigames, rewards, and other features in the works like token staking.



The mint schedule and process for these Cores is a bit complicated. It prioritizes long-term believers and crypto degens over regular gamers or newcomers with little to no crypto experience.&nbsp;



Buyers who already bought Cores in a private presale have received them via <a href="https://x.com/visitsugartown/status/1922075582776414555">airdrop</a>. Then, those still holding their Sugartown Ora NFTs from late 2023 will be able to mint Cores. The Ora holder mint opens today, with a free mint occurring first and a paid mint taking place after.



The free mint phase goes from 8 am until 2 pm ET today, but you’ll only be eligible if you have three Ora NFTs in one wallet.&nbsp;



Then, from 2 pm today until 8 am ET tomorrow, anyone with at least one Ora will be able to mint two cores for a fee, plus an additional two mints per three Oras held.&nbsp;



Does this sound like a high school math problem yet?&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXclfLvUKEecG-P-RGn49wGPB0PCH_XutlDOEDnq6YoU2gsh-80DagXmfEixgfSQD3QNUhU5V9PhVFwfOQS2-Fx_F8TkysBsVvfGowJ6nabjuTy7tG7dO8u5U-_9U6qPwHthmEEpXw?key=Ze5MYxNXZMrkEh0Gizp6kA" alt=""/></figure>



Tomorrow, the allowlist mint will open for just an hour from 12 pm until 1 pm ET. At 2 pm Wednesday, a public raffle will occur, with no regular public sale.



Degens without any special NFTs or allowlist access will have to buy their way into the ability to mint in the last stage with “deposit entries” — the more entries bought, the higher the chance they might be able to mint. It’s like a lottery, but if you don’t get in, your entries will be refunded, according to the team.



A lot of this feels like it’s prohibitive for casual gamers, but suitable for degens. The Sugartown website remains token-gated, so I can’t even see if anything’s live there yet.&nbsp;



But Ora holders can get access to whatever’s on the other side.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXebiGYfvsuInxObkggsd8h8t8p5R-tja1TwadBOoKJ5jPdH92HWi49kZT_LDszlHapyMrP3y3VrE93mHTsRSpxKGB5Y1SBQEiYcbUiOb_omHBpWrEn4leYIt86CZWzWDD_Pz2z4Xw?key=Ze5MYxNXZMrkEh0Gizp6kA" alt=""/></figure>



Sugartown <a href="https://x.com/visitsugartown/status/1921340872475705830">advisor</a> Bharat Krymo argued that all crypto games have an element of gambling during an <a href="https://x.com/i/spaces/1MYxNwLmBdyKw">X Space</a> yesterday.&nbsp;



And Tommy Ngo — who is Sugartown’s co-founder, D20 Labs’ co-founder, and formerly Zynga’s head of Web3 product — said during that Space that he wants those who do snag Cores to feel “really rewarded” for hanging onto them.



But a disclaimer in the Sugartown Discord server tells buyers that the platform’s NFTs “are not an investment product or business opportunity.”&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc72pyAkEN21CSlrpSzmuMD9Eit41AEVtgubWkt2kfwOgNJLxhvo8cWfzCy9YAV6CnkET8BN9kl0uif9ZTUE9dA9rQVEsJwQeLH0pgBRuVWlVXgdhfowr5GX_-u065EDPnfDbQDDg?key=Ze5MYxNXZMrkEh0Gizp6kA" alt=""/></figure>



Sugartown is a game platform where players connect their crypto wallets and can choose from a number of different minigames, including gambling or “social casino” games, plus poker and “hypercasual,” fast-paced minigames.



There are three minigames so far, all crypto-themed: the 2D scroller NGMI, the climbing game ATH, and poker game RNPC (<a href="https://venturebeat.com/games/ex-zynga-web3-team-d20-labs-unveils-social-casino-poker-game/">Royal Nutz Poker Club</a>).



Abstract co-inventor Michael Lee has <a href="https://x.com/CashBowie/status/1921959690252206301">said</a> Sugartown has five games in the works in total.



Sugartown has also promised a token, <a href="https://x.com/visitsugartown/status/1901710133694017687">WIN</a>, at some point, but when that might launch remains unclear.&nbsp;



Abstract, a relatively new Ethereum L2 chain that’s tried to target crypto newbies, is home to a number of other gambling and social casino apps already with names that speak for themselves, like Gamblor, Riskiiit, and Koala Coin Toss.



Degen szn continues.



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Gaming

Sugartown proves it’s still for degens with its latest mint

Donovan Choy

The following is part two of a multi-part series on the state of crypto liquid markets based on several conversations with liquid funds.



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



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Yesterday’s <a href="https://blockworks.co/news/crypto-liquid-funds-bitcoin-target-this-cycle">0xResearch coverage</a> looked at how the institutionalization of bitcoin and an altcoin supply glut has made it harder to invest in any crypto asset that isn’t bitcoin.



What are liquid funds doing about it? How are they adapting?



Of the eight liquid funds I spoke to, seven mentioned the importance of “fundamentals.”



“Crypto can only grow if it attracts institutional capital, and institutions care most about fundamentals. This is still limited in pockets but is improving within crypto in meaningful ways,” Pantera general partner Cosmo Jiang told me.



Fundamental investing is a lot like painting a mosaic — what is sometimes called &#8220;mosaic investing&#8221; in traditional equities, he said.&nbsp;



“Fundamental investors are building a mosaic of all the data points that exist today — both qualitative and quantitative — to predict the earnings power of this business in the future. What matters is not today&#8217;s metrics, but the cashflow potential of a business three to five years from now.”



What these metrics are, and how much they matter, depends largely on the context of the token’s business.



For instance, ParaFi Capital founder Ben Forman thinks valuable metrics for L1/L2 blockchains are “the total stablecoin and real-world asset supply issued on the chain” and “the velocity that those tokens are circulating.”



&#8220;Vanity metrics like TVL, which are often showcased by L1s but often involve wrapping of their native token, will be meaningfully less significant in the future,&#8221; Forman said.



While professional investors and data wizards still can’t agree on which metrics matter most, there is at least a common belief that narratives are no longer all that matters.



“In 2021, the majority of capital being deployed was not being done so through a fundamental lens,” Theia Fund’s Noah Goldberg argued in a previous <a href="https://x.com/Blockworks_/status/1897077974870245779">X space</a> with 0xResearch. “There was a lot of momentum trading, and retail capital that isn’t price-sensitive…Whereas today, I would say that a lot of capital in liquid markets is concentrated in the hands of funds,” he said.



One investor I spoke to pointed to how tokens with strong fundamental metrics tend to suffer less of a drawdown in a market crash.



The focus on fundamental investing also forces crypto to confront the industry’s most sacred narrative: the Bitcoin halving and four-year cycle.



Some, like Defiance’s Arthur Cheong, believe the four-year cycle of crypto has “officially ended.”



“As the marginal impact to supply of each successive halving event decreases, it will have less impact on the price going forward,” Cheong wrote in an investor letter.



Other funds dismissed the halving as irrelevant, since their mandate involved holding liquid tokens over time horizons longer than four years.



Another fund called the four-year cycle a “meme,” pointing to interest rate cycles as the real risk-on and -off toggle.



Pantera’s Cosmo Jiang <a href="https://panteracapital.com/blockchain-letter/looking-past-tariff-volatility/">saw</a> bitcoin’s historical bull rallies as simply having coincided with global liquidity cycles, like the Eurozone debt crisis in 2012, Brexit in 2016 and Covid in 2020.



In the third and final part of this series, we’ll finally dive into some of the crypto sectors that liquid funds are looking at.



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



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



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



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



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



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



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

Crypto liquid funds are turning to fundamentals to navigate a sea of altcoins

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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Money is speech.



Those three words are arguably the most succinct way to express the importance of Bitcoin.&nbsp;



To the idealist, Bitcoin is an obvious frontier in the war for personal freedoms. It embodies the freedom to transact in the same way that art and newspapers represent freedoms of expression and speech.



Today’s Supply Shock episode features legendary Cypherpunk Phil Zimmermann, the creator of Pretty Good Privacy (PGP) who fought tirelessly for our freedom of digital privacy during the 1990s. Check out one of our <a href="https://blockworks.co/news/cypherpunk-movement-history-wired-1993">previous retrospectives</a> for a primer on Zimmermann.



Who better to ask, considering his long-term collaboration with Bitcoin pioneer <a href="https://bitcoinhistorynl.beehiiv.com/p/user-1?utm_source=bitcoinhistorynl.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=user-1">Hal Finney</a>: If PGP was the frontline for the first Crypto War, is Bitcoin the battleground for Crypto War II?



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



Phil Zimmermann formally hired Hal Finney in 1996, almost a decade and a half before Bitcoin — back when “crypto” only really meant “cryptography.”&nbsp;



Hal had spent years developing PGP with Zimmermann officially as a <a href="https://web.archive.org/web/20170915204932/https://www.nytimes.com/2014/08/31/business/hal-finney-cryptographer-and-bitcoin-pioneer-dies-at-58.html?ref=obituaries">volunteer</a>, partly because PGP was not yet a company, and partly to avoid drawing the ire of the US government that had rained down on Zimmermann.



Zimmermann told Supply Shock host Pete Rizzo that he knew Hal was exploring proof-of-work projects, and said he himself found Bitcoin technically intriguing. However, he was working on other things at the time, which kept him from becoming wrapped up in early Bitcoin development in the same way Hal was.



“For the first time, you actually had a feasible electronic money scheme that was decentralized,” he said. “I mean, we&#8217;ve had electronic money for a long time just by banks…I think [Bitcoin] was a very creative breakthrough in the development of digital money.”



More recently, Zimmermann has been a headline feature of the Bitcoin conference circuit, appearing on stage last October <a href="https://www.youtube.com/watch?v=7Axo2CGwY00">alongside</a> Adam Back at the Plan B Forum in Lugano, Switzerland.



Bitcoin events have shown Zimmermann the positives of Bitcoin, particularly for those living under autocracies, as is the case across Latin America.



“The dictator executes his control over the population in a variety of ways. Some of them are violent, but sometimes he just takes their money,” he said. “Singapore has a high standard of living, high salaries and high percentage of home ownership. Everybody gets a pension when they work and the government there has control of that pension. If you criticize the government, you might lose your pension.”



“And so, if you live in an autocracy, it would be useful to have some of your assets in bitcoin so that it&#8217;s out of reach of the autocrat. I met a lot of people in Argentina at the Bitcoin conference there that had stories to tell about the places where they had used Bitcoin to protect some of their assets.”



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/MpCGYFXn5cI?si=M5XkkjyRVXx_ol9N" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







Still, Zimmermann’s relationship with Bitcoin is complicated, in many of the same ways that his connection with his own creation, PGP, was conflicted. Zimmermann lamented that he knew for a fact that PGP was in Al-Qaeda training manuals, for instance, but at the same time, the technology was a force for good elsewhere in the world.



“In the 90s, when we were engaging in the debate about strong cryptography and especially PGP…Some advocates for strong cryptography were denying that criminals use PGP — they were denying that terrorists were using PGP.&#8221;



He continued: “[PGP was also] used in lots of environments where there was great danger to people who lived in wartime conditions. I got letters from people who lived in places where people were being killed by oppressive governments or war, and PGP was saving lives. So these technologies quite often have mixed effects on society, and that includes Bitcoin. I would like to see more examples of Bitcoin being used for good.”



Check out the full episode of Supply Shock on <a href="https://www.youtube.com/watch?v=MpCGYFXn5cI">YouTube</a>, <a href="https://podcasts.apple.com/us/podcast/pgp-creator-bitcoin-is-not-the-revolution-you-think/id1558223079?i=1000708295114">Apple Podcasts</a> and <a href="https://open.spotify.com/episode/5rFyKjI5rwurM3Vf1UXffH">Spotify</a>.



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



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



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



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

Bitcoin

‘It’s out of reach of the autocrat’: How Cypherpunk Phil Zimmermann feels about Bitcoin

Some employees at Bitget’s new blockchain, Morph, initially thought of the L2 network as a potential future rival to Coinbase’s Base.&nbsp;



But sources familiar with the project tell Blockworks that Morph has been stymied by internal dysfunction. Sources claim that since a $20 million <a href="https://www.prnewswire.com/news-releases/morph-announces-20mm-fundraise-in-seed-and-angel-investment-302094646.html">seed raise</a> in March of last year, team conflicts, flashy spending and a mysterious “shadow CEO” have led to layoffs, delays and a loss of direction.&nbsp;



Blockworks spoke with a dozen current and former employees who were granted anonymity to share candid details of what went wrong inside one of Bitget’s most public bets.



<h2 class="wp-block-heading">Morph’s beginnings</h2>



Exchanges are crypto’s largest apps. One way these digital asset titans capitalize on their popularity is by launching their own blockchains.&nbsp;



Binance first <a href="https://www.binance.com/en/blog/all/bnb-smart-chain-launches-today-421499824684900933?hl=en">launched</a> the BNB Chain in 2020. Coinbase launched an Ethereum layer-2 named Base in 2023. Kraken, OKX, and Gate.io have all built or are building blockchains.&nbsp;



These chains can be lucrative. Base generated $76 million in gross profit in 2024, per Blockworks Research.



It was in this context that an L2 named Morph became a hot ticket after being incubated by Bitget, the 10th largest exchange by <a href="https://www.coingecko.com/research/publications/largest-centralized-crypto-exchanges#which-exchanges-have-lost-market-share-since-2020">spot volume</a>. But instead of following a more classic startup model where two co-founders come together with a single idea, Morph saw two co-founders who didn’t know each other become paired together.&nbsp;



The team behind Morph brought in Azeem Khan — who lives in the US and was previously head of impact at Gitcoin — and Cecilia Hsueh, who is based in Singapore, according to her LinkedIn. Hsueh was formerly chief marketing officer and, briefly, the CEO of the crypto exchange Phemex. She was tapped as CEO of Morph, while Khan became chief operating officer.



Things looked bright at first. As crypto fundraising began to recover, Morph raised $20 million in seed funding from US-based venture firm Dragonfly. Other investors included Pantera, MEXC Group, Bitget’s venture arm Foresight Ventures, and Spartan Group.



Bitget and Foresight didn’t return multiple requests for comment on Morph. Dragonfly and Pantera declined to comment when reached.



Morph’s mainnet went <a href="https://decrypt.co/289113/morph-announces-mainnet-launch-on-ethereum-paving-the-way-for-consumer-blockchain-adoption">live</a> in late October of last year. According to Morph’s <a href="https://morphl2.socialscan.io/">block explorer</a>, the L2 had roughly 16,000 transactions on Monday, May 12. To put those numbers in perspective, Base averages several million daily transactions, per a Blockworks Research dashboard.



The launch was only half the battle. The other big goal was to launch a token, former employees recounted, but this has yet to materialize.&nbsp;



Last month, Morph <a href="https://morph.ghost.io/morph-platinum-nft-sale-is-live/">teased</a> that folks who mint so-called Platinum NFTs would be “securing their position in the ecosystem at a $500 million FDV valuation, with 50% token unlock at TGE.”&nbsp;



The seed round had put Morph at a $125 million valuation in March 2024, according to a person familiar.



Since the raise, however, Bitget’s layer-2 has experienced a turbulent year.&nbsp;



<h2 class="wp-block-heading">‘Ghost founder’</h2>



As Morph staffed up and tried to bring a working blockchain to market, cracks emerged among its leadership.



People familiar described tension between Hsueh and Khan, who did not know each other before being tapped as co-founders.



Khan declined to comment when reached by Blockworks.



Bitget, which is not available in the US, has seen strong growth the past few years in Africa, South Asia and Southeast Asia, <a href="https://www.bitget.com/blog/articles/bitget-2024-year-in-review">according</a> to company data. Morph initially aimed to reach users in the Global South who are not being served by other exchange blockchains, as co-founder Azeem Khan explained in a CoinDesk <a href="https://www.youtube.com/watch?v=2j7oh5lfCpU">interview</a> last year.



Strategically, Khan and Hsueh were not always aligned, per several sources. While Khan talked about emerging markets in press appearances, those initiatives were slow to materialize internally, former employees recounted. A team that spent months planning out activations in those markets was told they wouldn’t receive a budget, a source said.



Stranger still, employees who spoke to Blockworks sensed that neither Khan nor CEO Hsueh seemed to always have the final say on things.



One employee described Khan as being more like a “ghost founder” than an actual co-founder, and noted they’d never seen anything like it throughout their crypto career.



A lot of decision-making power seemed to rest with Forest Bai, a co-founder and partner of Foresight Ventures (Bitget’s venture arm and an investor in Morph) as well as chair of The Block. Multiple people confirmed that Bai was like a “shadow CEO.” Sources noted that he had oversight on things like spending and company strategy.



Khan announced that he was leaving Morph in March, noting in an X post that stepping down was “the best path forward for me.” He’s since <a href="https://polygon.technology/blog/miden-raises-25m-from-a16z-crypto-1kx-and-hackvc-to-build-the-edge-blockchain">emerged</a> as a co-founder of a different blockchain named Miden.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">After careful consideration, I’ve chosen to step down from my position as co-founder &amp; COO of <a href="https://twitter.com/MorphLayer?ref_src=twsrc%5Etfw">@MorphLayer</a> . This was not a decision I took lightly, but ultimately after thinking it over, this is the best path forward for me. I’d like to take a moment to thank all my…&mdash; azeem (@azeemk_) <a href="https://twitter.com/azeemk_/status/1902933187296190593?ref_src=twsrc%5Etfw">March 21, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The lack of alignment and independent decision-making power contributed to Khan’s departure, according to multiple people familiar.



Hsueh has stayed on as CEO — although her power internally has allegedly waned further in recent months, three people told Blockworks.



<h2 class="wp-block-heading">Who’s really in charge?</h2>



Nearly everyone Blockworks spoke to described Hsueh as having a limited understanding of the technical ins and outs of blockchain. While it’s not a prerequisite for an executive to be crypto-native, sources claimed that Hsueh was out of touch with blockchain users and didn’t show an interest in learning about the technology, creating a feeling that Morph lacked clear strategic direction.



Instead, Hsueh was preoccupied with growing her online presence, sources said. Three ex-employees recounted being asked to engage with her posts. Others added that Hsueh would prioritize <a href="https://x.com/cecilia_hsueh/status/1851610014697361890">announcements</a> about Morph on her personal account over the official account.&nbsp;



At one point, Hsueh took to posting pictures of her feet on X.



<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">ran into some crypto folks and it went like this. guy: hey, aren’t you the founder who posts all those feet pics? me: yeah, i’m just really down to earth like that. <a href="https://t.co/A1ljUcNC6A">pic.twitter.com/A1ljUcNC6A</a>&mdash; Cecilia Hsueh 🐨 (@cecilia_hsueh) <a href="https://twitter.com/cecilia_hsueh/status/1846201866981642571?ref_src=twsrc%5Etfw">October 15, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



It’s unclear how much power Hsueh still holds, though an ex-employee described her as being “teflon.”



While she’s listed as the CEO in company documents, Foresight Ventures co-founder Forest Bai’s name appears next to hers on an internal organization chart shared with Blockworks.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd4a58UnMCtLHzaM-MMfwbiwnjBL1mMhIjaPApqsLYcWGP9p2P5s1pva4ovdBcd1led3MeMi50_8LybdDutbTnIwzGWzJBvRGGTZUQxTgmKWgM2JmvJ3Y7AVy-HmLB4aJ2twHzL?key=3cJcF7ftMvN2nPy8lwbXgJZM" alt=""/><figcaption class="wp-element-caption">An edited screenshot from Morph’s organizational chart showing Bai and Hsueh’s roles</figcaption></figure>



Neither Hsueh nor Bai returned emails or messages requesting comments.&nbsp;



While Bai has taken more control in recent months — having been officially added to the company Slack, per three sources familiar — others noted that he held sway over both Khan and Hsueh before Khan’s departure. Officially, Bai is listed as a consultant in internal Slack messages seen by Blockworks.



Another internal Slack message shared with Blockworks requested Bai’s presence in ecosystem and marketing team meetings.&nbsp;



<h2 class="wp-block-heading">Deal or no deal?</h2>



In 2024, Morph was a big spender, four people said. Granted, the company had just finalized a $20 million raise.&nbsp;



But the spending included events with K-pop band tripleS, where Morph allegedly covered the group’s travel and accommodations, one source told Blockworks. An invite on Lu.ma, a popular website utilized by projects planning post-conference events, teased a “special performance” by tripleS in April of last year. The <a href="https://lu.ma/KpopParty">event</a> was hosted by Zircuit, Bitget, Morph, Foresight Ventures and Quantstamp.



Multiple sources discussed Morph spending hundreds of thousands of dollars on events at crypto conferences. At Token2049 in Singapore, Morph hosted an all-day side event at Singapore’s ArtScience Museum, sources noted. A Lu.ma <a href="https://lu.ma/yb8ouaam">invite</a> shows that the event was attended by the likes of Vitalik Buterin, Avara’s Stani Kulechov and Aptos’ Mo Shaikh, with popular South Korean performer DJ SODA as the main act at the afterparty.



The large event spending didn’t align with the return on investment or bottom line, another source noted. And, while events seemed to get money, Hsueh seemed reluctant to greenlight actual business deals, people familiar told Blockworks.



The bright side of the company’s spending, per a source familiar, was that Morph initially compensated its employees competitively.



Outside of events, there were discussions for a physical office in New York City that culminated in a space on One World Trade Center’s 77th floor, three sources told Blockworks.&nbsp;



The office is also shared with Foresight and The Block, though it’s unclear who’s on the lease.



<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">Such a pleasant view from the <a href="https://twitter.com/MorphL2?ref_src=twsrc%5Etfw">@MorphL2</a> office <a href="https://t.co/6dZLnKR8QJ">pic.twitter.com/6dZLnKR8QJ</a>&mdash; azeem (@azeemk_) <a href="https://twitter.com/azeemk_/status/1861501600277090391?ref_src=twsrc%5Etfw">November 26, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



On the developer side, Morph once paid a team of developers over $200,000 to build a fork of Uniswap v2, according to multiple sources. Since Uniswap’s code is open source, one ex-employee felt that the project overpaid for the DEX, which became known as BulbaSwap. BulbaSwap currently holds around $93 million in total value locked, according to DeFiLlama, making it around the 200th-largest DEX by that metric.



<h2 class="wp-block-heading">The ‘dark arts’</h2>



Morph’s burn rate may have been offset by a planned Series A fundraise, but a fresh funding round is yet to materialize.&nbsp;



“We are looking for our next round,” Hsueh said in an <a href="https://www.youtube.com/watch?v=BMatGF85v0M">interview</a> with Web3TV in September, noting that “running a chain is very expensive,” and the company was looking to grow its headcount.



However, people familiar noted that there were tensions around a Series A prior to Khan’s departure. Bai, two people familiar said, pushed for Morph to raise another round.&nbsp;



Blockworks was unable to determine the current status of the Series A.



Even without the raise, a source familiar told Blockworks that Morph isn’t out of money yet, and it’s still backed by Bitget.



Morph didn’t return multiple requests for comment.



Meanwhile, Morph has had some trouble retaining talent. One ex-employee said it’s faced a “crazy amount” of turnover, from departures to layoffs. Some employees have also taken salary cuts, others noted.



Multiple employees said they didn’t receive token contracts. According to one source, Morph attempted to force some employees who did receive contracts to sign new ones in May of last year which would have changed their vesting periods.



Another source told Blockworks that the departures have left some teams depleted, and some Slack channels have little to no activity. Despite the hardships, Morph still plans to launch its token by the end of this year, a person familiar said.



For investors, Morph’s saving grace may be its connection to Bitget, which may yet be keen to list Morph’s forthcoming token at launch.



Bitget understands the “dark arts” of facilitating trading around tokens that may have questionable value, said an ex-employee.



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



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



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



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

Bitget

Morph, Bitget’s L2, is stymied by founder disputes, lavish spending and power struggles: Sources

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"/>



A new perps DEX is entering the chat.&nbsp;



The team exclusively told me that Perpl, a decentralized perpetual futures exchange, raised $9.25 million from Dragonfly to build on Monad.&nbsp;



Other participants in the round include Ergonia, Brevan Howard, Breed, L1D and CMS.&nbsp;



I had a chance to speak with co-founder PB, who told me that he and his cofounder — both Americans — left the US to build Perpl in London. They’ve since hired a London-based team. Surprise, surprise, the decision came due to the lack of regulatory clarity in the US.&nbsp;



PB isn’t writing off the US entirely, though, noting that if the laws change, Perpl would consider opening up to the market — it’s just not currently in the cards.&nbsp;



Perpetual futures, or perps, are becoming more of a popular product, especially in crypto. Just last week, Coinbase <a href="https://www.coinbase.com/blog/24-7-futures-trading-has-arrived">teased</a> that 24/7 perps were “coming soon” after announcing 24/7 futures trading.&nbsp;



“I think the thing with perps, specifically, is how simple it is. With options, there&#8217;s just a lot of complexity. There are expirations, there&#8217;s just a lot more math for users to be aware of. But perps, it&#8217;s very simple, never expires,” PB explained.&nbsp;



“You just have to keep track of liquidations. And then that also helps with getting all the liquidity in one place. With options, since you have expirations, you have liquidity each month, but with perps, all liquidity for the assets is in the same place. More liquidity, better trading experience.”



What PB noticed is that crypto traders like the ease of access that perps offer. There’s also the added benefit that a project like Perpl can move faster on a token listing than, say, a Coinbase.&nbsp;



“With perps, you just need an oracle price and USDC, and you can start immediately taking a position. If you were to rewind back to maybe a couple of years ago, you needed a Binance or one of these central exchanges to actually list perps, but with DEXs, they&#8217;re able to list these tokens faster,” he explained.&nbsp;



Perps DEXs are “broken in a very interesting way,” PB told me. Basically, there are infrastructure and engineering issues and then the DEXs make some trade-offs to account for them, but Perpl claims to be different.&nbsp;



“What Hyperliquid has done with a cloud-based perp DEX has shown that the market appetite is there for something that has a deep liquidity. What we&#8217;re really excited for is to see how the composability angle plays out with that,” he added.&nbsp;



Perpl plans to utilize the EVM architecture from Monad to build its onchain central limit order book. But the downside is that, since it’s on Monad, it won’t be able to launch mainnet until Monad itself goes live. It does, however, plan to launch testnet by the end of the year.&nbsp;



“We&#8217;ve raised enough money to help us sustain ourselves if testnet or mainnet takes longer, but we want to get it onto testnet by the end of this year, just because we want people to try it,” he said. “There are going to be bugs that they&#8217;re going to be able to find. No matter how much we test internally, [nothing beats] user testing, so we want them to be able to get their hands on it.”



But PB and the team aren’t too worried if Monad’s mainnet takes longer than anticipated; they’ll just be building up the features on Perpl in the meantime.



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



Get the news in your inbox. Explore Blockworks newsletters:



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



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



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



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



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



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



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

Dragonfly Capital

Exclusive: Perpl raises $9.25M from Dragonfly to build on Monad

This is a segment from the Blockworks Daily newsletter. To read full editions, <a href="https://blockworks.co/newsletter/daily">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">
“Leaders get killed from below.&#8221;



— Clay Christensen
</blockquote>



In <a href="https://www.amazon.com/Innovators-Dilemma-Technologies-Management-Innovation/dp/142219602X?tag=googhydr-20&amp;hvsb=Media_d&amp;hvcampaign=dsadesk">The Innovator’s Dilemma</a>, Clay Christensen introduced the concept of disruptive innovation — when a product that initially looks like a cheap knockoff ends up rewriting the rules of an entire industry.



These products typically get their start in either low-end or entirely new markets that incumbents have ignored because they were either not profitable enough to serve or didn’t seem strategically important.



But that turns out to be a good starting point: “A disruptive technology is initially embraced by the least profitable customers in a market,” Christensen explained.



These customers are often eager to adopt a product that is initially inferior in terms of traditional performance metrics, but cheaper, simpler and more accessible to them.



Christensen cites the example of Toyota, which got its start in the US market by targeting budget-conscious customers that the Big Three US automakers had overlooked.



The incumbents’ focus on bigger, faster, more feature-rich cars had created “a vacuum underneath them,” in Christensen’s telling, and Toyota filled that vacuum with the slower, smaller, no-frills Corona, which cost just $2,000 when it was introduced in 1965.



Today, Toyota is the second-largest automaker in the US — and its Lexus LX 600 Luxury SUV starts at $115,850.



Toyota used the Corona to wedge its way into the US market and then steadily climbed the value chain, proving Christensen’s thesis that the best way to the top is to start from the bottom.



Stablecoins may be on a similar trajectory.



<h2 class="wp-block-heading">Disruption is coming</h2>



Christensen’s disruptors started in niche markets — and stablecoins started in emerging ones.



For people in the United States with access to bank deposits, stablecoins are essentially an inferior kind of dollar — not FDIC insured, not properly audited, not integrated into ACH or SWIFT and (despite the name) not always exchangeable for $1.&nbsp;



For people outside of the United States, however, they are a better kind of dollar — unlike $100 bills, you don’t have to hide them, they won’t get torn or defaced, and you don’t have to meet someone face-to-face to exchange them.



This has made US dollar stablecoins wildly popular in countries like Argentina — one-fifth of Argentines are <a href="https://cryptoforinnovation.org/will-argentina-become-the-first-crypto-economy/">said</a> to use them daily — even as few people in the US could tell you what they are.



Argentina is not the only place stablecoins are used, of course — stables are popular with DeFi traders, anyone who can’t pass a KYC check, emigrants sending remittances home, employers paying cross-border freelancers and savers escaping their local hyperinflating currency.



None of these are profitable enough as customers for incumbent banks to bother with, so it didn’t matter that stablecoins started out as inferior to bank-issued money.



For a while, people were so desperate for digital dollars that they didn’t even seem to care whether Tether’s USDT was fully backed.



They are much improved since: Circle offers a regulated alternative to USDT, Tether itself appears to be playing it by the book too, and some stablecoins even offer yield.&nbsp;



But is this innovation truly disruptive?



The <a href="https://www.christenseninstitute.org/theory/disruptive-innovation/#:~:text=Disruptive%20Innovations%20are%20NOT%20breakthrough,make%20products%20and%20services%20more">Christensen Institute</a> has a six-part test to determine whether an innovation qualifies as disruptive:



Does it target non-consumers or people who are overserved by an incumbent’s existing offering in a market?



Yes — DeFi traders and emerging market savers don’t need FDIC-backed US bank deposits (they’d be “overserved” by a full US bank account), but they do want digital dollars.



Is the offering not as good as an incumbent’s existing offering as judged by historical measures of performance?



Yes — stablecoins have deviated from their $1 peg, gone to zero (Luna/UST), can be expensive to on- and off-ramp, and can be frozen without recourse.



Is the innovation simpler to use, more convenient or more affordable than the incumbent’s existing offering?



Yes — sending stablecoins is easier than sending bank deposits, are more convenient for many, and more affordable for some.



Does the offering have a technological enabler that can carry it upmarket and allow it to improve?



Yes — blockchains!



Is the technology paired with a business model innovation that allows it to be sustainable?



Maybe? Tether may be the most profitable company in history on a per-employee basis, but if US regulators allow stablecoins to pay interest, issuing them might not provide any profits at all.&nbsp;



Are existing providers motivated to ignore the new innovation and are not threatened at the outset? No. Incumbents seem alert to the threat and aware of the opportunity. “Almost always, when low-end disruptions emerge, it creates a situation where the leaders in the industry actually are motivated to flee rather than fight you,” Christensen <a href="https://online.hbs.edu/blog/post/low-end-disruption">writes</a>. “That’s why low-end disruption is such an important tool to create new growth businesses: The competitors don’t want to compete against you; they just walk away.”



Stablecoins may be a rare exception: Instead of walking away from the low-cost innovation of stablecoins, incumbents appear to be racing toward it.



The payment incumbents Visa, Mastercard and Stripe have all announced new stablecoin offerings in recent weeks; BlackRock’s BUIDL fund (which looks like a yield-paying stablecoin) is rapidly attracting assets; the CEO of Bank of America says it’s likely to issue a stablecoin as soon as regulators allow it.&nbsp;&nbsp;



That might be because finance executives have all read The Innovator’s Dilemma.



Or it might be because stablecoins are so easy to issue.&nbsp;&nbsp;



Christensen frames disruptive innovation as company driven — where startups use low-end beachheads to claw their way into the mainstream before incumbents take them seriously.&nbsp;



And that might be how it works out for stablecoins, too: The <a href="https://www.businesswire.com/news/home/20250421041939/en/Circle-Announces-Payments-Network-to-Transform-Global-Money-Movement">Circle Payments Network</a> may be to Circle what Lexus was to Toyota.&nbsp;&nbsp;



But Circle’s competition isn’t as sleepy and slow moving as Toyota’s, so it’s entirely possible that stablecoins&#8217; early innovators will, in an inverse of Christensen’s theory, be killed from above.



The end result could be the same either way: A recent Citi report predicted that stablecoin AUM could hit $3.7 trillion by 2030, largely because of institutional adoption.



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



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