Wrapped stETH

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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Solana watchers will hope 2025 brings some of those fabled bullish unlocks.



If you search for “SOL unlocks” on X, you’ll find a cascade of warnings that the token’s circulating supply is set to greatly increase in 2025 alongside grainy screenshots of an unsourced spreadsheet showing big unlock figures. While these unlocks are real, industry watchers I spoke to didn’t seem too concerned that the newly-sellable tokens — which account for a small percentage of the overall supply — will add much downward pressure to the asset.



In Solana’s early days, FTX purchased a ton of SOL tokens that came with yearslong lock-ups. After the exchange went bankrupt, the FTX estate sold off a number of still-locked tokens to investors at a significant discount to the market price. The biggest FTX estate Solana unlock is slated for March 1, when $2.58 billion will come available, according to data from Messari. That represents a little more than 2% of Solana’s current market capitalization. 97.5% of SOL is unlocked in total.



“The FTX estate sale of Solana tokens … attracted many new investors to SOL. We will soon learn how many of them stick around for the long term,” VanEck head of digital assets research Matthew Sigel said.



Matt Maximo, an investor also at VanEck, said the buyers of locked SOL tokens he knew were looking for 10x returns and had some appetite to hold. He doubts too many of the locked SOL tokens will hit the market.&nbsp;



A second potential source of SOL selling could come from the Grayscale Solana Trust, an investment vehicle for SOL. Private placement investors were able buy GSOL shares at the net asset value of the trust, which represents a discount against the market value of the shares. These investors agree to a one year lockup before they can sell their shares, and a number of those private placement shares were sold a year ago this week, per SEC filings.&nbsp;



When private placement shares unlock, investors can sell those shares to collect their premium, and this sell pressure has already <a href="https://www.grayscale.com/crypto-products/grayscale-solana-trust#stage2">closed</a> some of the gap between GSOL’s market value and NAV.



GSOL only has $125 million in assets under management compared to a $112 billion market cap for SOL, so the GSOL premium may disappear, but it likely won’t show up too much in the asset’s overall price movement.



“None of the [Solana] price action we’re seeing has to do with Grayscale’s instrument regarding SOL,” Jlabs Digital founding partner Ben Lilly said today on a crypto trading <a href="https://x.com/xchanging_good/status/1884244878046961694?s=46&amp;t=0mG6XTvWo-VxuftPqpEz2w">podcast</a>, adding that the unlocked shares represent a small fraction of the total shares. “It is very small, like a drop in the bucket in terms of the size of the market.”



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SOL investors shrug off unlocks

Ben Strack

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



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Blockchain Association published its <a href="https://theblockchainassociation.org/wp-content/uploads/2025/01/BlockchainAssociation-Digital-Asset-Market-Structure-Principles.pdf">“consensus position”</a> on digital market structure policies amid optimism of legislative/regulatory progress from a pro-crypto Congress and revamped SEC.&nbsp;



The advocacy group crafted these with help from its 100-plus member companies.



The 12 points are not exactly groundbreaking; we’ve heard most or all of them before. But I could see it being helpful to lawmakers and regulators needing a refresher on priorities.&nbsp;



One bullet calls for a regulatory framework that positions the US as the “preferred hub” for investment and technological advancement. Another seeks to safeguard the right to self-custody digital assets using non-custodial wallets.



Further down: “Policies should be carefully designed to avoid favoring specific solutions and focus on regulating specific activities rather than foundational infrastructure.”



<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">3/ Smart, fit-for-purpose regulation must be precise. Our principles on scope and infrastructure emphasize focusing on financial activities while protecting foundational blockchain technology.&mdash; Blockchain Association (@BlockchainAssn) <a href="https://twitter.com/BlockchainAssn/status/1884216793021178314?ref_src=twsrc%5Etfw">January 28, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Then there’s one stressing that developers of open-source software should be protected from liability when the software’s used by separate, bad actors. Does that remind anyone else of the <a href="https://blockworks.co/news/blockchain-association-amicus-brief-tornado-cash">Tornado Cash saga</a>?



Another point with a clear link to the past is making sure there’re clear classifications for tokens — “delineating securities, commodities, and other asset types with precision.”



You might remember <a href="https://blockworks.co/news/regulatory-clarity-ethereum-gensler">Gary Gensler not giving a straight answer</a> to whether ETH is a commodity or a security. Or the SEC lawsuits against <a href="https://blockworks.co/news/sec-sues-coinbase">Coinbase</a> and <a href="https://blockworks.co/news/sec-10-tokens-securities">Binance for alleged securities violations</a>. The agency earlier this month <a href="https://blockworks.co/news/sec-advances-ripple-appeal">moved ahead with an appeal</a> in its <a href="https://blockworks.co/news/sec-files-ripple-appeal-precedent">case against Ripple</a> … and the list goes on.



The new <a href="https://blockworks.co/news/new-sec-crypto-task-force">SEC crypto task force</a> appears to be a step toward change, but what Congress-crafted crypto legislation ends up looking like will be key. The bottom line: lawmakers might want to give these principles a read.

Blockchain Association crafts ‘consensus position’ on market structure policy

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 new survey weighing industry leader sentiment shows an optimistic outlook for crypto — with a dose of skepticism too.



It includes opinions from some 230 executives gathering at the CfC St. Moritz 2025 conference. Among them are the CEOs of Binance and Ripple, chair of the CFTC, and executives at TradFi giants like BlackRock, Fidelity and Franklin Templeton.



The biggest opportunities are going to be in the US, 61% of survey respondents agree — followed by the APAC region, then Middle East and Asia. That comes despite America being back of the pack on the favorable jurisdictions list (as legislation sits today), behind the UAE, Singapore, Switzerland, Hong Kong, the EU and the UK.



Developers moving or staying in the US will be a crucial piece to the country’s chance to leapfrog others, an anonymous respondent noted. The person pointed to a year-old <a href="https://www.developernation.net/developer-reports/dn26/">report</a> showing 19.6% of developers in Western Europe and 19.2% in North America (the two top spots).&nbsp;



<a href="https://blockworks.co/news/one-year-since-bitcoin-etf-approval">The popularity of crypto ETFs</a> in the US also contributes to the bullishness for growth there. To that point, 57% expect such wrappers around the top 20 coins in the not-so-distant future. A refresher on proposed funds in front of the SEC can be found <a href="https://blockworks.co/news/us-crypto-etfs-approval-outlook">here</a>.&nbsp;



Other interesting tidbits:



<ul class="wp-block-list">
<li>76% say the global macroeconomic backdrop is either “highly favorable” or “conducive” for the crypto industry’s growth.</li>



<li>The most interesting opportunities are in fintech, payments and trading tech (<a href="https://blockworks.co/news/tokenization-depends-on-use-cases-benefits">tokenization</a>/stablecoins is the runner-up).</li>



<li>About a third of respondents expect TradFi institutions to take over the crypto space, while roughly another third believe there will be a 50/50 retail-TradFi split.</li>
</ul>



Back to regulations, there’s a big “but” coming — as optimism doesn’t cover all feelings.&nbsp;



Roughly 70% believe supervisory scrutiny remains just as intense, or that those risks could even increase.



On the task ahead of the new US administration, ex-CFTC Chair J. Christopher Giancarlo is quoted as saying: “It&#8217;s one thing to end bad policy, but it&#8217;s an entirely different thing to create good policy.”



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Big US crypto opportunity not a sure thing, survey says

Casey Wagner

Well, not everyone.&nbsp;



The FOMC kicked off their two-day meeting this morning, and while we know they are busy discussing inflation and the labor market, I’m also willing to bet they have one eye on equities.&nbsp;



And the market, at least right now, is overwhelmingly dominated by the AI trade.&nbsp;



Chinese AI startup DeepSeek spurred a $1 trillion rout in US and European tech stocks yesterday.&nbsp;



Nvidia was a top loser. Shares closed 17% lower on Monday. Meta actually fared surprisingly well, paring losses early in Monday’s session after opening 3% lower.&nbsp;



Microsoft lost more than 2% and Alphabet closed more than 4% lower. In Europe, Siemens energy plummeted as much as 19%.&nbsp;



Lots to unpack here. First, what has investors so spooked?&nbsp;



DeepSeek claims it trained its new AI model for cheap. Like, really cheap. $5.6 million to be exact.&nbsp;



If that doesn’t sound like a deal, here’s a comparison to put things in perspective: Anthropic CEO Dario Amodei <a href="https://www.youtube.com/watch?v=xm6jNMSFT7g">says</a> building their models costs between $100 million and $1 billion. OpenAI said training GPT4 came with a nearly $100 million bill.&nbsp;



Even if you don’t buy DeepSeek’s $5.6 million claims — and to be clear, we should all take this self-reported figure with a massive grain of salt — the company does seem to be operating with an efficiency that US-based AI companies just don’t have.&nbsp;



DeepSeek also says it’s using a fraction of the computing power it takes to run other models, like Meta’s Llama, which ironically helped train R1. Thanks, open source.&nbsp;



On that note, Mark Zuckerberg reportedly has assembled four different “war rooms” at Meta, each dedicated to analyzing DeepSeek. With earnings season looming, we expect most AI firms to have a similar set up.&nbsp;



The “chip issue&#8221; is another pain point for US investors. Biden-era export restrictions on GPUs may not be working as well as we’d hoped. Or Chinese companies are finding other work-arounds. Either way, this raises concerns not only about demand for chip providers like Nvidia, but also about national security.&nbsp;



Doom and gloom aside, investors apparently woke up this morning in a better mood. Or in the mood to take advantage of a discount, at least. Nvidia shares were back in the green, trading 7% higher at 2 pm ET.&nbsp;



“Despite DeepSeek’s promise, we doubt the leading cloud vendors and AI builders will pause their plans, although it’s a risk that certainly bears watching,” Morningstar equity analyst Brian Colello said.&nbsp;



“We believe AI GPU demand still exceeds supply, so while slimmer models may enable greater development for the same number of chips, we still think tech firms will continue to buy all the GPUs they can as part of this AI ‘gold rush.’”



Nvidia execs will have some tough questions to answer on their Q4 earnings call. Lucky for them, they have about four weeks to prepare.&nbsp;



As far as tomorrow’s FOMC decision, markets are overwhelmingly expecting central bankers to hold interest rates steady. I doubt Powell will comment much on the AI situation, but I wouldn’t be surprised if he’s asked about it during the press conference.&nbsp;



Keep an eye on your inbox tomorrow for updates.



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



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It’s Fed Decision Day Eve. All anyone can talk about is the AI selloff.

Macauley Peterson

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



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Succinct’s SP1 ZKVM has come under scrutiny after <a href="https://lambdaclass.com/">LambdaClass</a> disclosed a critical <a href="https://blog.lambdaclass.com/responsible-disclosure-of-an-exploit-in-succincts-sp1-zkvm-found-in-partnership-with-3mi-labs-and-aligned-which-arises-from-the-interaction-of-two-distinct-security-vulnerabilities/">security vulnerability</a> in its proof generation. The exploit in version 3 of SP1, discovered in collaboration with 3Mi Labs and Aligned, stemmed from the interaction of two separate security flaws.



Succinct previously disclosed the potential exploit to its customers <a href="https://github.com/succinctlabs/sp1/security/advisories/GHSA-c873-wfhp-wx5m">via Github</a> and Telegram.



Here’s what happened in simple terms:



<ol class="wp-block-list">
<li>Missing Verification Step — The system relied on a list to track key proof components but didn’t properly verify that the list was accurate. Consequently, a malicious prover could potentially manipulate it to produce invalid proofs. New checks were added to fix the oversight.</li>



<li>Incomplete Proof Flag — A key part of SP1’s proof-checking system included a flag meant to confirm that a proof was fully executed. However, this flag wasn’t always properly enforced, leading to a potential loophole. Succinct tightened up the checks.</li>



<li>Polynomial Evaluation Issue — An issue found in Plonky3 (a dependency of SP1), meant that it didn’t fully verify all calculations before confirming a proof was valid. Post-patch, all proof components are properly verified.</li>
</ol>



While the vulnerability was quickly addressed prior to the disclosure, the process has raised concerns about transparency in security practices for zero-knowledge virtual machines (ZKVMs). SP1’s technology is currently underpinning high profile upgrades in rollup infrastructure under development.



<ul class="wp-block-list">
<li>Mantle Network has integrated SP1 to transition into a zero-knowledge (ZK) validity rollup, aiming to enhance transaction finality times and support institutional-grade asset settlements.</li>



<li>The AggLayer employs SP1 to generate pessimistic proofs, ensuring the security of its cross-chain interoperability solutions.</li>



<li>Taiko has adopted SP1 as a ZK prover to secure its layer-2 execution, which uses a multi-prover system</li>



<li>Soon, a relatively new project, is building an SVM rollup framework that settles to Ethereum with ZK fault proofs powered by SP1, similar to Eclipse, although the latter uses RISC Zero instead.</li>
</ul>



<h2 class="wp-block-heading">Transparency and implications</h2>



LambdaClass cautioned that the full implications of the flaw required further assessment. Notably, the exploit depended on the interplay between the two issues, meaning that fixing one might not be sufficient to prevent exploitation.



LambdaClass developer known as Fede, <a href="https://x.com/fede_intern/status/1883688063936692355">highlighted</a> on social media that his team felt compelled to make the disclosure public after perceiving a lack of urgency in Succinct’s communication about the issue.



Succinct’s leadership acted responsibly in fixing the issue, according to Avail’s Anurag Arjun, but he agreed&nbsp; better public disclosure practices are needed.



“ZKVM systems are very new and are constantly being updated, so you’d expect vulnerabilities,” Arjun told Blockworks. “In an open-source setting, anyone can run the prover, and if vulnerabilities aren’t disclosed properly, that’s definitely a risk.”



The Avail team, which uses SP1 for proof generation in its consensus mechanism, was informed about the issue privately ahead of public disclosure, Arjun confirmed.



Avail’s implementation was not exposed to risk, Arjun said, because they rely on Succinct’s proprietary prover, which remains permissioned. Avail’s rollup clients have also not yet begun using its SP1-powered bridge contract, so there was no practical impact.



Meanwhile, defenders of Succinct point out that responsible disclosure typically involves private reporting before public statements to avoid unnecessary panic and potential exploitation.



Succinct’s updated version 4 of SP1 — dubbed Turbo — resolves the identified vulnerability, and downstream projects have begun integrating these fixes.&nbsp;



The case illustrates how even well-audited code can and does contain bugs. As Succinct <a href="https://x.com/SuccinctLabs/status/1884083149136863656">put it</a>, “while auditors provide valuable insights, they are not infallible, and we remain committed to continuously improving and working hard to ensure our systems are safe and secure for everyone.”



The more explicit, if belated transparency from Succinct drew <a href="https://x.com/arik_g/status/1884084728783069206">praise</a>. What remains is the question of how to best balance security, transparency, and user protection. And finding <a href="https://x.com/dimahledba/status/1884199665035280586">the line between</a> due criticism and toxic infighting.



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Succinct’s SP1 bug sparks transparency debate in ZK security

David Canellis

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If narratives were food and AI was chicken, gaming would be the other white meat.



Gunzilla Games’ crypto-infused shooter Off the Grid is then an organic free-range pig: Its early access beta has had gamers foraging for crypto and NFTs as they please since October.



I’ve so far clocked about 40 hours. I wrote in my <a href="https://blockworks.co/news/empire-newsletter-nfts-comeback-gaming">initial thoughts</a> that the game was fun — it still is.&nbsp;



A quick refresher: Off the Grid is a battle royale in the same vein as PUBG, Fortnite and Warzone, with crypto elements powered by an Avalanche subnet which is still in testnet phase.



In-game items are actually NFTs: skins, guns, weapon attachments and cyberlimbs. You can sell those NFTs for an in-game cryptocurrency, GUN, which you also earn for each kill alongside other conditions, like lasting longer or reviving teammates.



And therein lies the hook. It mimics the crypto degen grindset in four steps:



<ol class="wp-block-list">
<li>Play a match to earn GUN and collect item NFTs.</li>



<li>Sell those item NFTs for more GUN.</li>



<li>Buy more powerful item NFTs, making GUN easier to earn.</li>



<li>Profit?</li>
</ol>



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1600" height="900" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcFjmjQyz7flgkJmC9kRu41b_nIHfpmz1I1reEwMIp-5O_iJf40sGscq1iwJrW6H_3q4vatRtdSqQGKlfrmy6mgCNI0FVkCeYebF4AN_Q3M3TRs5irBK7bMcMmSnMvBuIUiVVSalA.jpg" alt="" class="wp-image-96726" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcFjmjQyz7flgkJmC9kRu41b_nIHfpmz1I1reEwMIp-5O_iJf40sGscq1iwJrW6H_3q4vatRtdSqQGKlfrmy6mgCNI0FVkCeYebF4AN_Q3M3TRs5irBK7bMcMmSnMvBuIUiVVSalA.jpg?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcFjmjQyz7flgkJmC9kRu41b_nIHfpmz1I1reEwMIp-5O_iJf40sGscq1iwJrW6H_3q4vatRtdSqQGKlfrmy6mgCNI0FVkCeYebF4AN_Q3M3TRs5irBK7bMcMmSnMvBuIUiVVSalA.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcFjmjQyz7flgkJmC9kRu41b_nIHfpmz1I1reEwMIp-5O_iJf40sGscq1iwJrW6H_3q4vatRtdSqQGKlfrmy6mgCNI0FVkCeYebF4AN_Q3M3TRs5irBK7bMcMmSnMvBuIUiVVSalA.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcFjmjQyz7flgkJmC9kRu41b_nIHfpmz1I1reEwMIp-5O_iJf40sGscq1iwJrW6H_3q4vatRtdSqQGKlfrmy6mgCNI0FVkCeYebF4AN_Q3M3TRs5irBK7bMcMmSnMvBuIUiVVSalA.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcFjmjQyz7flgkJmC9kRu41b_nIHfpmz1I1reEwMIp-5O_iJf40sGscq1iwJrW6H_3q4vatRtdSqQGKlfrmy6mgCNI0FVkCeYebF4AN_Q3M3TRs5irBK7bMcMmSnMvBuIUiVVSalA.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcFjmjQyz7flgkJmC9kRu41b_nIHfpmz1I1reEwMIp-5O_iJf40sGscq1iwJrW6H_3q4vatRtdSqQGKlfrmy6mgCNI0FVkCeYebF4AN_Q3M3TRs5irBK7bMcMmSnMvBuIUiVVSalA.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcFjmjQyz7flgkJmC9kRu41b_nIHfpmz1I1reEwMIp-5O_iJf40sGscq1iwJrW6H_3q4vatRtdSqQGKlfrmy6mgCNI0FVkCeYebF4AN_Q3M3TRs5irBK7bMcMmSnMvBuIUiVVSalA.jpg?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcFjmjQyz7flgkJmC9kRu41b_nIHfpmz1I1reEwMIp-5O_iJf40sGscq1iwJrW6H_3q4vatRtdSqQGKlfrmy6mgCNI0FVkCeYebF4AN_Q3M3TRs5irBK7bMcMmSnMvBuIUiVVSalA.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcFjmjQyz7flgkJmC9kRu41b_nIHfpmz1I1reEwMIp-5O_iJf40sGscq1iwJrW6H_3q4vatRtdSqQGKlfrmy6mgCNI0FVkCeYebF4AN_Q3M3TRs5irBK7bMcMmSnMvBuIUiVVSalA.jpg?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /><figcaption class="wp-element-caption">Daily, weekly and monthly challenges earn you more crypto</figcaption></figure>



After a lull following its explosive launch, Twitch <a href="https://twitchtracker.com/games/983841243#google_vignette">stats</a> for Off the Grid are now showing signs of growth. Its underlying <a href="https://testnet.gunzscan.io/">testnet</a> is still seeing about 2.5 million transactions per day, down from three million in October.&nbsp;



The marketplace is active, with anecdotally fewer failed transactions now that the early hype wave has subsided.



There’s talk of eventual GUN listings on exchanges and NFT sales on OpenSea. So, deep down, as fun as the game is, I suspect that I’m mostly grinding Off the Grid to collect as many rare items and as much GUN as possible before it’s a real coin.



That means there’s a lot riding on Gunzilla Games and its newly-formed GUN <a href="https://decrypt.co/296506/off-the-grid-game-gunz-foundation-avalanche-token">foundation</a> pulling this off — as well as the eventual price of GUN in relation to the NFTs.



Nurturing a sustainable in-game economy without GUN going to zero is one thing. It’s another to maintain a high enough price for GUN so that hardcore players are incentivized enough to power the loot marketplace while protecting casual players from being priced out altogether.



In the meantime, we grind to find out.



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



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



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There’s a lot riding on Off the Grid’s token launch

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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That’s one way to describe yesterday’s action both in crypto and outside of it.&nbsp;



Galaxy Trading summed the action up to a “function of broader crypto market movements” while GSR’s Carlos Guzman said that the AI narrative dominated the day.&nbsp;



Basically, DeepSeek — a Chinese AI company — was able to rival OpenAI’s very expensive model for much cheaper on older (and much less expensive) chips, hence the selloff in Nvidia.&nbsp;



(Sidenote here: Decide AI’s Jesse Glass doesn’t think that the cheaper GPU story will last because DeepSeek will still need larger GPUs as it scales.)



What we then saw was folks scrambling to recalibrate how to approach the big AI plays, some of which, like OpenAI, now have <a href="https://www.nytimes.com/2024/10/02/technology/openai-valuation-150-billion.html">multibillion-dollar</a> valuations.&nbsp;



For the crypto side of things, the narrative was much the same according to Guzman. The AI tokens caught up in the selloff were largely overvalued given the use cases currently out there.&nbsp;



“I do think crypto and AI agents are a real thing, and we&#8217;ll eventually see a lot of real use cases of AI agents that use crypto … But, as often happens in crypto, the tech wasn&#8217;t quite there … The excitement got a little bit ahead of where the tech was,” he explained.&nbsp;



Galaxy noted that AI tokens weren’t trading near all-time highs before the recent correction, which shows that some aren’t quite sold on how they fit into the space yet. And AI researchers, like Glass, will carry some skepticism until projects can integrate or emphasize edge computing in their projects, instead of just launching tokens.



“For AI-focused crypto projects to break out of speculative cycles, they must demonstrate clear blockchain-native advantages — whether through cost efficiencies, trustless execution, or new incentive mechanisms. Accessibility also remains a challenge, as memecoin trading is one of the few areas that has broken through mainstream barriers,” the Galaxy Trading team explained.&nbsp;



So does yesterday’s action change a lot of the bullishness we’ve seen around the AI/crypto intersection and these tokens? Doesn’t seem like it. Guzman believes that more development and use cases will reopen the excitement around the tokens.



As for the current AI landscape, it’s honestly not looking too bad right now despite the sea of red. The thing is, as Guzman explained to me, in the long run, the DeepSeek saga might actually be healthy.&nbsp;



The current crop of AI companies in the US can now use the compute and data to improve their own models, allowing them to replicate and build on what they learned from DeepSeek.&nbsp;



I guess there really is always a silver lining.



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AI token selloff a product of too much ‘excitement’

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A feline-branded conference held in Istanbul this weekend gave away some of the future ambitions of Solana’s top swap app, Jupiter.&nbsp;



At so-called Catstanbul, Jupiter and its colorful founder known as meow made headlines for turning on protocol fees that will lead to token buybacks. It’s also launching a $10 million AI fund alongside AI agent upstart <a href="https://blockworks.co/news/stanford-lab-ai16z-partnership">Eliza Labs</a> as well as a multi-blockchain network that would expand beyond Solana.&nbsp;



But the most interesting announcement — to me at least — came when Jupiter said it had taken a majority stake in Moonshot, a memecoin app that Donald Trump directed buyers to use during his <a href="https://blockworks.co/news/trump-more-than-a-memecoin">memecoin launch</a>.



Jupiter’s killer feature is its swap interface, which routes user trades across DEXs to achieve the best possible price. For all intents and purposes, Jupiter is where users get the most bang for their buck when swapping one Solana token for another. 39% of Solana DEX trades go through Jupiter, according to a Dune <a href="https://dune.com/ilemi/solana-dex-metrics">dashboard</a>, and Jupiter currently has no real competitor as far as DEX aggregation goes.



But Jupiter has been hinting at bigger ambitions for a while. In May, it announced its <a href="https://blockworks.co/news/lightspeed-newsletter-jupiter-unified-markets-plan">giant unified markets</a> initiative which promised to bring all kinds of assets onchain and index them with Jupiter. But for all the talk of GUM, most Solana blockspace is still being chewed up by memecoins, so Jupiter took a majority stake in Moonshot.



Moonshot is a memecoin app that is easy for normies to use. It caught a considerable boost when the TRUMP memecoin’s website directed users to Moonshot, which rocketed the app to a stint at #1 on the App Store’s finance charts. It’s unclear whether the Trump team cut some sort of deal with Moonshot. A source at Jupiter also declined to comment on the terms of the Moonshot deal.



By acquiring most of Moonshot, which is focused on unsophisticated users, Jupiter now benefits from experienced and inexperienced memecoin traders alike. It also now collects fees on all that trading: In Istanbul, Jupiter <a href="https://x.com/SolanaFloor/status/1883184239396733027">announced</a> that it would begin collecting a 0.1% fee on its default swap feature, which had previously been free. Half of these fees will <a href="https://blockworks.co/news/value-accrual-matters-for-tokens">go toward buybacks</a> of the platform’s JUP token, which briefly surged in price. Moonshot also collects trading fees.



Plus, with Moonshot’s central role in the TRUMP memecoin launch, Jupiter may be getting not just a stake in an app but something much more important in these windfall days for crypto — a connection to President Trump.



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Jupiter takes majority stake in Trump-favored memecoin app

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It seems Colombia has narrowly avoided a trade war with the US.&nbsp;



The White House last night announced that Colombia had agreed to terms related to accepting newly deported immigrants. As such, Trump has revoked his 25% tariff threat.&nbsp;



It’s clear, though, that tariffs have emerged as one of Trump’s first and favorite tools when it comes to advancing his geopolitical agenda.&nbsp;



While we have yet to see any increases on Canadian, Mexican or Chinese tariffs, the White House has assured <a href="https://blockworks.co/news/trump-modifies-tariff-plan">these are coming</a>. Economists are <a href="https://cepr.org/voxeu/columns/tariffs-are-coming-how-trade-dynamics-will-shape-aggregate-demand-and-inflation">busy</a> assessing what the impact on domestic prices will be, and we suspect the Fed is considering this as well.&nbsp;



We already know the Fed tends to take a “wait and see” approach when it comes to responding to tariffs and inflation that ensues. Or at least it did back in 2018.&nbsp;



Trump’s tariff threats (and, to be clear, they are just threats for now), may be rocking global markets in the immediate term. But the actual impact on prices will take longer to see.&nbsp;



The two options for the central bank are:



<ol class="wp-block-list">
<li>Raise interest rates. </li>



<li>Take a so-called “see through” policy approach, where FOMC members ride out the (hopefully) temporary higher prices without raising rates. </li>
</ol>



We’re betting they go with option two, but we’ll be curious to see how Fed Chair Jerome Powell responds to any tariff-related questions during Wednesday’s press conference. More on that later this week.



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White House walks back Colombia tariffs 

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Bitcoin’s price dipped below six figures for the first time in a week. Sounds like a good chance to check in.



Hours after dropping below $98,000, BTC rebounded to ~$102,000 Monday morning. The asset was trading around $99,400 at 2 pm ET.



Price fluctuates, we know. But identifying the factors at play can go a long way in helping new and recurring investors gain a better understanding of this growing asset class.



Ledn CIO John Glover acknowledged on Friday that <a href="https://blockworks.co/news/trump-vs-biden-crypto-orders">President Donald Trump’s executive order</a> was enough to keep BTC from selling off last week after achieving an all-time high near $109,000. But he argued there are plenty of market participants looking to take profit — or swap their BTC for other assets that’ve underperformed since Trump’s election win.&nbsp;



Another factor to consider is the strong correlation between bitcoin and equities, which Bitfinex analysts wrote “remains one of the most reliable market dynamics.”&nbsp;



They explained the 30-day rolling Pearson correlation between BTC, the S&amp;P 500 and the Nasdaq reached 0.7 — “highlighting a trend that isnʼt just coincidental but indicative of how bitcoin is increasingly treated like a risk-on major asset class.”&nbsp;



Thus, the Bitfinex analysts note, BTC “reacted with caution” after last week’s Bank of Japan rate hike and sharply fell due to “jitters” stemming from Chinaʼs ability to produce <a href="https://www.reuters.com/technology/artificial-intelligence/chinese-ai-startup-deepseek-overtakes-chatgpt-apple-app-store-2025-01-27/">cheaper AI models</a> through startup DeepSeek. Bitcoin options implied volatility declined 13% over the course of last week, they added, “suggesting traders are not expecting to see elevated price action.”



Still, you’ve read here about the bullish signals. The latest crypto executive order and <a href="https://blockworks.co/news/hester-peirce-reveals-sab-121-rescission">the end of SAB 121</a>, sure — but also ongoing institutional investment into bitcoin ETFs, companies buying BTC, etc.&nbsp;&nbsp;



On those two points, the US spot BTC products nearly reached the $40 billion net inflow milestone last week after just over <a href="https://blockworks.co/news/one-year-since-bitcoin-etf-approval">one year on the market</a>.



MicroStrategy continues its big bitcoin purchases (scroll a bit for more on that) and more companies (like Critical Metals Corp., with a <a href="https://www.globenewswire.com/news-release/2025/01/21/3012798/0/en/Critical-Metals-Corp-Announces-Commencement-of-Bitcoin-Treasury-Strategy-and-Related-Financing-to-Acquire-Up-to-500-million-of-BTC.html">plan</a> to buy $500 million of BTC) mull, and execute, similar acquisitions. &nbsp;



Blockworks’ David Canellis <a href="https://blockworks.co/news/bitcoin-bull-market-nears-800-day">pointed out</a> that today marks day 799 of a bull market that — if history repeats — could last about 1,000 days.



While <a href="https://blockworks.co/news/btc-healthy-correction-pre-thanksgiving">corrections are normal</a> within bull markets, Two Prime Digital Assets has observed more sophisticated market participants pulling volatility out of the market through long-term investing behavior and derivatives strategies — going as far to coin a term: “The Silent Put.”



“In short, a new cadre of bidders, including governments and corporate balance sheets, are willing to buy the dip without getting shaken out,” the firm wrote 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">It would be foolish to say bitcoin can’t suffer big drawdowns anymore, as the 24/7 open market remains quite wild, but it is growing tamer by the day. Market participants that can adjust to the new reality stand to benefit from this. END🧵&mdash; Two Prime Digital Assets (@two_prime) <a href="https://twitter.com/two_prime/status/1881804323606483422?ref_src=twsrc%5Etfw">January 21, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Glover said in a Friday statement he’s still looking for BTC to trade towards $126,000 over the next two months. That could be a near-term top as “those looking to lock in profits battling with those bulls that are late to the party,” he added.



When I followed up with Glover Monday after the latest correction, he said his thoughts haven’t changed.



He told me he’s expecting “lots of directionless volatility” as we hear from various levels of government (and the central bank) as to how immediate (or not) Trump’s promises may be implemented.



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A market check-in after the latest BTC dip

Donovan Choy

This is a segment from the 0xResearch newsletter. To read full editions, <a href="https://blockworks.co/newsletter/research">subscribe</a>.



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



When crypto projects make big announcements using words like “buyback,” “burn,” or “revenue sharing,” that’s usually taken to mean there are bullish investing tailwinds at play.



But I have questions. How much does an annualized 10% buyback yield actually matter when these tokens can plummet 20% in a day?



Does value accrual matter because it is valuable for reasons of fundamental analysis (i.e. cash flows), or merely for narrative optics?&nbsp;



Over the weekend, Solana DEX aggregator Jupiter announced a significant JUP buyback program with 50% of fee revenues.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf_4tsr4zyW0OIP6A97XElGwSCz2SY1JAv4_j0B1x848V5lXNkjh4633xRWc6DC0n_UG5_DOh7wjDsyXh9ZeG6oXQs7uU42ymLxhh_y9n-9g37-oj2wdCJhOvgis3w8Eir4DUsyIA?key=-CDM7sPbxiTlUu9I9v5P6XQq" alt=""/></figure>



Based on estimates by Blockworks Research analyst Carlos Gonzalez, that translates to about $750 million in annualized JUP buybacks, or about a significant 40% of JUP’s circulating supply in a year.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdplw02vMpSaBOU0P0POet9MOc4FNpp3Xw-YxLbQxHfT4ilafp5dMIB2vtvrsBRHQXXvSBiaZnarzkjOeMZfgqnrzmuSS81n4CQdoABpbDgoLUifLfgfcoLWg9dGSbbDO6qlfD74w?key=-CDM7sPbxiTlUu9I9v5P6XQq" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://x.com/0xcarlosg/status/1883902757905510805">Blockworks Research</a></figcaption></figure>



That’s a pretty impressive annualized buyback yield of about 42%.&nbsp;



But what does 42% matter when token prices can tank 90% in a week?



Well, it’s not a flash in the pan solution, but it helps to sustain against selling pressure. Carlos pointed to <a href="https://x.com/blockworksres/status/1882505809063743582">Raydium’s</a> successful experiment with buybacks: “Raydium has accumulated 20% of RAY&#8217;s supply since the start of their buyback program. In terms of market structure, it adds buying pressure to the token and RAY has outperformed most of Solana DeFi. Fundamentals matter but of course you could also find examples to argue that buybacks aren&#8217;t that bullish. For instance, Maker.”



Virtuals, the leading AI agent launchpad on Base (now expanding to Solana), also <a href="https://x.com/virtuals_io/status/1879474894007927189">committed</a> two weeks ago to an estimated $40 million in buybacks and burns for 10k+ agent tokens over a 30-day TWAP.&nbsp;



Since the buybacks were announced on Jan. 15, the five largest agent token buybacks <a href="https://dune.com/queries/4498300/7524177">by far</a> are GAME, CONVO, AIXBT, SEKOIA and MISATO, all of which have given up all their gains as of yesterday’s market crash.



Over the last year, many blue-chip DeFi protocols with actual product-market fit have also sought to return revenues to token holders.



Compound, for instance, <a href="https://blockworks.co/news/compound-considers-fee-switch-governance-attacker">proposed</a> in August a fee switch to allocate 30% of its reserves to COMP stakers.



Marc Zeller of Aave proposed last July a “Buy &amp; Distribute” proposal to buy back AAVE on the open market with “net excess revenue of the protocol.”



Then there’s Uniswap, which <a href="https://gov.uniswap.org/t/temperature-check-activate-uniswap-protocol-governance/22936">planned</a> to implement a UNI fee switch for stakers, but quickly abandoned the proposal after <a href="https://blockworks.co/news/uniswap-responds-to-sec-wells-notice">receiving</a> an SEC Wells notice two months later (Uniswap is again <a href="https://blockworks.co/news/0xresearch-newsletter-uniswap-layer-2">attempting</a> some form of value accrual on its upcoming Unichain).



Major L2s like <a href="https://www.tally.xyz/gov/arbitrum/proposal/52793687237294107439411688810483120161857085958258363826553939061522164665920">Arbitrum</a>, <a href="https://governance.starknet.io/voting-proposals/5">Starknet</a> and <a href="https://forum.gnosis.io/t/gip-100-should-gnosis-dao-conduct-a-large-scale-buyback-program/8556/1">Gnosis</a> have floated proposals last year to return value to token holders who stake their tokens.



Starknet voted last September to enable Starknet staking (<a href="https://www.starknet.io/staking/">12.94%</a> APY) and Gnosis passed a proposal in June to spend $30 million of the DAO’s treasury to buy back liquid GNO over a six-month period.



As far as I can tell, out of all the above-mentioned value accrual proposals, only Starknet and Gnosis have actually implemented their value accretive mechanisms.



Yet from the time these value accrual mechanisms were put in place, GNO has seen a 46% decline, while STRK has stayed flat.



So what are the right mental models to think about value accrual mechanisms? They’re not a magic bullet. But they’re a key ingredient in the recipe of getting a successful token launch right.



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Why value accrual matters for tokens

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



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The truth is in the data. That’s kind of our motto if you ask me. And the data around the Trump coin is very telling.



Last week, Chainalysis released some data on the Trump coin launch, breaking down who owns it and where they’ve come from. The most obvious datapoint is that the majority of holders have less than $100 worth, suggesting that it’s heavily owned by retail.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc_hNe9vtu-4rcAOzZ7oP9lYdYVP68VVLCPBPwTqi9jXFomWjmQWnTUswuiX2WRlAxB2WJfHMJSW1_5g38awr5UVK204VXWRQnAdl0nmJN2V1MPMs_7FKb5mruLSpHL9WDlXWBbfA?key=ljKwsRqERWGreFpSbIYVBK8D" alt=""/></figure>



Source: Chainalysis



According to Chainalysis, a survey of the wallet age shows that a lot of these retail buyers are new to crypto. In the chart below, you can see that the majority have just opened the wallets, compared to the 16% of holders who’ve had the wallet for at least a year. <img loading="lazy" decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXexypE4ZqicmCK0mK9Q3iyh4wK-FzNkOJF0AovdYlesWcv9bWkRfPvwSo5phNN6nS1noEQ2xvb1ApYPEoUTQ7rZmgagewttGF-l5MXn0fFUxsgLOZzGS69zZcZGOQ9bH14vyPEE?key=ljKwsRqERWGreFpSbIYVBK8D" width="624" height="385">



But the real question, as posed by Dragonfly’s Rob Hadick, is are these new wallet holders going to actually become active participants in the overall ecosystem?



“A lot of people took [the Chainalysis] report to suggest that the TRUMP token was a mass onboarding event, primarily because 50% of TRUMP/MELANIA token holder wallets were net new to SOL altcoins,” he said.&nbsp;



“But that continues to make the same wallet/user fallacies and misses the distinction between interest in TRUMP vs onchain users that are value additive and contribute capital to the broader ecosystem.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">A lot of people took yesterday&#39;s <a href="https://twitter.com/chainalysis?ref_src=twsrc%5Etfw">@chainalysis</a> report to suggest that the TRUMP token was a mass onboarding event, primarily because 50% of TRUMP/MELANIA token holder wallets were net new to SOL altcoins, but that continues to make the same wallet/user fallacies and misses the… <a href="https://t.co/vbghaMW8Qa">pic.twitter.com/vbghaMW8Qa</a>&mdash; Rob Hadick ＞|＜ (@HadickM) <a href="https://twitter.com/HadickM/status/1882858357998191025?ref_src=twsrc%5Etfw">January 24, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The caveat here, he added, is that people outside of crypto have been asking about the space. And, personally, I can attest to that as well. But I think it’s fair to say that attention and action are two very different things, and so far we’re not seeing this lead to mass adoption.&nbsp;



Honestly, perhaps that’s too much to ask. For now, we may have to settle with piquing people’s interest. Adoption can come with use cases.&nbsp;



Or so I hope.



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Why the TRUMP launch wasn’t a ‘mass onboarding event’

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Today marks day 799 of the bitcoin bull market.&nbsp;



That’s about 26 and a half months of positive price action. A little more than two years. Cheers to that!



It’s tough to say exactly when bull markets start and end in crypto. Old-world <a href="https://www.investopedia.com/terms/b/bearmarket.asp#:~:text=One%20definition%20of%20a%20bear,%2Daverse%20than%20risk%2Dseeking.">definitions</a> — based on 20% retracements from local highs and so on — have no power here.&nbsp;



Drawdowns of that size just <a href="https://blockworks.co/news/bitcoin-bull-market-drawdowns">happen way too often</a> on the way up. Still, by my very rough estimates, the past three bitcoin bull markets going back to 2011 have lasted, on average, somewhere in the region of 1,000 days.



So, usually it goes that it takes less than three years for bitcoin to go from the bottom of the previous bear market, through to cycle peaks, down to a crash that in retrospect clearly put an end to any upward trajectory.



The good news: Bitcoin is looking super healthy this cycle when mapped to the previous three. Even after this correction.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1383" height="997" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXeAlxxmkKXjDgxmhD4dijsqxEe6HRle_Nx-aoKg8Da_YsSavsr_MQ7p1jetuQ4S0IHfGL67GgrWRmiQ3ROeV-MbBFjfyYuCEy-PbWhGBIrWKJ1KeX5ex9c90RbSNiuRA85_xjDCTA.png" alt="" class="wp-image-96665" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXeAlxxmkKXjDgxmhD4dijsqxEe6HRle_Nx-aoKg8Da_YsSavsr_MQ7p1jetuQ4S0IHfGL67GgrWRmiQ3ROeV-MbBFjfyYuCEy-PbWhGBIrWKJ1KeX5ex9c90RbSNiuRA85_xjDCTA.png?w=1383 1383w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXeAlxxmkKXjDgxmhD4dijsqxEe6HRle_Nx-aoKg8Da_YsSavsr_MQ7p1jetuQ4S0IHfGL67GgrWRmiQ3ROeV-MbBFjfyYuCEy-PbWhGBIrWKJ1KeX5ex9c90RbSNiuRA85_xjDCTA.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXeAlxxmkKXjDgxmhD4dijsqxEe6HRle_Nx-aoKg8Da_YsSavsr_MQ7p1jetuQ4S0IHfGL67GgrWRmiQ3ROeV-MbBFjfyYuCEy-PbWhGBIrWKJ1KeX5ex9c90RbSNiuRA85_xjDCTA.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXeAlxxmkKXjDgxmhD4dijsqxEe6HRle_Nx-aoKg8Da_YsSavsr_MQ7p1jetuQ4S0IHfGL67GgrWRmiQ3ROeV-MbBFjfyYuCEy-PbWhGBIrWKJ1KeX5ex9c90RbSNiuRA85_xjDCTA.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXeAlxxmkKXjDgxmhD4dijsqxEe6HRle_Nx-aoKg8Da_YsSavsr_MQ7p1jetuQ4S0IHfGL67GgrWRmiQ3ROeV-MbBFjfyYuCEy-PbWhGBIrWKJ1KeX5ex9c90RbSNiuRA85_xjDCTA.png?w=357 357w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXeAlxxmkKXjDgxmhD4dijsqxEe6HRle_Nx-aoKg8Da_YsSavsr_MQ7p1jetuQ4S0IHfGL67GgrWRmiQ3ROeV-MbBFjfyYuCEy-PbWhGBIrWKJ1KeX5ex9c90RbSNiuRA85_xjDCTA.png?w=362 362w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXeAlxxmkKXjDgxmhD4dijsqxEe6HRle_Nx-aoKg8Da_YsSavsr_MQ7p1jetuQ4S0IHfGL67GgrWRmiQ3ROeV-MbBFjfyYuCEy-PbWhGBIrWKJ1KeX5ex9c90RbSNiuRA85_xjDCTA.png?w=304 304w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXeAlxxmkKXjDgxmhD4dijsqxEe6HRle_Nx-aoKg8Da_YsSavsr_MQ7p1jetuQ4S0IHfGL67GgrWRmiQ3ROeV-MbBFjfyYuCEy-PbWhGBIrWKJ1KeX5ex9c90RbSNiuRA85_xjDCTA.png?w=80 80w" sizes="auto, (max-width: 1383px) 100vw, 1383px" /></figure>



Bitcoin’s performance during this bull market — which started at the end of 2022 — to date is shown on the chart above in log view. It’s done 6.6x so far, going from $15,474 to $99,000 as of this morning.



Notice how, for most of the cycle, BTC has tracked ahead or just below the brown line, which plots its performance during the prior bull cycle between 2018 and 2022.



BTC diverged below around 50 days ago, at the start of December. But that’s okay: We already know bitcoin returns are <a href="https://blockworks.co/news/bitcoin-halving-cycle-returns">diminishing every cycle</a>.&nbsp;



Its current trajectory better fits the pattern — all bull market cycles have followed a similar trajectory, it’s just less pronounced each time.



The bad news: We are no closer to a bonafide altcoin season, even after big rallies in coins such as XRP and TRUMP.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1385" height="1001" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXf9KcQEEkcKO0qDE_OoywwOjrrIh4B3FBo986XZ4s21Z426yp0Zc12_9NgD8novp0qKNANjB1RN4fQEtmzjtdbrOWydFeqoTnX0EAUUUpsOsf57fJcMiTj6miN6l3Ivf9aS5llT.png" alt="" class="wp-image-96664" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXf9KcQEEkcKO0qDE_OoywwOjrrIh4B3FBo986XZ4s21Z426yp0Zc12_9NgD8novp0qKNANjB1RN4fQEtmzjtdbrOWydFeqoTnX0EAUUUpsOsf57fJcMiTj6miN6l3Ivf9aS5llT.png?w=1385 1385w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXf9KcQEEkcKO0qDE_OoywwOjrrIh4B3FBo986XZ4s21Z426yp0Zc12_9NgD8novp0qKNANjB1RN4fQEtmzjtdbrOWydFeqoTnX0EAUUUpsOsf57fJcMiTj6miN6l3Ivf9aS5llT.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXf9KcQEEkcKO0qDE_OoywwOjrrIh4B3FBo986XZ4s21Z426yp0Zc12_9NgD8novp0qKNANjB1RN4fQEtmzjtdbrOWydFeqoTnX0EAUUUpsOsf57fJcMiTj6miN6l3Ivf9aS5llT.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXf9KcQEEkcKO0qDE_OoywwOjrrIh4B3FBo986XZ4s21Z426yp0Zc12_9NgD8novp0qKNANjB1RN4fQEtmzjtdbrOWydFeqoTnX0EAUUUpsOsf57fJcMiTj6miN6l3Ivf9aS5llT.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXf9KcQEEkcKO0qDE_OoywwOjrrIh4B3FBo986XZ4s21Z426yp0Zc12_9NgD8novp0qKNANjB1RN4fQEtmzjtdbrOWydFeqoTnX0EAUUUpsOsf57fJcMiTj6miN6l3Ivf9aS5llT.png?w=356 356w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXf9KcQEEkcKO0qDE_OoywwOjrrIh4B3FBo986XZ4s21Z426yp0Zc12_9NgD8novp0qKNANjB1RN4fQEtmzjtdbrOWydFeqoTnX0EAUUUpsOsf57fJcMiTj6miN6l3Ivf9aS5llT.png?w=361 361w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXf9KcQEEkcKO0qDE_OoywwOjrrIh4B3FBo986XZ4s21Z426yp0Zc12_9NgD8novp0qKNANjB1RN4fQEtmzjtdbrOWydFeqoTnX0EAUUUpsOsf57fJcMiTj6miN6l3Ivf9aS5llT.png?w=303 303w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXf9KcQEEkcKO0qDE_OoywwOjrrIh4B3FBo986XZ4s21Z426yp0Zc12_9NgD8novp0qKNANjB1RN4fQEtmzjtdbrOWydFeqoTnX0EAUUUpsOsf57fJcMiTj6miN6l3Ivf9aS5llT.png?w=80 80w" sizes="auto, (max-width: 1385px) 100vw, 1385px" /></figure>



This one charts the market cap growth of bitcoin (in orange) and the altcoin market (purple) for this bull market. As you can see, altcoins are suffering deeper losses but have still done 4.4x.



The blue columns in the back show the relative performance of bitcoin to altcoins — bitcoin is now more than 210% ahead of altcoins, the largest distance of the cycle. That’s too much for any <a href="https://blockworks.co/news/waiting-for-altcoin-season">real altcoin season</a>.



Like bull and bear markets, “altcoin season” has no formal definition. It’s more of a vibe.&nbsp;



Empire has done its <a href="https://blockworks.co/news/waiting-for-altcoin-season">best to quantify it</a>: Altcoin seasons potentially begin when the market cap growth of the altcoin market, over the bull market to date, exceeds that of bitcoin’s.



An altcoin season is only confirmed when altcoins have outpaced bitcoin for 90 consecutive days or more.&nbsp;



Ninety days sounds like a lot, but backtesting with those conditions provides three distinct altcoin seasons throughout crypto’s history:&nbsp;



<ul class="wp-block-list">
<li>the early innings of the Ethereum ICO era between mid-2016 and early 2018,</li>



<li>the first half of 2019 when many altcoins outperformed bitcoin, and&nbsp;</li>



<li>most of 2020’s DeFi Summer through to crypto’s all-time high in November 2021.</li>
</ul>



Perhaps the next altcoin season will look a lot different. For now, it’s still all about bitcoin.



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Bitcoin bull market nears 800th day, altcoin season still far away

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



Crypto’s new viral app isn’t very new at all.



Solana-based social project Clout saw its downloads take off after launching an iPhone app that lets users buy tokenized versions of social media profiles. This is very similar to the premise behind the viral 2023 app friend.tech, which was itself a rehashing of BitClout, a Crypto Twitter tokenization app that went viral in 2021. Friend.tech’s founding team <a href="https://blockworks.co/news/frienddottech-relinquishes-platform-control">already stepped away</a> from the platform, while BitClout’s founder was just <a href="https://blockworks.co/news/sec-doj-charge-bitclout-creator-crypto-fraud-social-media">charged with fraud</a> by the DOJ and the SEC.



Clout hasn’t leaned away from its forefathers. The project posted a meme today riffing on Justin Timberlake’s famous line as Sean Parker in The Social Network: “Drop the ‘Bit.’ Just ‘Clout.’ It’s cleaner.”



“Integrity and healthy tokenomics!” was Clout founder Ben Pasternak’s reply when I asked him what sets his app apart.



At the time of writing, Clout was #34 on the App Store’s finance chart. The app is so congested that I haven’t been able to land a transaction all day. And Clout isn’t the only so-called SocialFi app grabbing Solana users’ attention.



Tribe.run — which is still in invite-only mode — has also seen some momentum for a tokenized X profile app that creates token-gated group chats called tribes. I managed to snag an invite and have been enjoying the app, which features a nostalgic Windows 98-esque design. Tribe comes with an airdrop feature built in where I was able to send some of my token to my group chat members. This feature is enabled by Solana <a href="https://blockworks.co/news/lightspeed-newsletter-zk-compression-solana-data-storage">zero-knowledge compression</a>.



When I asked Tribe founder Bill Zheng why he thinks his app can succeed where friend.tech, for instance, failed, he said the former app had a “fundamental flaw” in that creators had no incentive to stay engaged. Tribe employs a subscription model where tribe members must pay a certain amount of SOL to stay in the group chat — giving the tribe creators a reason to stick around.



Outside of Solana, Kaito AI has seen success with its Yaps platform that doles out points for users who are active — or who yap a lot, in internet parlance — on Crypto Twitter.&nbsp;



SocialFi’s resilience underscores the resilience of Elon Musk’s social media platform. X remains the center of the online crypto world, and until that changes, crypto social apps will keep testing out new ways to monetize Crypto Twitter.



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SocialFi makes its return on Solana

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



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



SEC Commissioner Hester Peirce — two days after being named leader of a new <a href="https://blockworks.co/news/new-sec-crypto-task-force">crypto task force</a> — revealed SAB 121 would be no more.



<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">Bye, bye SAB 121! It&#39;s not been fun: <a href="https://t.co/cIwUc0isUE">https://t.co/cIwUc0isUE</a> | Staff Accounting Bulletin No. 122&mdash; Hester Peirce (@HesterPeirce) <a href="https://twitter.com/HesterPeirce/status/1882562977985114185?ref_src=twsrc%5Etfw">January 23, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Some context: A Staff Accounting Bulletin, or SAB, represents interpretations and policies followed by SEC divisions in administering federal securities laws-related <a href="https://blockworks.co/news/sec-staff-call-for-crypto-entities-to-show-liability-on-balance-sheet">disclosure requirements</a>.



The SEC published SAB 121 in March 2022. It notably said that an entity “should present a liability on its balance sheet to reflect its obligation to safeguard the crypto-assets held for its platform users.”



Why does the crypto industry <a href="https://blockworks.co/news/senate-gensler-sec-overturn-sab-121">care so much</a> about the agency <a href="https://www.sec.gov/rules-regulations/staff-guidance/staff-accounting-bulletins/staff-accounting-bulletin-122">rescinding</a> this?&nbsp;



Cantor Fitzgerald Howard Lutnick explained the issue pretty well in a <a href="https://x.com/howardlutnick/status/1831080474124681316?s=46">video</a> he posted to X in September — a couple months before <a href="https://blockworks.co/news/trump-nominates-commerce-dept-leader">Trump nominated him</a> to lead the Commerce department.



There’s a misunderstanding that TradFi players don’t want to transact in bitcoin, <a href="https://blockworks.co/news/on-the-margin-newsletter-tradfi-btc-transacting">Lutnick claimed</a>. He added that for banks to custody a client’s bitcoin, “they would have to set aside their own money equal to that amount in sort of like a jail.”



Indeed, financial organizations <a href="https://www.sifma.org/wp-content/uploads/2024/02/SAB-121-Joint-Trades.pdf">told</a> SEC Chair Gary Gensler that the bulletin “has curbed the ability of the associations’ members to develop and bring to market at scale certain digital asset products and services.”



The upshot? As VanEck research execs <a href="https://www.vaneck.com/us/en/blogs/digital-assets/matthew-sigel-vanecks-10-crypto-predictions-for-2025/">wrote</a> in a December post detailing 2025 crypto predictions, this repeal “will pave the way for banks and brokers to custody spot crypto, further integrating digital assets into traditional financial infrastructure.”



Benchmark analyst Mark Palmer argued in a Friday note that this SAB 121 rescission “represents an even more meaningful game-changer for bitcoin and the broader crypto ecosystem” than a potential strategic bitcoin reserve does.



While SAB 121 was published in 2022, it wasn’t until last year that <a href="https://blockworks.co/news/senate-passes-resolution-to-overturn-sab121">Congress sent a bill</a> overturning the guidance to Joe Biden’s desk. <a href="https://blockworks.co/news/biden-backing-gary-gensler-resolution">He vetoed it</a>.



Ava Labs deputy general counsel Wee Ming Choon told me last month that rescinding SAB 121 would be an act of “good will” that a new agency administration could take quickly. It seems that take was correct.&nbsp;



Rest up this weekend, as another wave of developments is sure to come.



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Why SAB 121’s end is a big deal

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



President Trump yesterday issued his first crypto <a href="https://www.whitehouse.gov/presidential-actions/2025/01/strengthening-american-leadership-in-digital-financial-technology/">executive order</a>.&nbsp;



The news and ensuing chaos on Crypto Twitter reminded me of Biden’s <a href="https://www.federalregister.gov/documents/2022/03/14/2022-05471/ensuring-responsible-development-of-digital-assets">crypto executive order</a>, published in March 2022.&nbsp;



Let’s take a trip down memory lane. Here’s what Trump’s report says, and how it differs from Biden’s plans:&nbsp;



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



Trump’s order prohibits federal agencies from establishing, issuing or promoting central bank digital currencies. It calls for any ongoing projects creating a CBDC to be “immediately terminated.”&nbsp;



CBDCs “threaten the stability of the financial system, individual privacy and the sovereignty of the United States,” Trump’s order reads.&nbsp;



Biden was less resolute on the topic. His administration struck a bit of a <a href="https://blockworks.co/news/bidens-crypto-executive-order-may-be-watershed-moment-despite-lack-of-specifics">middle ground</a>, saying they saw “merit” to a US CBDC but also acknowledged “potential risks and downsides to consider.” In the end, Biden directed agencies to create a report on the future of money and payment systems.&nbsp;



We eventually got this <a href="https://home.treasury.gov/system/files/136/Future-of-Money-and-Payments.pdf">report</a>, which, like Biden’s executive order, said little definitively. The Treasury recommended “advancing” work on a CBDC and “prioritizing” improvements to cross-border payments. Spoiler alert, a CBDC was never developed.&nbsp;



<h2 class="wp-block-heading">On “protection”</h2>



When it comes to security, Biden and Trump hold very different views on how to approach digital assets.&nbsp;



Biden’s order focused on protecting consumers from the risks associated with investing and engaging with crypto. He also highlighted national security concerns, calling digital assets a threat to financial stability and a tool ripe for abuse from illicit actors.&nbsp;



Trump’s EO also includes the term “protection,” but his administration is concerned with maintaining US dollar dominance and shielding citizens from the dangers of CBDCs.&nbsp;



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



Trump’s order established a Working Group on Digital Asset Markets, to be led by <a href="https://blockworks.co/news/trump-picks-crypto-czar">“crypto czar” David Sacks</a>.&nbsp;



Included in this group are the chairs of the CFTC and SEC, attorney general and secretaries of the Treasury and Homeland Security, among other cabinet members.&nbsp;



Trump’s Working Group “shall evaluate the potential creation and maintenance of a national <a href="https://blockworks.co/news/us-gov-unloading-bitcoin-process">digital asset stockpile</a> and propose criteria for establishing such a stockpile, potentially derived from cryptocurrencies lawfully seized by the federal government through its law enforcement efforts.”&nbsp;



As one source on the Hill told me last night, this is a long way of saying the “<a href="https://blockworks.co/news/senator-lummis-bitcoin-reserve-bill-crypto-policy">strategic bitcoin reserve</a> is going to live in bureaucratic purgatory for a long time, maybe forever.”&nbsp;



Biden did not create any such working group, or any crypto-specific advisory council. But he did task the President’s Working Group on Financial Markets to create a report outlining the various risks of digital assets.&nbsp;



This report noted that crypto can pose a threat to financial stability, and it recommended Congress pass legislation designating rulemaking authority to appropriate agencies (something like a market structure bill, for example.)



Spoiler: This, too, has lived in political limbo for years.&nbsp;



Only time will tell if this latest crypto executive order inspires more progress than Biden’s.&nbsp;



But it’s worth noting that the industry excitement around Trump’s EO bodes well. Never underestimate what some well-funded lobbyists can get done on Capitol Hill.



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