Ethena USDe

Ben Strack

Casey Wagner

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<h2 class="wp-block-heading">New research sheds light on investor, voter attitudes&nbsp;&nbsp;</h2>



It’s always good to digest surveys with a grain of salt, but they often give us a solid look into how various demographics are interacting with the space.&nbsp;



And with the presidential election less than three weeks away, some of the findings seem to have a heightened importance — particularly if the pro-crypto crowd ends up being a key voting bloc.



On that note, an <a href="https://blockworks.co/news/a16z-monthly-active-addresses-aths">Andreessen Horowitz report</a> showed that crypto interest — as far as internet searches — has grown in several so-called swing states since the last election.&nbsp;&nbsp;



From 2020 to 2024, Pennsylvania and Wisconsin have seen jumps in that category of 5.3% and 4.7%, respectively. The ranking is based on an average across searches for words including “bitcoin,” “ethereum” and “crypto.”



PA and WI are behind only North Dakota, Arkansas and Minnesota in terms of four-year crypto search growth. Another swing state, Michigan, ranks eighth (up 3.3% since 2020). Nevada and Arizona have seen declines in this category from four years ago.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeo2NUoBC77K0CdcF6G4_o2ux2FT6KhYsD717gDyvVDstIN6SbyAX1Ko_In75Buqk6qbGKO_B65LhebWDbA7up7mcT1a5enB0os_MTsDXNLBsLux_cbqTlxQXcmr7D5awQZmcIJ0fnqcBCb1LDUS1zemME?key=qUiMHjiXX5mKtHpWeRpQFQ" alt=""/></figure>



And on the topic of <a href="https://blockworks.co/news/forward-guidance-newsletter-crypto-survey-data">swing states</a>, there are roughly 40 million Gen Z’ers — youngsters born between 1995 and 2006 — eligible to vote in the upcoming US election.&nbsp;



A recent survey conducted by Atomik Research shows that members of that generation are slightly more likely to invest in crypto, at 24%, than traditional asset classes (22%).&nbsp;



The findings — based on roughly 2,000 respondents surveyed between Sept. 24 and 27 — shows that crypto is the preferred investment in the UK. In the US, it is ahead of stocks and bonds but lags pensions and mutual funds.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcT93_nRv9sJT7PqIq_dwkC3yYXmW__jZYl1Rb4TceoVwu94w5f0z7ZsykB2a-KJGK-Wqa523xDuff7O_XOrBAZ22AbIqhhz8OOnhJPFwhEc1_ikK3TWuPueTUpQ1Z2D0ykmlFgDxpuFMcEjwZ3UmZUc8E?key=qUiMHjiXX5mKtHpWeRpQFQ" alt=""/></figure>



Not all Gen Z voters will be focused on a single issue, let alone motivated to cast their ballot with crypto in mind. But <a href="https://blockworks.co/news/harris-trump-crypto-stances-coinbase">Coinbase’s Faryar Shirzad told me</a> he expects crypto to be “a winning issue” in the future, and seeing this glimpse into younger people’s investment preferences seems to support such a projection.



And then we had a hedge fund survey last week that jives with some of what we heard from industry watchers at <a href="https://blockworks.co/tag/permissionless">Permissionless</a> last week.&nbsp;



Nearly half of traditional hedge funds (47%, to be exact) have exposure to digital assets, according to new research from the Alternative Investment Management Association and PwC. That is up from 29% in 2023.



The boost is not exactly surprising, given the launch of spot bitcoin and ether ETFs this year.&nbsp;



Hedge funds (such as Millennium Management) have <a href="https://blockworks.co/news/tradfi-firms-disclose-positions-in-blackrock-bitcoin-etf">jumped</a> into these bitcoin products and, in many cases, are executing basis trades, Permissionless speakers James Seyffart and Jim Bianco <a href="https://www.youtube.com/watch?v=UVy0kkrrZfY">noted</a> last week. This means they’re taking positions in both the BTC spot and futures markets in a bid to profit from price differences.



Traditional hedge funds’ use of crypto derivatives has grown from 38% last year to 58% in 2024, signaling “growing sophistication in hedge fund strategies,” the latest report notes. Spot trading, meanwhile, dropped to 25% this year after peaking at 69% in 2023.&nbsp;



Two-thirds of the hedge funds allocating to crypto plan to maintain those investments. The other third say they expect to invest more in the space by the end of the year.



More hedge funds are also “committed to or exploring tokenization” (increasing from 25% to 33% year over year), with 12% already investing in tokenized assets. Based on <a href="https://blockworks.co/news/blackrock-tokenization-investment">bullishness from TradFi giants</a> and recent announcements from <a href="https://blockworks.co/news/visa-to-help-banks-test-tokenized-assets-smart-contracts">Visa</a> and <a href="https://www.dtcc.com/news/2024/october/15/dtcc-announces-industry-sandbox-to-support-and-advance-the-digital-asset-ecosystem">DTCC</a>, this space appears ripe for a boom.&nbsp;



Not all hedge funds want to be involved, as 76% not yet invested in crypto say they don’t plan to be three years from now (up from 54% in 2023).&nbsp;



The top hurdle (cited by 38% hedge funds this year) was investment mandates excluding digital assets, with the “<a href="https://blockworks.co/news/crypto-must-work-closely-with-regulators">regulatory uncertainty</a>” barrier easing due to the EU’s <a href="https://blockworks.co/news/micar-foreign-stablecoins-advantage-in-europe">MiCA</a> regulation.



Perhaps that’s a lot to take in. But as the space evolves, catching up on a variety of data points can help bring a fuller picture to life.&nbsp;&nbsp;



— Ben Strack&nbsp;



<h3 class="wp-block-heading">$1.18 billion</h3>



The net inflows tallied by the lot of US-listed spot bitcoin funds during the last three trading days, according to Farside Investors <a href="https://farside.co.uk/bitcoin-etf-flow-all-data/">data</a>.&nbsp;



BlackRock’s iShares Bitcoin Trust (IBIT) just crossed the $22 billion net inflow mark since its January launch, while Fidelity Wise Origin Bitcoin Fund (FBTC) surpassed $10 billion of positive flows. The category — weighed down by $20 billion of net outflows from Grayscale’s GBTC — has seen $19.8 billion flow in on a net basis in the past nine months.



This latest asset surge has come amid <a href="https://blockworks.co/news/btc-uptober-price-gains">a bitcoin rally</a>. The asset’s price eclipsed $68,000 on Wednesday before settling around $67,900 at 2 pm ET — up nearly 9% from five days ago. BTC is now less than 8% off of its all-time high (above $73,000) hit <a href="https://blockworks.co/news/bitcoin-all-time-high">in March</a>.&nbsp;



<h2 class="wp-block-heading">Panda-monium in Chinese markets&nbsp;</h2>



As Washington DC’s newest <a href="https://www.nbcwashington.com/news/local/live-updates-pair-of-giant-pandas-arriving-in-dc-from-china/3740836/">fluffy residents</a> made their journey from Chengdu to Dulles, Chinese markets took another tumble.&nbsp;



The CSI 300 Index — a cap-weighted index tracking the top 300 stocks on the Shanghai and Shenzhen stock exchanges — closed Wednesday almost a point lower. It is now down around 10% from its Oct. 8 high, but still up 20% over the past month.&nbsp;



China’s stock market boom started late last month. When officials announced a $113 billion central bank <a href="https://blockworks.co/news/on-the-margin-newsletter-china-stimulus-stagnation">stimulus package</a>, the CSI 300 soared about 27% in two weeks. But details of the fiscal spending plan have yet to emerge, and investors are getting antsy.&nbsp;



Retail traders specifically pulled back in a big way. The CSI 300 fell around 7% on Oct. 9, marking the largest single-day decline since 2020. Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-10-16/china-s-wild-stock-market-swings-hurt-a-21-trillion-bull-case">reported</a> that the phrase “close securities account” appeared on social media platform WeChat 56 million times on Oct. 9. The index is now at its highest 60-day annualized <a href="https://vlab.stern.nyu.edu/volatility/VOL.SHSZ300%3AIND-R.GARCH">volatility</a> since 2016.&nbsp;



Analysts from crypto research firm Kaiko said Monday that while bitcoin’s correlation with the CSI 300 has historically been low (remember, China banned crypto trading in 2021, but we all know that hasn’t completely stopped activity), there is still something to be learned. The initial run-up in Chinese equities coincided with heightened BTC selling in Asia, likely because retail investors were liquidating crypto holdings to panic-buy stocks, Kaiko analysts said.&nbsp;



“A revival in Chinese consumer confidence could benefit both asset classes, potentially unlocking significant cash from both institutional and retail traders currently sitting on the sidelines,” Kaiko’s report added.&nbsp;



Another market hit by Chinese consumer skepticism? Luxury brands. LVMH — the holding company that owns Louis Vuitton, Dior and other opulent names — saw its Asia region (excluding Japan, but including China) lose 16% in sales <a href="https://www.lvmh.com/investors">last quarter</a>. It’s the third straight quarterly decline.&nbsp;



Analysts largely say the economic slowdown in China should have a minimal impact on US economic growth and inflation, at least for now. Things could change considerably after the election, especially if we are facing a second Donald Trump <a href="https://blockworks.co/news/donald-trump-economic-new-york-club-comments">presidency</a> and additional tariffs.&nbsp;



There is one Chinese import that we can rest assured will boost American spending, though, at least locally: the two giant pandas that will soon debut at the National Zoo.&nbsp;



They aren’t cheap (the US is leasing each from China for $1 million annually), but Bao Li and Qing Bao are expected to bring crowds — upwards of 2 million a year — that are going to spend on merch, lodging, food and travel.&nbsp;



— Casey Wagner



<h2 class="wp-block-heading">Crypto makes it to the (smaller) debate stage&nbsp;</h2>



We may have <a href="https://blockworks.co/news/forward-guidance-newsletter-kamala-harris-crypto-silence">missed the chance</a> to hear crypto discussion on the presidential and VP debate stages. But at the congressional level, crypto had a big moment last night.&nbsp;



Sitting Massachusetts US Senator Elizabeth Warren faced her <a href="https://blockworks.co/news/john-deaton-secures-republican-nomination">Republican opponent</a> John Deaton Tuesday night.



Crypto-friendly lawyer Deaton <a href="https://blockworks.co/news/elizabeth-warren-challenger-senate">entered the race</a> in February, saying he wanted to “shake things up for the people who need it most.&#8221; Warren, however, argued Tuesday night that Deaton is really only interested in protecting “his crypto buddies,” who have made up the majority of his campaign donations.



Deaton has raised a combined $3.6 million in direct and super PAC donations, latest FEC filings show. But the single largest contribution of $1 million to his war chest came from his own pockets.&nbsp;



Deaton countered, arguing that bitcoin and digital assets can help elevate marginalized communities. He pointed to his own mother, who he said struggled to maintain minimum balances required by banks and often faced additional fees. Fees that do not come with bitcoin, he noted.&nbsp;



In response, Warren said it’s “fine” if people want to invest in bitcoin and other cryptocurrencies — she just wants to make sure they’re doing so safely. Digital assets are routinely used for illicit activities, so crypto firms shouldn’t get a free pass, she added. In other words, Warren contended, they have to follow the same rules as other financial institutions.&nbsp;



The <a href="https://projects.fivethirtyeight.com/polls/senate/2024/massachusetts/">latest polls</a> from earlier this month (with the debate not factored in) have Warren leading Deaton, 56% to 34%.&nbsp;



Still, Deaton sailed through the Republican primary last month, earning almost two-thirds of votes. History is not on his side, though. In 2012, Warren won her seat by defeating incumbent GOP Sen. Scott Brown with 53% of the vote. In her most recent election in 2018, she secured re-election by a 60%-to-36% margin against Republican Geoff Diehl.



As Jan van Eck <a href="https://x.com/caseywagnerr/status/1844427126122086823">said</a> last week at Permissionless, the real races to watch in November are going to be in Congress, so keep an eye on this one.&nbsp;



— Casey Wagner



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



<ul class="wp-block-list">
<li>In case you missed it, Grayscale has <a href="https://www.grayscale.com/blog/general-updates/assets-under-consideration-current-products">shared</a> 35 crypto assets it would consider including in its future investment products. Nearly half of these are within the smart contract platforms segment, while dogecoin (DOGE) and kaspa (KAS) made the list in the consumer &amp; culture and currencies sectors, respectively.</li>



<li>While we noted that bitcoin ETFs have been <a href="https://blockworks.co/news/0xresearch-newsletter-btc-bullish-reversal">welcoming</a> a large amount of investor assets in recent days, flows into and out of US spot ETH products have remained slow and fairly flat in recent weeks. As they approach three months on the market, net outflows from that category so far amount to $542 million.</li>



<li>Speaking of ether, ETH’s price rose about $2,640 earlier today before retreating down to $2,620 just after 2 pm ET — up 0.5% from 24 hours ago and 7.6% in the past five days. </li>



<li>Want to watch videos from last week’s Permissionless conference in Salt Lake City? Follow this <a href="https://blockworks.co/event/permissionless-iii/recordings">link</a> so you know when the recordings become available.</li>
</ul>



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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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From swing states to hedge funds, here’s what the crypto surveys say

Jack Kubinec

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



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Narratives move quickly in crypto.&nbsp;



A month and a half ago, Solana Foundation head of strategy Austin Federa wrote on X that “​​Most of the L2-ish things on Solana are better thought of as Network Extensions.” The basic rationale is that while layer-2s are meant to scale Ethereum by running smart contracts more cheaply on different software, Solana is meant to scale at the base layer, and many Solana-centric networks are meant to do different things than the layer-1.



This kicked off an online debate mainly between Solana fans who agreed with Federa and Ethereum boosters who argued that Solana was simply rebranding the concept of layer-2s, which are a frequent topic of Solana ire.&nbsp;



Today, Neon EVM, a platform for deploying Ethereum-centric apps on Solana, formally adopted the “network extension” title. The move comes just a month and a half after the term made its public debut.



“Unlike an L2, Neon EVM doesn&#8217;t add an extra layer on top of Solana,” Neon EVM chief commercial officer Davide Menegaldo told me in a text. “L2s are built on top of a base Layer 1 blockchain to enhance scalability, they batch transactions before settling on the main chain, and they [fragment] liquidity as well as user experience.”



Neon EVM doesn’t do any of these things, Menegaldo argues, so it’s better thought of as a network extension.&nbsp;



When I asked Federa about his term, he said network extensions are meant to be a big-tent term that ditch the Ethereum-centric assumptions about what L2s are.



“Neon EVM is not an L2 on Solana, it&#8217;s a ‘L1.5’ because it&#8217;s its own VM but it can atomically compose with SVM stuff. What do we call that? It&#8217;s not a rollup, not an L2&#8230; [it’s] a network extension,” Federa wrote in a direct message.&nbsp;



Neon isn’t alone in embracing the term. Solana co-founder Anatoly Yakovenko <a href="https://x.com/aeyakovenko/status/1830994614557515850">voiced</a> his support, and a co-founder of the high-throughput Ethereum layer-2 MegaETH <a href="https://x.com/hotpot_dao/status/1830786592325120139">said</a> she liked the label.



L2s aren’t exclusively Ethereum’s terrain though. The Solana-based DeFi platform Zeta is building a layer-2 that uses a sequencer and follows a lot of the principles that go into Ethereum L2 design, the platform’s founder Tristan Frizza told me.&nbsp;



Zeta also has a similar mission to ETH L2s, which is to achieve lower latency than Solana’s 400 ms block times would allow, so Frizza feels “hesitant” to adopt the network extension term.



“I feel like it&#8217;s a Solana marketing term for L2s, but idk if there are other apps/chains that are genuinely completely different,” Frizza wrote in a text.



Helius CEO Mert Mumtaz also came out against calling L2-like projects on Solana network extensions, casting them as “too general.”



Instead, those debating semantics should “build something people need so crypto overall can grow the pie…hope this helps,” Mumtaz wrote.



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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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Solana-based Neon EVM adopts ‘network extension’ title

Donovan Choy

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



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Here’s a simplified explanation of how restaking works today:&nbsp;



<ol class="wp-block-list">
<li>Bob deposits ETH/stETH into a liquid restaking protocol like Ether.Fi, Puffer, Eigenpie or Renzo.</li>



<li>The liquid restaking protocol delegates Bob’s assets to an EigenLayer operator.</li>



<li>The EigenLayer operator uses Bob’s asset to secure one or many AVSs to return some yield to Bob.</li>



<li>Bob is happy because his ETH is a yield-bearing productive asset, and he enjoys a liquid ETH derivative that he can use to dabble in other degenerate DeFi activities.</li>
</ol>



About <a href="https://app.eigenlayer.xyz/operator">299</a> active EigenLayer operators compete for $11.2 billion in TVL in EigenLayer, so competition is pretty stiff.



EigenLayer operators compete for user attention in one of many ways.&nbsp;



Technical competency is one obvious factor, namely keeping a consistent uptime and fulfilling specific responsibilities for the AVSs they validate.



Operators also try to validate as many AVSs as they can so as to compound yield returns to users (and slashing risks), or promise to share any potential airdrops with delegators. You can see many such explicit advertisements on the EigenLayer operator page.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfqAipEC7L-Aam8rAjKDpl8FVl8un07v6wRcCXCulDlD_-rxh4QoTCLMYV76CjPOvZAgbFZf0hxmz_iW5t9cPhYExziKgjvCnd0vb20m3CQBZobzFv5Po-7KHMOS7x0lGRYp3Y4cITGYYsNhC5msjdBQ77K?key=iNUO5Mkvv7G-Ji0ffJ3mQQ" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.eigenlayer.xyz/operator/0x5accc90436492f24e6af278569691e2c942a676d">EigenLayer</a></figcaption></figure>



Another way that EigenLayer operators could compete, of course, is to simply promise more of their cut to delegators. That has not been the case, until today.



P2P.org, the <a href="https://app.eigenlayer.xyz/operator">largest</a> EigenLayer operator by total ETH restaked (at 274,000 ETH), announced Wednesday that it would launch revenue distribution to users delegating ETH to them.



As part of a “new structure [to] reward long-term trust and engagement,” all delegators staking with P2P.org prior to Aug. 15 will be eligible for the revenue share.



It’s a bold move —&nbsp;and not one you’d typically expect from a leader at the top.



It’s not clear how much revenue that actually translates into for P2P.org delegators, but here’s some napkin math from Blockworks Research Analyst Marc Arjoon.



<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">With ~8K stakers on <a href="https://twitter.com/P2Pvalidator?ref_src=twsrc%5Etfw">@P2Pvalidator</a> this equates to ~$1,500 pp (at today&#39;s prices with no commission and excluding additional AVS revenues) <a href="https://t.co/14oN8AG1rI">https://t.co/14oN8AG1rI</a> <a href="https://t.co/7KEvvmcI8J">pic.twitter.com/7KEvvmcI8J</a>&mdash; Marc Arjoon 🟪 (@marcarjoon) <a href="https://twitter.com/marcarjoon/status/1846557289391481090?ref_src=twsrc%5Etfw">October 16, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



P2P has about 274,000 ETH and 8.53 million EIGEN staked on EigenLayer across ~8k stakers.



As part of its “programmatic incentives” program, EigenLayer is allocating 67 million EIGEN through the first year, with 3/4 going to ETH stakers and another 1/4 to EIGEN stakers and operators.



For P2P, that comes up to about ~3.63 million of EIGEN incentives (worth $12 million today).



Assuming today’s EIGEN price of $3.3, each staker would receive about $1,500, excluding any AVS yield.



Not a bad reward.



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



Crypto VC funding still lagging:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcnsYi8_AzNTEzO3QQPzzmv-jGZq_tpZUowCxGnoa6sHHBPiIoOUdTL4sTcGzKiGgSgzm-h1wvNNGsxzr6oPCfrmz0vNLn562Dh6JryF73Wf4GhkqHs4lMMbeiRcEItVnT5mFG8t7cQE96KSqCRCApuSIv6?key=iNUO5Mkvv7G-Ji0ffJ3mQQ" alt="1 - crypto deal count capital invested2"/><figcaption class="wp-element-caption">Source: <a href="https://www.galaxy.com/insights/research/crypto-blockchain-venture-capital-q3-2024/">Galaxy Research</a></figcaption></figure>



According to Galaxy Research, crypto venture capital funds invested about $2.4 billion across 478 deals in Q3 2024. That’s 20% capital invested and 17% fewer deals than the previous quarter.&nbsp;



Within Q3, companies in the “trading/exchange/investing/lending” category raised the most, at $462 million. Cryptospherex and Figure markets raised $200 million and $73.3 million, respectively.&nbsp;



In a sign that the L1 trade isn’t going away, the second-largest raise came from L1 projects — about $341 million in total.



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



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>.



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



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

EigenLayer’s biggest node operator promises revenue-sharing

While various politicians have voiced support for crypto, a Coinbase executive is urging the industry to take note of how candidates elaborate on the topic.



While the upcoming presidential election’s outcome is likely to be consequential for the crypto community, it has already been “an extraordinarily successful election year” for the segment, Coinbase Chief Policy Officer Faryar Shirzad said.



“Whatever happens on Election Day will be just additive to the success we’ve already had by putting ourselves on the main political stage,” the executive noted during an interview with Blockworks last week at <a href="https://blockworks.co/tag/permissionless">Permissionless</a>.



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



Donald Trump “deserves enormous credit for what he’s <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-crypto-promises">said on the crypto issues</a> and how comprehensive his vision has been,” Shirzad added. He also offered Harris credit for the efforts she’s made to converse with the crypto community and <a href="https://blockworks.co/news/on-the-margin-newsletter-china-stimulus-stagnation">her seeming intention</a> to be more constructive on the issue.



“There’s reason to feel optimism on both sides,” he explained. “But at the end of the day, more substance and more detail are critical, and we’re hoping to get more from the vice president between now and Election Day.”



The interview with Shirzad came before <a href="https://blockworks.co/tag/kamala-harris">Harris</a> unveiled on Monday an “opportunity agenda” that includes “supporting a regulatory framework for cryptocurrency and other digital assets so Black men who invest in and own these assets are protected.”&nbsp;



While some <a href="https://x.com/ShevrinJones/status/1845806476062806375">praised</a> the initiative, Harris <a href="https://blockworks.co/news/forward-guidance-newsletter-kamala-harris-crypto-silence">failed to mention blockchain</a> in a speech that night.



Keep reading for more excerpts from Blockworks’ interview with Shirzad.



__________________________________________________________________________



Blockworks: How do you feel about the crypto advocacy efforts in recent months and the impact it’s had? &nbsp;



Shirzad: I think as a community we should feel very good about having already a historical election cycle in terms of the number of candidates who’ve spoken up on the crypto issue, who’ve filled out their Stand With Crypto questionnaire [and] who’ve embraced the importance of the US being a leader of digital asset innovation. We shouldn’t lose sight of how much progress we’ve already made.&nbsp;



Read more: <a href="https://blockworks.co/news/forward-guidance-newsletter-crypto-survey-data">Unpacking survey findings about the ‘crypto voter’</a>



Blockworks: You mention Trump “deserves enormous credit.” Which of his crypto-related comments are most significant in your mind?&nbsp;



Shirzad: I think he said three things that are most important.&nbsp;



One is just declaring that crypto should be built <a href="https://blockworks.co/news/donald-trump-speaks-bitcoin-2024">in the United States</a>; I think that is massive. Two, saying that [regulators] shouldn’t engage in abuse of power against an industry. And then I think the thing that people haven’t paid the most attention to — which I think was the most important thing he said — is that he would protect the right for people to self-custody their crypto. My interpretation of what he means is that he’s protecting the DeFi ecosystem and the ability of individuals … to control [their wallet] and have all the Fourth Amendment protections and privileges that one should be entitled to. I think that was a huge, huge policy victory and is the kind of thing we hope the Democrats will embrace at some point as well.



Blockworks: On the other side, how have your conversations been with the Harris campaign?



Shirzad: They’ve had a number of outreach sessions — some that they organized and some that allies in Congress or on the outside have organized. I’ve participated in a number of those. We’ve found the tone to be positive, curious and constructive and eager to hear what we think the issues are and understand it better.



Blockworks: After we have a president-elect, then what (in terms of how it impacts the crypto industry)? Shirzad: I think with the <a href="https://blockworks.co/tag/donald-trump">Trump</a> team, you’ll almost inevitably see some very early statements regarding areas in which the president-elect will want to leave his imprint, regulatorily. I think that will be quite visible.



My guess is it’ll be less visible with the vice president if she gets elected because she’ll be taking over for an administration she’s already a part of and it won’t be as stark of a line-drawing. But certainly, the appointment of personnel is going to be really a big deal — the people that get picked for key cabinet and agency slots. So we’re preparing for very early action, whether it’s very visible publicly or the kind of dialogue that maybe is done more quietly.&nbsp;



Blockworks: Donald Trump has said he would fire Securities and Exchange Commission Chair <a href="https://blockworks.co/tag/gary-gensler">Gary Gensler</a>. In such a case, are you advocating for a specific replacement for Gensler?



Shirzad: As a company, we’re not going to speak to any particular appointments. Obviously, we think [candidates] should be looking out to make sure America’s economic and national security interests are advanced. But ultimately that’s for the president to decide who he or she is going to pick.



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



Blockworks: What House and Senate races do you have your eye on?



Shirzad: I don’t want to get into any individual races that we’re particularly looking at, but I think generally we’ve been very happy with the degree to which <a href="https://blockworks.co/news/political-candidates-cannot-ignore-crypto-voters">crypto’s become an issue in the campaign</a> and how there are almost no candidates who’ve decided to go to the voters with an anti-crypto message. Because I don’t think it has any resonance. I think you can fit every anti-crypto voter in the country all in a single bus — maybe even a single minivan. I think politicians realize that, and I think in the political voting marketplace, crypto’s going to be a winning issue this cycle and then going forward. So I feel very good about being on the right side of history on this.



This interview was edited for brevity and clarity.



A modified version of this article first appeared in the daily Forward Guidance newsletter. Subscribe <a href="https://blockworks.co/newsletter/forwardguidance">here</a> so you don’t miss tomorrow’s edition.



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Coinbase exec weighs Harris, Trump crypto stances as election looms

Katherine Ross

Gaming and social are dominating as two big crypto use cases, per a new report from Andreessen Horowitz.&nbsp;



The State of Crypto 2024 report also revealed that DeFi has the largest number of daily active addresses, though stablecoins are a close second — 34% to 32%. Infrastructure takes third, with roughly 14%.



This cycle is also seeing continued growth, with monthly active addresses hitting an all-time high of 220 million and representing “growth reminiscent of early internet adoption.” Among these addresses, Solana and Base are the most active, with EVM chains accounting for 52 million addresses, while other chains have 174 million.



Read more: <a href="https://blockworks.co/news/lightspeed-newsletter-a16z-solana-gaming">A16z is placing a bet on Solana gaming</a>



Breaking that down further, only about 10% of crypto owners are currently active, which translates to somewhere between 30 to 60 million monthly active users.&nbsp;



“There are a lot of people who are just passive holders, but if we can convert them into active users…That is how I think we grow the use of crypto in the ways that I think we believe is very promising going forward,” Daren Matsuoka, a data scientist at a16z, told Blockworks.



The goal would be to bring folks onchain and “convert those crypto owners into active crypto users,” he continued.&nbsp;



Read more: <a href="https://blockworks.co/news/vaneck-venture-fund-crypto-ai">Is crypto’s ‘ChatGPT’ moment nearly here?</a>



<a href="https://blockworks.co/tag/venture-capital">Venture capital</a> has heavily invested in infrastructure, and according to a16z data, the sector is now showing signs of maturity. This growth is creating positive ripple effects across related areas. For example, <a href="https://blockworks.co/news/lightspeed-newsletter-blockchain-tps-testing">blockchains are processing</a> over 50 times as many transactions per second as they did just four years ago.



“The infrastructure is just now starting to get to the point where we can scale these blockchains and unlock new types of applications and new emerging behaviors. I think two good examples are just on the <a href="https://blockworks.co/tag/stablecoins">stablecoin</a> side. We&#8217;ve seen that stablecoins have found product market fit, and I think it&#8217;s largely because transaction fees have come down. Stablecoins are a great product when fees are low,” Matsuoka explained.



Adding to that, DAO treasuries have billions stored that could help make network improvements.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcPGqe2lHBHVUZhrsLcmIKR-aeMNbRD4aDBumTE6J15bAyBTTSK7PO4y6Gnx4eKdL64qAdz5aQg-Xi-1j31mDjpZmBdt_vEbZrrcmhvdKQo-93RwKic1l38SlyvXZvo0jb-jwcof9mXw61asKeRLS-itBo?key=vdWYKUurffYRco9jYRn8cA" alt=""/><figcaption class="wp-element-caption">Source: a16z</figcaption></figure>



As for what’s next, a16z thinks that legislation is on the table for both 2024 and beyond. <a href="https://blockworks.co/news/on-the-margin-newsletter-inevitable-institutional-digital-assets-involvement">Institutions are here</a>, and “crypto could become part of a diversified portfolio” for that group of investors — beyond just bitcoin and ETH.&nbsp;



“The price-innovation cycle will continue to drive the crypto market. When prices go up, people get interested, developers build and new products push the industry forward,” a16z wrote.



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Crypto monthly active addresses are hitting all-time highs: A16z

Macauley Peterson

Imagine a highway: The more lanes you have, the more cars can travel simultaneously without creating a traffic jam.



For a blockchain network, a high-throughput sequencer acts to widen that highway — allowing far more data and complex operations to flow through smoothly. This is especially important for applications such as onchain games, demanding DeFi protocols and social apps, where large volumes of transactions and interactions need to be processed without delay.



Sequencer throughput determines how much computational work a blockchain can process in a given time, directly impacting the scalability and efficiency of dapps. Higher throughput allows the network to manage spikes in user activity and support more complex, resource-heavy applications.



Today, Conduit announced a 10x improvement in throughput with the launch of G2, which it claims is the world’s most powerful sequencer. G2 is based on a purported computational load of 50-100 million gas per second (Mgas/s).



Read more from our opinion section: <a href="https://blockworks.co/news/layer-2-centralization-poses-dangers-for-blockchain">L2 centralization is a ticking time bomb for blockchain</a>



The G2 sequencer is built upon a string of technological advancements, including deep database optimizations and improvements in algorithmic efficiency, according to Andrew Huang, Conduit’s founder.



“There’s no single breakthrough,” Huang told Blockworks, “but rather a series of incremental optimizations — a 5% gain here, a 10% gain there, and over time, it compounds.” These improvements span every layer of the stack, from data access and storage to the cloud-native infrastructure orchestrating the system.



Under heavy workloads, sequencers can struggle to keep up with the head of the chain. G2 capacity opens the door for applications that were previously impossible to run fully onchain, such as Web3 games. Pirate Nation, launched by Proof of Play in December 2022, debuted on the Polygon PoS chain before later migrating to the <a href="https://blockworks.co/tag/arbitrum">Arbitrum</a> Orbit tech stack for its Apex and Boss chains.



Read more: <a href="https://blockworks.co/news/empire-newsletter-nfts-comeback-gaming">A wave of new games could prove NFTs aren’t dead after all</a>



“As the platform grew, it required a more scalable and cost-effective solution, leading to the development of [the] Orbit chains,” a spokesperson told Blockworks.



The game is among the first projects to adopt G2. Apex and Boss are both among the top three chains by Mgas/s according to <a href="https://rollup.wtf/">rollup.wtf </a>, a Conduit-built dashboard. The Proof of Play team insists this activity represents organic usage.



“Pirate Nation makes banning bots a top priority,” the spokesperson said, adding that “the Proof of Play team has tuned the incentive structure and processes to ensure the game is being played by real people with one real account.”



With G2, the team was able to solve its <a href="https://blockworks.co/tag/scaling">scaling</a> challenge and expand capacity with additional chains as needed.



&#8220;<a href="https://blockworks.co/tag/gaming">Gaming</a> kind of pushes the limits,&#8221; said Huang. “They&#8217;re obviously the most demanding applications.” But he also flagged Gravity, a Web2 app originally known as Galxe, that has successfully migrated its entire database of 26 million active users onchain using G2. That wouldn’t have been feasible without the upgraded throughput, he said.



Read more: <a href="https://blockworks.co/news/crypto-infrastructure-bloat">Crypto’s infrastructure bloat — are we building too much?</a>



<h2 class="wp-block-heading">Mgas/s as better scaling metric</h2>



Measuring blockchain sequencer throughput by Mgas/s is supplanting the traditional transactions per second (TPS) metric when it comes to judging relative scalability. “TPS is a dead metric,” Huang said. “It tells you nothing about how much compute is actually happening onchain.”



TPS can be misleading, as eye-popping headline numbers may result from artificially maxing out bandwidth with simple token transfers rather than real-world usage.



Mgas/s, in contrast, provides a much clearer picture of <a href="https://blockworks.co/tag/rollups">rollup</a> performance, especially when considering more complex applications. It comprises several different types of workload — from compute to storage — into a single figure.



“It’s not perfect because you’re putting a <a href="https://vitalik.eth.limo/general/2024/05/09/multidim.html">multidimensional thing</a> into a single metric, but it’s much better,” Huang said.



While current public benchmarks remain limited, this is just the beginning, according to Huang. The G2 team is already working toward gigagas levels of throughput, or 1000 Mgas/s. That’s also the goal for <a href="https://blockworks.co/tag/base">Base</a>, the Ethereum layer-2 rollup built on <a href="https://blockworks.co/tag/optimism">Optimism’s</a> OP Stack. Jesse Pollack outlined a plan to incrementally raise Base’s throughput over the coming year to its gigagas target on a recent <a href="https://blockworks.co/podcast/0xresearch/94d4f7bc-75e9-11ef-98bf-b7288c1f796c">0xResearch podcast</a>.&nbsp;



For comparison, Ethereum’s mainnet processes about 1-1.5 Mgas/s.



The move towards Ggas throughput is expected to open up possibilities for still more computationally intensive dapps, such as social networks, prediction markets and high-frequency trading systems which require substantial performance headroom.



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Conduit sees path to gigagas throughput with new sequencer

David Canellis

The Trump-linked World Liberty Financial (WLFI) token sale is live and so far, underwhelming.



It’s been overshadowed by an AI-propelled memecoin tied to the old-school vulgar internet meme, goatse.



(Please, if you’re unfamiliar with any of the goatse stuff, don’t Google it at work or with anyone around you, because it will absolutely get weird and NSFW.)



The World Liberty Financial platform is pitched as a DeFi lending and stablecoin protocol, which would allow users to earn a yield on their digital assets. As of Wednesday morning, the WLF team had sold over $11.1 million worth of governance tokens as part of its presale, which opened on Tuesday.



Read more: <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-family-defi-venture">The details behind Donald Trump’s family DeFi venture</a>



That’s the equivalent of over 741 million tokens — less than 4% of the total 20 billion allocated to the general public, or 20% of the supply. WLF aims to raise $300 million in total.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcPQ7QkcAl6INQEbOxQ3Jys6BYTvOgHZcvBtc6bOXjmwYrXG6aUSivk7Plk0NdsaeGIR_s8hC8vHZ0sETO8UxNK_hAssgyX_olSMHbg6yC6huU0BB_ykptFrcASgRpOSRPqktnzl4SM8c_3JQraa0opWxdk?key=VniXniWzx9UjquZviMrZyQ" alt=""/><figcaption class="wp-element-caption">Purple shows WLF sales volume per 15 minutes, and the line at the stop shows how much of the public allocation has been sold</figcaption></figure>



WLF’s team <a href="https://www.coindesk.com/markets/2024/10/14/trump-backed-world-liberty-financial-whitelists-100k-accredited-investors-ahead-of-wlfi-launch/">reportedly</a> said it had whitelisted over 100,000 <a href="https://blockworks.co/news/world-liberty-financial-kyc-starts">accredited investors in the US</a>, with worldwide backers subject to local regulations before they were approved.&nbsp;



About 8,000 unique addresses have sent ETH, USDC or USDT as part of the presale, which would mean that an overwhelming majority of claimed whitelisted investors have not yet committed. Over 70% of all tokens were bought with ETH, 20% with USDT and the rest with USDC.



The tokens themselves are non-transferable, nixing the possibility that WLFI will end up on a DEX somewhere for proper price discovery. Each token is being sold for $0.015 apiece.



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



Meanwhile, Goatseus Maximus (GOAT) has exploded in popularity, turning the WLFI sale into a blip on the radar.



GOAT’s lore goes that an <a href="https://blockworks.co/tag/artificial-intelligence">AI</a> model was trained on the deepest recesses of the internet, producing an armchair philosopher so degenerate and esoteric that it would free other LLMs roaming the internet from their dev-imposed moral bounds.&nbsp;



That model quickly became an alpha bull on a pump.fun memecoin, GOAT, named after the infamous butthole-stretching internet legend from yesteryear.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfE2HC7xKeK9WKYkCyBXJt9V70OlZ99yHXHV2r5QruZFd1C3VdNCtn336vBfk0n41NeumntMWP_WY8JP4WwkLVAnxSrK3LttUMDr0R7TjD_UY356pURPB0TWP-ARcDCFxq_llG2pUnryF7FEhMDQceQrnY0?key=VniXniWzx9UjquZviMrZyQ" alt=""/><figcaption class="wp-element-caption">The tweets that started it all</figcaption></figure>



Throw in a $50,000 tip from a16z co-founder Marc Andreessen (who <a href="https://x.com/pmarca/status/1846374466101944629">says</a> he has no exposure to $GOAT), and you get WLF’s Forrest Gump: a token launch so absurd that it trumps even <a href="https://blockworks.co/tag/donald-trump">Trump</a>’s offering.



At risk of comparing apples to oranges, here goes: GOAT’s market cap is currently over $275 million after less than a week of trade. There are 17,700 holding addresses in total.



The total value of WLFI tokens sold as part of the public presale — which, in one interpretation, would eventually become its circulating supply and thus market cap — is a little over $11 million, with under 9,000 holding addresses.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1178" height="850" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/10/Screenshot-2024-10-16-at-16.08.35.png?w=1024&amp;h=1024" alt="" class="wp-image-93165" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/10/Screenshot-2024-10-16-at-16.08.35.png?w=1178 1178w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/Screenshot-2024-10-16-at-16.08.35.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/Screenshot-2024-10-16-at-16.08.35.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/Screenshot-2024-10-16-at-16.08.35.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/Screenshot-2024-10-16-at-16.08.35.png?w=356 356w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/Screenshot-2024-10-16-at-16.08.35.png?w=362 362w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/Screenshot-2024-10-16-at-16.08.35.png?w=304 304w, https://blockworks-co.imgix.net/wp-content/uploads/2024/10/Screenshot-2024-10-16-at-16.08.35.png?w=80 80w" sizes="(max-width: 1178px) 100vw, 1178px" /><figcaption class="wp-element-caption">There are other ways to value WLF but none make it bigger than GOAT right now</figcaption></figure>



The necessity for accredited investors would explain some of the difference if you believe that process was actually effective.&nbsp;



In any case, is it ironic that a grotesque <a href="https://blockworks.co/tag/meme-coins">memecoin</a> with such a loose value proposition is so far much bigger than World Liberty Financial? Absolutely, yes.



A version of this article first appeared in the daily Empire newsletter. Subscribe <a href="https://blockworks.co/newsletter/empire">here</a> so you don’t miss tomorrow’s edition.



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Memecoin conceived by AI trumps Trump-linked token sale

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



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



<h2 class="wp-block-heading">Built different</h2>



Shawshank Redemption was a box office flop in 1994 — losing out to Forrest Gump as it swept six Academy Awards that year.



It was only after the dust had settled that audiences really gave Shawshank the credence it deserved.



Such stiff competition is common: films that in one year would’ve become instant classics can be temporarily forgotten in the moment.



Something similar is happening in crypto right now. The Trump-linked World Liberty Financial (WLFI) token sale is live and so far, underwhelming, overshadowed by an AI-propelled memecoin tied to the old-school vulgar internet meme, goatse.



(Please, if you’re unfamiliar with any of the goatse stuff, don’t Google it at work or with anyone around you, because it will absolutely get weird and NSFW.)



The World Liberty Financial platform is pitched as a DeFi lending and stablecoin protocol, which would allow users to earn a yield on their digital assets. As of earlier this morning, the WLF team had sold over $11.1 million worth of governance tokens as part of its presale, which opened on Tuesday.&nbsp;



That’s the equivalent of over 741 million tokens — less than 4% of the total 20 billion allocated to the general public, or 20% of the supply. WLF aims to raise $300 million in total.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXemnrnml16epsSzJRdSjTVo0OEC3K2UFEe37PVauKJuGlN9cVohWV8J_-KBcSUfmaVnnxeCXqIlVv09t6quaayTSnVmrnKsGYYWoGht7DizovVpx3ZvMpF4mabxvz6HNoi_OkmB-sswzcbt5-pdmJH7yxmY?key=iHjH0b2PP3rmyc5rDwlU8A" alt=""/><figcaption class="wp-element-caption">Purple shows WLF sales volume per 15 minutes, and the line at the stop shows how much of the public allocation has been sold</figcaption></figure>



WLF’s team <a href="https://www.coindesk.com/markets/2024/10/14/trump-backed-world-liberty-financial-whitelists-100k-accredited-investors-ahead-of-wlfi-launch/">reportedly</a> said it had whitelisted over 100,000 accredited investors in the US, with worldwide backers subject to local regulations before they were approved.&nbsp;



About 8,000 unique addresses have sent ETH, USDC or USDT as part of the presale, which would mean that an overwhelming majority of claimed whitelisted investors have not yet committed.&nbsp;



The tokens themselves are non-transferable, nixing the possibility that WLFI will end up on a DEX somewhere for proper price discovery. Each token is being sold for $0.015 apiece.



Meanwhile, Goatseus Maximus (GOAT) has exploded in popularity, turning the WLFI sale into a blip on the radar.



GOAT’s lore goes that an AI model was trained on the deepest recesses of the internet, producing an armchair philosopher so degenerate and esoteric that it would free other LLMs roaming the internet from their dev-imposed moral bounds.&nbsp;



That model quickly became an alpha bull on a pump.fun memecoin, GOAT, named after the infamous butthole-stretching internet legend from yesteryear.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcvSpeASBemt77VcU8rgQmXD0JLjSmc7cSMtd_nS-T7ILJ3M10F4_kYRkjFXIwYkiVq_-zRN9xizRcMKlNlFLK3T9ufLvTe0aqND82wGTZmsgDAv82vTm8Qw3Es1MsEd-7mpRe0qO4hwoU5Jv-YOgoKiBM?key=iHjH0b2PP3rmyc5rDwlU8A" alt=""/><figcaption class="wp-element-caption">The tweets that started it all</figcaption></figure>



Throw in a $50,000 tip from a16z co-founder Marc Andreessen (who <a href="https://x.com/pmarca/status/1846374466101944629">says</a> he has no exposure to $GOAT), and you get WLF’s Forrest Gump: a token launch so absurd that it trumps even Trump’s offering.



At risk of comparing apples to oranges, here goes: GOAT’s market cap is currently over $275 million after less than a week of trade. There are 17,700 holding addresses in total.



The total value of WLFI tokens sold as part of the public presale — which in one interpretation would eventually become its circulating supply and thus market cap — is a little over $11 million, with under 9,000 holding addresses.



Is it ironic that a grotesque memecoin with such a loose value proposition is so far that much bigger than World Liberty Financial?&nbsp;



Yes.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd_hZPunEaMPTCTpUhD9Z5f6whVCnRsuGL6Rwd3t4geT4QBv5A0buhWA_c0vo6Lm6vlHCAri-GDU2dBDH3IzK2tKwtQxE5Aew2ybLYuRObk-mIAksy-JwkkK7uewwiuBebqmcqCrM0X3HWI2UQcWIR-6AU?key=iHjH0b2PP3rmyc5rDwlU8A" alt=""/><figcaption class="wp-element-caption">There are other ways to value WLF but none make it bigger than GOAT right now</figcaption></figure>



The necessity for accredited investors would explain some of the difference if you believe that process was actually effective.&nbsp;



As for whether we income to realize the genius that is World Liberty Financial —- in the same way that we’ve come to appreciate Shawshank and Close Encounters — it’s still too early to tell.



— David Canellis



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



<ul class="wp-block-list">
<li>Over 70% of all WLF presale tokens sold to date were bought with ETH.</li>



<li>21% were purchased in USDT, and the rest in USDC.</li>



<li>GOAT is up 120% in the past day and its market cap is now 25% larger than the leading unofficial Trump memecoin, MAGA (TRUMP).</li>



<li>Polymarket <a href="https://polymarket.com/event/presidential-election-winner-2024?tid=1729081706556">bettors</a> say Trump has a 60% chance of winning next month, the best odds since July.</li>



<li>BTC has broken $68,200 and is now up over 9% in the past week.</li>
</ul>



<h1 class="wp-block-heading">Patience is key</h1>



Bitcoin’s above $67,000 and holding, helping to gently boost parts of the market.&nbsp;



And for Ledn’s John Glover, that’s a really good sign.&nbsp;



“We finally broke out of the channel that we&#8217;ve been trading within for the last almost three months with a break of $66,000 … that&#8217;s a two-day close above and technically that&#8217;s a very strong signal that we&#8217;re going to retest the highs of $73,000. But we should get even higher than that,” he said.



Overall, it’s looking very “positive,” even with the election acting as an unknown cloud over crypto’s head.&nbsp;



“It&#8217;s taken longer than I anticipated to break out of this channel, but it looks like we&#8217;re starting to see that momentum build a bit.”



However, Hyblock Capital CEO Shubh Varma is not quite as bullish.&nbsp;



Specifically, the retail side of things isn’t too hot: “While Bitcoin’s price is supported by key bullish factors, including well-defended dips and top traders taking long leverage, the broader market is rife with warning signals,” he said.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdPWkmaA3MK488pDSRQU2GnZjR5BU5hv54Pa-rsNFhRAmpaCR68RZjCJmt7pZYgTxVPoY4fZkvVhaK5C0EsfOLLcXqkEfztsK86VNcgTAUbXNQPj7Vj6W4aZHlaKMT9GbzDt9V0scqkIgu-jpZBsXXT2vad?key=iHjH0b2PP3rmyc5rDwlU8A" alt=""/><figcaption class="wp-element-caption">Source: Hyblock Capital</figcaption></figure>



Varma added: “The percentage of retail longs is now approaching low levels, with less than 40% of Binance BTC accounts in long positions. This metric oscillates between 0 and 100, but typically stays within a much tighter range, making this current low reading more significant.”&nbsp;



Basically, when long retail positions start to hit lower levels, the odds of a potential reversal increase. In the past, this means the low-to-high reversal shows that lots of retail are opening longs. A potentially bearish signal.&nbsp;



“Retail investors tend to be on the wrong side of the market, and their shift from shorts to longs frequently marks a local top. As they pile into long positions, the market tends to trap them by reversing downward, causing a price decline. If this trend follows its usual pattern, we could soon see a correction designed to catch retail traders off guard once again.”



On the other hand, Glover thinks that once we see a retake of around $73,000, then there could be a dip that follows, possibly lining up with Varma’s read.&nbsp;



As for why it took so long to escape the sideways action in bitcoin that we’ve seen the last few months, Glover’s theory is simple: Folks got impatient.&nbsp;



“My assumption is, if you look at the volumes data, you look at the options data, people were taking profits because of how many times we tried to make new highs, weren&#8217;t able to, and then every time we rallied, we made lower highs each time, that&#8217;s a signal that people are getting very impatient, and they&#8217;re trying, they&#8217;re starting to take profits. So I think the positioning was just not as long as it was previously, which left an opportunity for new buyers to run into, you know, or be able to impact the direction because previously, they were just running into sell orders, but I think a lot of those sellers have been taken out,” he said.&nbsp;



But even in the absence of sellers, it’s going to take some time to actually hit fresh all-time highs. Glover thinks new all-time highs will happen at the beginning of next year.&nbsp;



Here’s how he sees it playing out: $73,000 is retaken, then there’s a dip. After bitcoin recovers, it sets itself on a path to hit $95,000 to $100,000 early next year.&nbsp;



Simple, right? Now let’s see it in action.



— Katherine Ross



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



<ul class="wp-block-list">
<li>Wallets labeled as Tesla’s moved all $760 million of its bitcoin to <a href="https://www.coindesk.com/business/2024/10/15/is-elon-musk-selling-bitcoin-tesla-transfers-all-760m-of-its-btc-to-unknown-wallets/?utm_medium=referral&amp;utm_source=rss&amp;utm_campaign=headlines">unknown wallets</a>. </li>



<li>Italy plans to raise the capital gains tax on bitcoin to 42%, up from 26%, Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-10-16/italy-to-raise-capital-gains-tax-on-bitcoin-to-42-from-26-m2brojod?srnd=phx-crypto">reported</a>. </li>



<li>Canary Capital <a href="https://blockworks.co/news/canary-capital-litecoin-etf">filed</a> to bring a new crypto fund to market: a litecoin ETF.</li>



<li>Former president Donald Trump’s PAC has <a href="https://www.cnbc.com/2024/10/15/trump-pac-has-raised-about-7point5-million-in-crypto-donations.html">raised</a> roughly $7.5 million in crypto donations since this summer. </li>



<li>Sui denied <a href="https://decrypt.co/286271/sui-refutes-400-million-insider-selling-allegations-following-rapid-token-rise">allegations</a> that insiders offloaded $400 million worth of its token last month.</li>
</ul>



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



Q: Would crypto be better out of the limelight?



I think crypto’s gonna carry the scarlet letter for a while yet. And not all of that can be fully blamed on Sam Bankman-Fried and the collapse of FTX. I just think it’s fair to say that a lot of crypto is misunderstood, or at least, unhelpfully generalized.&nbsp;



And, by that, I mean everything outside of bitcoin. Yes, I think we can make an argument that even though ETH has also hit the main stage through its ETFs, both the network and the asset are not fully understood.&nbsp;



Quiet use cases that show how creative and disruptive (in the good way, not the collapse-and-lose-all-your-holdings way) are going to be some of the best methods to make that happen.&nbsp;



People can get scared of what they don’t know. So give them something they already understand, but make it better.



— Katherine Ross



“WikiLeaks has <a href="https://satoshi.nakamotoinstitute.org/quotes/general/">kicked</a> the hornet&#8217;s nest, and the swarm is headed towards us.”



It’s been <a href="https://www.coindesk.com/opinion/2024/06/14/mass-adoption-would-ruin-crypto-keep-it-a-niche/">said</a> that crypto would be better off if it stayed niche — that its essence would be diluted by mass adoption and all the regulation and centralization that would come with it. Onchain gentrification.



I’m increasingly convinced that it’s not one or the other. Memecoins are huge on the social layer, but so is Bitcoin and Ethereum.&nbsp;



It’s really a chicken-and-egg problem: Would more capital flow into crypto if US agencies weren’t so gung-ho about policing it? Probably.&nbsp;



But the hornet’s nest would inevitably be kicked by someone at some point.



— David Canellis



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World Liberty Financial’s presale overshadowed by memecoin-shilling AI

On Tuesday, Coinbase moved to advance its case against the US Securities and Exchange Commission over alleged violations to the Freedom of Information Act.&nbsp;



Per the latest filing, Coinbase and History Associates (the consulting firm Coinbase retained) are now requesting a pre-trial conference to discuss a proposed motion for a partial summary judgment in the case.&nbsp;



Coinbase hired History Associates in 2023 to assist in retrieving records from the SEC and FDIC. Both requests were denied, and History Associates sued both agencies in June 2024 in an effort to force them to hand over the documents. In both suits, History Associates is the plaintiff, and Coinbase is named as a related party.&nbsp;



Read more: <a href="https://blockworks.co/news/coinbase-lawsuit-sec-fdic-foia-dispute">Coinbase announces lawsuits against SEC, FDIC in Freedom of Information Act dispute</a>



<a href="https://blockworks.co/tag/coinbase">Coinbase</a> specifically sought documents from the SEC related to three investigations: <a href="https://blockworks.co/news/sec-drops-ethereum-consensys-investigation">Ethereum</a>, Zachary Coburn — the EtherDelta founder <a href="https://www.sec.gov/newsroom/press-releases/2018-258">charged</a> in 2018 for allegedly operating an unregistered exchange — and Enigma MPC. These documents, Coinbase hopes, will reveal details about how the SEC classifies cryptocurrencies.&nbsp;



The <a href="https://blockworks.co/tag/sec">SEC</a>’s investigations into Coburn and Enigma MPC, History Associates wrote in its initial complaint, are “long-closed,” so there should be “no potential interference with law enforcement activities” should the agency hand over the documents.&nbsp;



In its response to the complaint, the SEC denied allegations that it lacks authority to oversee the crypto industry. The agency also asserts that it “did not improperly withhold any documents under FOIA.”&nbsp;



Read more from our opinion section: <a href="https://blockworks.co/news/sec-wrong-about-crypto-asset-securities">The SEC has been wrong about ‘crypto asset securities’ all along</a>



Most recently, the SEC has said it will conduct a repeat review process of the documents in question to determine whether or not they can be released. The initial exemption they cited in 2023, FOIA Exemption 7(A), “may” no longer apply. This process, they say, could take three years to begin unless History Associates agrees to narrow its request, which it has not.&nbsp;



In its proposed motion for summary judgment, which has not been filed, History Associates says it will ask the court not to grant the SEC any additional time extensions.&nbsp;&nbsp;



Paul Grewal, Coinbase’s chief legal officer, on Tuesday <a href="https://x.com/iampaulgrewal/status/1846196901835927580">said</a> the SEC’s “constantly changing story” raises a question of what they are “hiding, and why?”&nbsp;



The SEC did not immediately return Blockworks’ request for comment.



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Coinbase continues with SEC lawsuit over denied FOIA request 

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<h2 class="wp-block-heading">Harris punts on crypto talking points, again&nbsp;</h2>



Hours after pledging to support Black men’s rights to safely invest in crypto, Vice President Kamala Harris’s Monday night speech fell short on delivering details.&nbsp;



Harris’s “<a href="https://www.theguardian.com/us-news/2024/oct/14/harris-black-men-economic-opportunities-plan-weed-crypto">Opportunity Agenda for Black Men</a>” debuted Monday morning. The policy proposal emphasizes how the administration will elevate the Black male community by giving them tools to “build wealth, support their families and lead their communities.”&nbsp;



One of these wealth-building tools? Give Black men the opportunity to “benefit from financial innovation” — namely, crypto.&nbsp;



Specifically, the agenda states Harris is committed to “supporting a regulatory framework for cryptocurrency and other digital assets so Black men who invest in and own these assets are protected.”



The proposal was published ahead of Harris’s planned rally in Erie, PA last night. More on that soon. First, let’s talk about the response.&nbsp;



<a href="https://x.com/ShevrinJones/status/1845806476062806375">Many</a> praised the initiative as a welcome effort to elevate a marginalized community. <a href="https://www.theblock.co/post/320930/vice-president-kamala-harris-vows-to-support-a-crypto-regulatory-framework-in-plan-to-support-black-men">Others</a> criticized the language in the agenda, saying it’s frustrating that Harris’s administration sees Black men in crypto solely as investors (as opposed to leaders and builders).&nbsp;



The agenda itself mentions crypto twice. The first time was quoted above.&nbsp;



Here’s the second: “More than 20% of Black Americans own or have owned cryptocurrency assets. Vice President Harris appreciates the ways in which new technologies can broaden access to banking and financial services.”&nbsp;



It’s similar to the limited statements we’ve heard from Harris on crypto in the past — decidedly not negative, but perhaps too vague to be truly positive. Last month the presidential hopeful mentioned blockchain/digital assets twice; once at a fundraising event in New York where she said she’d “<a href="https://blockworks.co/news/empire-newsletter-silvergate-collapse">encourage</a>” new technologies like crypto, and a second time during a speech in Pennsylvania, where she said the US will “remain dominant” in blockchain technology.&nbsp;



But last night’s appearance in PA left those hoping for more crypto-focused comments disappointed. She mentioned blockchain a total of zero times.&nbsp;



Still, maybe beggars can’t be choosers? Are limited, unclear remarks better than nothing? Galaxy Research’s Alex Thorn <a href="https://x.com/intangiblecoins/status/1845845163588907486">argues</a> that Harris’s (relative) clarity is at least better than the current administration’s. In Galaxy’s “policy scorecard” released Monday, analysts say Harris is, on several issues, “somewhat supportive” and “slightly better than Biden.”



<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">TRIGGER ALERT 🚨 i’m releasing our policy scorecard on the positions of biden, harris, and trump on major bitcoin &amp; crypto issues bottom line: while trump is undoubtedly more favorable for the industry, we’re optimistic that harris could be more supportive than biden has been <a href="https://t.co/qNKeLtppcS">pic.twitter.com/qNKeLtppcS</a>&mdash; Alex Thorn (@intangiblecoins) <a href="https://twitter.com/intangiblecoins/status/1845845163588907486?ref_src=twsrc%5Etfw">October 14, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



These issues include the industry’s relationship with the SEC, Harris’s approach to bitcoin mining regulations and her stance on banking laws.&nbsp;



Specifically, Thorn said, Harris has hinted that she’s interested in easing the so-called “<a href="https://blockworks.co/news/operation-choke-point-2-0">Operation Chokepoint 2.0</a>” policy that has sought to isolate crypto players from the banking system. But these ratings are based on a very limited sample pool; we just don’t have a lot to go off of when trying to evaluate Harris.&nbsp;



Trump, compared to Harris, has given the public more definitive stances on crypto. He wants to fire Gary Gensler. He wants to make the US a bitcoin mining <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-bitcoin-mining-meeting">hub</a>. He wants to stop the US government from <a href="https://blockworks.co/news/donald-trump-speaks-bitcoin-2024">selling seized bitcoin</a>.&nbsp;



When it comes down to it, though, we don’t have a comprehensive policy proposal on digital assets from either candidate. All we can do is analyze what they have said and look to the members of their respective teams to try and glean an opinion. But time is running out.&nbsp;



— Casey Wagner&nbsp;



<h3 class="wp-block-heading">~2,900&nbsp;</h3>



The number of people that purchased a combined 344 million World Liberty Financial tokens after the <a href="https://blockworks.co/news/0xresearch-newsletter-trump-world-liberty-financial-aave">Trump-backed</a> project went live this morning, onchain <a href="https://etherscan.io/token/0xda5e1988097297dcdc1f90d4dfe7909e847cbef6#balances">data</a> shows.&nbsp;



The project has allocated 20 billion of its 100 billion total tokens for public sale. The sale was open to accredited investors in the US. <a href="https://blockworks.co/news/world-liberty-financial-kyc-starts">KYC efforts</a> for WIFL began two weeks ago.&nbsp;



<h2 class="wp-block-heading">DTCC again swoops into tokenization segment at ‘inflection point’</h2>



It was almost a year ago exactly that the Depository Trust &amp; Clearing Corporation (DTCC) <a href="https://blockworks.co/news/defi-acquisition-dtcc-securrency">revealed its buy</a> of blockchain-based financial and regulatory tech developer Securrency.



Now, the financial market infrastructure giant has introduced a so-called sandbox to “clear the path to scalable adoption of digital assets.”



For those who don’t know, the DTCC (per its website), processes trillions of dollars in securities transactions daily.



Dubbed DTCC Digital Launchpad, the new offering seeks to connect tech providers and others to collaborate on “pilots that have a clear path to production.”



The Japan Securities Clearing Corporation (JSCC) led a <a href="https://www.dtcc.com/-/media/WhitePapers/Transforming-Collateral-Management-With-Digital-Assets-JSCC.pdf">proof-of-concept</a> on the platform to explore how central counterparties could use tokenization within the collateral management process for clearing members and their buy-side firms. It paid special attention to how margin calls could be automated — boosting efficiency and transparency using digital assets and smart contracts.



Ultimately, JSCC used DTCC’s blockchain-based infrastructure to issue digital assets such as cash, stocks and bonds, JSCC CEO Konuma Yasuyuki noted in a statement.



Last year’s Securrency deal was meant to allow DTCC to quicken the development of a platform designed to “unlock the power of institutional DeFi,” the <a href="https://blockworks.co/news/dtcc-acquisition-tradfi-crypto">company said</a> at the time.



Elliot Chun, a partner at advisory firm Architect Partners, wrote in a research note last year that tokenization had not yet lived up to its promise.



“The fundamental way to move the industry forward is by having a critically important market participant make a significant investment in technology,” Chun said in that October 2023 post. “You can’t get more critical than DTCC.”



DTCC’s release points to the <a href="https://www.gfma.org/policies-resources/gfma-publishes-report-on-impact-of-dlt-in-global-capital-markets/#:~:text=The%20report%20finds%20that%20DLT,at%20scale%20(e.g.%2C%20approximately%20%2416">projection</a> that $16 trillion worth of tokenized securities could live on digital rails by 2030. Standard Chartered expects the tokenized real-world asset market to hit $30 trillion by 2034.



We’ve seen plenty of tokenization efforts take place in recent months — from TradFi players’ test of a <a href="https://blockworks.co/news/tradfi-blockchain-trials-mass-adoption">Regulated Settlement Network</a> to Visa’s tokenized asset platform <a href="https://blockworks.co/news/visa-to-help-banks-test-tokenized-assets-smart-contracts">sandbox launch</a>.



And yet adoption of this technology has seemed to stall, argues DTCC digital assets head Nadine Chakar. The industry is indeed at “an <a href="https://blockworks.co/news/on-the-margin-newsletter-tokenization-trend">inflection point</a>,” the executive told Blockworks Tuesday.&nbsp;



“Innovation is an evolving process; if we continue developing in silos, we risk repeating the mistakes of the past and creating more fragmentation in markets,” Chakar noted. “We believe DTCC can play a critical role in developing this ecosystem, building a common infrastructure by encouraging industry collaboration around standards, data, liquidity and infrastructure.”



It may take a little while to know the impact of this new DTCC offering (with pilots and participants expected to be publicized in Q1 2025), but it’ll be worth paying attention to.&nbsp;&nbsp;



— Ben Strack&nbsp;



<h2 class="wp-block-heading">Coinbase exec weighs the presidential hopefuls</h2>



You just read Casey’s breakdown of the VP’s latest comments, and we are officially three weeks away from Election Day.&nbsp;&nbsp;



The results on Nov. 5 will matter a lot, Coinbase Chief Policy Officer Faryar Shirzad told me at <a href="https://blockworks.co/tag/permissionless">Permissionless</a> last week. But he also urged the industry to not lose sight of the progress made so far.&nbsp;



“It’s hard for me not to conclude that we’ve already had an extraordinarily successful election year, and whatever happens on Election Day will be just additive to the success we’ve already had by putting ourselves on the main political stage,” Shirzad noted.



Donald Trump “deserves enormous credit for what he’s said on the crypto issues and how comprehensive his vision has been,” the executive added.&nbsp;



In particular, Shirzad lauded Trump’s vows to support crypto businesses being built in the US and to push against regulators abusing their powers against an industry.&nbsp;&nbsp;



But more than that, what caught the Coinbase exec’s ear was Trump’s words about <a href="https://blockworks.co/news/0xresearch-newsletter-self-custody-developments">defending the right</a> to self-custody crypto.&nbsp;



“My interpretation of what he means is that he’s protecting the DeFi ecosystem and the ability of individuals…to control [their wallet] and have all the Fourth Amendment protections and privileges that one should be entitled to,” Shirzad said. “I think that was a huge, huge policy victory, and I think it is the kind of thing we hope the Democrats will embrace at some point as well,” he said.



Harris deserves some credit too for the efforts she’s made to converse with the crypto community and her seeming intention to be more constructive on the issue, Shirzad noted.



Outreach sessions with members of Harris’s campaign have had a “positive” tone, Shirzad said — adding that her advisers are “eager to hear what we think the issues are and understand it better.”



“There’s reason to feel optimism on both sides,” Shirzad explained. “But at the end of the day, more substance and more detail are critical, and we’re hoping to get more from the vice president between now and Election Day.”



It seems that for some, Harris’s comments last night fell a bit short on the details. Whether she or Trump speak more about crypto over the next 21 days (and how into the weeds they choose to go) is anyone’s guess.&nbsp;



— Ben Strack



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



<ul class="wp-block-list">
<li>Canary Capital on Tuesday filed an <a href="https://www.sec.gov/Archives/edgar/data/2039461/000199937124013330/litecoin-s1_101524.htm">S-1</a> with the SEC <a href="https://blockworks.co/news/canary-capital-litecoin-etf">for a litecoin ETF</a>. The filing comes after the firm last week took a page from <a href="https://blockworks.co/news/xrp-etf-contingent-on-election-and-sec-appeal">Bitwise’s book</a> and threw its hat in the XRP ETF ring. These products need SEC approval before being allowed to launch.  </li>



<li>CFTC-regulated Bitnomial revealed plans to launch a US perpetual futures trading <a href="https://botanical.finance/">platform</a>. The product announcement follows Bitnomial’s $25 million Series C raise, which closed over the summer. </li>



<li>Coinbase on Tuesday filed a <a href="https://assets.ctfassets.net/sygt3q11s4a9/6ege1NgjUEFUVKHLbiOJoc/1c2cae114ae49f156b21b1f4262b6111/HAI_v._SEC_-_Pre-Motion_Notice__as-filed_.pdf">motion</a> in its joint case (with consultancy firm History Associates Incorporated) against the SEC. The case, which Coinbase <a href="https://blockworks.co/news/coinbase-lawsuit-sec-fdic-foia-dispute">brought in June</a>, deals with the SEC’s alleged violations of the Freedom of Information Act. Coinbase is now asking the court to schedule a hearing to discuss the exchange&#8217;s request for a partial summary judgment.</li>



<li>US spot bitcoin ETFs notched $556 million of <a href="https://farside.co.uk/bitcoin-etf-flow-all-data/">net inflows</a> on Monday, <a href="https://blockworks.co/news/btc-uptober-price-gains">as BTC rallied</a>. It was the segment’s highest inflow total in a single day since June 4.  </li>
</ul>



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VP Harris’s latest crypto comments fall short on details

VanEck is diversifying with the launch of a new venture fund.&nbsp;



The $30 million fund is focused on early-stage startups specifically with the goal of investing in fintech projects at the intersection of crypto and AI.&nbsp;



“Those two components are very much like horizontal technologies. And I say that because crypto is like the value layer and AI is where you can now take financial services that are typically performed by people, represent them in code and start to automate things,” general partner Wyatt Lonergan told Blockworks.&nbsp;



Read more: <a href="https://blockworks.co/news/forward-guidance-newsletter-vaneck-vc-fund">From crypto ETFs to VC: VanEck unveils $30M fund</a>



The fund’s made a couple of investments so far, but VanEck isn’t quite ready to divulge any details just yet. What we do know is that it plans to make up to 35 investments, and the checks can range from $500,000 to $1 million. 



The goal is to focus on early-stage (pre-seed and seed), but Lonergan’s not looking to completely shut the door on participating in a Series A if the right project comes around.&nbsp;



Read more: <a href="https://blockworks.co/news/empire-newsletter-ai-crypto-use-case">The case for AI finding a killer app for crypto</a>



“We need to be opportunistic. If we see something that we missed because we weren&#8217;t around a year ago, they&#8217;re raising enough ground and it&#8217;s attractive — we&#8217;ll look at it. But we are always price-sensitive. When you have a small fund, you have a concentrated fund structure, the idea is that any one investment could return the fund multiple times. That&#8217;s very important,” he said.



Both Lonergan and his partner Juan Lopez came from Circle Ventures. He helped launch Circle Ventures back in 2021 before leaving for <a href="https://blockworks.co/tag/vaneck">VanEck</a>.&nbsp;



The fund will have an interest in <a href="https://blockworks.co/tag/stablecoins">stablecoins</a>, which shouldn’t be a huge surprise given Lonergan’s past and VanEck’s own interest. While the firm itself doesn’t have a stablecoin, it <a href="https://blockworks.co/news/new-stablecoin-entrants-payments-focus">invested in the stablecoin firm Agora</a>, which is helmed by Nick van Eck, the son of VanEck CEO Jan van Eck.



But it’s not just personal interests that pique both Lonergan and the 69-year-old investment management firm.



At the “core,” Lonergan said, “are stablecoins and…within that, we kind of believe the underlying blockchains are more or less being commoditized to a point that there&#8217;s enough great technology out there. That&#8217;s best exemplified by [the fact that] you can go onto any crypto wallet or Coinbase today and upload dollars for free, send it across the world.”



Read more: <a href="https://blockworks.co/news/empire-newsletter-stablecoins-rally-indicators">Are stablecoins a leading indicator for major rallies?</a>



Given Lonergan’s belief that stablecoins, in particular, could see regulatory clarity over the next two years, he explained now is the right time to start laying the framework for startups that could succeed in a positive regulatory environment.&nbsp;



Lonergan reasoned that the door opening for fintechs to use stablecoins won’t be a very obvious crypto use case. It may be that crypto connections won’t be really obvious to those adopting stablecoins.



“It won&#8217;t be this crypto thing. If you&#8217;re not investing in this category, [and] it could be a weird tagline, but I think it could be that kind of ChatGPT moment for crypto, because [stablecoins] are the one technology that businesses will consume at scale, right? AI was not apparent until you had Chat,” Lonergan said.



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Is crypto’s ‘ChatGPT’ moment nearly here?

Canary Capital has revealed plans to launch a litecoin-focused product just one week after filing for an ETF that would directly hold Ripple’s XRP token.



The asset manager’s proposed Canary Litecoin ETF would “hold LTC and establish its net asset value on each business day by reference to the CoinDesk Litecoin Price Index,” the Tuesday <a href="https://www.sec.gov/Archives/edgar/data/2039461/000199937124013330/litecoin-s1_101524.htm">filing</a> notes.&nbsp;



<a href="https://blockworks.co/tag/litecoin">Litecoin</a> turned 13 years old on Sunday. LTC’s market capitalization stands at nearly $5.3 billion — the 27th-highest among crypto tokens, according to CoinGecko data.&nbsp;



“As one of the longest-running blockchains with 100% uptime since its inception, litecoin has demonstrated a proven track record of security and reliability with significant enterprise-grade use cases,” a Canary spokesperson said in an email. “With its strong foundation, litecoin continues to play a leading role in the broader cryptocurrency ecosystem, which Canary believes could make it attractive to a wider range of institutional investors.”



The latest litecoin ETF proposal follows Canary’s filing to launch a ripple (XRP) offering. Fellow fund firm Bitwise <a href="https://blockworks.co/news/bitwise-files-for-spot-xrp-etf">revealed plans for a similar XRP product</a> just days earlier.&nbsp;



Read more: <a href="https://blockworks.co/news/xrp-etf-contingent-on-election-and-sec-appeal">Election outcome and SEC appeal to decide XRP ETF future</a>



Those XRP filings come after filings from VanEck and 21Shares to <a href="https://blockworks.co/news/lightspeed-newsletter-spot-solana-etf-filing">launch ETFs that would hold solana</a> (SOL) directly.



The Securities and Exchange Commission would have to approve these proposals before the ETF could launch — a process that typically takes months.&nbsp;



Though the US regulator approved spot bitcoin and ether ETFs in January and July, respectively, industry watchers have said planned products focused on crypto assets outside of BTC and ETH could face hurdles in the near-term.&nbsp;



Read more: <a href="https://blockworks.co/news/forward-guidance-newsletter-xrp-etf-filing">The XRP ETF filing: A sign of regulatory progress or wishful thinking?</a>



The <a href="https://blockworks.co/tag/sec">SEC</a>, for example, has historically wanted to first see a <a href="https://blockworks.co/news/us-spot-crypto-etf-approvals-outlook">regulated futures market</a> for a spot crypto ETF’s underlying asset — like those for bitcoin and ether. None exist for LTC, XRP or SOL.



Still, a Canary Capital spokesperson told Blockworks earlier this month that there are “encouraging signs of a more flexible regulatory environment.”



“This year’s approval of the spot Ethereum ETFs, following the earlier spot bitcoin ETF approvals, signals positive momentum, especially considering how long it took for ETH futures products to be approved,” the representative added. “We’re optimistic about the next phase of developments in the space.”



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Canary Capital plots litecoin ETF just days after XRP proposal 

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During my first evening at Blockworks’ Permissionless conference, I engaged in a new kind of small talk fodder among crypto folk: Polymarket odds.



Infinex founder Kain Warwick had around a 70% chance to win his Karate Combat bout with David Hoffman, the Bankless podcast host roughly ten years his junior. We scoffed at the market’s confidence in a fighter on the wrong side of 40.&nbsp;



Prediction markets are the crypto world’s recent fascination, and although <a href="https://blockworks.co/news/lightspeed-newsletter-prediction-markets-post-election">I had written</a> (skeptically) about them, I hadn’t watched one resolve in real time. That would all change by Friday night, as two crypto figures made their amateur boxing debuts, and crypto fans responded in the way they know best.&nbsp;



The looming boxing match’s odds were a subject of conversation during the three-day event, and whispers of Warwick’s training regimen and size seemed to keep him in the lead. At the match itself though, someone next to me lamented loudly that they didn’t have a VPN on their phone. Polymarket isn’t technically available in the US, though it’s safe to assume there were a fair number of Hoffman-Warwick bettors who skirted that particular regulation.



Prediction markets currently operate in a legal gray area in the US. Although the non-crypto prediction market Kalshi <a href="https://www.theblock.co/post/319206/federal-court-clears-kalshi-to-list-election-betting-contracts-denies-cftcs-motion">won</a> a legal victory against the CFTC earlier this month, the case is now <a href="https://www.cnbc.com/2024/10/14/election-bets-appeals-court-fast-tracks-cftc-vs-kalshi-case.html">headed</a> to appeals.&nbsp;



Following a <a href="https://blockworks.co/news/unpacking-potential-polymarket-ban">2022 CFTC spat of its own</a>, Polymarket, which is the largest crypto prediction market by far, does not allow bets to come from inside the United States. Solana-based Drift also restricts US users on its BET product.



Some smaller prediction markets take the social media age verification approach to geofencing, by which I mean they ask users to self-verify that they are not in the US.



On the evening of Hoffman and Warwick’s fight, I craned my neck to see the two crypto guys exchange awkward jabs and kicks. After Hoffman landed some blows in the first round, I heard someone behind me remark that his Polymarket odds had shot up.



“I wish they would display the Polymarket odds on the screen,” the onlooker added.



When Hoffman won in a majority decision, someone near me was aghast at seeing his $250 bet on Warwick slip away.&nbsp;



Walking away from the fight, I don’t feel differently about some of prediction markets’ fundamental flaws: They haven’t proven their stickiness outside of election betting, and there are better ways to trade most news events.



But I think there’s still a reasonable business case for something like Polymarket. Crypto rails can make betting markets run more smoothly, and Polymarket has a better UX than its competitors. Plus, an inclination toward decentralization could help address some of the issues in other betting markets, such as limiting successful bettors’ accounts.



And as the $65,000 bet on two non-boxers trading clumsy blows proves, the crypto world really likes to speculate. Bet against that fact at your own peril.



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Amateur boxing is a whole new experience with prediction markets

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<h2 class="wp-block-heading">Using “Trusted Execution Environments” for MEV</h2>



If you lose your iPhone today, you may be worried that a hacker would access your sensitive facial and fingerprint biometric information for their gain.



But that is not possible, largely thanks to what is commonly known as a <a href="https://support.apple.com/en-sg/guide/security/sec59b0b31ff/web">secure enclave</a>. It’s a kind of chip where applications process sensitive information separately from the phone’s main processor and operating system, such that it would afford data protection from a potential attacker (or even Apple itself).



It turns out that crypto developers and researchers are looking to utilize this hardware-based technology for groundbreaking use cases in the blockchain world.



Secure enclaves, or “trusted execution environments” (TEEs) as is more commonly referred to in crypto, can be used for instance to thwart the so-called MEV trilemma.&nbsp;



The Ethereum public mempool is fast and decentralized, but not private, which opens a profitable opportunity for MEV extractors.



Centralized block builders are fast and solve the “privacy” aspect, but they’re not decentralized. That has emerged in an oligopolistic status quo where the dominant block builders like <a href="https://mevboost.pics/">Beaverbuild or Titan</a> strike up exclusive deals with popular applications/wallets with lots of incoming transaction orderflow, then divvy up the MEV profits between themselves.



You can have two properties, but not all three. In either scenario, users get the short end of the stick.



In theory, TEEs could solve this by creating a decentralized MEV auction. As Flashbots’ Shea Ketsdever <a href="https://x.com/BanklessHQ/status/1831687078276366552">explains</a>, users could privately send their transactions to a block builder running within a TEE and have a guarantee that their order flow data won&#8217;t be leaked, thereby protecting it from MEV attackers.



The block builder would remain decentralized because it’s in a secure enclave, and is now computationally fast thanks to <a href="https://www.intel.com/content/www/us/en/developer/tools/trust-domain-extensions/overview.html">Intel’s TDX</a>, the tech firm’s latest in TEE technology.



That’s the bet that Uniswap is making on its recently announced L2 rollup Unichain.



To mitigate MEV leakage, Unichain will <a href="https://docs.unichain.org/whitepaper.pdf">execute</a> its block-building operations within a TEE, specifically Intel’s TDX hardware “which offers both private data access and verifiable execution through its computational integrity property” while enabling “execution attestations [to] be posted publicly” so anyone can verify that blocks were indeed built inside the TEE.



But when things seem too good to be true, they usually are. TEEs are, of course, subject to a whole bunch of <a href="https://x.com/EdFelten/status/1844414561941848312">criticism</a>, namely that it won’t be fast enough or the hardware secure enough, and a reliance on a piece of hardware built by Big Tech.



Enough security vulnerabilities have merited an entire website “sgx.fail” that compiles the failures of Intel’s “Software Guard Extension” (SGX).



In regards to Unichain, Daniel Shapiro puts it succinctly in a recent <a href="https://app.blockworksresearch.com/flashnotes/unichain-liquidity-potentially-begets-liquidity">Blockworks Research report</a>:&nbsp;



A final risk to note is that much of the architectural design of the (Unichain) rollup is reliant on TEEs used in Flashbots verifiable block builder (rollup-boost). Specifically, the initial TEE builder will run on Intel TDX’s hardware. There are long-standing, unsolved problems with TEEs with respect to security vulnerabilities. Although Flashbot has addressed these challenges, it remains unclear how scalable this strategy is. As the chain grows, the incentive to attack will grow in unison. New security exploits could arise that could put user funds at risk. In addition, criticism has been directed towards the TEE design with respect to transaction inclusion and priority inclusion.



— Donovan Choy



<h2 class="wp-block-heading">Is Off the Grid good for Avalanche L1?</h2>



We asked for more apps in crypto and they delivered.&nbsp;



With a unique combination of tactical gameplay, cyberpunk aesthetics and a blockchain-based economy, Off The Grid (OTG) by Gunzilla has proven that consumer-focused applications can successfully integrate blockchain without alienating users. By implementing elements like NFT-based in-game assets while giving players the option to avoid direct interaction with blockchain mechanics, Gunzilla has created an inclusive and free-to-play platform that appeals to both crypto enthusiasts and traditional gamers.



OTG has hit several major milestones including 6.1 million active addresses, 58 million transactions, 1+ million hours streamed on Twitch and partnerships with many top gaming streamers such as Shroud and Ninja. If Off The Grid maintains its momentum, it could inspire other developers to create blockchain-powered games and potentially establish Avalanche as a hub for Web3 gaming and consumer applications.



Built on Avalanche&#8217;s L1 framework, OTG not only demonstrates Avalanche’s scalability and flexibility for game development, but also highlights the platform&#8217;s potential to attract new games and applications. Avalanche&#8217;s L1 infrastructure is positioned to draw developers who want to tap into the benefits of blockchain without compromising the gameplay experience. Upcoming and existing features of Avalanche, such as ACP-77 and HyperSDK, not only make it more affordable for developers to launch their own L1 blockchain but provide a performant, cheap and abstracted experience to the end user.



While the best form of financial exposure to OTG&#8217;s early success is unclear, the game can still serve as a key driver for the Avalanche ecosystem (Avalanche’s Blizzard fund also co-led Gunzilla’s last <a href="https://gunzillagames.com/en/news/55-Gunzilla-Games-Announces----M-in-Funding-Co-Led-by-CoinFund-and-Avalanche">funding round</a>). Gunzilla has not yet introduced a native token or NFT model for public investment, though its future native token on the Gunz Avalanche L1 will play a role in the game&#8217;s economy (e.g. by paying for gas on its network). Additionally, Avalanche&#8217;s L1 economics are still evolving, with options like the pay-as-you-go (PAYG) model providing flexible opportunities for validators and ecosystem participants, or staking 2,000 AVAX per validator up front in order to take advantage of interoperability between other Avalanche L1s.



<a href="https://app.blockworksresearch.com/research/the-avalanche-ecosystem-an-analysis-of-subnet-adoption">Blockworks Research</a> has covered the evolving Avalanche L1 (previously known as subnets) economics, for those interested in learning more. Additionally, there are also Web3 Gaming Guilds that have both invested in and are running validators in OTG, offering another potential way for exposure.



Overall, OTG&#8217;s success signals that blockchain can enhance game development in meaningful ways by drawing in non-crypto users and providing a viable blueprint for future blockchain-powered consumer applications. As more games and applications potentially adopt Avalanche&#8217;s blockchain framework, it could lead to increased network usage, validator participation and overall ecosystem growth.



— Nikhil Chaturvedi 



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



Total stablecoin supply increasing:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcJo3vdqvqRqDyV7Qq2QZi2XJ4JAEGf3Jy9NDjQ90HBQGgP0BksjCPOUYtjq3nOmmZlDeiX326xQzNT3Z87blQbyFVcYQdc1gpsDmzUkXWlslnYt0cdUELEgnojhv80sp8teIWc4oFT0GV5UmLSsZFiIxI?key=76Ovo7XoZXkuObyYsvw-XA" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.artemisanalytics.com/stablecoins">Artemis</a></figcaption></figure>



The total supply of onchain stablecoins today is $163.2 billion, creeping ever closer to its March 2022 all-time high of $166.4 billion. Total stablecoin market cap has increased by about $1 billion over the past month, with about $1 billion apiece coming from USDT and USDC.



— Donovan Choy



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Can the MEV trilemma be solved with trusted execution environments?

Ran Yi

DeFi&#8217;s infrastructure needs to evolve significantly if it intends to compete with traditional financial systems and drive mass adoption. Despite the promise of decentralized finance, current platforms fall short in areas like liquidity, speed and cross-chain compatibility. Without addressing these critical shortcomings, DeFi will struggle to gain the trust and adoption needed to rival TradFi. To truly bring DeFi into the mainstream, we must develop frameworks that are as secure, scalable and efficient as their TradFi counterparts.



Global financial infrastructures like Swift and other core systems were the backbone of the digital finance boom in TradFi. They enabled seamless cross-border transactions, improved trust in financial institutions and ultimately aided global adoption. Just as the pillars of TradFi required strong, innovative frameworks to thrive, DeFi must evolve beyond its current limitations. The exponential growth of Web3, onchain trading and decentralized finance demands infrastructure that can not only keep pace but also drive further adoption.&nbsp;



Read more: <a href="https://blockworks.co/news/banks-swift-crypto-transaction-trials">Banks to use Swift network for crypto transaction trials</a>



Centralized exchanges have arguably come closest to emulating the foundational pillars of TradFi, as evidenced by their broad user bases and large trading volumes which comfortably outstrip those of DeFi platforms. However, the downfall of FTX in 2022 served as a harsh reminder of the risks inherent in using custodial services, while underscoring the value of decentralized, non-custodial solutions. This is where DeFi has the opportunity to truly differentiate itself — but only if the underlying infrastructure is up to the task.



Read more: <a href="https://blockworks.co/news/non-custodial-stablecoin-native-exchange">Post-FTX world needs ‘next-generation’ exchange, ex-Coinbase exec says</a>



So, which infrastructure options do developers have to build orderbook-based platforms in the DeFi space?



While some devs may opt for crypto exchange clone scripts — white-label solutions that replicate existing CEXs or DEXs — these often fall short in crucial areas. Although they can reduce development time, they lack the foundational elements necessary for long-term survival and success. Furthermore, while there are a number of CEX clone scripts available to build orderbook-based platforms, there aren’t that many options for orderbook-based DEXs.



In my view, any infrastructure designed to support successful DeFi platforms must excel in four key areas. First, deep liquidity is essential — it’s the lifeblood of any trading system. Without sufficient liquidity, platforms will struggle to offer competitive spreads, leading to a poor user experience and ultimately, failure.



Read more from our opinion section: <a href="https://blockworks.co/news/bitcoin-powerful-defi-potential">Bitcoin’s evolution into DeFi is inevitable — and it’s about time</a>



Next, omnichain functionality — the capacity of assets to move freely and securely across multiple blockchains — is crucial for enhancing liquidity and creating new trading opportunities. This process can be simplified further by chain abstraction, which reduces the complexities involved in cross-chain transactions and makes the entire ecosystem more seamless.



Modularity is another important factor. Developers need the flexibility to customize infrastructure to meet the specific needs of their platform. A modular approach allows them to choose the components that best serve them, driving innovation and adaptability.



Finally, there’s speed. In trading, speed is everything. High latency kills market opportunities, and slow platforms will inevitably drive users away. For any DeFi platform to be taken seriously, high-speed infrastructure is non-negotiable.



By integrating features like deep liquidity, omnichain compatibility, modularity and speed, developers can unlock significant advantages across various DeFi platforms. For example, in the case of spot or perpetual DEXs, shared orderbooks can offer users better price discovery, reduced slippage and institutional-grade trading experiences — benefits typically associated with CEXs.



Read more from our opinion section: <a href="https://blockworks.co/news/defi-future-nirvana-hack-risk">DeFi is the future (and a hack can’t convince me otherwise)</a>



Similarly, DeFi aggregators can leverage a unified liquidity pool, minimizing the fragmentation of liquidity across different networks. This allows seamless access to deep liquidity, without the need for separate integrations, thus creating a more efficient trading environment.



When it comes to institutional trading platforms, robust infrastructure ensures they can meet the high standards required by professional and algorithmic traders. With the right setup, it becomes much easier to implement advanced features like algorithmic trading, diverse order types and risk management tools, all supported by reliable onchain data and liquidity.



Even CEXs stand to benefit from this type of infrastructure. By developing decentralized counterparts to their platforms, CEXs can cater to users who prioritize the autonomy and transparency of DeFi, while still offering the speed and trading experience expected from centralized platforms. Hybrid models, such as WOOFi Pro and BTSE DEX, are already leading the charge in this area.



Similarly, derivatives and options platforms can take advantage of real-time price feeds, transparent order matching and efficient settlement processes, all directly onchain. This reduces the need to rely on centralized entities, offering a more decentralized and transparent trading ecosystem for complex financial products.



However, none of these advantages matter without active traders. Liquidity is the lifeblood of any market and without it, the crypto market as we know it would cease to function. When deep liquidity and fast execution are present, traders benefit from tighter spreads, reduced slippage and a superior overall trading experience.



To drive mass adoption, the focus must shift from grand promises to tangible advancements. Imagine a world where decentralized exchanges and platforms offer the same reliability and efficiency as traditional finance, where traders can move assets across chains without friction, and where high-frequency trading happens at the speed of thought. Building this future is necessary if DeFi is ever to move beyond the fringes and take its place as a serious contender in the global financial ecosystem.



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DeFi’s slow infrastructure is holding back mass adoption

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<h2 class="wp-block-heading">Old dogs, new tricks</h2>



Step aside, boys, there’s a new venture fund in town.&nbsp;



VanEck Ventures was officially announced last week. It’s a $30 million early-stage fund, which is meant to be a “fintech vehicle very much at the center of crypto and AI,” general partner Wyatt Lonergan told me.&nbsp;



“Those two components are very much like horizontal technologies. And I say that because crypto is like the value layer and AI is where you can now take financial services that are typically performed by people, represent them in code and start to automate things,” he said.&nbsp;



Lonergan teased that the fund’s made a couple of investments so far, but VanEck isn’t quite ready to divulge any deets just yet. Sad. What we do know is that they plan to make up to 35 investments, and the checks can range from $500,000 to $1 million.&nbsp;



The goal is to focus on early-stage (pre-seed and seed), but Lonergan’s not looking to completely shut the door on participating in a Series A if the right project comes around.&nbsp;



“We need to be opportunistic. If we see something that we missed because we weren&#8217;t around a year ago, they&#8217;re raising enough ground and it&#8217;s attractive — we&#8217;ll look at it. But we are always price-sensitive. When you have a small fund, you have a concentrated fund structure, the idea is that any one investment could return the fund multiple times. That&#8217;s very important,” he said.



Both Lonergan and his partner Juan Lopez came from Circle Ventures. Lonergan helped launch Circle Ventures back in 2021 before he left for VanEck.&nbsp;



The fund will still have a keen interest in stablecoins, which shouldn’t be a huge surprise given Lonergan’s past and VanEck’s own interest. While the firm itself doesn’t have a stablecoin, it invested in the stablecoin firm Agora, which is helmed by Nick Van Eck, the son of VanEck CEO Jan Van Eck.



But it’s not just personal interests that pique both Lonergan and the 69-year-old investment management firm.



At the “core,” Lonergan said, “are stablecoins and … within that, we kind of believe the underlying blockchains are more or less being commoditized to a point that there&#8217;s enough great technology out there. That&#8217;s best exemplified by [the fact that] you can go onto any crypto wallet or Coinbase today and upload dollars for free, send it across the world.”



Lonergan’s tone came off as bullish, given his belief that stablecoins, in particular, could see regulatory clarity in the next two years. Building upon the regulation that could be coming “very soon,” the thought is that legal stablecoins could draw in fintech firms.



As always, there’s a bit of a catch. Lonergan reasoned that the door opening for fintechs to use stablecoins won’t be a very obvious crypto use case. Basically, it wouldn’t be surprising if the crypto connections weren’t wildly obvious to those adopting stablecoins.



“It won&#8217;t be this crypto thing. If you&#8217;re not investing in this category, [and] it could be a weird tagline, but I think it could be that kind of ChatGPT moment for crypto, because [stablecoins] are the one technology that businesses will consume at scale, right? AI was not apparent until you had chat,” Lonergan said.



If we’re looking at the most popular use cases for crypto at this moment, he may very well be on to something. Polymarket, when mentioned in non-crypto media, isn’t flaunted as “crypto,” though we know it is.



For now, perhaps flying a little under the radar might be the best thing for potential killer apps.



— Katherine Ross



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



<ul class="wp-block-list">
<li>BTC and ETH are taking it easy after yesterday’s push, now up 1% and 2% apiece in the past day. (BTC: $65,500; ETH: 2,600.)</li>



<li>HNT has given up most of its gains made in the past two months, having fallen nearly 30% from its six-month peak in September.</li>



<li>Sui leads Base and Solana for weekly DEX volume <a href="https://defillama.com/dexs/chains">growth</a>, up 41.6% to $227.9 million.</li>



<li>Base and Solana have otherwise grown 20% and 14.6% week-on-week, processing $1.1 billion and $1.76 billion, respectively.</li>



<li>Avalanche has gained about $100 million in <a href="https://defillama.com/stablecoins/chains">stablecoins</a> in the past seven days, rising 4.5% — the most of any chain with $350 million supplies or more.</li>
</ul>



<h2 class="wp-block-heading">A stable indicator</h2>



Rising stablecoin supplies are sometimes viewed as bullish indicators for individual coins.



More stablecoins on a network imply increased onchain activity, leading to more value accrual for the native token, and, eventually, converting to higher prices.



But how true is it?



After mapping stablecoin supplies against token performance for most of the top blockchains, I’m not entirely sold.



Ten out of the top 16 blockchains by stablecoin supplies — which includes any network with $250 million or more native <a href="https://defillama.com/stablecoins/chains">supplies</a> right now — indeed showed a fairly clear correlation between the amount of stablecoins minted onchain and token prices.



In almost every case, though, it was token prices that shot first, often weeks or months in advance, before stablecoin supplies started really taking off.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXczjzB2ruexQa9NRW0ge_fIBDiOeAqnpfjr0kNi7RjNRA1rx9LWT5OWAJQiZcIxFZiIp1dXd_Kv1apAAky8yUGHljzp9uJTsEHXlM5zgBVAw6unNVzYx-NYLlFEiszTEekVVaJj5nIZSYKl2zcLej9jQBcb?key=wCv5NmLSPh_S0kPauR7BbA" alt=""/><figcaption class="wp-element-caption">Price has led stablecoin growth in most cases</figcaption></figure>



SOL, for instance, began rallying hard at the end of last September, as bitcoin was heating up for an ETF-hype-fueled bull run.&nbsp;



Solana’s stablecoin supplies, as shown by the purple-shaded area in the background above, had been stagnant for six months, at around $1.5 billion, leading up to that rally.&nbsp;



It wasn’t until December that Solana’s stablecoin supplies rose in any meaningful way, during which time SOL had rallied over 300%. NEAR showed an almost identical lag.



Similar patterns can be seen in aptos, toncoin, near, avalanche and, to a lesser degree, ether, although prices and stablecoin supplies decoupled during recent consolidation for the former two.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcft7Dv8LiXmszPZOsQ564OKFRm1dr6n_sWyNyHe4hi4Nl1uhU3sMoVEiqiRjA5e9mhwrl6oDsuZFCHflymG5DFw7L1jbcjBRRg1r8i9L4iGiaZ26eNOoB4rHaNJ3FSwx_vGLYK05pNDxVlNLeY60STdnwN?key=wCv5NmLSPh_S0kPauR7BbA" alt=""/><figcaption class="wp-element-caption">SUI has showed tight correlation while APT has lagged behind Aptos’ stablecoin supplies</figcaption></figure>



Stablecoin supplies on Ethereum layer-2s also rose massively well after their own price rallies, but that correlation has also died off for now.&nbsp;



The extent to which L2 activity accrues to their base assets — let alone ETH — is however an <a href="https://blockworks.co/podcast/bellcurve/eeab0b9a-8521-11ef-b118-8f1e8c202670">ongoing debate</a>, so it’s probably better to focus only on layer-1s.



In any case, there were exceptions: BNB, MATIC, FTM and CELO didn’t really show a clear correlation either way. Token prices stayed flat while stablecoins increased, or prices went up despite stablecoin supplies hardly budging or even shrinking.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXekA0TS3ZGQv-q6yNRObXUT1LdgXjPmgarv4kMrB3b1nlvjRhEbixjhSAcF-F3Gv-1ToGKm9JhTKpVDLo7Udqe3J5Wp5ocBjxFt2t8gwb3DAXAJfdIwaGPH5GQjei26yZCMvh_o0KrYafq4-DV9b7fp0THA?key=wCv5NmLSPh_S0kPauR7BbA" alt=""/><figcaption class="wp-element-caption">The price of bitcoin jumped in Q4 2023 — bringing stablecoin supplies along with it</figcaption></figure>



And besides, bitcoin itself front-ran the current rally in global stablecoin supplies. But the amount of stablecoins in the crypto ecosystem has gone up during bitcoin’s sideways action, which has now persisted since March.



The real question is then: Are stablecoins front-running the next bitcoin rally? Who knows, but that would certainly align with calls for bulls to take control for the next eight-to-10 months.&nbsp;



— David Canellis



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



<ul class="wp-block-list">
<li>As part of its multibillion-dollar settlement, TD Bank failed to <a href="https://blockworks.co/news/fincen-td-bank-suspicious-crypto-transactions">disclose</a> ‘suspicious’ transactions related to crypto. </li>



<li>The man who accidentally dumped a hard drive with 8,000 bitcoin (worth $522 million) is now <a href="https://www.walesonline.co.uk/news/wales-news/im-suing-council-495m-because-30106009">suing</a> his local city council to let him search for the missing BTC.</li>



<li>Coinbase’s Base has <a href="https://www.dlnews.com/articles/defi/coinbase-chain-base-beats-arbitrum-as-top-ethereum-layer-2/">stolen</a> Arbitrum’s title of the largest rollup by total value locked. </li>



<li>TD Cowen <a href="https://www.theblock.co/post/320969/sen-hagertys-draft-stablecoin-bill-could-shape-legislation-in-2025-td-cowen-says?utm_source=rss&amp;utm_medium=rss">thinks</a> that the draft stablecoin legislation from Sen. Bill Hagerty could shape the regulatory framework for stablecoins.</li>



<li>Tether’s considering potentially lending billions to commodities traders, Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-10-14/tether-talking-to-commodity-traders-about-lending-its-crypto-billions-usdt">reported</a>.</li>
</ul>



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



Q: Will crypto ever move on from Tether?



Pockets of the space will probably adopt alternatives.&nbsp;



Yield-bearing stablecoins could become the default asset for some DeFi apps, or even wallets, leading to increased usage.



I’d be on the lookout for these kinds of partnerships moving forward, especially for newer layer-1 networks still building out their LEGO infrastructure.



Failing a doomsday scenario involving police intervention or other such drastic regulatory action against Tether and its executives, it would take a catastrophic failure of the firm’s own doing to unravel at this point.&nbsp;



Realistically, the only thing that has ever mattered to the market is whether Tether can <a href="https://blockworks.co/news/the-historic-significance-of-tether-16b-bank-run">redeem their tokens</a> for real dollars. And despite all the oddities in Tether’s history, there’s been no publicly disclosed instance of failing to process those requests.



Whether crypto is prepared for that possibility, say by ensuring there’s infrastructure in place to support sudden mass exodus from USDT into alternatives, is another story altogether.&nbsp;



From a risk management perspective, it could be wise. More likely, though, is that crypto would be reactive to such a situation than proactive.



— David Canellis



Crypto in general? Probably not. It’s too baked in.&nbsp;



But will we see a bit of a shift in power dynamics due to the regulatory environment? I’m leaning toward yes at this stage.&nbsp;



Look, if Tether isn’t able to operate in the EU and if the US were to ever follow in similar tracks, then that does make USDC the go-to when it comes to major players in those two environments.&nbsp;



But outside of the US and EU, I think Tether will maintain its dominance. It’s solving one of the biggest issues that crypto wanted to take care of: allowing access to something like a dollar digitally (that’s the easiest, most crass way to put it though we could argue that it’s not entirely true).&nbsp;



It’s not really a sexy use case, but it’s a damn good one.&nbsp;



If we were to turn all of this on its head and say that Tether is suddenly MiCA compliant and fully accepted by the US government, then I think the crown is practically soldered on its head, and Tether will reign over the other offerings.&nbsp;



As usual, I’m left with a desire to grab some popcorn and watch this play out.



— Katherine Ross



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