Wormhole

Jack Kubinec

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



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Donald Trump begins his second term as President of the United States on Monday, and after an expensive campaign season, crypto will finally get its president.&nbsp;



Bitcoin gained momentum following Trump’s victory, largely due to his pledge to create a strategic bitcoin reserve that would see the US Treasury Department <a href="https://blockworks.co/news/empire-newsletter-strategic-bitcoin-reserve">accumulate</a> nearly 5% of all bitcoin. But Trump taking office may still reap benefits for a less reserve asset and more use case focused network in Solana, industry participants say.



SOL is up 19% on the week leading up to Trump’s inauguration. The asset spiked 5% right after the New York Post <a href="https://nypost.com/2025/01/16/business/new-trump-ends-crypto-communitys-government-harassment/">reported</a> the incoming president is “receptive to the idea” of a second strategic crypto reserve of tokens founded in the US like SOL, XRP, and USDC.



On that point, listen: I’m receptive to the idea of playing in the NBA, but that doesn’t mean you’ll see me suiting up for the Knicks this weekend. I think Paradigm’s vice president Alexander Grieve was prescient on the America-first crypto reserve.



“View such stories with skepticism until it comes from [Trump] or his staff,” Grieve wrote in an X post yesterday. “And question why such details might be in the press in [the] first place—[and] who might have put them there.”



There was other reporting on the Trump-crypto front that felt much more plausible this week however. Reuters <a href="https://www.reuters.com/world/us/trumps-new-sec-leadership-poised-kick-start-crypto-overhaul-sources-say-2025-01-15/">reported</a> that under President Trump, the Securities and Exchange Commission would “potentially freeze” crypto litigation that does not come with allegations of fraud.&nbsp;



The SEC sued Coinbase and Binance in 2023, alleging that the crypto exchanges operated as unregistered broker-dealers for facilitating the trading of SOL, among other tokens.&nbsp;



In defining SOL as a security, Gary Gensler’s SEC essentially said that US firms that exchange the token are breaking the law. This is because it has only given out two of its special purpose broker-dealer licenses, and neither of those recipients offer SOL. The SEC already <a href="https://blockworks.co/news/sec-didnt-say-sol-isnt-a-security">dropped its Solana allegations</a> from the Binance suit, but if the Coinbase enforcement were to also be frozen, then a potential major obstacle to the network’s adoption would be cleared.



With Solana’s unregistered security issues seemingly being put to bed, some are already looking ahead to SOL ETFs that would see regulated Solana investment vehicles trade on public stock exchanges. Polymarket bettors give SOL ETFs a 75% chance of being approved in 2025, although Sol Strategies CEO Leah Wald said she doesn’t expect Solana ETFs to be approved “anytime soon” in a <a href="https://blockworks.co/news/us-sol-etfs-unlikely-to-be-approved-soon">recent interview</a> with Blockworks’ Katherine Ross.



There’s also arguably a more intangible benefit to come for Solana under a Trump presidency and friendlier regulatory regime.&nbsp;



When SOL’s regulatory status was uncertain, developers largely focused on facilitating memecoin trading, which was “effectively a form of protest” against regulatory unclarity coming from the SEC, Titus Capilnean, vice president of go-to-market at Civic Technologies, said.



With Trump in office, crypto “may see a shift from pure speculation to utility-driven growth as builders gain confidence to launch more sophisticated applications without fear of regulatory backlash,” Capilnean said.



Many US Solana builders have told me over the last year that with regulatory clarity, their products would stand a much better chance of finding product-market fit. Here’s their chance to prove it.



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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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What’s to come for Solana under a Trump presidency?

Casey Wagner

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



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President-elect Donald Trump has made a lot of promises for his first day in office, to the crypto industry and otherwise.&nbsp;



With his inauguration just days away, let’s review some of his vows:&nbsp;



<h2 class="wp-block-heading">Increase tariffs </h2>



Trump’s proposed <a href="https://blockworks.co/news/unpacking-trump-potential-tariff-policies">tariff plans</a> have made headlines for months. In late November, though, he made a new promise: a 10% increase on China, plus 25% tariffs on Canada and Mexico. The latter two countries quickly signaled they were willing to negotiate.&nbsp;



Just this week Trump said that the “External Revenue Service,” a new agency that would be tasked with collecting tariff income, will be created on Monday. We at Forward Guidance are of the belief that tariff increases will happen at a much <a href="https://blockworks.co/news/trump-gradual-tariff-policy">slower</a> pace, though.&nbsp;



<h2 class="wp-block-heading">Commute Silk Road creator’s sentence</h2>



Trump in May <a href="https://www.politico.com/news/2024/05/25/trump-commute-ross-ulbricht-sentence-libertarian-convention-00160025">pledged</a> to commute the sentence of Ross Ulbricht, who has been <a href="https://blockworks.co/news/silk-road-founder-10-years">serving</a> a double life sentence plus 40 years since 2015.&nbsp;



Ulbricht&nbsp; was convicted on seven federal counts including narcotics conspiracy and money laundering for his role in founding the <a href="https://blockworks.co/tag/silk-road">Silk Road</a> marketplace. Prosecutors also presented evidence during trial supporting allegations that Ulbricht had paid $730,000 in murder-for-hire fees, but he was not charged with this crime.&nbsp;



<h2 class="wp-block-heading">Overturn SAB 121</h2>



Trump <a href="https://www.washingtonpost.com/politics/2025/01/13/andreessen-tech-industry-trump-administration-doge/">reportedly</a> plans to reverse the <a href="https://blockworks.co/news/senate-gensler-sec-overturn-sab-121">SEC’s controversial</a> SAB 121 guidance, which states that crypto custodians should list custodied assets as liabilities on their balance sheet. 



President Biden last year <a href="https://blockworks.co/news/house-fails-to-override-anti-sab121-veto">vetoed</a> a bipartisan resolution that sought to do just this, <a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2024/05/31/a-message-to-the-house-of-representatives-on-the-presidents-veto-of-h-j-res-109/">arguing</a> the legislation “would inappropriately constrain” the SEC.



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Trump’s day 1 promises come due 

Ben Strack

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



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After the 2024 launches of US bitcoin and ether ETFs, proposals for funds holding <a href="https://blockworks.co/news/us-sol-etfs-unlikely-to-be-approved-soon">solana</a>, <a href="https://blockworks.co/news/xrp-etf-contingent-on-election-and-sec-appeal">XRP</a> and <a href="https://www.sec.gov/Archives/edgar/data/2039458/000199937124014510/hbar_s1-111224.htm#hbars1a002">even HBAR</a> surfaced. Others would, if greenlit, diversify across multiple coins.



There was also a <a href="https://blockworks.co/news/canary-capital-litecoin-etf">litecoin ETF plan</a> from Canary Capital Group that the firm <a href="https://www.sec.gov/Archives/edgar/data/2039461/000183988225002329/canary-s1a_011525.htm">amended</a> this week. Nasdaq submitted a <a href="https://listingcenter.nasdaq.com/assets/rulebook/nasdaq/filings/SR-NASDAQ-2025-005.pdf">19b-4</a> form on Canary’s behalf — with some considering this step a positive sign for the product’s fate.



Canary CEO Steven McClurg told me he has “a high level of confidence” there’ll be more spot crypto ETFs in the US market this year, declining to get too specific.



We’ve heard industry watchers offer their “when, not if” optimism. But as the proposal stack grows bigger on the proverbial SEC desk (we’re in the digital filing age, didn’t you know?), the key question is what exactly it will take for these to get the go-ahead.



And with a <a href="https://blockworks.co/news/trump-nominates-new-sec-chair">new</a> SEC administration, are we talking weeks, months or years? Bloomberg Intelligence’s James Seyffart (who <a href="https://blockworks.co/news/one-year-since-bitcoin-etf-approval">spoke with me</a> and <a href="https://www.youtube.com/watch?v=2L2izGpzL-U">Felix</a> recently) noted on X that a litecoin ETF could see the light of day before SOL and XRP offerings.



<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">To be clear, i view a Solana or an XRP ETF approval from the SEC as a matter of &quot;when&quot; not &quot;if&quot; at this point but Litecoin *MIGHT* get through first &#8212; largely because of a lack of accusations that Litecoin is a security from the SEC&mdash; James Seyffart (@JSeyff) <a href="https://twitter.com/JSeyff/status/1879944849400688820?ref_src=twsrc%5Etfw">January 16, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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One of the reasons would be that the SEC — in <a href="https://blockworks.co/news/coinbase-binance-suits-different">lawsuits against</a> Coinbase and Binance, for example — <a href="https://blockworks.co/news/the-sec-says-these-crypto-assets-are-securities-their-reasoning-is-wrong#">has not labeled litecoin as a security</a>.&nbsp;



It did however put SOL in that <a href="https://blockworks.co/news/lightspeed-newsletter-mango-markets-sol">securities category</a>. And you know about the agency’s legal battle with Ripple. If you need a refresher, Casey yesterday detailed the SEC moving forward <a href="https://blockworks.co/news/sec-advances-ripple-appeal">with an appeal</a> in <a href="https://blockworks.co/news/sec-files-ripple-appeal-precedent">that case</a>.



ETF.com analyst Sumit Roy agreed an LTC ETF may have better odds due to “its simpler use case and history,” avoiding some regulatory scrutiny tied to XRP and SOL. He added that approval in 2025 is possible. “That said, the SEC remains cautious about market manipulation and custody risks, which apply to all crypto ETFs,” Roy told me.



Beyond the young US spot crypto products, today is the seven-year anniversary of the Amplify Transformational Data Sharing ETF (BLOK) coming to market.&nbsp;



Crypto equity ETFs remain a key way advisers plan to <a href="https://blockworks.co/news/financial-advisers-crypto-adoption-survey">get exposure</a> to the space (see Bitwise/VettaFi survey results below), so I’ll be interested to see what sort of flows this fund notches in 2025. Its assets under management stand just shy of $1 billion.



<figure class="wp-block-image is-style-default"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfqou9nxhw7MKaCg-3LZp8_nQRWDdk00e-o6wGM1lK7f9l-hbMsDic1sDkMhm28IjXyfqR_vks3Z_iGuB9OKZBIzODwpQfgdjtwN9uABcB4pttPAw6TTlMvhqsV4hohEfgsZzswDA?key=kSQe3_theVV6kqUG3io8EXYk" alt=""/></figure>



We could see new holdings for BLOK when more crypto- and blockchain-related companies go public. But for now, BLOK co-portfolio manager Dan Weiskopf <a href="https://blockworks.co/news/2025-crypto-stocks-to-watch">told us</a> he’s watching miners delving deeper into the AI segment and companies buying/holding BTC.



BLOK’s top five holdings are currently Galaxy, Robinhood, Core Scientific, Coinbase and MicroStrategy.&nbsp;



The six-spot goes to Metaplanet, a Japan-based MicroStrategy Jr. of sorts that has said it intends to up its bitcoin holdings to 10,000 BTC this year.



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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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ETP: Exchange-traded patience

Macauley Peterson

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



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In the first ACD call of the year following the holiday break, Ethereum core developers were focused on tying up loose ends on the upcoming <a href="https://blockworks.co/news/testing-bottleneck-next-ethereum-upgrade">Pectra hard fork</a>.



Devnet 5, which went live shortly before the call, may be the last [network implemented] before moving on to the testnet phase, tentatively scheduled to begin in early February. System contracts for Pectra underwent bytecode audits, with all changes already implemented. A follow-up presentation on audit findings will occur in two weeks.



A significant part of the discussion focused on refining the gas refund mechanisms. <a href="https://ethresear.ch/t/analyzing-eip-7623-increase-calldata-cost/19002">EIP-7623</a>, which aims to clarify the handling of gas refunds, was successfully merged, resolving issues with the order of gas refund application. A fix addresses a lingering point for Pectra, ensuring that transaction gas costs align with expected outcomes.



Another key feature under scrutiny was EIP-7840, which pertains to <a href="https://blockworks.co/news/ethereum-increases-gas-limit-pectra">base fee updates</a> in Ethereum&#8217;s future. Marek Moraczyński from the Nethermind team provided context for a proposal aiming to streamline configuration and bring consistency to Ethereum, enhancing network efficiency.



As Ethereum looks to pick off any low-hanging fruit to help with scaling, other improvements are working their way toward developer consensus. One, related to <a href="https://blockworks.co/news/ethereum-increases-gas-limit-pectra">BLS precompilation</a> gas costs under <a href="https://typefully.com/LogarithmicRex/ethereum-upgrade-eip-2537-VvunN9Q">EIP-2537</a>, seeks to align gas constants with prior assumptions. Radek Zagórowicz from the Ipsilon team explained that “the easiest fix to the spec is&#8230;correcting the constant so it follows their previous assumptions.” This adjustment ensures gas costs are consistent, aligning with Ethereum’s larger goal of efficient scalability.



Gas limits on the <a href="https://blockworks.co/news/ethereum-dencun-upgrade-progresses">Holesky testnet</a> were discussed, with a proposal to keep them elevated, relative to mainnet, for testing purposes. For instance, the gas limit would increase to 60 million after the Pectra fork, and progressively rise with each fork thereafter.



<h2 class="wp-block-heading">Who should lead the EF?</h2>



Outside of the day-to-day development, the Ethereum community is also rallying behind Danny Ryan as a strong candidate to lead the Ethereum Foundation (EF). His technical expertise, demonstrated during Ethereum’s transition to proof-of-stake, as well as his community-driven approach, have made him a well-regarded figure in the space.



Aya Miyaguchi has been at the helm of the EF, serving as its executive director since 2018, but there’ve been a slew of calls on X for new leadership, many of which are in support of Ryan.



Anton Cheng <a href="https://x.com/antonttc/status/1879719906058678519">shared</a> his story of how Ryan inspired him in 2019 by “[showing him] the path to Ethereum,” as a strong proponent of open-source software. The prominent, though pseudonymous, DCinvestor similarly <a href="https://x.com/iamDCinvestor/status/1879694111348793634">outlined</a> Ryan’s leadership qualities, noting his ability to lead through uncertainty and his deep technical understanding of Ethereum, two essential qualities as Ethereum navigates its scaling challenges.&nbsp;



Ryan, who <a href="https://x.com/dannyryan/status/1834648555845271625">left</a> the EF in September, has been <a href="https://x.com/econoar/status/1879560601674121649">reportedly</a> interested in the EF role. He sounded a diplomatic note on X in a bid to head off any incivility:



“Regardless of the future of Ethereum — whether with or without me in any capacity — I want to state publicly and very clearly that I have nothing but respect and praise for [Miyagotchi&#8217;s] leadership and friendship,” Ryan <a href="https://x.com/dannyryan/status/1879705279761178690">wrote</a>.



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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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Pectra progress: Gas refunds, audits and Ethereum leadership talk

Katherine Ross

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



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Coinbase is shaking things up.&nbsp;



If you somehow didn’t hear, Morpho and Coinbase have teamed up to offer loans where Coinbase users (though New York users can’t, much to the disappointment of some of my colleagues) can borrow USDC against bitcoin held on Coinbase. Pretty cool, right? Definitely yet another sign of the <a href="https://blockworks.co/news/accountable-wants-to-be-the-new-celsius">changing times</a>.&nbsp;



Blockworks data whiz Dan Smith joined <a href="https://blockworks.co/podcast/empire/307eeabe-d45a-11ef-b591-8f988d3ad736">Empire’s round-up this week</a>, telling host Jason Yanowitz that he thinks the announcement is a win for bitcoin… with some caveats.



“ Bitcoin&#8217;s money, they [Coinbase] want it to be everywhere,” Smith said. But the asterisk, as he called it, is that the loanee now has to trust that Morpho can hold that bitcoin as collateral on Base. This can, understandably, cause anxiety about that going wrong.



As Smith pointed out, the upside is that Coinbase is the largest centralized exchange in the US.



For some folks, that’ll be enough to entrust Morpho and Coinbase with holding their loaned bitcoin.&nbsp;



<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="What&#039;s Wrong with Crypto Data (And How To Fix It) | Roundup" width="1024" height="576" src="https://www.youtube.com/embed/WrwwEzkC2xQ?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>
</div><figcaption class="wp-element-caption">Watch today’s Empire roundup through the jump</figcaption></figure>



There’s been a lot of demand for the product, according to Coinbase’s VP of Product Max Branzburg.



Smith, in the episode, also noted that the pairing of onchain lending startup Morpho and Coinbase here is a huge win for the former.



For Branzburg and Coinbase, Morpho was the go-to because it has “built some really great products in this area, and has built protocols that are very well audited that are safe, secure, [and] provide that kind of value.”



But he’s not ruling out the potential for other integrations with other projects.&nbsp;



“As more people are building on base, we&#8217;ll find ways to bring Coinbase users to those builders,” Branzburg said.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The future of finance is onchain. Onchain is faster, more efficient, and more global &#8211; and it&#39;s now in the hands of millions of Coinbase users with billions of dollars of assets to put to work. This is step one &#8211; imagine what&#39;s next. <a href="https://t.co/1GObSQjAyP">https://t.co/1GObSQjAyP</a>&mdash; Max Branzburg 🛡 (@maxbranzburg) <a href="https://twitter.com/maxbranzburg/status/1879910470313972173?ref_src=twsrc%5Etfw">January 16, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Honestly, one of my burning questions personally was two-fold, why bitcoin, and is this only going to be a bitcoin offering?&nbsp;



A few weeks ago, when I spoke with Haynes Boone partner Matthew Frankle, we discussed the rising appetite for bitcoin margin loans (which unfortunately didn’t make <a href="https://blockworks.co/news/sec-crypto-lawsuits-future">its way into this newsletter</a>…yet). And now we have this big partnership announcement from Coinbase.



Branzburg’s simple answer to the first part is that bitcoin’s the “OG.” It’s really following the same formula Coinbase used when it announced its wrapped bitcoin product last year, which allowed folks to utilize their bitcoin exposure on Base.



“That was a pretty cool breakthrough a few months ago, but you still had to go take your bitcoin, get it into your wallet, navigate the protocols, figure out how to use it. What&#8217;s happening here is, under the hood, we&#8217;re doing all of that for you, abstracting all that complexity away,” he explained.&nbsp;



Essentially, it gives customers a potential value add for their bitcoin (and keeps it from getting dusty, of course).&nbsp;



Anyway, the last tidbit of information I gleaned was that bitcoin’s just the start for onchain lending via Coinbase.



“This roadmap will expand to other assets over time as well,” Branzburg told me.



So there you have it folks, Coinbase is going further onchain and, perhaps, just in time for crypto to have its moment in the spotlight.



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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>.



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



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Coinbase’s bitcoin-backed loans are just the start

David Canellis

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



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True believers of an impending <a href="https://blockworks.co/news/altcoin-market-returns-against-btc">altcoin season</a> now have their most compelling evidence to date:



XRP is at all-time highs (sort of), and the XRP Army is finally looking like the smart ones in the room.



It’s for sure a big deal. Price records for XRP have turned out to be crypto’s answer to Haley’s comet: They only come around once every half-decade or so. Which is eons around here.



There’ve been mixed reports over whether XRP has really broken its 2018 peak. A Fortune <a href="https://fortune.com/crypto/2025/01/16/ripples-xrp-breaks-3-for-first-time-since-2018-nears-all-time-high/">piece</a> yesterday pointed out that XRP’s all-time high is $3.84 on Binance while CoinGecko says $3.40.



XRP reached as high as $3.3991 on Binance on Thursday afternoon, per TradingView data. So eh, close enough.&nbsp;



Not to mention, Ripple Labs CTO David “JoelKatz” Schwartz has historically been <a href="https://x.com/JoelKatz/status/1879804948663398505">adamant</a> that XRP had never actually reached $3.84 in 2018 for most of the crypto trading world.



That price was supposedly met only briefly on South Korean exchanges, which at the time placed a hefty <a href="https://www.investopedia.com/terms/k/kimchi-premium.asp">premium</a> on many top coins, including BTC and XRP.



Keep in mind that the goal for most crypto traders and investors is to avoid “round-tripping” their bags — holding coins from bull market top to bear market trough and back again.



Real roundtripping in XRP’s case would mean holding through a 90% collapse between January 2018 and December 2019, and another 80% drop between April 2021 and the following June.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXekw00ZhA5s4bW8zVHia7MMcFK82jH4Wi9xCeepk9RweCpgQDguZzn-6E5KAgC1Tg05MPvVrUIyEPGihqTXPUT7yU6yDyCy3piEolSBGmuG-70a0d2sTr0Wt2NWRHnkmfiFEcai9g?key=uNt10HG54B7aajpTJAD8tDt9" alt=""/></figure>



Here’s the rub: because XRP’s last all-time high was so long ago, its equivalent today would be much higher due to US dollar inflation.



What was $3.40 in 2018’s money would now be $4.25. XRP would need to rally by another 25% or so to break its inflation-adjusted all-time high, as shown by the beige area at the top of the chart above.



But that’s only against the dollar. XRP’s bitcoin and ether ratios continue to be firmly underwater, even despite its near-500% rally since this time last year.



The purple line on the chart below plots XRP’s performance against ETH, while the pink line is its BTC ratio.&nbsp;



XRP has lost 64% of its value against ETH since Ethereum launched in 2015 and 42% against BTC over its recorded trading history, starting in 2013.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdWXPGHvj_qw3RrwaZIGgTMMx985sXCxnobfJWthn7oSwGHNMN3jSo4V1t3doaSPCcy6WOSwJvnB3-Qk_Lmen7d61JVNY7eCpqhu5BCJkyG8ObwwmuJrpGIIww-0RZccDwOuQBuSQ?key=uNt10HG54B7aajpTJAD8tDt9" alt=""/></figure>



No matter. XRP’s rally is still very much a symbol of a crypto groundswell in the US ahead of Trump’s second term. A sign of the times that screams the US is open for crypto business.



Take Ripple’s branding and communication in its <a href="https://web.archive.org/web/20130427154139/https://ripple.com/bitcoiners/">early</a> years: “crypto” and “blockchain” were curiously absent right up until <a href="https://web.archive.org/web/20170801103655/https://ripple.com/">mid-2017</a>, instead opting to <a href="https://web.archive.org/web/20131206081901/https://ripple.com/guide/#ripple-is-like-email">present</a> its distributed ledger as a payments protocol similar to email.



Now, they’re “<a href="https://ripple.com/company/">pioneers in crypto</a>.”



If there was such a thing as reverse <a href="https://blockworks.co/news/definitive-guide-chain-abstraction">chain abstraction</a>, Ripple has nailed it. And it’s paying off.



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Roasting Ripple: XRP Army finally becomes the smart money

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 Multicoin Capital was one of Solana’s early investors. Now it’s trying to change the <a href="https://blockworks.co/news/lightspeed-newsletter-solana-economics">network’s inflation mechanism.</a>



The Austin, Texas-based firm <a href="https://github.com/solana-foundation/solana-improvement-documents/pull/228/commits/8969b469c724e89f64ac42540d5f99948f6dc3b5">published</a> a Solana Improvement Document this morning that would change SOL emissions from the current fixed schedule to a market-based solution. Multicoin’s proposal would likely drive down inflation — which dilutes SOL holders — but would also lower staking yields, which are a boon for SOL stakers.



In Solana terms, inflation refers to the network issuing SOL to the validators who run Solana’s software and help build the blockchain. Validators then pass this issuance along with some MEV rewards to the stakers who delegate staked SOL to them.&nbsp;



In brief, Multicoin’s proposal sets a target staking rate of 50% for security and decentralization purposes. If more than 50% of SOL is staked, then issuance would decrease to discourage staking by reducing yield. If less than 50% of SOL is staked, then issuance would increase to raise yields and encourage staking. The minimum inflation would be 0%, and the maximum would be based on the current Solana issuance curve.&nbsp;



Solana’s inflation rate was initially set at 8%, and this figure will decrease by 15% yearly until it reaches 1.5% inflation. SOL’s inflation rate is currently around 4.8%, according to Solana Compass. Solana co-founder Anatoly Yakovenko said <a href="https://www.youtube.com/watch?v=OLsSUqQc-N8">on the Lightspeed podcast</a> that the fixed rate idea was borrowed from the Cosmos blockchain, and inflation is just “accounting.”



Yakovenko doesn’t care much about inflation, because the process of SOL issuance doesn’t create or destroy value, it simply moves value around. Newly-minted SOL gets passed along to stakers, while non-stakers see their holdings become relatively less valuable.



Still, Multicoin sees a reduction in SOL inflation as necessary for a few reasons. New SOL being passed only to stakers centralizes the network, high inflation reduces the usefulness of SOL for things like DeFi since there’s a high opportunity cost to not stake, and only 9% of staked SOL is liquid. Lower staking rewards could also reduce sell pressure in jurisdictions where staking rewards are counted as income for tax purposes.&nbsp;



Even though issuance doesn’t technically induce a cost to the network as a whole, the negative perception created by unstaked SOL being diluted makes it worth limiting inflation in Multicoin’s view.



There’s some positive precedent here: Ethereum had narrative success defining ETH as ultrasound money after becoming a proof-of-stake network and greatly diminishing its issuance. But there’s also negative precedent in a different way: Cosmos adopted a market-based inflation mechanism for ATOM, but its community has <a href="https://www.theblock.co/post/273899/cosmos-hub-inflation-reduction-proposal-rejection">quibbled</a> over where the bounds should be — and ATOM’s price is still down 34% over the past year.&nbsp;



In any event, Multicoin partner JR Reed told me the proposal was inspired by perpetual swaps and their use of funding rates, not Ethereum’s mechanism for limiting inflation. 



There’s one other obvious consequence of Multicoin’s proposal: SOL staking yield, which has <a href="https://dune.com/21co/solana-key-metrics">historically</a> stayed higher than 7%, would decrease if issuance decreased. A growth in MEV rewards could offset the lower inflation, but otherwise, staking SOL would begin to pay fewer dividends.



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Solana to weigh possible SOL inflation cut

Felix Jauvin

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Ever since COVID closed global economies in 2020, gauging where we stand in the business cycle has been a very difficult act.&nbsp;



The typical business cycle looks as follows, and historically, it’s been fairly easy to have a general idea of where we stood by contrasting it with interest rates and monetary policy:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1251" height="876" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-3.png?w=1024&amp;h=1024" alt="" class="wp-image-96329" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-3.png?w=1251 1251w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-3.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-3.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-3.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-3.png?w=367 367w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-3.png?w=373 373w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-3.png?w=313 313w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-3.png?w=80 80w" sizes="auto, (max-width: 1251px) 100vw, 1251px" /></figure>



However, everything has been somewhat upside down in recent years, leaving many economists befuddled.&nbsp;



For example, in 2022 we saw negative real GDP prints (initially at two but then revised down to one):



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcaD8bJiY9EI6a_un5011HMUAE4n7ebj2s_5L5kMY0FZFczdw-D709gyxWMsOHcQ10-Lxuf45W42gKdvFetRjM_yxCIor80D161xiORXbMsIENJ3z0S87FY2mZXKHRj5y88FfGwyg?key=Gt2XLrt4V7a7uq7GkcoKF_N2" alt=""/></figure>



However, during that same time we saw one of the hottest labor markets we’ve ever seen, as per JOLTS data.&nbsp;



It’s hard to believe in a recession with a labor market that strong:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfu1pS8mCEdMrnS9J3iGUp6gAL8JCfIDtYyn-kGoEFZvoR43BLyADoRFcRQEqzar_TQZrKSDVO1UN3gEVurdCjqw87-MlsArccmbQPBF_Og3OGJuvEOC_VQc1vDj0NntflgCL78?key=Gt2XLrt4V7a7uq7GkcoKF_N2" alt=""/></figure>



Since 2022, we’ve seen a major rate hiking cycle from the Fed that somehow also didn’t tilt the economy into a recession when looking at it on an aggregate basis. Stocks hit new highs everyday, the labor market cooled but remained resilient, and GDP growth powered ahead.



During that same time, however, if you honed in on the manufacturing and goods sector and set aside the services economy, it almost looks like we’ve just been through a manufacturing recession.&nbsp;



ISM Manufacturing PMIs have been in contraction territory for a couple years now:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="1002" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-2-1.png?w=1024&amp;h=1024" alt="" class="wp-image-96328" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-2-1.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-2-1.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-2-1.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-2-1.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-2-1.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-2-1.png?w=410 410w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-2-1.png?w=417 417w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-2-1.png?w=350 350w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-2-1.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



During that time, we saw significant disinflation leading to outright deflation in the goods sector of the economy:



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfgDG1Vk4pLHxhRoWvTWu4Odo0vZpcfPvp3egPuVaVpT39kmU3Wq7mJ2EOvfkxMkHMbQm5SM6mXOhcU-0mB_z37DzuAOX9yLHd8dA3PBUmGXcaau2BkoCeXSIQ4Hu3_UEpMJvXN1A?key=Gt2XLrt4V7a7uq7GkcoKF_N2" alt="" style="width:480px;height:auto"/><figcaption class="wp-element-caption">Source: <a href="https://inflationguy.blog/2025/01/15/inflation-guys-cpi-summary-december-2024/">inflationguy.blog</a> </figcaption></figure>



Fast forward to today, and we’ve seen the Fed cut rates to frontrun concerns about the labor market and continue attempting a soft landing of the economy where we move into a new business cycle without a recession.



We’re now seeing leading indicators hinting that the manufacturing sector might be exiting the doldrums and heading toward a new upswing.



We’re starting to see commodities begin to break out after two years of consolidation, hinting at an upswing in economic growth:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXemmqOzL4DMgA6_oqmypMeAV88GMrAAuwLilLBFwzrbGzVH_JZMOuHF4WsC9O8agmsVvcg1hP10KrrsgvIVOcfj0SlN0JA4fG1lQ2nDtiad4XRGc3jpai2kV72_RjLEfEZekeL5?key=Gt2XLrt4V7a7uq7GkcoKF_N2" alt=""/></figure>



ISM new orders look to be breaking out, as well as the Philly Fed manufacturing index: 



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="853" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-1-1.png?w=1024&amp;h=1024" alt="" class="wp-image-96327" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-1-1.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-1-1.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-1-1.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-1-1.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-1-1.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-1-1.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-1-1.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-1-1.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/unnamed-1-1.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeJJdCi6qIkwK5gQkla7A3FAtcLx_w3R6cLf3gZiCPpyAc9HkeC9rbM4G4oJ3N6r8-Q-GAA8TGs3OOattGg5lB4QqW643LdYPDor7ChxhBb18lMZU0axQRWHViEftCFH_yhq6wmrQ?key=Gt2XLrt4V7a7uq7GkcoKF_N2" alt=""/></figure>



Per the survey data, it’s looking like much of this is being led by optimism from the business sector ever since the <a href="https://blockworks.co/news/donald-trump-declared-president-2024-election">election</a>:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfpE451KEJufpBH6Rq7ZdDK10o8EG5j2AQRGI7SbOz0vQNLgtaNGjRT4Xy0GDzzlH0T_qXeO6EBr9YMGjtbiwvQdAoZeBdNYTZoR8GktQDNHN-vlBEhhZu_83bCPRQoCmvDaIXNaw?key=Gt2XLrt4V7a7uq7GkcoKF_N2" alt=""/></figure>



So where does this chart-geeking journey lead us?&nbsp;



I think it’s safe to say we’re not late in the cycle. It increasingly looks like we are in fact in the early innings of a new business cycle that avoided a recession due to the huge fiscal stimulus and deficits during the last couple of years.



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Are we at the start of a new business cycle?

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The SEC has moved forward with an appeal in its <a href="https://blockworks.co/news/sec-files-ripple-appeal-precedent">case against Ripple</a>.&nbsp;



The securities regulator is seeking to reverse a 2023 <a href="https://blockworks.co/news/judge-rules-ripple-xrp-not-security">ruling</a> that determined retail sales of Ripple’s XRP token were not unregistered securities offerings. Federal Judge Analisa Torres said that blind/programmatic sales of XRP, which occur on exchanges, were not in violation of US securities laws.&nbsp;



“The district court erred both factually and legally in concluding that defendants’ offers and sales of XRP to public buyers who purchased on crypto asset trading platforms,” the SEC wrote in its opening brief, filed late last night.&nbsp;



Even if buyers didn’t know their XRP tokens were coming from third parties or Ripple itself, Ripple still led the public to have “reasonable expectations of profits” from the cryptocurrency, the SEC said. Ripple’s “public marketing campaign…specifically engaged ‘less sophisticated’ investors,” the regulator added.&nbsp;



Ripple chief legal officer Stuart Alderoty dismissed the SEC’s claims, writing on <a href="https://x.com/s_alderoty/status/1879680738926481670">X</a> that the brief is nothing but “a rehash of already failed arguments.”&nbsp;



Plus, Alderoty added, <a href="https://blockworks.co/news/sec-chair-nominee-crypto-past">new leadership</a> at the SEC is likely to &#8220;abandon&#8221; the case altogether.&nbsp;&nbsp;



On this last point, I’m less certain that the SEC will drop this case after Trump takes office and Chair Gary Gensler <a href="https://blockworks.co/news/gary-gensler-resigning">departs</a>, at least immediately. It’s possible, but any decisions Commissioners Hester Peirce and Mark Uyeda make in the short term (before three additional commissioners are appointed and confirmed) will face harsh legal scrutiny. 



We’re much more likely to see commission votes resume after there are at least three sitting commissioners.



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SEC moves ahead with Ripple appeal in Gensler’s final days 

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Amid ongoing speculation about an American strategic bitcoin reserve, several US states are looking to take matters into their own hands.&nbsp;



“It&#8217;s time for Texas to lead the way in establishing a strategic bitcoin reserve,” Texas senator Charles Schwertner wrote in a Wednesday X <a href="https://x.com/DrSchwertner/status/1879630775835890082">post</a>.&nbsp;



The GOP lawmaker’s proposal calls bitcoin a valuable digital asset “with strategic potential for enhancing this state’s financial resilience.” Its decentralized nature and finite supply are “unique qualities that can serve as a hedge against inflation and economic volatility.”



The draft bill seems to echo a Texas House <a href="https://legiscan.com/TX/text/HB1598/2025">proposal</a> from Rep. Giovanni Capriglione last month.&nbsp;



The reserve would be a “special fund” outside the state treasury’s general revenue fund. The comptroller would be responsible for establishing secure custody of the BTC (i.e. via cold storage) and may contract a US-based third party for help.&nbsp;



The Texas legislature — by a two-thirds majority vote in each house — can direct the comptroller to transfer, sell or convert the reserve’s BTC. It would then deposit proceeds to another state treasury fund or account.&nbsp;



Meanwhile, a lawmaker from Oklahoma (Cody Maynard) <a href="http://webserver1.lsb.state.ok.us/cf_pdf/2025-26%20int/hb/HB1203%20int.pdf">introduced</a> a bill to allow the state treasurer to invest public funds in BTC, stablecoins or any other digital asset with an average market cap north of $500 billion over the previous calendar year.&nbsp;



Money used for such purchases could come from the state’s general, revenue stabilization and/or constitutional reserve funds. The amount it invests in BTC can’t exceed 10% of the public funds in the account.&nbsp;



These proposals follow similar ones by <a href="https://www.legis.state.pa.us/cfdocs/billInfo/billInfo.cfm?bn=2664&amp;body=H&amp;sInd=0&amp;sYear=2023&amp;type=B">Pennsylvania</a>, <a href="https://x.com/Dennis_Porter_/status/1877746381949116787">New Hampshire</a>, North Dakota and other states.



While the fate of <a href="https://blockworks.co/news/bitcoin-as-a-potential-us-reserve-asset">Cynthia Lummis’s</a> national BTC reserve plan remains unclear, at the very least <a href="https://blockworks.co/news/trump-campaign-promises-bitcoin-reserve">Trump has promised</a> to keep the BTC the government already possesses.



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State bitcoin reserve plans proliferate

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The rise of “<a href="https://blockworks.co/news/bitcoin-powerful-defi-potential">Bitcoin DeFi</a>” on new networks looking to scale Bitcoin has primarily come through bitcoin-backed derivatives like SolvBTC.BBN and LBTC. These derivatives receive staking rewards from Babylon, offering new avenues for liquidity and yield generation. However, concerns about the transparency of these platforms, particularly regarding the management of bitcoin reserves, have sparked debate within the Bitcoin community.



A recent <a href="https://x.com/trackoor/status/1875307649862135830">article</a> by the co-founder of Nubit, known online as Hans, raised alarms about the potential for unbacked reserves and the inflation of total value locked (TVL) in platforms like Solv. These concerns highlight broader risks in the bitcoin-backed derivatives space, especially as market volatility persists.



SolvBTC is minted by depositing either BTC or flavors of wrapped bitcoin so that solvBTC tokens mirror the value of the BTC held in reserves 1:1.



But after that, solvBTC can be moved freely across chains and apps, making it challenging to track TVL. That led to <a href="https://x.com/trackoor/status/1875876403536953575">allegations</a> of double-counting solvBTC issuance.



Solv co-founder Ryan Chow <a href="https://x.com/RyanChow_DeFi/status/1875414459747070086">called</a> the claims “a smear campaign, coordinated and orchestrated” by Solv’s competitors.



SolvBTC.BBN suffers from a liquidity discount which <a href="https://x.com/januszg_/status/1876728550931190049">deepened</a> to 7% last week following a hack of the protocol’s X account.



Solv has <a href="https://x.com/SolvProtocol/status/1876544783507988566">pledged</a> to reimburse user funds lost as a result of the hack.



Despite these clarifications, the core issue remains that Solv, like other bitcoin-backed derivatives platforms, introduces additional layers of trust. While some transparency improvements are being made, the underlying reliance on centralized mechanisms to mint and manage bitcoin-backed derivatives adds risk for users. As @0xTindorr pointed out in an X <a href="https://x.com/0xTindorr/status/1876479673154392268">thread</a> defending Solv, any bitcoin liquid staking tokens (LSTs) inherently carry additional risk.



As the bitcoin-backed derivatives market continues to expand, ensuring these platforms are genuinely backed by reserves and thus remaining transparent will be crucial to maintaining trust and mitigating risks. Users must remain cautious, understanding that the promise of liquidity and yield often comes with hidden risks, especially when the backing of assets is unclear.



Solv Protocol’s native token, SOLV, is set to list Thursday on Binance with a total supply of 9.66 billion and an initial circulating supply of approximately 1.48 billion at time of listing. The token’s launch, which followed a points campaign, adds a new layer to the growing ecosystem of bitcoin-backed derivatives. It will be revealing to monitor performance in this space in light of the potential risks associated with Solv’s expanding offerings.



Other bitcoin derivative issuers, including Lombard and Bedrock, have been using points programs to entice deposits, often a prelude to launching a token.



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Risky business? Transparency in BTC-backed derivatives

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If I were to boil it down, I’d say there are three key reasons why Tribe Capital’s Evan Park is bullish on DePIN. The use cases, sustainability, and — of course — the revenue potential.



Tribe’s backed a few DePINs including Wynd Networks (the <a href="https://blockworks.co/news/grass-data-verification-depin-funding">company behind Grass</a>), flight tracking project Wingbits and Akash.&nbsp;



When looking at DePIN projects, Park’s biggest question is whether or not the project is “solving a problem where real demand can be generated.”



Specifically, when Park is being pitched, he’s skeptical when a project shows him revenue figures that aren’t necessarily coming from the underlying network.&nbsp;



I asked him what makes him call bullshit on a DePIN pitch and he told me: It’s “important to distinguish revenue in crypto, but also in DePIN.” He wants to know where the revenue is coming from, essentially. Are the users also validators? Are individuals “contributing to the network and their data, is that the thing that’s making revenue?”



He also keeps a close eye on organic growth and gets validation on potential demand.



But a good team, and a founder “deep in the space” are huge green flags for Park. If this sounds familiar to you, it’s probably because Wyatt Lonergan of VanEck Ventures told us that he also pays close attention to project teams last month.



“It&#8217;s a consideration that&#8217;s more important in DePIN than any other sector. But also having domain expertise, or having advisors and team members that have that domain expertise in your given industry, while bridging that with crypto native experience. It&#8217;s not enough to have one without the other,” he noted.&nbsp;



And there’s your insider scoop for the day.



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What to look for in DePIN projects: Tribe Capital VC

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The full version of Firedancer — a very-performant re-write of Solana’s validator software authored by Jump Crypto — may still be <a href="https://blockworks.co/news/2025-solana-product-launches">a ways away</a>. But in the meantime, Solana validators still can use a limited version of the client named Frankendancer. 



Frankendancer was spawned by Jump taking the Agave client, which is descended from the original Solana Labs software, and replacing parts of it piecemeal to create a new client akin to Frankenstein’s monster. Frankendancer <a href="https://blockworks.co/news/lightspeed-newsletter-solana-firedancer-testnet">went to Solana mainnet in September</a> during Solana’s Breakpoint conference — but since then, it’s seen limited uptake.



So far, 12 validators controlling roughly 5.4 million staked SOL are running Frankendancer, according to <a href="https://beta.validatorbase.com/solana">data</a> from Validatorbase. That’s out of 392 million staked SOL in existence, according to Solana Compass.



The “main reason most validators aren&#8217;t running [Frankendancer] yet is because it doesn&#8217;t capture MEV efficiently,” Temporal engineering partner Ben Coverston told me.



Maximal extractible value, or MEV, is the processing of adding, removing, or reordering transactions in a block to extract extra value. Many Solana validators capture MEV by running the Jito-Solana client, which is a version of the Agave client with MEV modifications attached.&nbsp;



MEV is quite lucrative for Solana validators. Around 25% of validator staking rewards — which can be thought of like the revenue a validator creates by running Solana — currently come from MEV, <a href="https://dune.com/21co/solana-key-metrics">according</a> to a Dune dashboard. Roughly 65% of the rewards come from SOL issuance, and 10% comes from fees.&nbsp;



It’s not impossible to capture MEV without Jito, Coverston added, but it is certainly more difficult, so any validators who want to run Frankendancer are likely looking at a lower return on their investment.



That’s not to say there’s no reason to run Frankendancer. Phase Labs announced today that its validator has upgraded to the Frankendancer client, calling the software “the next leap forward” for Solana.



Phase’s Aeropool stake pool <a href="https://blockworks.co/news/solana-stake-pools-yield-vs-punishment">has specifically said</a> that its stake delegation strategy is to empower positive Solana contributors rather than only chase the highest APY.



Most validators don’t share this strategy — over 93% of Solana validators currently <a href="https://www.jito.network/stakenet/history/">use</a> Jito-Solana. On testnet, they may begin seeing some pressure to try Frankendancer however: Solana developer shop Anza has <a href="https://discord.com/channels/428295358100013066/594138785558691840/1326768397047824487">talked</a> about beginning to push for a Frankendancer supermajority of stake on testnet next week.



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Solana validators slow to adopt Frankendancer for MEV reasons

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Crypto is a creature of extremes. Look no further than the major narratives right now.&nbsp;



AI agents and memecoins are almost completely virtual. DePIN, meanwhile, derives practically its entire value proposition from very physical networks of hardware. In the real world.&nbsp;



So, you can’t fault Helium — the decentralized wireless carrier powered by Solana — for teaming up with DAWN to expand both their networks, together.



The pair have struck a partnership to allow Helium hotspot operators to serve DAWN broadband internet, and vice versa, to create “the world’s first fully decentralized last-mile internet solution.”



Like how Helium is shooting to disrupt centralized telecoms, DAWN is pushing to <a href="https://blockworks.co/news/two-vaneck-funds-back-depin-dawn">change our relationship with traditional ISPs</a>, allowing regular users to both own the infrastructure and be rewarded in crypto for providing wireless broadband to anyone in range.



“The conversation started with a strong alignment on the mission of decentralizing internet access,” a Helium spokesperson told me. “We&#8217;re moving toward making connectivity owned by the many and accessible to everyone.”



It means that the Helium Network will automatically grow by 8,000 nodes that already serve the DAWN ecosystem, according to a press release.



A Helium Foundation <a href="https://dune.com/helium-foundation/helium-makers">dashboard</a> meanwhile points to more than 25,000 mobile hotspots onboarded since last April, which hypothetically could serve DAWN broadband once the functionality is rolled out, although it’s not immediately clear how many are currently active.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1382" height="998" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcS2KLUG9cyxVVCmOyGyMtabV-GqO6WfmGYnWh-Jyw1sYAued80xonZL9J3L_UXvxcfOcSfyJaKEQyJW9mBV6ui_1t8RJQKdsPJwnUTe5Av3abo1bUC-NVYnfEE6SXvEVFkKRnhvw.png" alt="" class="wp-image-96300" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcS2KLUG9cyxVVCmOyGyMtabV-GqO6WfmGYnWh-Jyw1sYAued80xonZL9J3L_UXvxcfOcSfyJaKEQyJW9mBV6ui_1t8RJQKdsPJwnUTe5Av3abo1bUC-NVYnfEE6SXvEVFkKRnhvw.png?w=1382 1382w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcS2KLUG9cyxVVCmOyGyMtabV-GqO6WfmGYnWh-Jyw1sYAued80xonZL9J3L_UXvxcfOcSfyJaKEQyJW9mBV6ui_1t8RJQKdsPJwnUTe5Av3abo1bUC-NVYnfEE6SXvEVFkKRnhvw.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcS2KLUG9cyxVVCmOyGyMtabV-GqO6WfmGYnWh-Jyw1sYAued80xonZL9J3L_UXvxcfOcSfyJaKEQyJW9mBV6ui_1t8RJQKdsPJwnUTe5Av3abo1bUC-NVYnfEE6SXvEVFkKRnhvw.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcS2KLUG9cyxVVCmOyGyMtabV-GqO6WfmGYnWh-Jyw1sYAued80xonZL9J3L_UXvxcfOcSfyJaKEQyJW9mBV6ui_1t8RJQKdsPJwnUTe5Av3abo1bUC-NVYnfEE6SXvEVFkKRnhvw.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcS2KLUG9cyxVVCmOyGyMtabV-GqO6WfmGYnWh-Jyw1sYAued80xonZL9J3L_UXvxcfOcSfyJaKEQyJW9mBV6ui_1t8RJQKdsPJwnUTe5Av3abo1bUC-NVYnfEE6SXvEVFkKRnhvw.png?w=356 356w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcS2KLUG9cyxVVCmOyGyMtabV-GqO6WfmGYnWh-Jyw1sYAued80xonZL9J3L_UXvxcfOcSfyJaKEQyJW9mBV6ui_1t8RJQKdsPJwnUTe5Av3abo1bUC-NVYnfEE6SXvEVFkKRnhvw.png?w=361 361w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcS2KLUG9cyxVVCmOyGyMtabV-GqO6WfmGYnWh-Jyw1sYAued80xonZL9J3L_UXvxcfOcSfyJaKEQyJW9mBV6ui_1t8RJQKdsPJwnUTe5Av3abo1bUC-NVYnfEE6SXvEVFkKRnhvw.png?w=303 303w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXcS2KLUG9cyxVVCmOyGyMtabV-GqO6WfmGYnWh-Jyw1sYAued80xonZL9J3L_UXvxcfOcSfyJaKEQyJW9mBV6ui_1t8RJQKdsPJwnUTe5Av3abo1bUC-NVYnfEE6SXvEVFkKRnhvw.png?w=80 80w" sizes="auto, (max-width: 1382px) 100vw, 1382px" /><figcaption class="wp-element-caption">Helium’s HNT is still working on reclaiming highs from the last cycle. DAWN, which has an active points program, is yet to confirm a token launch</figcaption></figure>



The spokesperson said that there’s no equity or investment deal as part of the partnership. Still, it all suggests a certain coalescence in the DePIN space.&nbsp;



Like how GPUs and ASIC mining rigs can be used to mine a number of different cryptocurrencies — switching between them based on profitability — we could be headed for a world where DePIN devices in our homes can be pointed to all sorts of different use cases depending on demand.&nbsp;



It might mean additional income for the household without the often extreme overheads related to proof-of-work mining, although how much would be largely dependent on token prices and whatnot.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1380" height="1000" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXd1nND-GiHGinDzKPsTMQoHZpIsMAO9sRbIxvucteXY8QVyXzckJPVYFPSWbaG8q5B4smbdT9Sk21fQxESHnBI7ao1gb3IEupRaUJ1vkGak1ZA4ae1RNMwTOYrta425yRYk5J8aKg.png" alt="" class="wp-image-96299" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXd1nND-GiHGinDzKPsTMQoHZpIsMAO9sRbIxvucteXY8QVyXzckJPVYFPSWbaG8q5B4smbdT9Sk21fQxESHnBI7ao1gb3IEupRaUJ1vkGak1ZA4ae1RNMwTOYrta425yRYk5J8aKg.png?w=1380 1380w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXd1nND-GiHGinDzKPsTMQoHZpIsMAO9sRbIxvucteXY8QVyXzckJPVYFPSWbaG8q5B4smbdT9Sk21fQxESHnBI7ao1gb3IEupRaUJ1vkGak1ZA4ae1RNMwTOYrta425yRYk5J8aKg.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXd1nND-GiHGinDzKPsTMQoHZpIsMAO9sRbIxvucteXY8QVyXzckJPVYFPSWbaG8q5B4smbdT9Sk21fQxESHnBI7ao1gb3IEupRaUJ1vkGak1ZA4ae1RNMwTOYrta425yRYk5J8aKg.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXd1nND-GiHGinDzKPsTMQoHZpIsMAO9sRbIxvucteXY8QVyXzckJPVYFPSWbaG8q5B4smbdT9Sk21fQxESHnBI7ao1gb3IEupRaUJ1vkGak1ZA4ae1RNMwTOYrta425yRYk5J8aKg.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXd1nND-GiHGinDzKPsTMQoHZpIsMAO9sRbIxvucteXY8QVyXzckJPVYFPSWbaG8q5B4smbdT9Sk21fQxESHnBI7ao1gb3IEupRaUJ1vkGak1ZA4ae1RNMwTOYrta425yRYk5J8aKg.png?w=355 355w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXd1nND-GiHGinDzKPsTMQoHZpIsMAO9sRbIxvucteXY8QVyXzckJPVYFPSWbaG8q5B4smbdT9Sk21fQxESHnBI7ao1gb3IEupRaUJ1vkGak1ZA4ae1RNMwTOYrta425yRYk5J8aKg.png?w=360 360w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXd1nND-GiHGinDzKPsTMQoHZpIsMAO9sRbIxvucteXY8QVyXzckJPVYFPSWbaG8q5B4smbdT9Sk21fQxESHnBI7ao1gb3IEupRaUJ1vkGak1ZA4ae1RNMwTOYrta425yRYk5J8aKg.png?w=302 302w, https://blockworks-co.imgix.net/wp-content/uploads/2025/01/AD_4nXd1nND-GiHGinDzKPsTMQoHZpIsMAO9sRbIxvucteXY8QVyXzckJPVYFPSWbaG8q5B4smbdT9Sk21fQxESHnBI7ao1gb3IEupRaUJ1vkGak1ZA4ae1RNMwTOYrta425yRYk5J8aKg.png?w=80 80w" sizes="auto, (max-width: 1380px) 100vw, 1380px" /><figcaption class="wp-element-caption">Helium users are spending ~$6,000 HNT per week right now, up from under $3,000 in January 2024</figcaption></figure>



What’s interesting is that had this partnership not been made, eventually Helium and DAWN would’ve been considered competitors. But not really anymore.



Wouldn’t that make Elon Musk’s Starlink the biggest rival to the Helium-DAWN partnership, outside of the traditional carriers?



“Starlink is disrupting the connectivity industry in ways that were unimaginable just a few years ago,” the Helium spokesperson said. “Several Helium deployments use Starlink as an internet backhaul in the US and Mexico.”&nbsp;



The team has also developed a connectivity kit that combines Starlink with Helium Hotspots, to better serve phones in areas without cell coverage.



In any case, the Helium-DAWN partnership makes total sense, especially considering the latter is expected to airdrop a token to early adopters at some point.



After all, when it comes to incentivizing people to set up physical devices in their homes, two token flywheels must be better than one.



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Helium partners with DAWN to create ‘last-mile internet solution’

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I broke down the <a href="https://blockworks.co/news/coinbase-sec-appeals-decision">Coinbase-SEC court ruling</a> yesterday and noted it would take some time to sort out its broader implications.&nbsp;



One legal pro’s viewpoint suggests the decision could be a final straw of sorts to force long-anticipated regulatory clarity.



Monday’s court decision was not exactly surprising, according to Arie Heijkoop, a partner in Haynes Boone’s investment management practice group. The SEC’s response to Coinbase’s petition “was lacking in any substance,” he explained; but a court ordering an agency to issue a new rule has a high bar.&nbsp;&nbsp;



That said, Heijkoop told me the opinion’s descriptive language (exhibiting increased understanding of the space) suggests “the SEC may be running out of room to continue evading coming out with a defined position on crypto and digital asset regulation.”



Indeed, Judge Stephanos Bibas notes the SEC’s “old regulations fit poorly with this new technology, and its <a href="https://blockworks.co/news/regulation-by-enforcement-unsustainable">enforcement strategy</a> raises constitutional notice concerns.”



Bibas’s concurring opinion, in particular, seems to implore the SEC to distinguish the coins that operate more like securities from those that do not, Heijkoop explained.&nbsp;



“As the number of crypto products, and how they function, proliferate, if there will ever be crypto regulation handed down, it will likely have to account for those differences,” the Haynes Boone partner added.



This ruling may provide some optimism to defendants to challenge crypto enforcement actions if there is no further SEC guidance. But handing down a new rule would be “a fairly seismic action,” Heijkoop said.&nbsp;



Further, SEC actions for unregistered securities offerings may not fully cease given the decision’s recognition of crypto products with securities-type characteristics.



Whether the agency’s <a href="https://blockworks.co/news/sec-chair-nominee-crypto-past">new administration</a> offers more guidance through regulation rather than litigation remains a key question.



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Weighing in on the latest Coinbase-SEC ruling

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As President Biden rounds out his final days in office, the Senate has begun the process of confirming President-elect Trump’s Cabinet picks.



Defense Secretary hopeful Pete Hegseth was the first to take the hot seat.&nbsp;



Republicans, as expected, embraced Hegseth, calling his “unconventional” resume a strength while Democrats grilled him about his <a href="https://thehill.com/homenews/5084889-tim-kaine-pete-hegseth-hearing-infidelity/">character and judgement</a>. It was hours of tense questioning, but Senate Majority Leader John Thune says he plans to schedule the vote soon, and Hegseth should have the nomination in the bag.&nbsp;



On tap for confirmation hearings today are Trump’s picks for attorney general (Pam Bondi), CIA director (John Ratcliffe) and the White House office of management and budget (Russ Vought).&nbsp;



The Senate Banking Committee has not yet scheduled <a href="https://blockworks.co/news/trump-nominates-new-sec-chair">SEC chair hopeful</a> Paul Atkins’s confirmation hearing, but with widespread Republican <a href="https://www.banking.senate.gov/newsroom/majority/scott-statement-on-meeting-with-paul-atkins-nominee-to-serve-as-sec-chairman">support</a> Atkins should be a shoo-in. In the meantime, Trump will select either Commissioner Peirce or Uyeda to serve as <a href="https://blockworks.co/news/sec-crenshaw-confirmation-vote-cancelled">acting chair</a>. We’re expecting the transition team to announce this decision in the next few days.&nbsp;



In his final <a href="https://www.sec.gov/newsroom/speeches-statements/gensler-sec-011425?utm_medium=email&amp;utm_source=govdelivery">town hall</a> address Tuesday, <a href="https://blockworks.co/news/sec-commissioner-crenshaw-vote-delayed">outgoing</a> SEC Chair Gary Gensler praised his agency staff for their “wise counsel and help.”&nbsp;



“You vigorously followed the facts and the law without fear or favor to ensure that market participants comply with the securities laws, whether it be regarding traditional financial products or more recent ones like crypto,” Gensler said, in what may be his final nod to the industry as head of the agency.&nbsp;



Trump has still not named his pick for CFTC Chair. Rostin Behnam, who long <a href="https://www.cftc.gov/PressRoom/SpeechesTestimony/opabehnam48">advocated</a> for Congress to grant the CFTC explicit oversight of digital asset commodities, will be <a href="https://blockworks.co/news/cftc-chair-announces-departure">stepping down</a> on Monday. Caroline Pham or Summer Mersinger, both Republican CFTC commissioners, are expected to head the agency in the interim.&nbsp;



External candidates who’ve made Trump’s short list reportedly include former CFTC Commissioner Brian Quintenz, former agency official Josh Sterling and attorney Neal Kumar. I doubt we get an official nomination from Team Trump before Monday, but we’ll be on the lookout just in case.&nbsp;



Over in the House, Majority Whip Tom Emmer yesterday was selected to vice chair the digital assets subcommittee.&nbsp;



“With President Trump in the White House, and Gary Gensler confined to the waste bin of Washington, we have an excellent opportunity to ensure that the future of digital assets is guided by Americans, with American values,” Emmer wrote in a <a href="https://x.com/GOPMajorityWhip/status/1879319142303498579">statement</a> on X. 



Emmer, who co-sponsored the CBDC Anti-Surveillance <a href="https://blockworks.co/news/house-passes-cbdc-anti-surveillance-act">State Act</a>, the <a href="https://blockworks.co/news/senate-passes-resolution-to-overturn-sab121">anti-SAB 121</a> resolution and <a href="https://blockworks.co/news/fit21-crypto-bill-advances-to-senate">FIT21</a>, has advocated for <a href="https://blockworks.co/news/reps-ask-sec-for-clarity-securities-airdrops">more lenient</a> crypto regulation in recent years. The House Financial Services Committee has not yet released a schedule of upcoming hearings.



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