Welcome to the On the Margin Newsletter, brought to you by Ben Strack, Casey Wagner and Felix Jauvin. Here’s what you’ll find in today’s edition:




General election season is well underway, and crypto companies are opening their checkbooks. A sign the bull market is truly upon us afterall, perhaps? 



A $1.6 trillion asset manager came out swinging in the ether ETF fee war, but a competitor could be positioned to one-up them.








109



As promised, President Joe Biden on Friday vetoed H.J.Res. 109 — a pro-crypto bill that attempted to overturn the SEC’s Staff Accounting Bulletin (SAB) 121. The veto comes after a rare show of bipartisan support and cross-chamber cooperation required to even get this bill to the President’s desk.



It’s virtually unheard of for a president to not back up their head of agency (i.e. Gary Gensler), so we saw this one coming. All eyes shift to the Senate, which should be voting on a couple other crypto-related bills any day now.



So everyone has $25 million laying around? 



Coinbase this morning became the latest crypto company to give $25 million to crypto-focused super PACs, bringing this cycle’s total fundraising amount to more than $160 million so far. 



Coinbase’s donation follows those of a16z and Ripple. Those two companies said last week they would be giving $25 million each to Fairshake and associated super PACs Protect Progress and Defend American Jobs. 



Fairshake had more than $52 million in cash-on-hand, as of April 2024 — not including any of these latest donations. The super PAC has only deployed around $11 million since January 2023, according to the latest filings. 



The vast majority of that ($10 million) went toward Fairshake’s successful campaign against former Senate-hopeful Katie Porter, a Democrat from California. 



Porter, currently serving in the US House for California’s 47th district, lost in the March primary to Rep. Adam Schiff, D-CA. Schiff will face Republican

On the Margin Newsletter: Coinbase adds to crypto’s war chest

… Masters in International Relations from the University of Pennsylvania and a Bachelor of Arts from the University of Michigan, Ann Arbor.






Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.



The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Hey regulators, here’s how to get crypto right

Howdy!



It’s summertime in Brooklyn, which means stooping season is in full swing. I might go wander around Park Slope later to see if I can find one of those chairs shaped like a hand sitting out on the sidewalk. 



But as for today’s Solana stuff:







Switchboard hauls in $7.5M despite sleepy venture week



June is here, and the markets appear to be taking a summertime nap. 



Solana’s often-bumpy price chart has sat mostly between $160 and $170 for 10-plus days now, and the venture market has similarly zenned out. 



Of the venture deals announced in recent days, perhaps the most notable came from oracle platform Switchboard, which closed a $7.5 million Series A. Tribe Capital and RockawayX led the round. The Solana Foundation invested, as did notable Solana-adjacent angel investors Mert Mumtaz and Joe McCann.



Oracles help feed data to smart contracts. Most straightforwardly, this can look like providing price feeds for DeFi protocols — which otherwise could not access price information outside of their blockchain environment. 



Switchboard helps with oracle services for a number of liquid staking tokens (LSTs) including those offered by Jito, Sanctum, and Marinade, a spokesperson told Blockworks. It’s also pitched itself as a fast and efficient oracle for a blockchain that has sometimes struggled with congestion. Switchboard’s improved oracle — named Switchboard On-Demand — went live on Solana’s devnet in late March.



Switchboard isn’t without competitors in becoming Solana’s choice oracle though. Pyth is another popular solution. Solana DeFi protocol MarginFi has said it primarily uses Pyth’s data alongside data from Switchboard.



There are a couple other recent Solana-focused raises to be aware of: Parasail, formerly named Repl, raised $4 million in seed funding for a DePIN infrastructure service (or in longer form, decentralized physical infrastructure infrastructure). This comes less than a month after Repl was given

Lightspeed Newsletter: Switchboard hauls in $7.5M despite sleepy venture week

A new slate of amended spot ether ETF applications are in, and at least one more round is expected before the products are able to launch. 



The latest document dump suggests another fee battle is in store and revealed that one issuer has decided to focus more on bitcoin. 



While the Securities and Exchange Commission on May 23 approved 19b-4 proposals filed by Cboe, NYSE Arca, and the Nasdaq to list such funds, the regulator now turns to finalizing S-1 registration statements as a last step before launch. 



Read more: On the Margin Newsletter: What needs to happen before ETH ETFs hit your brokerage accounts



BlackRock revealed its $10 million in seed capital and authorized participants for its fund on Wednesday. But as more filings flooded in late Friday, one of the biggest takeaways was the planned price point of 0.19% for Franklin Templeton’s ether fund. 



The $1.6 trillion asset manager was the first to reveal its proposed fee, setting the stage for an expected fee war similar to what we saw in January among bitcoin ETF issuers. 



Franklin Templeton had undercut Bitwise to become the cheapest bitcoin ETF a day after those funds launched in January.  



Nate Geraci, president of The ETF Store, said he expects the spot ether ETF fee war to be “every bit as brutal and bloody” as the one surrounding BTC funds — adding that the two battles are tied together.“Fee competition in one category will likely impact the other, because end investors will expect comparable pricing on both,” Geraci told Blockworks.



Sumit Roy, a senior analyst at ETF.com, said fee waivers are likely to play a role again as well. Permanent expense ratios could hit as low as 0.15%, he guessed.



“The 0.19% fee is super low, but I wouldn't be surprised to see it undercut at some point,” Roy said.



Another main takeaway from the filing was the omission of Ark Invest’s name. The firm focused on disruptive innovation had partnered with 21Shares to launch a spot

What we learned from the latest ETH ETF filing dump

Michael Saylor and MicroStrategy will pay $40 million to resolve a tax fraud case with the Washington DC Attorney General’s office. 



AG Brian Schwalb posted about the resolution in a series of X posts. 



The case marks the “largest income tax fraud recovery” in DC history, Schwalb said. 




NEW: Michael Saylor – billionaire tech executive and investor – will pay $40 million to the District in the largest income tax fraud recovery in DC history.Saylor not only broke the law, he openly bragged about his tax evasion scheme and encouraged others to follow his example.— AG Brian Schwalb (@DCAttorneyGen) June 3, 2024




“Saylor illegally pretended to live in lower-tax jurisdictions to avoid paying taxes on hundreds of millions of dollars of income — all while living in a 7,000 square foot Georgetown penthouse and docking multiple yachts at Washington Harbour,” Schwalb added. 



According to court documents, MicroStrategy and Saylor will pay a total of $40 million to resolve the case. 



Read more: Bitcoin bull Michael Saylor loses bid to dismiss tax evasion lawsuit



The case, filed with a DC court last year, alleged that Saylor evaded over $25 million in DC income taxes between 2005 and 2021. Saylor, the government said, posed as a resident in states like Florida and Virginia, which have lower taxes. 



MicroStrategy was also named in the suit, with the DC AG alleging that the company helped to cover up his DC residency. 



“The false records and statements MicroStrategy submitted to the District Office of Tax and Revenue, which Defendant Saylor caused the company to submit, deprived the District of tens of millions of dollars in income tax revenue,” the filing said.



Saylor, a big bitcoin bull, is worth over $4.6 billion according to Forbes. MicroStrategy owns 1% of all bitcoin, worth a total of $14 billion. 



He embarked on a — previously disclosed — share sale spree earlier this year, unloading 315,000 shares of MSTR, though

MicroStrategy, Michael Saylor settle with DC AG for $40M in income tax fraud case

Real-world attitude



Wall Street may have taken the lead in the bitcoin ETF arms race, but crypto natives are still holding their ground in the real-world asset space.



There’s now almost $1.5 billion tied up in tokenized funds buying US Treasurys and other public securities, a figure which has tripled over the past year and nearly doubled year-to-date.



BlackRock’s and Franklin Templeton’s funds, BUIDL and FOBXX, are the two biggest with $456 million and $348 million a pop from 13 and 419 token holders, according to RWA.xyz.



WisdomTree Prime’s government money market digital fund has otherwise attracted $5.5 million from 130 contributors.



(A $5-million minimum investment for BUIDL likely has something to do with the discrepancy. FOBXX has no minimum deposit.)



A baker’s dozen of crypto-native startups are however matching the three TradFi funds for growth, and still make up half of the tokenized fund space.



New York-headquartered Ondo, which has a short-term US government bond fund and a US dollar yield vehicle, has just hit a record $310 million market cap across the two entities, up from $126 million at the start of the year.



Tokenized funds managed by Hashnote, operating out of Miami Beach, and Superstate, based in San Francisco, have seen market cap growth of over 220% together since February. 



Traditional finance’s onchain funds are highlighted in brighter colors



The funds broadly operate similarly to stablecoins like USDT and USDC — but without the stablecoin part. In Tether’s case, it sells tokenized dollars for fiat and buys an equal amount of cash equivalents, mostly short-dated US Treasurys.



What results is that each USDT is backed by an equivalent value which can be easily liquidated to process any redemptions. Tether gets to keep the yield from the Treasurys, earning them billions of dollars in profit every year.



Aside from not issuing stablecoins in return for capital, tokenized money market funds and the

Empire Newsletter: Crypto natives dig themselves in to the RWA space

Another week, another slew of venture capital rounds. 



Bitcoin staking protocol Babylon led this week’s raises, announcing a $70 million raise led by Paradigm on Thursday. 



Bullish Capital, Polychain Capital and Galaxy also participated in the round. 



“This latest round of investment will accelerate Babylon’s mission to enable a Bitcoin-secured decentralized economy. Babylon Bitcoin Staking protocol allows PoS systems like PoS chains, [layer-2s], DA layers, oracles, etc., to acquire staking capital from Bitcoin.”



PitchBook analyst Robert Le previously told Blockworks that he believes infrastructure projects will capture the attention of venture capital at this point in the cycle. 



Read more: Let’s talk Bitcoin staking: Babylon’s litepaper



“I still think infrastructure is still underdeveloped,” he told Blockworks at the time, citing prices he’s seen on Base. “There’s no way that we can say infrastructure [and blockchains are] mature when you pay $5 to sign a transaction.” 



“Trustless staking is a novel and fundamental primitive for bitcoin and the broader ecosystem,” Paradigm’s Arjun Balaji said in a statement. He added that the team is “at the frontier of bitcoin innovation.”



The week was quieter on the funding front, though it followed Farcaster’s announcement of $150 million. 



Speaking of Farcaster, Fortune reported that Neynar — which allows developers to build social applications on Farcaster — raised $11 million from Haun Ventures and Coinbase. 



Other notable funding news:




OpenSocial, an infrastructure layer to build social applications, announced a $5 million seed funding round, which closed in January 2024.*



DeFi platform Aperture announced a Series A raise, totaling $12 million across its rounds to bring its valuation to $250 million. The raise included Skyland Ventures, and Blockchain Founders Fund. 



Swiss-based crypto asset financial services company Scrypt announced a $5

Funding Wrap: Babylon announces $70M raise led by Paradigm

Polygon’s co-founder is now also the company’s chief business officer.



Sandeep Nailwal, an original founder of what was in 2017 called the MATIC network, has been executive chairman of Polygon Labs, and will continue to be. 



But under a new expanded role, Nailwal is set to focus more on Polygon’s zero-knowledge solutions, like Polygon CDK — an open-source software toolkit for developers to create layer-2s on Ethereum.



“Polygon Labs is in the midst of building incredible, transformational technology that will provide developers and enterprises with countless opportunities to scale quickly and securely while having access to liquidity,” Nailwal said in a statement.



Read more: Polygon zkEVM prover reaches Type 1 status



Beyond the additional responsibilities for Nailwal, two crypto-focused companies fresh off of fundraises have also named new leaders.



Tokenized asset platform Centrifuge added a chief operating officer and a head of product as the on-chain asset management space gains momentum.



Centrifuge’s new COO, Julia Merkel, was previously the chief financial officer at venture capital firm BlueYard Capital.



The company has also tapped Sonam Joshi — a former pro at UBS, Google and Amazon — to lead its product unit. Joshi was also previously a director of product at Abra.



Centrifuge facilitates pools of tokenized real-world assets (RWAs), including assets like loans, credit and real estate. Centrifuge has roughly $280 million worth of assets in its liquidity pools.



"They join at a perfect time as Centrifuge looks to scale to meet the widespread, increasing demand for tokenized real-world assets,” Centrifuge co-founder Lucas Vogelsang said in a statement. 



Read more: Anchorage, Arca Labs link up in bid to advance tokenization adoption



The hires come after Centrifuge raised $15 million in April as part of a funding round co-led by ParaFi Capital and Greenfield.



Also raising money in April was Movement Labs.

Crypto Hiring: Polygon co-founder now has larger role

Soccer megastar Cristiano Ronaldo released another set of NFTs on Binance this week, marking his fourth collection since partnering with Binance in mid-2022. 



The NFTs give holders the chance to meet Ronaldo, as well as access to exclusive content, per Binance’s website. The drop also comes a few weeks after a Florida judge denied Ronaldo’s legal team’s motion to have a $1 billion class action lawsuit dismissed stemming from his promotion of the crypto exchange, Newsweek reported.



The lawsuit says Ronaldo was not forthcoming about aspects of the promotion, and he essentially aided Binance in the sale of unregistered currencies. 



Ronaldo’s continued involvement with Binance and crypto is interesting in light of other sports stars’ chastening following crypto-related lawsuits (you don’t see Tom Brady posting about bitcoin much these days). Not even the $4.3 billion settlement Binance had to pay the Securities and Exchange Commission for breaking US laws could scare off Ronaldo. 



Read more: Binance, Zhao ‘deliberately’ violated US law, SEC argues



I spoke with Binance’s head of partnerships, Sarah Dale, this week to get a sense of how the exchange thinks about and pulls off sports partnerships like its continuing one with Ronaldo. 



Dale said the Ronaldo partnership helps Binance reach customers who aren’t necessarily “crypto natives.” He’s also a star with popularity in the countries where Binance has a license to operate, a consideration the company has to make when choosing partnerships.



“The Olympics isn't going to work for us, because we aren't even in all of those countries,” Dale said as an example. 



Read more: Web3 Watch: Binance seems likely to retain its sports partnerships despite DOJ actions



Overall, Dale told me sports is a main focus for Binance’s cultural marketing. This perhaps makes intuitive sense, as customers interested in Ronaldo and customers potentially interested in crypto may have a

Web3 Watch: Ronaldo re-ups Binance NFTs despite lawsuit

While the recent approval of the spot bitcoin ETF in the US marks a positive step towards the institutionalization of the digital asset industry, the imminent approval of spot ether ETFs raises some concerns. 



These ETFs do not offer staking rewards to investors (unlike European ether crypto ETPs), reflecting a lack of understanding by regulators and certain traditional finance asset managers of the key features that distinguish ether from bitcoin. 



Despite both being leading cryptocurrencies, ETH and BTC differ significantly in their functionality and role within the blockchain ecosystem. It’s therefore essential for the industry and regulators to tailor financial products to their specific characteristics, benefiting both investors and the underlying networks.



Understanding staking and Ethereum 2.0



Before delving into the specifics of ether ETFs, it’s important to understand what staking entails and why it is integral to Ethereum’s project. 



The Ethereum blockchain transitioned from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) model with the launch of Ethereum 2.0 in September 2020.



Staking involves locking up a certain amount of cryptocurrency in a wallet to support the network’s operations, such as block validation, network security and governance. In return, stakers receive rewards in the form of additional cryptocurrency.



To illustrate the importance of staking, consider that over 32 million ETH is currently locked up for staking. This represents 27% of Ethereum’s total supply. At current prices, this equates to more than $121 billion. This significant portion of ETH being staked underscores the critical role staking plays in securing and maintaining the Ethereum network.



BTC vs ETH: Different natures, different functions, different benefits



To fully appreciate the significance of staking in Ethereum, it’s important to understand the fundamental differences between ETH and BTC. While both are

Spot ETH ETFs without staking miss the mark

Another week, another incredibly cringy tweet on Crypto Twitter.



Ryan Salame, the former FTX executive who was recently sentenced to 7.5 years in prison, decided to celebrate his upcoming near-decade in prison this week by hopping online to tweet for the first time since FTX collapsed.



His timeline reads like a weird time capsule — his most recent tweets are from November 2022, including several retweets of Sam Bankman-Fried reassuring customers, one particularly painful retweet of Caroline Ellison promising to buy FTT from CZ at $22, and then a personal tweet from Salame about how much he loves his friends. 



More than two years later, following the FTX collapse and 25-year sentence of Bankman-Fried, Salame returned to Twitter to tell the crypto world: “hot damn, this is going to get interesting quickly.”



There’s a clear pattern in the crypto industry of tweeting things that really are better left untweeted. 



Read more: The best Crypto Twitter moments of 2023



Some tweets go down in history — like the failed Terra creator Do Kwon’s “Deploying more capital - steady lads” before the collapse of his algorithmic stablecoin took down the whole market. 



More recent examples all come back to the FTX case, most notably when the government actually used some of Bankman-Fried’s tweets during the November ruckus in their legal case against him. Then there are the tweets from crypto leaders (and former leaders now about to serve jail time) that haven’t aged badly — yet. But there’s still time.



The idea of posting recklessly on social media in spite of any potential future harm to your reputation or freedom definitely didn’t begin on Crypto Twitter, but it has been a hallmark of online financial forums for some time. 



We all remember the infamous WallStreetBets subreddit, where groups of novice traders bragged about how much money they lost for years before banding together in 2021 to inspire short squeezes that briefly shook

Crypto Twitter should stop tweeting weird and terrible things

Howdy!



I hope your week has gone better than it has for the Minnesota Timberwolves. At least now they’ll be spared the trouble of losing in five games to the Celtics in the NBA Finals.



In this Friday edition, we’ll be zooming out from the week’s PayPal news to consider where Solana stands in the eyes of institutions — and their sweet, sweet liquidity. 







Is this Solana’s institutional adoption moment?



PayPal launched its stablecoin on Solana this week while pledging to explore payment use cases on the network. 



The news followed similar Solana interest shown in recent months by Stripe, Visa, and Shopify. That’s four integrations with payment giants in short succession — and to some, a vindication that the bear market months spent chewing glass are paying dividends. 



But then again, crypto payments initiatives are still pretty marginal in the US, and there’s certainly a range of seriousness when it comes to how large corporations treat their crypto desks. 



So, I reached out to more than a dozen builders and investors in the Solana ecosystem to ask whether PayPal Week represents a watershed in Solana’s use by institutions — or if the ecosystem is still in earlier stages of adoption. 



(I should note, all of these sources work in crypto and share a general belief that institutional adoption will become a reality at some point.)



According to my rough-hewn categories, 35% of these sources said Solana’s institutional moment has arrived, and 65% said Solana has some hill yet to climb. 



The general sentiment from the institution bulls was that Solana’s cheap fees and low transactions, coupled with the compliance features it now offers through token extensions, make Solana the go-to for any firm exploring crypto payment rails. 



“What was once a nice-to-have integration for many is now essential to stay competitive in the crypto payments landscape,” Chris Hermida, CEO of Switchboard, told me. 



Estimates put