Michael McSweeney

Crypto prices plunged Friday, triggering the market’s most severe — and perhaps most consequential — wave of liquidations on record.



More than $19 billion worth of liquidations were triggered during the past day, according to <a href="https://www.coinglass.com/LiquidationData">Coinglass</a> data, with $16.8 billion of that figure on the long side. The true figure “is likely much higher” owing to the way Binance, which saw significant volume during the event, reports&nbsp; liquidations, Coinglass <a href="https://x.com/coinglass_com/status/1976796969961193641">wrote</a> on X.&nbsp;&nbsp;



The decentralized perpetuals trading platform Hyperliquid saw a significant portion of the day’s action: $10.3 billion in liquidations, with $9.3 billion on the long side, per Coinglass.



The developments were fueled by the escalating <a href="https://x.com/0xdoug/status/1976850615621107743">unwind</a> of leveraged positions and a collapse in open interest. Bitcoin’s price fell to as low as $104,000, with altcoins big and small impacted more severely.



Felix Jauvin, host of the Forward Guidance podcast, told me, &#8220;This was one of the messiest liquidation events that I’ve seen in a long time. The last one I remember like this was probably May 2021. With estimates of around $20b of liquidations, it’s likely someone big got carried out and there was nowhere to hide other than spot long.&#8221;



&#8220;Leverage long? Liquidated. Leverage short? Forced deleveraging through exchange auto deleveraging (ADL),&#8221; he explained. &#8220;I’m&nbsp;hearing a lot of stories of people that were short, took profits and bought the dip and then were quickly liquidated right after.&nbsp;It’s&nbsp;a mess and will take quite a while for market makers to reshore up liquidity again.”



Onchain activity surged dramatically, though some users encountered significant delays in the chaos. Aave founder Stani Kulechov <a href="https://x.com/StaniKulechov/status/1976777483824644454">wrote</a> on X that “[t]he protocol operated flawlessly, automatically liquidating a record $180M worth of collateral in just one hour, without any human intervention.”



<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">1/ Yesterdays crash brought chaos to DeFi lending markets. Aave: $182M in liquidated loans Spark: $16M in liquidated loans Morpho: $35M in liquidated loans Lets dive into the data 👇&mdash; Jack 🟪 (@JackMandin) <a href="https://twitter.com/JackMandin/status/1977008640281510245?ref_src=twsrc%5Etfw">October 11, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Speculation quickly surfaced on Crypto Twitter around yet-to-be-named industry firms suffering major losses that, in turn, deepened the rout. Alongside these theories, traders shared testimonies of complete or near-total wipeouts of leveraged positions.



“Probably one of the most severe flushes I’ve ever seen on alts, I didn’t even imagine alts had this much leverage in them,” Cobie, the long-time crypto trader and commentator, <a href="https://x.com/cobie/status/1976788855006302686">wrote</a> on X Friday. “It feels like someone got hit very hard and will see a large body float to the surface soon, reminds me a little of summer 2021.”



“Don’t let a leverage blowup dictate your long-term views. The future is bright, good things to come, patience is rewarded,” he went on to conclude.



Bitcoin’s price has since partially recovered and is trading around $112,200 at the time of writing. The collective crypto market cap is down 9% in the past day, per Coingecko. Among the altcoins bucking the trend was <a href="https://www.coingecko.com/en/coins/zcash">Zcash</a>, which posted additional gains post-crash after climbing sharply in the days and hours beforehand.



Some market participants swiftly drew comparisons to the dramatic market drops around Tether/Luna and FTX. Both proved to be market-defining events last cycle.&nbsp;



Beyond the raw numbers —&nbsp;Coinglass reports 1.6 million traders liquidated in the past 24 hours —&nbsp;the event demonstrated crypto’s vastly expanded interconnectedness with global markets and power politics.



The selloff appears part of a broader reaction to a new flare-up in US President Donald Trump’s trade war against China. Trump, in a pair of posts on his Truth Social website, declared his intention to impose 100% tariffs in response to a move by China to restrict access to its rare earth materials. The U.S. would also restrict Chinese access to “critical software”, Trump said, per the <a href="https://www.nytimes.com/2025/10/10/us/politics/trump-xi-china-tariffs-rare-earth.html">New York Times</a>. Major US indices <a href="https://www.nytimes.com/2025/10/10/business/stock-market-trump-tariffs.html">tumbled</a> on the news, especially after Trump doubled down on his tariff threats.&nbsp;



While the US-China trade relationship has fluctuated between cool détente and outright hostility since Trump took office, his latest moves struck at the heart of the most important exchange of goods between the two countries: software that fuels the global AI revolution and the crucial ingredients required to manufacture the chips behind it.



Beyond the macro implications, the Trumpian roots of the crypto market turbulence may prove to be more consequential than the losses themselves.



Nearly 10 months into his second term, Trump and his family have fully embraced the industry —&nbsp;personally, professionally, and politically. The industry, too, embraced Trump, pouring millions of dollars into GOP election coffers. 



In return, the Trump administration has pushed policies that favor the industry, and it ended an era of oversight under former President Joseph Biden that prioritized regulatory pressure and legal combat. Congress passed <a href="https://blockworks.co/news/trump-signs-genius-law">landmark stablecoin regulation</a> and, despite <a href="https://www.politico.com/news/2025/10/09/tensions-over-crypto-bill-boil-over-in-the-senate-00601479?cdlcid=5d23ad3c953109375ea49b92&amp;section=&amp;utm_campaign=cryptocodex&amp;utm_medium=email&amp;utm_source=newsletter">disputes</a> between Republicans and Democrats, lawmakers are likely to pass market structure reforms sometime in the future as well.&nbsp;



Still, Friday’s events confirm that, despite the favorable treatment, the crypto market is not immune to Trump’s geopolitical whims. The industry’s march across Wall Street — ETFs, DATs, investments and more — means that crypto may inescapably rise or fall as Trump’s hot-and-cold trade war with China continues. Friday’s events could happen again, though perhaps not with the same scale or intensity.



The coming days will reveal the extent of the damages, the firms impacted, and the degree to which publicly traded crypto companies will be affected.&nbsp;



More broadly, it remains to be seen whether Friday was the start of a new crypto bear market — or the latest twist in its most important bull market yet.&nbsp;

Bitcoin

Crypto liquidations drive historic market turbulence 

David Canellis

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



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



Crypto has grown into a Kafkaesque maze of meta-bets: Bitcoin is the reserve asset of the internet, and if it can do that, then Ethereum must be the World Computer.&nbsp;



But if Ethereum can’t scale to be the World Computer all by itself, then perhaps Solana, Avalanche or some other layer-1 will be the global settlement layer for computation instead.



That settlement layer will need apps. Lots of them. Great for the <a href="https://davidphelps.substack.com/p/the-fat-app-thesis">fat app thesis</a> — the investment logic that suggests “most of the value to be found in crypto today is to be found in apps.”&nbsp;



And if those fat apps have tokens, then hoo boy! — Imagine the value accrual. Especially for those apps that thrive in crypto’s hyperactive attention economy.



What if the apps are so successful that they overload their settlement layers, thereby proving that those blockchains can’t scale, either? Or maybe their devs, validators or other ecosystem participants are not aligned with the apps themselves. What then?



<h2 class="wp-block-heading">Fun with flywheels</h2>



Odds are you’ll then love the <a href="https://www.youtube.com/channel/UC9aOLLMQht_1FKRxbQe60NA">appchain thesis</a>. It has everything good about the fat app thesis, with the added benefit of a very special property: ongoing utility for network participants. Tokens can be dished out as rewards (read: payment) to the people and companies keeping the network online.&nbsp;



And those people need to stake their tokens (and not sell them) to receive more of those rewards — reducing downward pressure on the token’s price and maybe attracting new users (and holders) along the way. The token is an integral part of that flywheel.



Something that Empire host Santiago Roel Santos said on today’s podcast got me thinking about all of this. The topic of <a href="https://blockworks.co/news/polymarket-culture-chasm">Polymarket’s trajectory</a> had come up, and Santi recounted that he had participated in the ICO for the original blockchain-powered prediction market, Augur, which coincidentally occurred 10 years ago this week.&nbsp;



Augur had a brief moment around early 2018 but never enjoyed the same kind of cultural inertia as Polymarket — a fact that hung in the air as the opportunity came for ParaFi to invest.



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/21OwuCgRqMc?si=OGfeGXmdlg3oThzO" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







“It&#8217;s a classic example for anyone that&#8217;s interested in investing in technology. And like, you could have sat there and said, ‘Hey, Augur&#8217;s not successful, so this is definitely not gonna be successful,” Santi told Yano and Dragonfly’s Rob Hadick.



“The reality is, it pays to re-underwrite the thesis under new circumstances. And yeah, you can laugh, sitting there all day long, ‘This time&#8217;s gonna be different.’ But credibly, Augur didn&#8217;t work for a number of reasons that we can talk about here. My main diagnosis is that you didn&#8217;t have a stablecoin. And if you can&#8217;t settle the bet on a stablecoin, it&#8217;s just really noisy.”



<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 Fed cut rates by 25 BPS yesterday. A trader on Polymarket &quot;aBeancounter&quot; who joined last month made $1.4 million on the trade. <a href="https://t.co/vj5gvLS1g4">pic.twitter.com/vj5gvLS1g4</a>&mdash; unusual_whales (@unusual_whales) <a href="https://twitter.com/unusual_whales/status/1968695508282618258?ref_src=twsrc%5Etfw">September 18, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Santi outlined a scenario where someone bets 30 ETH, and the price of ETH suddenly crashes 80% while the bet is still in play. “It hurts to be right and then lose money,” Santi said. Polymarket fixed this by allowing bets to settle natively in USDC.



Sounds like a stablecoin thesis to me. Hadick expanded on Santi’s point. “Stablecoins are the enabler of other types of financial markets and financial ecosystems onchain,” he said. Without stablecoins, it’s much harder to “do financial activity in any real way over any long period of time onchain,” because of the FX risk.&nbsp;



And if free-flowing stablecoins are the crucial infrastructure layer that has so far been missing from the crypto economy, then it’s not just the prediction-market thesis that needs re-underwriting. It’s practically every other vertical in the space: NFTs, gaming, you name it.



Santi said: “[A quote has] just stuck with me forever, which is ‘Anytime you remove friction from a system, it unlocks non-linear consumer behavior.’ The internet, e-commerce, and then stablecoins, [which] I think are primitive from e-commerce to gaming to everything in the middle. It&#8217;s just explosive, and I think we’re just scratching the surface of what is gonna be possible here.”



But if bitcoin is the reserve asset of the internet, and stablecoins are the unit of account of the crypto economy — sprawling with social, finance and gaming platforms, exchanges, prediction markets, launchpads and apps we’re yet to even dreamed of — then what about the tokens issued by all the apps? What do they do? What would Polymarket’s token do, if it launched one tomorrow?



We’re about to get a new wave of tokens that might start with MetaMask and OpenSea, two of the most well-known and well-used apps in crypto history.



<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">Metamask and Opensea airdrops are going to feed families (of down bad 2021 NFT traders)&mdash; Otto Suwen (@OttoSuwenNFT) <a href="https://twitter.com/OttoSuwenNFT/status/1968825178583859236?ref_src=twsrc%5Etfw">September 18, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



In cycles past, those tokens could reasonably double as a payment bridge within the app itself. We used to call these “utility tokens,” but if what Santi and Rob are saying is true, then stablecoins have rendered those well and truly redundant.&nbsp;



Governance has always been the fallback value prop for tokens that don’t really have a reason to exist other than as a conduit for capital (itself a function that has historically rubbed securities regulators the wrong way). The governance token thesis has so far not been overly compelling, and it’s worth unpacking that debate further in another email.



The most obvious function for these tokens will be to reward anyone who has used either app to any meaningful degree. Validators and stakers get paid tokens to secure a layer-1, so why wouldn’t users get paid to drive early adoption on an app?&nbsp;



One problem: Airdrops and token rewards accrue value to the user, not the token. The token becomes the product, and in a crypto economy dominated by stablecoins, such a flywheel quickly runs out of steam.



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Empire Newsletter

Will stablecoins break the token flywheel?

Jack Kubinec

Apps, users, and revenue are all nice, but what blockchains really need in 2025 is a Michael Saylor.



As Wall Street has swooned over public companies that buy crypto, it’s become clear that Solana has a couple of disadvantages in the digital asset treasury (<a href="https://blockworks.co/tag/treasury-companies">DAT</a>) game. It is younger and carries a smaller market cap than bitcoin or ether, so Wall Street is less familiar with it.&nbsp;



And in the eyes of some investors, SOL is missing something else: a Michael Saylor-like figure who can sing the asset’s praises to mainstream investors.&nbsp;



The lack of a Wall Street advocate has contributed to Solana’s struggle to keep up with bitcoin and ether treasury companies. While so-called DATs hold roughly 3.4% and 2.9% of all BTC and ETH, respectively, they hold just 1% of SOL. And despite their growing number, the largest Solana DAT is just the tenth-largest DAT overall.&nbsp;



In conversations on Solana’s search for a <a href="https://blockworks.co/tag/michael-saylor">Michael Saylor</a> or a <a href="https://blockworks.co/news/tom-lees-price-predictions">Tom Lee</a>, two common threads emerged: Solana needs a Wall Street figurehead to keep pace in the current market environment, and no one is quite sure who that person should be.&nbsp;



Multiple sources told Blockworks that Solana’s version of Saylor should be someone from a traditional finance background rather than Solana’s current online orbit.



At Strategy, <a href="https://blockworks.co/news/michael-saylor-bitcoin-microstrategy">Saylor has turned</a> what was once a middling software company stock into a bitcoin-buying behemoth with a net asset value — which is the market value of its bitcoin holdings — of more than $70 billion. His bullish X posts and TV appearances have turned him into a de facto bitcoin spokesperson.



BitMine, a bitcoin mining company that recently adopted an Ethereum treasury strategy, appears to have caught the same lightning in a bottle when it appointed Fundstrat chief investment officer and CNBC contributor Tom Lee as its chairman.&nbsp;



With Lee making regular CNBC appearances to sing ETH’s praises and a Founders Fund investment providing legitimacy in the eyes of investors, BMNR has grown to become the second-largest treasury company with a NAV of over $8 billion.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="772" height="320" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-39.png" alt="" class="wp-image-107201" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-39.png?w=772 772w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-39.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-39.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-39.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-39.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-39.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/09/image-39.png?w=80 80w" sizes="auto, (max-width: 772px) 100vw, 772px" /><figcaption class="wp-element-caption">The ten largest DATs. Source: <a href="https://blockworks.com/analytics/treasury-companies">Blockworks Research</a></figcaption></figure>



Behind the scenes, DAT executives are casting around in search of public-facing Solana advocates.&nbsp;



One person involved in a Solana DAT recounted asking ChatGPT who Michael Saylor’s equivalent could be for a Solana treasury company. The chatbot listed Helius CEO Mert Mumtaz, Asymmetric CEO Joe McCann, Solana co-founder Raj Gokal, and Solana Foundation CEO Lily Liu.



The problem with well-known Solana figures like these is that they tend to have “something [else] going on,” as a different person working at a DAT put it.



In a text, Mumtaz said he has been “approached by roughly all [Solana DATs] to be involved in varying capacities,” noting that he hasn’t made any final decisions and adding: “[I’m] overall interested in the long-term health of solana above all and am trying to figure out how best I can help with that.”



McCann, who until recently would frequently post about Solana to more than 100,000 X followers, was <a href="https://unchainedcrypto.com/new-solana-treasury-company-raising-1-5-billion-to-be-led-by-joe-mccann/">tapped</a> as CEO of a potential $1.5 billion Solana DAT. The deal fell apart after a limited partner in McCann’s hedge fund posted about the fund’s poor performance on X, <a href="https://blockworks.co/news/joe-mccann-solana-spac-deal-off">Blockworks previously reported</a>. McCann did not return a request for comment.



Gokal and a representative for Liu did not return requests for comment on whether they intend to formally get involved in DATs.



Galaxy Digital, Multicoin Capital, and Jump Crypto are reportedly plotting a $1 billion Solana DAT raise, according to <a href="https://www.bloomberg.com/news/articles/2025-08-25/galaxy-jump-multicoin-seek-1-billion-for-buying-solana-token">Bloomberg</a>. Such a deal would involve two names that came up in conversations about potential Solana DAT leaders: Galaxy CEO Mike Novogratz and Multicoin managing partner Kyle Samani. But both already have day jobs, so it’s unclear whether they’d want to take on a role akin to being CEO of a publicly traded company.&nbsp;



Samani and Novogratz did not comment on their roles in the reported DAT.



Among the CEOs of existing Solana DATs, Sol Strategies <a href="https://blockworks.co/news/sol-strategies-is-solanas-microstrategy">CEO Leah Wald</a> shows promise as a public face for Solana, boasting a sizable online following and an impressive institutional crypto resume. However, she has (so far) played a more behind-the-scenes role as the Canadian holding company <a href="https://blockworks.co/news/nasdaq-on-solana-opening-bell-sol-strategies">awaits</a> a hoped-for Nasdaq listing.



“I don’t see myself as a Saylor or a Lee. I’m secretly an introvert, and that job would mean way too much public speaking. That’d be like being scared of heights and then deciding to become a window washer on skyscrapers,” Wald said in a text.



Due to the slim pickings in Solanaland, some DATs are thinking the right person might be a relative unknown to Solana folks — as Saylor and Lee were to bitcoin and ether before assuming their current roles.&nbsp;



“In Tom Lee you have two things: He is very comfortable on CNBC, and he speaks to TradFi. I have been looking and have not found who that person would be,” said one person working on a Solana DAT, who said they had considered making inroads with candidates ranging from former White House communications director Anthony Scaramucci to the meme stock influencer Roaring Kitty.&nbsp;



Potential leaders also don’t come cheap. Former BlackRock executive Joseph Chalom <a href="https://www.sec.gov/Archives/edgar/data/1981535/000164117225020947/form8-k.htm">received</a> a $7 million stock grant plus a potential salary and long-term incentive bonus in the millions to become co-CEO of SharpLink Gaming, the second-largest ETH treasury company.&nbsp;



Looking at Chalom’s compensation package, one Solana DAT executive said the price tag “could be well worth it” for SharpLink. Even so, the executive noted, getting Wall Street compliance departments to sign off on DAT partnerships can be a challenge.



“Our issue is not getting it in front of these crazy high-level people, it’s the strict compliance side of things” that is making it hard to get well-known Wall Streeters on board, they said.



It’s nevertheless becoming clear that Solana DATs intend to start rolling out their own versions of Saylor and Lee.&nbsp;



Last week, the crypto investment platform CoinList sent some investors an email, reviewed by Blockworks, which advertised an “upcoming SOL treasury company coming imminently to the public market.”



“This anticipated vehicle is currently in stealth, and we cannot disclose the details. If completed, it will be the largest SOL treasury vehicle on the market with some of the most prominent industry backers, and the likely ‘Saylor of Solana,’” the email said.



The deal is expected to close and be announced on September 8th, the email said. CoinList did not return multiple requests for comment.



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Michael Saylor

Solana continues to search for its champion on Wall Street

Macauley Peterson

Circle is building its own blockchain —&nbsp;and it’s not a rollup, but a layer-1.



In doing so, the American stablecoin issuer is betting that the shortest path between a dollar and a smart contract is the one it controls — full-stack, sovereign, and custom-built for payments.



The new chain, dubbed Arc, will be Ethereum-compatible, but use USDC for gas, and feature sub-second deterministic finality.&nbsp;



The big question for Ethereum is whether Arc will shift stablecoin activity or function more like a hub-and-spoke architecture, internalizing issuance and settlement while routing liquidity and flow outward to the broader EVM ecosystem via <a href="https://blockworks.co/podcast/0xresearch/58c53fc4-c272-11ed-a55a-23d88d4d81ed">CCTP</a> and other bridges.



The decision to build a new sovereign chain — rather than deploying on a modular layer 2 — has reignited a familiar argument on Crypto Twitter: does this mark a return to enterprise chains, or is it simply the logical architecture for a dollar-native payments platform? Does it weaken Ethereum’s long-held role as crypto’s settlement layer for stablecoins, or further entrench it through cross-chain interoperability and network effects?



The answers may hinge less on ideology than execution, and whether <a href="https://blockworks.co/tag/circle">Circle</a> pursues Arc as a walled garden or merely a better bank.



<h2 class="wp-block-heading">Vertical integration</h2>



Circle declined to comment on Arc’s technical design, citing a quiet period. But what we know from the <a href="https://6778953.fs1.hubspotusercontent-na1.net/hubfs/6778953/Arc%20Litepaper%20-%202025.pdf">published</a> light paper is that the L1 is built on <a href="https://github.com/circlefin/malachite">Malachite</a>, a new high-performance BFT consensus engine originally developed by Informal Systems as a rewrite of <a href="https://blockworks.co/tag/cosmos">Tendermint</a>. Circle has hired the core team of nine behind Malachite, but the engine remains open-source and is already being used elsewhere, <a href="https://www.starknet.io/blog/product-market-fit/">including</a> in Starknet’s decentralization roadmap.



Informal co-founder Ethan Buchman told Blockworks he views Malachite as akin to the Rust language: “Originally developed at Mozilla, now used by everyone.”



For Buchman, Circle’s decision to launch its own chain is not a rejection of <a href="https://blockworks.co/tag/ethereum">Ethereum</a>, but a standard business choice for a team with sufficient resources. “It’s the same decision every time when people choose to build their own chain: they value vertical integration,” Buchman said.



“The kind of predictability that gives you, and how it sort of hedges uncertainty — because you have the stack, you have the team, you&#8217;re not dependent on some external team for core components,” he said.



Crypto Twitter/X is split on the net-impact. The bullish-ETH read (<a href="https://x.com/RyanSAdams/status/1955270488860614795">Ryan Sean Adams</a>, <a href="https://x.com/armaniferrante/status/1955261652892348782">Armani Ferrante</a>) says EVM-first corporate chains still feed Ethereum’s network effects. The bearish-ETH camp (<a href="https://x.com/jon_charb/status/1955260430890213650">Jon Charbonneau</a>) argues the marginal EVM developer now accrues close to zero to ETH if flows internalize elsewhere.&nbsp;



Others worry about censorship and developer gravity: <a href="https://x.com/EliBenSasson/status/1955237895473672568">Eli Ben-Sasson</a> fired a warning shot — “Corporate L1s / L2s won’t succeed” — against more open systems, while <a href="https://x.com/adamscochran/status/1955257074318823568">Adam Cochran</a> tried to disqualify Arc as “a consortium chain” rather than an L1.



The counter-narrative from operators is that deterministic finality and protocol-level controls are critical for payments and FX. Arc’s paper leans into that: “A transaction on Arc is either unconfirmed or it is 100% final and irreversible.”&nbsp;



This is the crux of L1 over L2 as a business decision. Rollups “rent” Ethereum’s finality and <a href="https://blockworks.co/news/ethereum-roadmap-data-availability-da">data availability</a>; sovereign L1s own the base-layer policy surface, including <a href="https://blockworks.co/tag/gas-fees">gas</a> denomination, <a href="https://blockworks.co/tag/kyc">KYC</a> hooks, dispute/refund logic, and transaction ordering.



Circle will start with what amounts to a <a href="https://blockworks.co/tag/cosmos">Cosmos</a> chain using Proof-of-Authority, with a closed validator set. “It’s very cheap to operate,” Interchain Labs co-founder Barry Plunkett told Blockworks.&nbsp;



For instance, 5-10 Cosmos validator costs on the order of a few thousand dollars a month. “Maybe an L2 is a little cheaper because you don’t need as many boxes and don’t have the overhead of paying third parties to operate them for you. But you do have DA costs, so it’s probably a wash,” Plunkett said.



If your profit margin lives on settlement economics and working-capital velocity, sovereignty is attractive. If your priority is time-to-market and broad composability, a centralized-sequencer rollup may be cheaper and easier to ship.



<h2 class="wp-block-heading">Stablecoin boom as backdrop</h2>



A Keyrock/Bitso <a href="https://documents.keyrock.com/hubfs/Stablecoin-Payments-The-Trillion-Dollar-Opportunity.pdf">report</a> out today argues stablecoins are already reshaping the payments landscape. Monthly stablecoin payments more than tripled to $6.3 billion by February 2025, with B2B volumes jumping from $120 million to $2.7 billion in two years; card-based flows crossed $1 billion/month. On their trajectory, annual stablecoin payment volume could approach $1 trillion by 2030.&nbsp;



That helps explain why companies with distribution are eyeing sovereign rails, according to Alchemy CTO Guillaume Poncin, formerly Stripe’s engineering head.



“We are seeing several companies race to build a stablecoin-first blockchain,” Poncin told Blockworks. “The revenue opportunity from owning the settlement layer will dwarf traditional payment processing margins.” The infrastructure costs are tiny by comparison.



Poncin similarly frames L1 vs. L2 analysis as boiling down to a question of control vs time-to-market. “Choosing between the two is a nuanced trade-off… L1s can be fully customized at every layer, [but] <a href="https://blockworks.co/tag/rollups">rollups</a> are battle-tested and much easier to build and secure.” He’s not too concerned with fragmentation due to Arc’s <a href="https://blockworks.co/tag/evm">EVM</a> compatibility, because it “speeds adoption by both developers and users.”



As crypto-native builders chase composability and yield, Circle is playing a different game: infrastructure that can compete with payments giants like <a href="https://blockworks.co/tag/visa">Visa</a> and <a href="https://blockworks.co/tag/stripe">Stripe</a>, or even <a href="https://blockworks.co/tag/fednow">FedNow</a>.



<h2 class="wp-block-heading">Ethereum isn’t going anywhere</h2>



Critics have framed Arc as a sign that Circle, whose USDC accounts for <a href="https://blockworks.co/analytics/ethereum/ethereum-stablecoins">nearly 30%</a> of stablecoin supply on Ethereum, is pulling away from the chain that bootstrapped it.



But that overstates the case, according to Buchman.



“I think Ethereum is here for the long term, no matter what decision Circle makes today. I think it, it has achieved a kind of breakout velocity, it&#8217;s entrenched itself as a technology of fundamental import to human rights… Its longevity will be related to its neutrality and its conservatism.”



Circle will continue to have to grapple with that. Past concerns over the influence of the USDC issuer over Ethereum’s direction have been muted by the proliferation of competing stablecoin issuers, in Buchman’s view.



“This is part of Ethereum&#8217;s evolution and the idea that Ethereum only works if all compute happens on Ethereum, I think, is obscene and just it kind of misses the fundamental role Ethereum is going to have over the next 100 years or so,” Buchman said.



Ethereum’s centrality as a destination for stablecoin flows can persist even as issuance and FX trading move upstream to Arc. We don’t yet know the extent to which Circle will court DeFi apps to deploy on Arc, but in general, the application layer still wants to live where liquidity is deepest.



One legitimate concern is whether Arc’s USDC-native design introduces new vectors for censorship or exclusion, especially in sanctioned jurisdictions. If USDC is both asset and gas, what happens when the token itself is frozen?



“Technically, fallback mechanisms are possible,” Buchman said, but the baseline should be the current banking system and he thinks Arc will certainly clear that low bar.



“Is it going to be as freedom-supporting and protective of human rights as Ethereum and Bitcoin themselves? No. I don&#8217;t think anyone&#8217;s trying to kid themselves about it. But I feel like Circle is trying to go to bat for an open economy.”



There remain open questions about system-level privacy and regulatory constraints, which Circle has only lightly touched on. “We pitched them hard on privacy,” Buchman added.



“They’ve acknowledged it, but we’ll see how far they take it,” he said. “Malachite is well-suited to support privacy-preserving chains, and that’s going to be a critical next step.”



Whether it will ultimately be a handful of new chains or a <a href="https://blockworks.co/newsletter/daily/issue/post_afb749f3-24b3-4a45-a982-d6e174f353d7">Cambrian explosion</a>, it’s clear that some enterprises still prefer building sovereign chains, even in the era of modular, shared security stacks. The tradeoffs between customization, governance, cost, and platform risk are nuanced, whether it’s <a href="https://blockworks.co/news/robinhood-l2-staking-us">Robinhood’s rollup</a> on Arbitrum Orbit or Arc’s full L1, or whatever Stripe has in store its newly announced L1 <a href="https://blockworks.co/news/stripe-circle-l1s-solana">Tempo</a>.



“I see it a lot like cloud versus on-prem[esis],” Buchman said. “Right now there&#8217;s this whole movement to move things out of the cloud back to on-prem and it&#8217;s going to oscillate back and forth until the end of time — and I think we&#8217;ll see something similar with L1s and L2s.”



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Circle

Why Circle chose an L1 — and what it means for Ethereum

Katherine Ross

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



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At the end of last year, Pantera <a href="https://panteracapital.com/blockchain-compensation-survey-2024/">collected</a> a decent batch of data, taking a look at just how folks in crypto are being paid.&nbsp;



Roughly 3% of people in the industry were paid in crypto in 2023, but that number shot up to 9.6% by the end of 2024. Interestingly enough, there was also a trend in folks opting to take their salaries in stablecoins.&nbsp;



Mind you, this was prior to stablecoins taking off (as we’ve seen and discussed) throughout 2025. So it seems that it’s not just institutions that’re buying into the stablecoin narrative. 



Specifically, people opted to take their paychecks in USDC and USDT, the report noted.&nbsp;



“USDC (63%) and USDT (28.6%) collectively account for over 90% of crypto salaries, cementing their status as the go-to choices for payroll stability and liquidity,” the report said.



As you can see in the chart below, a far smaller number of folks opted to be paid in SOL and ETH.&nbsp;



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcL4OxOPzQjspFJJMulkcxS3TgPs03_clDVZe9Z-AREuo6xd1-rm2anc0vrEIqaBl5iKbEhtkvLCKD0ghWX6xdjYpTjF2poInsDx___n6Za7yCIA0DYxabnMql_O_J8T1OqUDfViw?key=WD576P408GcPlFBIyJaQbQ" alt="" style="width:720px;height:auto"/><figcaption class="wp-element-caption">Source: Pantera’s Compensation Survey</figcaption></figure>



Admittedly, this is data from 2024 (meaning it happened well before lawmakers were finalizing the stablecoin legislation in the US), but I’m slightly surprised that USDC outranks USDT by a decent margin.&nbsp;



Especially since the respondents were largely international, as you can see in the chart below.



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1368" height="1082" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image.png?w=1024&amp;h=1024" alt="" class="wp-image-105872" style="width:624px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image.png?w=1368 1368w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image.png?w=325 325w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image.png?w=330 330w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image.png?w=277 277w, https://blockworks-co.imgix.net/wp-content/uploads/2025/08/image.png?w=80 80w" sizes="auto, (max-width: 1368px) 100vw, 1368px" /><figcaption class="wp-element-caption">Source: Pantera Compensation Survey</figcaption></figure>



But there’s a reason for that, Pantera found.&nbsp;



“We initially thought this was due to our survey skewing more western. After digging in further, we found it very interesting that none of the major payroll providers in the space (Deel, Remote, Rippling) offer USDT for payroll,” the survey said.&nbsp;



The team at Pantera told me that the data was collected from a variety of projects around crypto.&nbsp;



“Our survey includes data pulled from dozens of geographically-distributed startups and information we gathered from hundreds of participants in the crypto community spanning a wide range of professions,” they noted.&nbsp;



And this came from around 1,600 folks in different sectors, including DeFi, CeFi, gaming, etc. Of that total sum, 47% of respondents were in senior positions, while 29% were in the middle of their careers. The smallest number of respondents, 24%, were junior employees.&nbsp;



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeE2Hnj-_H0Mq6YFvA-BzQtQnj44bYXVmtQQqmNkdWLpRZUL5Z2GYIeDep4d4w_UwaAhd3nvZFAswv0Fz_Kda_affW1myT_wL9pj8kj-FLQCXYb9HI7h_CHzGw_3-yVCSD8caBUGg?key=WD576P408GcPlFBIyJaQbQ" alt="" style="width:459px;height:auto"/><figcaption class="wp-element-caption">Source: Pantera Compensation Survey</figcaption></figure>



“There’s still no reliable, comprehensive database for compensation in the blockchain ecosystem — so we set out to change that,” Nick Zurick, head of portfolio talent at Pantera, told me. “This survey is a first step toward bringing transparency to crypto compensation. Whether you&#8217;re a founder, candidate, or operator, we hope the data is valuable as you build and grow in the space.“



I point this data out because it shows the larger trend towards stablecoins. And now, as we head into the final months of 2025, I’ll be curious to see if we see an even higher tick up. But, alas, only time will tell.&nbsp;



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Stablecoins accounted for 90% of salaries paid in crypto in 2024: Pantera survey

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



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On July 12, the pump.fun ICO <a href="https://x.com/ChristiaanDefi/status/1944038638968615302">sold out</a> in 12 minutes, raising over $500 million onchain and an additional $100 million via centralized exchange partners. The ICO <a href="https://blockworks.co/news/pump-fun-500m-ico-twitch">attracted</a> over 10,000 wallets with a median buy-in of $537, according to Blockworks Research <a href="https://app.blockworksresearch.com/analytics/pumpfun/?dashboard=345">data</a>. 



Quite a big win for Pump, especially considering that we are long past the days of sell-out ICOs being the norm.



But underneath the ICO’s record-breaking demand, some interesting anomalies emerged.



One wallet (88888FAoqY6JdSvz7fk1FPd6qjPTcCMGcS64GbwonLoE) <a href="https://x.com/0xSharples/status/1944443037070905549">funded</a> 500 different addresses, each with $400 in USDC and 0.05 SOL for gas, according to data compiled by Blockworks researchers.&nbsp;



These wallets all participated in the ICO, purchasing $200,000 in PUMP tokens before fees. One wallet appears to have utilized centralized exchanges to create the illusion of being many wallets. It’s an impressive feat, given that KYC checks were required to purchase PUMP.



Onchain data shows the wallet’s activity in sequence: Withdraw stablecoins from Bybit and Binance, distribute them evenly to 500 wallets, send a bit of SOL to cover gas fees and have each wallet contribute exactly $400 to the ICO.



Researcher Sharples notes that these wallets <a href="https://x.com/0xSharples/status/1944443037070905549">show up</a> under the “unknown address” category in Blockworks Research’s funding source chart, skewing the optics of distribution.



Blockworks’ Dan Smith <a href="https://x.com/smyyguy/status/1944461735164850292">tracked the wallet’s history</a> and found that the actor previously used the same network of addresses to spoof holder counts in low-float memecoins like ARTIC and WUKONG.



Nine months ago, these wallets were dusted with 0.000000001 tokens to inflate “unique holder” metrics. ARTIC later rugged. It’s worth noting that the use of older wallets may help bypass anti-Sybil heuristics that flag recently funded/created addresses.



Some have <a href="https://x.com/0xDoing/status/1944462572951867545">suggested</a> that the orchestrator may have been speculating on future airdrops or bonuses for small buyers. By splitting a $200k allocation into hundreds of sub-$500 entries, the whale could appear to be 500 unique participants — each potentially eligible for future rewards from pump.fun or third-party protocols.



Of course, none of this is to suggest that pump.fun had any involvement in the behavior of this currently anonymous whale. Once tokens are live, it’s pretty impossible to control how wallets participate.



What is clear, however, is that without strong Sybil resistance, sophisticated actors can game even well-structured launches using fragmented wallets and coordinated funding strategies to dominate allocation, spoof demand and manipulate downstream incentives.



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Blockworks Research

Pump.fun’s record ICO flooded by coordinated wallet participation

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



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Fifteen years ago exactly, Satoshi released Bitcoin v0.3. Well, it was really yesterday, but it was in the evening, so it counts.



The version was Satoshi’s sixth going by <a href="https://www.bitcoin.com/satoshi-archive/emails/bitcoin-list/">this archive</a> of the official bitcoin mailing list. It was bundled with a Mac OS X version built by <a href="https://blockworks.co/news/3-piping-hot-pizza-day-facts-for-bitcoin-connoisseurs">Laszlo Hanycez</a> and extra features including control of the nodes via the command line and a “hashmeter” performance display for mining, which was still being done with CPUs across the board.



The update notably came with 20% faster hashing. But whatever competitive edge was quickly dulled by the arrival of the first GPU miners on the network less than two weeks later.&nbsp;



GPUs were capable of much more than 20% — but that’s for another time.



In any case, you could tell Satoshi was excited. Their announcement <a href="https://bitcointalk.org/index.php?topic=238.0">post</a> had two exclamation points, and there was even an extra one in the title: “Bitcoin 0.3 released!” It also featured arguably the most appealing tagline in Bitcoin history:



“Escape the arbitrary inflation risk of centrally managed currencies!”



Still, there wasn’t much initial fanfare. The Bitcointalk thread only received four replies, the same amount seen on the Bitcoin.org <a href="https://web.archive.org/web/20110522084201/http://forum.bitcoin.org/index.php?board=1.1800">forum</a> (that version of the thread gathered about 500 views in total).&nbsp;



We can infer from the post below that Satoshi intended v0.3 to be Bitcoin’s first official version, under v1.0. Early adopter <a href="https://blockworks.co/news/happy-bitcoin-mmo-day-tale-in-the-desert">Andrew “teppy” Tepper</a> had crowdsourced feedback on his proposed <a href="https://bitcointalk.org/index.php?topic=234">submission</a> to Slashdot in the days leading up to the version’s release, but Satoshi walked back Bitcoin’s graduation from beta status in a reply:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdJfcVL13YUn_nnIb7GdKDpaJI7FxMWC2WklBqSN-aP0lwQm1q8jOck8sqgQnAQwB81uxEKn7fvXcGUTBhHjAd8Wv88O12Ha8fHtIByqd7qg1q9KUbQ52J4PsKi79eZqzexKUsH?key=qEqpfBJAQzbDA0OyTOO60w" alt=""/><figcaption class="wp-element-caption">Satoshi wasn’t a big fan of teppy’s first draft</figcaption></figure>



It worked. Slashdot featured teppy’s submission on its front page on July 11, 2010 — widely regarded as the first instance of a major media platform publicizing Bitcoin (it’s even in Slashdot’s Wiki entry). Bitcoins were trading for about $0.05 at the time.



&#8220;How&#8217;s this for a disruptive technology? <a href="http://www.bitcoin.org/">Bitcoin</a> is a peer-to-peer, network-based digital currency with no central bank, and no transaction fees. Using a proof-of-work concept, nodes burn CPU cycles searching for bundles of coins, broadcasting their findings to the network.”&nbsp;



“Analysis of energy usage indicates that the market value of Bitcoins is already above the value of the energy needed to generate them, indicating healthy demand. The community is hopeful the currency will remain outside the reach of any government.&#8221;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdcY7HE43F1qGY7_nX7Ga_UCZrBke2l0Ns5-WEWCNi73wK-nJnThxAlt__noPF1zrafqGXzSNDxo0HlMbKiaLQDmZaKnyoQloknLIqnp-1m9Q-aUVkB29YV4dnw236qGJ8Km-9cPA?key=qEqpfBJAQzbDA0OyTOO60w" alt=""/><figcaption class="wp-element-caption">This was Bitcoin’s equivalent of Nirvana releasing Nevermind in 1991, feat. Smells Like Teen Spirit. It would quickly make the band a household name.</figcaption></figure>



Bitcoin’s price began its first major bull run about three months following the Slashdot post, in October 2010, and would reach dollar parity by February 2011. 



Slashdot also celebrated that milestone with another front-page <a href="https://news.slashdot.org/story/11/02/10/189246/online-only-currency-bitcoin-reaches-dollar-parity">feature</a>, which when played back-to-back showed just how important Bitcoin’s first few fans really were.



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Bitcoin’s journey to the mainstream started 15 years ago

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



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Who’s selling bitcoin?



It’s a question that’s popping up routinely. The wonder is somewhat justified: Strategy alone is buying up billions in bitcoin every other week — so there must be an equivalent force dumping coins at the same time.



For more context, public stocks like Strategy, Metaplanet, Semler, Coinbase and two dozen others have scooped up about 251,700 BTC since the start of the year, a sum currently valued at $26.51 billion. 



That’s more than 3x the number of fresh coins that were mined in the same period. And that’s not counting the 20,800 BTC ($2.2 billion) collected by private companies like Tether and countries such as <a href="https://blockworks.co/news/bhutan-btc-mining-operations">Bhutan</a> and <a href="https://blockworks.co/news/president-nayib-bukele-bitcoin-maxi">El Salvador</a>.



ETFs from around the world have bought an additional 149,100 BTC ($15.7 billion) on behalf of shareholders — predominantly BlackRock’s IBIT, which is holding 130,850 ($13.8 billion) more coins than it was on Jan. 1.



All told, going by the latest available disclosures, more than 400,800 BTC has been stashed away by governments, private and public companies and ETFs this year — equal to 2% of the circulating supply.



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdSvl7nW-M8nOa1YV3DfaU0xAxY9CVeZjqEd9725lGkPL3iQiKCvxAQG70iSJ4zokUjaIJGRCYlOwxhbo2xjBAoCkBCS02Dqr_WwShJwxRJMSDPsP8YPpIU7SXzVQF3D9osYIWpjA?key=H_vVFm07tgzAgZ5vSoF73w" alt="" style="width:619px;height:auto"/></figure>



But that’s only counting companies that have increased their holdings.&nbsp;



As for who is actively selling, on the surface level, there doesn’t appear to be one major cohort that’s the culprit.



Still, miners have been slowly offloading their stock. CryptoQuant <a href="https://cryptoquant.com/asset/btc/chart/miner-flows/miner-reserve">data</a> shows miner balances overall are down about 2,000 BTC since the start of the year while retaining an eye-watering 1.8 million BTC ($191.4 billion, over 9% of the circulating supply). The US dollar value of collective miner holdings is, however, at an all-time high.



Otherwise, more than half of all ETFs have been selling the pico top. Fidelity’s FBTC has shed over 6,500 BTC this year while Grayscale’s Bitcoin Trust has sold more than 20,000 BTC, with its mini-trust making up only a fraction of the difference. Many other funds have released thousands of coins in the first six months of this year.



It may not be a perfect counterbalance to Strategy, the Saylor clones, and the ETFs that are buying, but it’s clearly adding up.



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If companies, countries and ETFs are buying bitcoin — who’s selling?

Donovan Choy

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In the wake of <a href="https://blockworks.co/news/circle-hits-75-nyse-trading">Circle’s IPO</a> and Plasma’s token sale, stablecoins are undisputedly in vogue.



Meanwhile, the US Senate is going into a final vote on the landmark stablecoin bill, dubbed the <a href="https://blockworks.co/news/senate-advances-genius-act">GENIUS Act</a>, this week.



What does the stablecoin landscape look like today?



First, total stablecoin supply remains up and to the right — $249 billion in the last week. USDT and USDC represent the lion’s share of stablecoins, about 88% ($218 billion) of the entire stablecoin market put together.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcwOcBAI_1ARWa4GWK9q7hORy4CfolwJ45QA9kdi4a4tWP6cQNMNqfKD3KjkD8TeDtASgakuQaXFPgK81uM1oaF5XWuUl_t-NgxVZCTfRvHtaQyEMQ8XmJQvfbKtuoGbYNgBaFGtw?key=uZGaWtDD5o70irUY8op54A" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.blockworksresearch.com/analytics/l1?dashboard=225">Blockworks Research</a></figcaption></figure>



Okay, stablecoin supply is growing, but how are they being used?



B2B use cases drive the largest share of stablecoin usage today.



B2B cross-border payments tracked at nearly $3 billion in February 2025 alone, compared to $1.1 billion for card-based spending, $1.5 billion in peer-to-peer payments, or $275 million in B2C payments across the same time period.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeMXE7gk2EeffMZD7wbBCo1uOq_XW6EFA4mzjZTB8EYdS4F1R0Ury-IIOU_2exUgm--Zg_wkDbpYz-dgk3Wh60u_5UPsfjvkCTJne0XhcXjTldCTyP2MKw0fyi6mEHSYTd4fr9m?key=uZGaWtDD5o70irUY8op54A" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://www.stablecoin.fyi/use-case#b2b-stablecoin-volumes">Stablecoin.fyi</a></figcaption></figure>



18% of small and medium US businesses “[that] are aware of cryptocurrency” use stablecoins for their business needs in 2025 — up from 8% in 2024, according to Coinbase’s State of Crypto 2025 <a href="https://assets.ctfassets.net/sygt3q11s4a9/6oinXHvVekdIUw2Ch7yIQw/22d0185eba3c49322ce7cf0d287ea872/SOCQ2Report_final.pdf">report</a>.



The chains facilitating the most stablecoin transfers? Ethereum, Base and Tron.&nbsp;



In May, Ethereum saw $1.2 trillion in volumes (29%), while Base had $1 trillion (26%) and Tron $687 billion (17%). Total stablecoin volumes in May came up to $4 trillion.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdMht8oQftaPSSSvZmqb1ELTZHuK87BgVNg2dqZyZo28efugDVzXJUumx2D8JaCBNeIeXjXaPWk2LRRCdOqHv6iGpzSeBgAU2HdEYfJoxOKC2a46vh-w1N46HM5dhh0kxazQo9_?key=uZGaWtDD5o70irUY8op54A" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://app.artemisanalytics.com/stablecoins?tab=chains">Artemis</a></figcaption></figure>



Should the GENIUS Act come to pass, which players stand to gain the most?



If the GENIUS Act requires stablecoins to be backed by US dollars or Treasury bills, the answer is probably: TradFi regulated issuers such as Circle, traditional Fintech companies like PayPal, and banks and money market funds, Blockworks Research analyst Luke Leasure told me.



Decentralized stablecoins like Ethena’s USDe or Sky’s (previously Maker) USDS are not entirely backed by cash equivalents, so would not be compliant with GENIUS (unless registered in the US).



Yet, there are still downstream positive effects for DeFi from a burst in stablecoin growth.



In particular, money markets like Aave and Pendle stand to gain.



On Aave v3 alone (across all chains), stablecoins make up about $10.2 billion in TVL.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfta1DbYCfqjWBYsWOCcjBCPHFUcCn24uc-Lrx2I6qU-qeYvm6iVvZCjMSxd4rQ0PgiymNXKItoUtRpiK8_TQWgAnXxHqXC1T_-1xDgoVkMe0tMQlUrJWqw-VgBfL1x1hgTu7p6CA?key=uZGaWtDD5o70irUY8op54A" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://defillama.com/protocol/tvl/aave-v3">DefiLlama</a></figcaption></figure>



What about Pendle?



Though Pendle is technically a “yield trading” app, it has cemented itself as a de facto go-to-market platform for all yield-bearing assets, particularly stablecoins.



High risk appetite users onchain don’t just want to stake and earn an underlying T-bill yield, they want to speculate on points.



A snapshot of Pendle’s $5.3 billion in TVL today demonstrates the business’s effectiveness in capturing the downstream growth of new yield-bearing stablecoin launches. About ~61% of it comprises Ethena’s USDe and eUSDe (a restaking token), Sky’s USDS and OpenEden’s USDO.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeMAW-x1DpEbtyttgYSbMOGeSquG7_iNAY9SGmkRPPK4MNB0irqYXh-WMUjmPFkjX6jUHYczCYVRzJjtJ3uLxYWIDevFeNFQYk8q4Ei8t2xFUrB2UcjxFf6Ify6du9hx_QmUxMTQw?key=uZGaWtDD5o70irUY8op54A" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://defillama.com/protocol/tvl/pendle">DefiLlama</a></figcaption></figure>



A recent <a href="https://www.modularcapital.xyz/writing/pendle">report</a> from Spartan Group and Modular Capital found that Pendle has captured approximately 30% of the whole $11 billion yield-bearing stablecoin market — about 1.3% of total stablecoin supply.



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0xResearch Newsletter

What does ‘stablecoin summer’ look like?

Felix Jauvin

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



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This week is all about the labor market! With the jobs report coming out tomorrow, let’s dive in and get a state of play on where things stand.&nbsp;



My favorite way to get a high-level pulse on the labor market is taking a look at Atlanta Fed’s labor market spider chart:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdl_1-GmyBgNjNKdMUI41Ss4x5RPqT4t08Uex5Jx3wCK_fbt03yG7IT1k2y38ZZUsrF7-hrb-toq0F36TE9K2wIRxCa3etSggRf5_ciRgz2Jnwu_y4DBx8tKX76rrr2Z6rLrTld?key=P1xUCJRImdAC8G2rHgJigA" alt=""/></figure>



Compared to both one year ago and to the pre-Covid trend, we can glean a few general trends:



<ul class="wp-block-list">
<li>The private sector is quite weak and continues to be. Hiring rates are very low, causing people to hold onto their jobs and avoid quitting at all costs.</li>



<li>Wage growth, one of the key drivers of the huge inflation we saw in 2021-2022, continues to soften as the labor market returns to being in balance.</li>



<li>Generally, it’s a bad time to look for a new job, but as long as you don’t quit, it’s unlikely you’ll be laid off either.</li>
</ul>



With the stage set, let’s dig into all the labor market data we’ve received this week.



<h2 class="wp-block-heading">JOLTS</h2>



On Monday, we received the JOLTS report for April, which came in quite strong.



Job openings rebounded higher to 7.39 million, above consensus expectations of 7.10 million.



However, when contrasting it to higher-frequency data like Indeed Job Postings, this is likely to be an outlier bounce higher that is likely to return to a downward trend next month.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfBLuU8ER87COjuMY2STgxWLLa1pR8h2QV1-j9yOTXixfzXPbYXtBuPWj3ewJYrMxKS4YcbX1OOa72QaiXVKnY7rhq4ydawC7g3TkVMBN0gV4hXB3yYvfWvanqwu36Hz9G1vNy0Xg?key=P1xUCJRImdAC8G2rHgJigA" alt=""/></figure>



One of the key insights for understanding slack in the labor market is comparing the number of job openings to unemployment.&nbsp;



One of the big reasons the Fed was able to hike so aggressively in 2022 without hurting the labor market is because the huge amount of job openings acted as a buffer so that the unemployment rate wouldn’t tick up. The Beveridge curve is the best way to view this dynamic.&nbsp;



As we can see from this week’s print, we held steady at the low end of the job vacancy rate where there’s just enough slack in the labor market to avoid an acceleration in unemployment:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcSdKL_HEL6fJSwlBhzctWOajhBfV5c8z0tH1hNNrlB2u_J1QwsASelwvXytOvwaQpZsvHd7GPfjfayskXSWCxMeFz8GNYrbZWv5FGdx09TVvAfULwWE1Asj4_xnz4F2WP0fjc1vQ?key=P1xUCJRImdAC8G2rHgJigA" alt=""/></figure>



<h2 class="wp-block-heading">Claims data</h2>



Today we received the claims data, which provides one of the more high-frequency labor market data points we can see every week.&nbsp;



Interestingly, continuing claims — which saw a new cycle high last week — were revised lower and are now back within the range:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXenzw1VeKvGYZ88zL4N-8gQ5nHapVUXpPJNr7oDCMrFJpSyd8j-6D8Pd-NiHF3kGHQZs9CsGI-rR4U88xjPrSwPh53c6gIb3W-TB0n2PdEHzU8tOO6eXsb3ulxCt4jpw8DknsMvvg?key=P1xUCJRImdAC8G2rHgJigA" alt=""/></figure>



Finally, we receive the jobs report tomorrow, which will provide a good look into how the labor market is digesting the impact of tariffs:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe-zrs5X2pKIR76pN7AxCxGGTH7N0tEMvkTsnSaHd5j7GsfujQwfvUHpUQyn4EOXdlKQ5k8QPs56AYw58ykx3eelJpDFdgWwdkJLJfnDjt68oW_EVU4ieB5Pqa8uVPiB6rJnMF9?key=P1xUCJRImdAC8G2rHgJigA" alt=""/></figure>



Overall, according to this week’s data, a picture of a labor market that remains on thin ice emerges.&nbsp;



Not quite bad enough to crack the ice — but still strong enough to hold up the economy.



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Economy

The current labor market, in charts

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



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Decentralization is a spectrum.



No doubt you’ve heard this before. After all, Bitcoin started out much more centralized than it is today: There were <a href="https://bitcointalk.org/index.php?topic=194078.0">check points</a> and single-digit node counts, and the hash rate is <a href="https://blockworks.co/news/satoshi-bitcoin-holdings-wallet-123b">believed</a> to have been concentrated mostly with Satoshi for at least the first year.



But a spectrum needs two dimensions, otherwise it’s just a scale.&nbsp;



For blockchains (and peer-to-peer networks more generally), the other dimension would be “interestingness” — the more decentralized something is, the more interesting it is.



Pre-Bitcoin, e-gold was the most successful alternative digital currency. And it was still very interesting, even with its overt centralization.



Seventeen years ago, in 2008 (and five months before Bitcoin’s white paper), the public got <a href="https://www.offshorealert.com/us-judge-rejects-e-golds-argument-that-it-is-not-a-money-transmitter/">confirmation</a> that e-gold’s legal appeals couldn’t save it: A federal judge had ruled that e-gold was in fact a money transmitter by the government’s standards.



The company and its execs would officially stand trial for operating as one without a license, with four criminal counts against their names, for which they’d plead guilty.



At the very surface level, e-gold was not totally dissimilar from how some stablecoins operate, only it was launched in 1998, when there was no such thing as a cryptocurrency.



Users would first exchange fiat currency for digital grams of gold that would then be credited to their e-gold accounts. Gold &amp; Silver Reserve Inc., an offshore company registered in Saint Kitts and Nevis, physically backed each of those digital grams with actual gold — first in a safe deposit box in Florida and later across bank vaults in London and Dubai.



E-gold users could then cheaply send gold-denominated payments to other users, and balances could then be cashed out via supporting money exchangers.



All transactions were instant, irreversible and tallied by a private ledger operated by the company on a centralized server. Gold &amp; Silver Reserve Inc. charged a minor fee for the trouble, and allowed accounts to be opened without any identity checks, making each user pseudonymous.



E-gold was properly massive for its time. At its 2006 peak, it was second only to PayPal when it came to internet-native payment processing: over 5 million registered <a href="https://www.wired.com/2009/06/e-gold/">accounts</a> spread all over the world, with active users pushing $2 billion worth of transactions per year.&nbsp;



But the cumulative value of all the e-gold in circulation — which we’d probably describe as its market cap — was low by today’s standard. It was only $85 million, converting to around 3.8 metric tons of physical gold to back each unit.



Tether Gold, probably the closest we have to a modern crypto equivalent of e-gold, otherwise has a circulating <a href="https://www.coingecko.com/en/coins/tether-gold">supply</a> of over $800 million, but only about 134,000 transactions in the token’s entire <a href="https://etherscan.io/token/0x68749665ff8d2d112fa859aa293f07a622782f38">history</a>. Around 7,250 Ethereum addresses contain at least some Tether Gold, although those include exchange hot wallets holding balances on behalf of an unknown numbers of users.



E-gold unravelled precisely due to its lack of decentralization. In the simplest terms, the feds could shut it down because it was run by a small number of people who controlled all of its functions, from the buying and selling of gold reserves to server maintenance and lax fraud prevention.



E-gold was interesting on a libertarian level — and even with cypherpunks — until the risks of its centralization became glaringly obvious.&nbsp;



Bitcoin fixed this.



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digital gold

Before Bitcoin: Digital gold in the ’90s was interesting, until it wasn’t

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With the US imposing 145% tariffs on China, the two largest economies in the world are effectively in a trade embargo. Shipping volumes from China are completely freezing up. Many compare this situation to the Covid supply chain shock we experienced just a few years ago.&nbsp;



To better understand what’s truly going on and how to effectively analyze the situation, I had Craig Fuller, CEO and founder of FreightWaves, on Forward Guidance this week to unpack all things shipping and logistics.&nbsp;



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/xbERzXSG0qQ?si=m9zZJT1n3DO-F_ei" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







Here are my top takeaways from our interview:



<h2 class="wp-block-heading">Covid vs. today</h2>



Craig was quick to emphasize that there won’t be toilet paper shortages or food shortages. He was also quick to emphasize that the US is highly self-sufficient in that realm, and the bigger impact will be on hard goods.



As Craig told me:



“There&#8217;s unlikely to be a food shortage. I remember in early Covid, you would go to the grocery store and there wouldn&#8217;t be meat, there wouldn&#8217;t be chicken. Those types of things just aren&#8217;t real [concerns] here. And one of the things to keep in mind is, everybody keeps talking about supermarket shelves being empty, and that&#8217;s not going to happen.&nbsp;



“We produce 88% of the food we eat here in the United States. So the idea that you&#8217;re gonna go to the grocery store and not have food is not credible.”



<h2 class="wp-block-heading">Shipping volumes drying up from China</h2>



Due to the <a href="https://blockworks.co/news/us-stocks-retreat-trump-china-trade-deal-uncertain">Chinese tariffs</a>, shipping containers heading to the US are already down 35% year over year and accelerating.&nbsp;



What’s crucial is understanding how the second-order impacts will affect the US economy.&nbsp;



Craig was quick to mention that some of the first things to spike will be trucker and distribution center layoffs:



“The volume that would&#8217;ve come over is not coming, and now we&#8217;re in the thick of it, where we are seeing sharp volume drops going to major shipping ports.&nbsp;



“And so let&#8217;s talk about what happens from there. There’s half a million people in Southern California that work in logistics. They&#8217;re just simply not gonna have as much work. So the ports union contracts have a little bit more…staying power. They can do maintenance around the port, but then you&#8217;ve got this sort of dependency of the truckers that are in and out of the ports. They&#8217;re gonna see a sharp drop. So you&#8217;re going to see reduced order counts that will quickly shift into mass layoffs.”



<h2 class="wp-block-heading">How long does Trump have to negotiate before it’s too late?</h2>



The big question for many: How long can the economy weather this storm and draw down inventories until the store shortages become more apparent and we hit the point of no return?&nbsp;



Although Craig was quick to highlight that a “point of no return” is not the right way to think about it, he did imply that things can still revert if tariffs normalize by the summer:



“So let&#8217;s say we get a trade deal in a couple of weeks. Those orders that would have come over for back-to-school can easily be sent over, and inventory stockouts just probably aren&#8217;t a major concern.&nbsp;



“But if we get later into the calendar, and we&#8217;re starting to look in July and certainly August, this is where ‘would-be orders’ are a problem. Because what&#8217;s happening is, US companies are not placing orders to Chinese contract manufacturers, because they&#8217;re not placing orders to contract manufacturers.&nbsp;



“The lead time, if we were to get a deal, would be about a month to put the economy back in line and [for] those products that were ordered to come back and flow over. So if trade can somewhat normalize by July or August, the economy would be able to look through this.”



There’s a lot more to the interview, so I recommend giving it a watch. But to summarize the framework I learned for how to think about this supply shock:



<ul class="wp-block-list">
<li>There are more differences than similarities between this shock and the Covid shock, and it’s really more a convenient comparison.</li>



<li>Shipping volumes are drying up and will quickly trigger layoffs and inactivity in wide swaths of the shipping industry.</li>



<li>The Trump administration has until summer to get a deal done. Otherwise, the negative impacts of this trade war will be set in stone to a certain degree.</li>
</ul>



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Donald Trump

What’s going on with the supply chain? We asked an expert

Jeff Albus

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



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Earlier this week, we wrote that Solayer was about to begin its token unlocks.



We <a href="https://blockworks.co/news/solana-bug-patch-zero-knowledge-proofs">noted</a> that this would mark the first real loosening of grip over Solayer’s tightly controlled float, and observed that while the token had surged 87% in a month, traders appeared to be bracing for volatility.



Well, SURPRISE! That volatility came early.



In the 48 hours that followed, $LAYER <a href="https://app.blockworksresearch.com/assets/layer">collapsed more than 55%</a> from its all-time high, wiping out over $350 million in market cap. The selloff was sharp, disorderly and possibly — in the eyes of some — deliberate.



Back in March, onchain researcher Andrew 10 GWEI <a href="https://x.com/Andrey_10gwei/status/1919829616115540303">flagged</a> a series of Solayer team-linked wallets that <a href="https://x.com/Andrey_10gwei/status/1904213428148826407">received</a> large airdrop allocations, <a href="https://x.com/Andrey_10gwei/status/1904213436877140478">deposited</a> funds to Binance and appeared to sell into the market well ahead of this week’s unlock.&nbsp;



His analysis <a href="https://x.com/Andrey_10gwei/status/1904213441339924484">suggested</a> that only 3.6% of the total token supply — rather than the 12% promised — was actually distributed through the Genesis Drop. He claimed at the time that over $28 million in tokens were routed through wallets tied to the team.



Though Blockworks was unable to directly verify these claims, they have contributed to <a href="https://x.com/onchainquant/status/1919641933796016535">speculation</a> that the <a href="https://x.com/langeriuseth/status/1919855807404863796">downturn</a> was more of a <a href="https://x.com/Colasama/status/1919823238575649249">coordinated</a> exit. But whether orchestrated or not, the crash fed on itself. Thin order books, high leverage and looming dilution made for a classic cascade. The market structure Solayer relied on — thin float, heavy lockups and delayed investor cliffs — is the same playbook that powered dozens of outsized runs this cycle. But this can also be deeply unstable.



When a token trades with a high FDV and low float, <a href="https://www.binance.com/en/square/post/20199723509546">price discovery</a> becomes a function of narrative momentum, not actual demand depth. Early buyers are betting they can rotate out before gravity hits, and any deviation — a perceived exit, a mispriced unlock, a sharp funding flip — sparks the kindling.



Once that kind of volatility begins, there’s usually little structural support to stop it.



Zooming out, while Solayer unraveled, the Solana ecosystem <a href="https://app.blockworksresearch.com/flashnotes/solana-april-2025-update">posted</a> one of its strongest months in a year. DEX volumes and REV bounced back. SOL outperformed both ETH and BTC in April.



Block space rose to 50 million CUs with 60 million on the way. SolFi and ZeroFi, two closed-source “prop AMMs,” now make up 20% of DEX volume. Stablecoin supply hit an all-time high of $12.6 billion. Solana’s price at the time of publication is $146.57.



The chain’s fundamentals continue to accelerate. So why, then, does one of its most high-performing new tokens seem to have imploded?



Maybe because Solayer wasn’t priced on fundamentals — it was priced on narrative. On mechanical scarcity. On the hope that a thin float, institutional heat and Solana tailwinds could suspend gravity. The future of Solana itself may be bright, but its token economy is still wild, still early, and still very much a game of timing.



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investors

Volatility arrives early for Solayer

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This week is one of the biggest we’ve had in a while for economic data releases.



In the spirit of all this data, let’s run through some charts and takeaways.&nbsp;



<h2 class="wp-block-heading">JOLTS report</h2>



On Tuesday we received the Job Openings and Labor Turnover Survey (JOLTS) report. It was a mixed one.



On one side, we saw job openings miss to the downside and begin to roll over after a few months of positive surprises:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdDaL2OJDnn3r36agPhI_jUSvNsO7hXsMg0UejpL3dLheBxLmQKp93qa1q-JW957arsogfe4USbzEpwiuLTui0LMHZ9ZrrFaWUOT2kLEWcYqK-9xrZArSP24ixL_RFxHWQFBWnoYQ?key=90IYwOw3SLKy-ekNe1rwF0Vl" alt=""/></figure>



On the other side, we saw the quits rate actually increase, hinting at increased confidence in the jobs market by individuals willing to quit their jobs and find something better elsewhere:&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcELLxRE2bP81fjPy9t6XP712Ykd5iUBZ2FxBBeFnIiUWuP6CAWwF4MbHHwaZvHQwaKYVVKqFuaxnSael5VJciXp9O-5F_RT-cqwby4duOFc1H68rKg5QPNj068SBOfH6XbKer2?key=90IYwOw3SLKy-ekNe1rwF0Vl" alt=""/></figure>



It’s pretty rare to see these two prints diverge. I think we’ll need to see the jobs report on Friday to get a cleaner read on the direction of the labor market, which is a key driver of the Fed’s reaction function.&nbsp;



<h2 class="wp-block-heading">GDP print</h2>



As mentioned in <a href="https://forward-guidance.beehiiv.com/p/greatly-disappointing-print">yesterday’s newsletter</a>, we received the first look at Q1’s GDP print, which was also quite mixed. The topline number of -0.3% quarter over quarter hid some interesting insights:



The big driver was net exports crashing lower, primarily due to a huge increase in imports. That mechanically lowers GDP growth. 



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="427" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/05/fg1.png?w=1024&amp;h=1024" alt="" class="wp-image-101447" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/05/fg1.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/fg1.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/fg1.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/fg1.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/fg1.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/fg1.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/fg1.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/fg1.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/fg1.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



However, looking at the more important components of GDP, consumption held up decently, and investment actually surged!



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf9SXvl6WS4nt_dH7l2sh2PD2flD1RjKSPo5HWmi8mc6Nl_9F5RR8XxCjibX98yqGJ52x7xeJD7p8685nvzVfAat-DNfOMuXFvK4xVvSisRxcbTFuQGvD4yt2N2ak75QQryWcIywA?key=90IYwOw3SLKy-ekNe1rwF0Vl" alt=""/></figure>



This hints at something I’ve been thinking a lot about recently, which is that tariffs could be creating a mirage in the hard data. This mirage creates the appearance of a strong economy because of all the tariff frontrunning that occurs from both consumers and businesses trying to buy goods before the tariffs truly begin.&nbsp;



<h2 class="wp-block-heading">Core PCE print</h2>



We also got the Core Personal Consumption Expenditures (PCE) print, which came in at 0% month over month (vs. consensus expectations of 0.1%)!



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="996" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/05/fg2.png?w=1024&amp;h=1024" alt="" class="wp-image-101448" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/05/fg2.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/fg2.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/fg2.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/fg2.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/fg2.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/fg2.png?w=413 413w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/fg2.png?w=419 419w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/fg2.png?w=352 352w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/fg2.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



This kind of data shines a light on how, if it weren’t for the fear of tariff-induced inflation, inflation would be on a fast track back to target and the Fed would be cutting interest rates like mad.&nbsp;



<h2 class="wp-block-heading">ISM survey</h2>



Finally, today saw the ISM Manufacturing PMI survey results, which provide a leading look into how the economy is digesting the <a href="https://blockworks.co/news/trump-sell-us-assets-trade-deficit">tariff war</a>.&nbsp;



Overall, we’re seeing it hold strong, and I think this validates the notion that a lot of manufacturing activity has been frontloaded due to tariffs:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc9bme6dNflh9HIshm1LDj1E1jz0Atsj96Kxm6Jxkif6_EENC7kHMX5deQnnaPNNDJQLRUE-Fm0t6zqE9NGQfEUayoIE6XROcwzGDfa5h9tPSSn9zomSGzZqoNXL_TlBHJhP3LBaQ?key=90IYwOw3SLKy-ekNe1rwF0Vl" alt=""/></figure>



Out of the subcomponents, the aspect that continues to be of more interest to me is the prices-paid component, which continues to surge:&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfCjRXyVpzq2JWE1Uv6xNrQM7TeflEqYSRSdLK96I4kt9g_5kf6WsJFl1NCCEVjV2N6gumKY3BfN7le7uwjmozRZeNwfJO-e1TsDxD74IH9R8aLXMZQJd5W_fuUYmvswuVe902HIw?key=90IYwOw3SLKy-ekNe1rwF0Vl" alt=""/></figure>



As one of the most leading indicators of inflation, this kind of uptick in prices paid does not bode well for the trajectory of rate cuts expected from the Fed.



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Unpacking a big week for US economic data

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



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To be clear, Satoshi never actually coded a poker game into the Bitcoin client.&nbsp;



Bitcoin’s creator did, however, include the graphic user interface for a poker lobby in the first <a href="https://github.com/bitcoin/bitcoin/commit/4405b78d6059e536c36974088a8ed4d9f0f29898">version</a>. Satoshi removed the code in the very next commit.



Erik Voorhees made up for it and then some with SatoshiDice.



The service <a href="https://bitcointalk.org/index.php?topic=77870.0">launched</a> around this time in 2012 as a provably fair Bitcoin betting game that mostly ran onchain.



Players would directly send bitcoin to one of many “1dice” vanity addresses, each with their own special properties designated by the platform.



Deposit between 0.001 BTC and ~20 BTC to 1dice7fUk, for example, and you’d have 24.4% odds of instantly quadrupling your coins.



Otherwise, sending up to 0.0025 BTC to 1dice1e6p… would net a 0.0015% chance of boosting your original bet by 65,000x.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfT1cr2wqn1yUtkOc9HthO-1tttkML228QkP-GTRz4FIBKc5Qr-jV2tVSMMb3mTW7ESembExsMEsA72wk7JfAy0YFnaUnH62Yub6UBSVZAioNZwQpg3zwBZi_pCQbF8deyOzeBBVQ?key=W4Xnu8cU1IbUl2CiljmF_UEd" alt=""/><figcaption class="wp-element-caption">The original SatoshiDice is defunct, so do your own research before interacting with any modern sites with similar names.</figcaption></figure>



SatoshiDice bets won or lost depending on their transaction hash. The site would run the bet’s hash through a secondary function and use the first four bytes of that hash as the so-called lucky number.&nbsp;



If that number fell below a preset threshold for the associated odds, the bet was considered a winner and was paid out immediately. Losers would instead receive a single satoshi in return.&nbsp;



SatoshiDice later published the secrets used to hash the transaction IDs, so that players could reverse-engineer the process to confirm the game wasn’t rigged. This method was the precursor to the Provably Fair system utilized by many modern crypto gambling sites.



“SatoshiDice is a subroutine of an advanced artificial intelligence, which arose spontaneously as one of the less-harmful consequences of the United States&#8217; quantitative easing monetary program,” joked the site’s <a href="https://web.archive.org/web/20120508030355/http://www.satoshidice.com/bits.php">documentation</a>.&nbsp;



“The system exists solely within the RAM of an abandoned Nokia 3310 mobile phone which was left in a subway station in Tokyo, and powers itself by feeding off the ghost of the late Satoshi Nakamoto (who was in fact a super hot 20 yr old female Japanese programmer and exotic animal collector).”



“While the Intelligence decides on its next course of action, it runs this SatoshiDice subroutine. Some people ask why Bitcoin was really created&#8230;it was created by the Intelligence as an internet currency which enables free individuals around the world to play the SatoshiDice game. By playing, you are fulfilling the Intelligence&#8217;s Grand Vision.”



Uptake was fast. The bets were super cheap, after all — costing fractions of a penny in fees — and they were accepted and paid out with zero confirmations, usually within 30 seconds.



In a 2014 <a href="https://www.federalreserve.gov/econresdata/feds/2014/files/2014104pap.pdf#:~:text=,weeks%20of%20its%20inception%2C">report</a> on the Bitcoin ecosystem, Federal Reserve analysts found that within weeks, SatoshiDice was responsible for more than half of all bitcoin transactions by volume.&nbsp;



“It is reasonable to conclude that almost all small-value transactions [under $100] on the Bitcoin network before mid-2013 were driven by the online gambling site,” they wrote.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdvHa_qoA9fAWLIByGzDHzl40fM7182i00-A214YthCOscUDbK0kLFimZwygCsK7Bpxb402dBjX2pDSEWEKa0WhN4n4USa_z-c77pVbx305I4lRPwUEz_wNPlj17wu2iGYAS9tW?key=W4Xnu8cU1IbUl2CiljmF_UEd" alt=""/><figcaption class="wp-element-caption">In the left graph, SatoshiDice volume is shown by the red area with all other Bitcoin activity shown in green.</figcaption></figure>



Meanwhile, SatoshiDice had proved extremely profitable. In its first 15 months of operation, over 5.3 million bets had been made through SatoshiDice.



Around 3.9 million were winning bets, in part due to the popularity of addresses carrying the highest odds, with 21% of all bets placed in the 97% category.&nbsp;



SatoshiDice’s <a href="https://www.investopedia.com/articles/personal-finance/110415/why-does-house-always-win-look-casino-profitability.asp#:~:text=The%20house%20edge%2C%20which%20is,to%20a%20bit%20over%202%25.">house edge</a> was <a href="https://wizardofvegas.com/forum/gambling/betting-systems/34702-satoshi-dice-safest-aggressive-martingale-at-50-odds/">calculated</a> at between 1% and 1.9%. One <a href="https://thenextweb.com/news/first-major-bitcoin-acquisition-sees-gambling-site-satoshidice-sold-for-11-5-million">report</a> cited the site’s income at past $50,000 per week, preceding Voorhees to list dividend-paying shares in SatoshiDice on the long-gone Bitcoin securities exchange MPEX in August 2012.



Overall, 13 million shares in the platform were sold to the public, raising 50,600 BTC ($5 million at the time).



With the number of SatoshiDice bets regularly eclipsing BTC transfers, concerns grew over whether it was, in fact, spamming the chain with non-economic activity. 



Around the same time, some miners briefly <a href="https://research.mempool.space/block-size-report/#:~:text=,with%20the%20satoshi%20dice%20website">enforced</a> smaller block size limits, which has been suggested may have been to avoid managing relatively large volumes of SatoshiDice data.



<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">Just discovered that my Bitcoin casino game, SatoshiDice, is now responsible for over 50% of all Bitcoin transactions ever (over 1.37m txs)&mdash; Erik Voorhees (@ErikVoorhees) <a href="https://twitter.com/ErikVoorhees/status/226436118088933376?ref_src=twsrc%5Etfw">July 20, 2012</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Still, in one <a href="https://www.reddit.com/r/Bitcoin/comments/195hvp/satoshidice_player_bets_002_btc_wins_1278_btc/?rdt=62849#:~:text=SatoshiDice%20Player%20Bets%200,2%20or%203%20bitcoins">case</a> shared on Reddit, a SatoshiDice player had bet 0.02 BTC (~$0.40 at the time) to win 1,278 BTC — a 64,000x payout then worth $28,000 and nearly $127 million in today’s money.&nbsp;



Voorhees was also a big winner, despite a minor <a href="https://www.sec.gov/newsroom/press-releases/2014-111">run-in</a> with the SEC over the MPEX offering. He made <a href="https://thenextweb.com/news/first-major-bitcoin-acquisition-sees-gambling-site-satoshidice-sold-for-11-5-million">history</a> when he sold his SatoshiDice stake in July 2013 to an unnamed buyer for $11.5 million.



The deal was paid entirely in bitcoins, precisely 126,315 BTC, the equivalent of almost $12 billion at current prices.&nbsp;



If held until today, that’s equal to Voorhees winning a 10,000x bet on SatoshiDice, which carried winning odds of just 0.0061%.&nbsp;



Although, it’s more likely that some of those coins went into funding ShapeShift, which Voorhees founded about a year after cashing out. Clearly, the house always wins.



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Bitcoin gambling: How SatoshiDice picked up where Satoshi left off

Ben Strack

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



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Crypto investment products notched net inflows of $3.4 billion from April 21-25, a CoinShares report highlighted — the largest influx since December and the third-biggest weekly haul ever.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeB4OLtuoZb_KkFlXdSMqCEPSYh9KfmDEWjOIYADeI3fc05criTZUzvlGztiVTo1EbDXJORkK7V1ZkhM9U6zZd8Fli0zkaMwPB0ZkhGvx9iBlipw_3eNZxnRg9jjC2vQS7EHZUocg?key=w_iUrTeVTVGuPWKu9jA-Jnf-" alt=""/></figure>



Nearly $3.1 billion went into US spot bitcoin ETFs, according to Farside Investors <a href="https://farside.co.uk/btc/">data</a>. Their Ethereum counterparts got some love too, as the $183 million of net inflows broke an eight-week outflow streak.&nbsp;



“We believe concerns over the tariff impact on corporate earnings and the dramatic weakening of the US dollar are the reasons investors have turned towards digital assets, which are being seen as an emerging safe haven,” CoinShares’ James Butterfill noted.



The key word is “emerging,” as bitcoin more recently <a href="https://blockworks.co/news/can-btc-sustain-up-only-mode">decoupled from tech stocks</a> (at least temporarily). BTC was trading around $94,130 at 2 pm ET — up 10.5% from a week ago.



It’s difficult to sort out which type of investors these inflows are coming from.



Bloomberg Intelligence’s Eric Balchunas noted the speed at which the bitcoin ETF inflows picked up in an X <a href="https://x.com/EricBalchunas/status/1915375943851311576">post</a>, adding: “Prob some is basis trade back in effect, that&#8217;s the fast money that tends to come in and out [with] price.”



He’s referring to hedge funds seeking to profit from the “basis spread” — the difference between BTC’s futures and spot prices. We do know from Q1 13F filings that hedge funds represent ~37% of the spot bitcoin ETP assets under management (AUM) that is held by professional investors.   



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdffQqiLJh5qKZl2P9MVUpdck4vEIC2oeQnXucabxeHRp_zUk-VJxlpVEJkqKDRQYfbXxHDxHJaKFfRzVvxaNXr4e6irwQOwAIA79YajC8YiFvw9rNtknvPZfrNTYyW59e9SxdxVQ?key=w_iUrTeVTVGuPWKu9jA-Jnf-" alt=""/></figure>



Outside this pro investor cohort that discloses BTC holdings in filings, however, are individual investors and smaller financial advisors that also represent “a significant portion” of the investment activity we’re seeing, Bitwise research head Ryan Rasmussen told me.



“Given that, I&#8217;d assume the flows this week were primarily driven by long-term investors and a less meaningful portion was driven by hedge funds deploying the basis trade,” he added.



And separately (but ETF-related), two quick clarifications as some XRP product headlines might be misleading readers: 



First, the proposed XRP funds by ProShares are futures-based offerings, not spot. Also, a ProShares spokesperson <a href="https://x.com/strack_ben/status/1916862175425056988">told me</a> that while some have reported those going live on Wednesday, the firm has no plans to launch them then. Keep in mind, too, that CME Group isn’t set to introduce XRP futures contracts until May 19.  



You know we’ll offer any important crypto ETF updates to you when we have them.



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CoinShares

‘Basis trade’ or HODLers: What’s behind the crypto ETF inflow spike?

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



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Eleven years ago this week, one of the first great Bitcoin documentaries, The Rise and Rise of Bitcoin, premiered at the Tribeca Film Festival.



The film is rare in that it was made by someone with real skin in the game.



It centers around Daniel Mross, a Pittsburgh-native computer programmer who began mining bitcoin in 2011 and went on to found Bitcoin-focused investment fund Maximalist Capital.



Filmed by brother Nicholas between 2013 and 2014, when bitcoin was headed to $100 for the first time, Dan travels the world to meet major figures in the space, as yet only four years into its lifespan.



They meet <a href="https://x.com/pete_rizzo_/status/1875542871270449274">Charlie Shrem</a>, then-CEO of bitcoin exchange service BitInstant as it worked through sudden supply issues resulting from Mt Gox downtime; <a href="https://x.com/pete_rizzo_/status/1808833197397958969">Eric Voorhees</a>, when BitDice was still a big deal; and Mark Karpeles, who gave a secretive tour of Mt Gox’s office in Japan only months before it went down for good.



Brian Armstrong and Fred Ehrsam also make cameos. Coinbase was timely: The global Bitcoin economy was actively reckoning with the growing need for more crypto exchanges in light of the Mt Gox debacle.



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/A06qdTpOYcg?si=SF79EOofDflvZ8Z-" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







The Rise and Rise of Bitcoin has a 7.1 rating on IMDb



The Mross brothers even visit Gavin Andresen — still lead maintainer at the time — at his Massachusetts home. “Do your neighbors know that you’re at the center of one of the most disruptive technologies?” Daniel asked.&nbsp;



“I think they know that I do this wacky Bitcoin project… I don’t think they know quite how big it is yet,” Andresen replied.



One electric scene shows Roger Ver — before the Block Size Wars, when he was Bitcoin Jesus — explain the benefits of Bitcoin (and BitPay, in which he was an early investor) to a Korean grocery store owner in the Bay Area.



Bitcoin and BitPay’s low fees compared to credit cards were a major selling point. “I guarantee over the next couple weeks you’ll have lots of computer nerds that love bitcoins, [who] will be coming in here specifically to shop at your supermarket so that they can pay with Bitcoin,” Ver said.



The store owner had the perfect follow-up: “And there’s no central office that they could raid or anything like that?&#8230;So who’s the owner of bitcoins: everybody that owns bitcoins?”



Ver replied: “Yeah! Just like, ‘Who’s the owner of gold: whoever owns some gold.’ Short of shutting down the entire internet and the entire world, there’s no way to stop Bitcoin.”



When we speak of Bitcoin nostalgia, this type of scene comes to mind. What we all would do to return to a time when simply explaining the fundamentals of Bitcoin as it is in the moment, and not what it could be sometime in the future, brought real wonder into people’s lives.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfLiYx1lSprSWMDssGbQHWuNS0nUmpkXqdICR_gRUFJIBCY10X_ndV7nNcV_rbOPJBEN4Io0wlcgTk2vsPdhNfxhGiCZ7pkqToSFwycWliRMjM-NLmJSyJcG1QNCfv94qOdc6BszQ?key=IVx1y8CKchDT7rDFWSNfOpRh" alt=""/></figure>



Bitcoin’s magic affected all sorts of people. “Mr Bitcoin,” a drug dealer who did business via Silk Road out of an internet cafe in Los Angeles, told the filmmakers:



“I think of it as a global thing when I’m on the computer — I’m doing business with the world. When I first heard about it, I was laughing about it. It took me a week to just even think about this for real…I mean, I&#8217;m not gonna lie — I get booty off this. I kind of like talking about this stuff with girls, like girls be like, ‘That shit is hot,’ and like, ‘You&#8217;re not on your street, and you got a little nerd knowledge; this is great.’”



But if nostalgia is really about severe homesickness, as Krauss suggests, then what is “home” in the Bitcoin context?



Watching The Rise and Rise of Bitcoin, the answer is clear: our homes, literally.



The film starts with Daniel showing off his home mining setup — a handful of GPUs sprawled across a basic table in his basement.&nbsp;



Then, as the film progresses and the mining difficulty rises alongside bitcoin’s price, he upgrades to some of the first ever ASIC rigs, still in his basement.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdl6t1YHPEZsh_SL0JkQD68Xovm0f5NqlL6BWZ7LkEVRuS8ES0HBbnTFy3QPAtgCtbWuuNRAUA-iCBTVVtZpJGDjH2qVyx938RfwwlvrLCI_vDvQ5w6J9FlzdfVtQqv3KHZtWdm3w?key=IVx1y8CKchDT7rDFWSNfOpRh" alt=""/></figure>



By the end, though, Daniel is forced to give up mining altogether, having been actively priced out during filming. “When I started, Bitcoin mining was a hobby for geeks, now it’s a big business. In order to continue mining and continue playing the game and be competitive and profitable, I would have to spend hundreds of thousands of dollars on gear.”



“The 18 miners I ordered from Avalon never arrived and the units from Butterfly Labs took over a year to ship. By the time I got them, Bitcoin mining was so competitive that I would never be able to mine back all the coins I used to buy them. As my new units are arriving, I’m selling them for bitcoins to try to recoup what I can.”



Obviously, there’s no putting the genie back in the bottle when it comes to bitcoin mining. The odds are stacked even further against home miners these days, and it’s questionable whether bitcoin’s initial low-fee feature was ever going to be sustainable with widespread adoption.



But if you’re nostalgic about Bitcoin from the early-mid 2010s, I’d offer two potential cures: go and use bitcoin as money — not an investment — and start tinkering around with open-source mining rigs.&nbsp; Aside from bringing Bitcoin back home, literally and figuratively, I hear they <a href="https://blockworks.co/news/solo-bitcoin-miner-solves-block">can be incredibly lucky</a>.



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Two cures to treat Bitcoin nostalgia for the 2010s

Pete Rizzo

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The final known Satoshi email was sent to Mike Hearn, one of the earliest Bitcoin contributors and former Google engineer, in April 2011. 



By that point, Bitcoin had been running for 840 days, or less than two and a half years. Satoshi previously said they had been working on Bitcoin’s design since 2007 — so at most they were active in Bitcoin development for about four years.



Hearn, who has since stepped back from Bitcoin, had kept up <a href="https://plan99.net/~mike/satoshi-emails/thread5.html">emails</a> with Satoshi even after their <a href="https://blockworks.co/news/satoshi-nakamoto-last-online">final post</a> on BitcoinTalk in December 2010.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcZZVZwIwBSiK-A_RKyiyuhF1-ajEFlU7j9LEGzTBhYRwpb_jY63f8u3k1DCRz0g0yutHA4qo-fRdigBu4_4sFk-iYvJJONow9pgzgy6OeVg9rbPJvSFH4HEDpaL6fLi3RzxPZtgw?key=JL_yRvqxyiwt9MZUlz_5eEaa" alt=""/><figcaption class="wp-element-caption">Hearn hosts a set of Satoshi emails on his personal <a href="https://plan99.net/~mike/">website</a></figcaption></figure>



“Satoshi did not leave the community because of Gavin&#8217;s CIA visit. He had already stopped posting publicly by the end of 2010 but was willing to continue emailing back and forth with me for months after,” Hearn <a href="https://www.reddit.com/r/btc/comments/6t2ci2/never_before_seen_mike_hearn_satoshi_nakamoto/">wrote</a> on Reddit in 2017. “I realised this situation probably wouldn&#8217;t last which is why I kept peppering him with technical questions.”



Bitcoin’s creator had recently encouraged other community members to take over, a move that led to Gavin Andresen stepping up as lead maintainer. Alongside Hearn, Andresen would go on to <a href="https://en.bitcoin.it/wiki/Bitcoin_XT#:~:text=After%20Andresen's%20resignation%20from%20the,be%20implemented%20in%20Bitcoin%20Core.">organize</a> the forking of Bitcoin Core for BitcoinXT, which featured an increased block size limit that would also get larger every two years.&nbsp;



It was Bitcoin’s first great civil war, as <a href="https://www.theguardian.com/technology/2015/aug/17/bitcoin-xt-alternative-cryptocurrency-chief-scientist">portrayed</a> by mainstream media. Hearn had <a href="https://blog.plan99.net/the-resolution-of-the-bitcoin-experiment-dabb30201f7">sold</a> all his bitcoin by January 2016, when coins were worth under $500, and eventually moved on to build enterprise distributed ledger Corda as R3’s lead platform engineer, a position he <a href="https://www.ledgerinsights.com/lead-engineer-mike-hearn-departs-enterprise-blockchain-firm-r3/">left</a> in 2021.



“Can cryptocurrency work? Sure, I do believe that. It does need extensive competition between different coins, which we now have,” Hearn <a href="https://www.reddit.com/r/btc/comments/kc2k3h/comment/gforyhb/">wrote</a> in late 2020. “Unfortunately when it comes to currencies, competition works against gaining critical mass and none of them have managed to get the same levels of awareness Bitcoin did.”



“I did stoically plug away at it for many years, but fundamentally my answers to how you can build a global consensus network in which people peacefully co-exist looks like the Bitcoin Foundation or the Corda Network, and that was far too suit-wearing to ever be accepted by the cryptocurrency community.”



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXckpVhTXFhCobS35P4eANlFbWMH06ySXCOOfH1aa9r-WqOmUfDqdND_Ue5oeVea98BAXm49sTvUZUpxie6mq7wQ02wRxeBKN-8oQnwAeO_iQk6sFjzxYl7Ni83FszzRSUzX-XGwNg?key=JL_yRvqxyiwt9MZUlz_5eEaa" alt=""/><figcaption class="wp-element-caption">Satoshi had foreshadowed his leaving five months earlier on BitcoinTalk</figcaption></figure>



Certainly, we’ve all mused enough over the reasons for Satoshi’s departure. WikiLeaks “kicking the hornet’s nest” could be <a href="https://bitcointalk.org/index.php?topic=2216.msg29280#msg29280">one</a>. Andresen’s <a href="https://thenextweb.com/news/satoshi-nakamoto-left-bitcoin-because-of-the-cia-theory-cryptocurrency">visit to the CIA</a> could be too — Satoshi sent his last email to Hearn shortly after Andresen disclosed that he’d accepted the agency’s invite.&nbsp;



And perhaps, Satoshi really did have other balls in the air. He’d used similar language 11 months earlier, when he told Martti Malmi via <a href="https://mmalmi.github.io/satoshi/">email</a> that he’d “been busy with other things for the last month and a half” to explain his absence.&nbsp;



Maybe, Satoshi knew there was going to be tension between the cypherpunks, with their energetic anarchism, and the suits, with their rules and business hierarchies, and simply thought it easier to go return some video tapes instead. Who could blame them?



<h2 class="wp-block-heading">Rizzo, The Bitcoin Historian&#8217;s view</h2>



There history goes again, always rhyming. As David notes, the tensions in the community that Satoshi left may be alive and well, but then again, so is the inherent demand for Bitcoin, with the “<a href="https://satoshi.nakamotoinstitute.org/quotes/bitcoin-economics/">positive feedback loop</a>” he imagined working at a geo-political scale. Yesterday, shockwaves were sent across the industry when it was revealed SoftBank, Cantor Fitzgerald and Tether are <a href="https://bitcoinmagazine.com/bitcoin-for-corporations/softbank-tether-cantor-fitzgerald-prepare-3b-public-bitcoin-treasury-vehicle">reportedly</a> preparing to funnel bitcoin worth $3 billion into a new firm running the Strategy playbook, amassing capital to stockpile BTC.



The numbers alone are staggering. Could we have another Strategy? Another multi-billion company racing, alongside the ETFs, to capture 500,000 or more Bitcoin?  Certainly, the <a href="https://www.businesswire.com/news/home/20250423962305/en/Tether-SoftBank-Group-and-Jack-Mallers-Launch-Twenty-One-a-Bitcoin-native-Company-Through-a-Business-Combination-With-Cantor-Equity-Partners">players</a> involved are enough to make the suggestion plausible. The only question that remains is how much bitcoin can they buy? Regardless, it’s another example of how Satoshi’s <a href="https://satoshi.nakamotoinstitute.org/quotes/bitcoin-economics/">own stash</a> — and his foresight — only seem more impressive with time.



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What Bitcoin’s Satoshi and Patrick Bateman have in common

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We all know halvings double the cost of production, a fact the media tends to dress up as an existential threat to Bitcoin every four years.



Miners seeking profit must also contend with fluctuating difficulty and energy costs. But if the price goes up, at least they’d get more money for every coin they mine.



At $88,500, bitcoin is ahead by 36% since the halving. More importantly, it’s up 130% on the average price during the last phase of the prior halving cycle (more than double!)



As it goes, high prices attract more miners, which have driven bitcoin’s total hash rate to all-time highs alongside the difficulty.



In fact, while mining revenue is more-or-less in line with its five-year average, the difficulty is currently five times what it was in April 2021, and 40% higher than just before the last halving.



So, it’s harder than ever to generate bitcoins. But how much does it cost to mine 1 BTC right now? Always hard to say, with the answer highly dependent on electricity and other overhead costs, although Cambridge currently <a href="https://ccaf.io/cbnsi/cbeci/mining_map/mining_data">estimates</a> $48,671 per coin.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcPm6lCLOLsYMEswc_dYNNK9i5qsFS8r9u6e8SEU8JiY-JFKhv5m-fNWgp89v4igCvYAWgHMKT4E9OOGoZ15mJl1HwlqHfMe3wuo2yKynPSFMVChcoq7tRJNfWf2s3_cAVtuDgwRQ?key=GuAZi2sZmjsdrrf8BehQomo4" alt=""/><figcaption class="wp-element-caption">Strong bitcoin prices have kept miner revenue almost on par with peak 2021 and 2024 bull markets (source: <a href="https://app.blockworksresearch.com/analytics/bitcoin?dashboard=btc-financial">Blockworks Research</a>).</figcaption></figure>



Let’s use Marathon, the $4 billion mining giant responsible for about 7% of Bitcoin’s total hash rate, as an example.&nbsp;



In the three quarters leading up to the most recent halving, Marathon’s cost of mining revenues were $224.95 million, according to its SEC filings.



Marathon mined in total 10,542 BTC over the same period, which puts the estimated cost of producing each coin at just under $21,500. Bitcoin traded at $39,300 on average over that time, implying potential profit of $17,800 per coin.



Across the third and fourth quarters of last year, Marathon’s estimated cost of production using the same method works out at $43,270 — correctly doubling since the halving and in line with Cambridge’s estimate — against an average trade price of $72,250. That suggests potential profit of nearly $29,000, which is even higher than before the halving.



(Marathon CEO Fred Thiel <a href="https://www.investing.com/news/transcripts/earnings-call-transcript-marathon-digital-q4-2024-beats-eps-forecasts-93CH-3894570">said</a> in February that Marathon’s direct energy cost per bitcoin for last year was $28,801 overall, although that would include some of the previous epoch, before the cost of production doubled. Marathon profited over half a billion dollars in Q4 2024)



One year on from the halving and based on Marathon’s figures, the bitcoin block subsidy is still lucrative enough, at least at current prices for the most well capitalised operations. Other miners might sometimes run at a loss, going by <a href="https://data.hashrateindex.com/network-data/bitcoin-hashprice-index">Luxor’s Hashrate Index</a>, which points to some of the lowest profitability on record. Understandable, given five halvings have passed.



In any case, Bitcoin has three years left to double in price to counteract the next one. Plenty of time.



<h2 class="wp-block-heading">Money is speech</h2>



“I&#8217;m sure that in 20 years there will either be very large transaction volume or no volume.”



Satoshi <a href="https://bitcointalk.org/index.php?topic=48.msg329#msg329">said</a> that on Valentine’s Day in 2010 — a little over 15 years ago.&nbsp;



It was an addendum to a comment about the necessity for transaction fees in a system that sees block rewards cut to zero over time. “In a few decades when the reward gets too small, the transaction fee will become the main compensation for nodes.”



So, how close is Satoshi to the truth, less than five years out from his hypothetical?&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfBSQ3CtFqYrljmyWJd6NYWzi3g6VHPlZsMXVaHCwM1w-Vlz57E7EnL5QV3bL9PMRQMgQfnXqbT-oRxJebHxNof0_HD0JVLBv_AQEgtAzQdbhD7u_ucy9J59yFfgyES3fSs6codQg?key=GuAZi2sZmjsdrrf8BehQomo4" alt=""/><figcaption class="wp-element-caption">Monthly transfer volume has fallen in recent months but is still way up 2023 (source: <a href="https://app.blockworksresearch.com/analytics/bitcoin?dashboard=btc-onchain-activity">Blockworks Research</a>).</figcaption></figure>



Bitcoin processes more than 11.5 million transactions per month, up from under 8 million in early 2022, converting to $1.8 trillion BTC in volume on average.



On one hand, that might be “very large,” like Satoshi predicted, but over 98% of miner revenue still comes from the block subsidy.



A few more halvings and the current dynamic may no longer be tenable, so expect debate over Bitcoin’s fee market structure to ramp up over time. For more on the reasons to be alarmed, you can listen to core developer James O’Beirne on <a href="https://www.youtube.com/watch?v=JITvE9BwIRQ">today’s episode of Supply Shock</a>.



<h2 class="wp-block-heading">Rizzo&#8217;s view, on this day</h2>



You might hear the phrase “Bitcoin bubble” a lot these days, what with prices surging over $100,000. A look back at media articles from the past, however, and not much has changed. <img loading="lazy" decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeTmUnYXhCXGgDnb_SdUU5uw0CYsphzDre8GS216mFldrul2DEHXCJegoDGveIcgBVIaUeyzRsouF-Q8gEQFzICjoCZkRPcGaejY6MU2qaF8XokBMLsc25n6_T5G7H5RPd8bWvi4A?key=GuAZi2sZmjsdrrf8BehQomo4" width="624" height="333">



On Reddit, I posted this chart as a reminder of just how long the trope has lasted. In fact, the above chart was <a href="https://techliberation.com/2011/04/25/revisiting-the-bitcoin-bubble/">posted by Coin Center founder Jerry Brito</a>, 14 years ago. There he wrote about how even if Bitcoin died, the technology was here to stay. He was right with one caveat — the technology was Bitcoin. <a href="https://www.reddit.com/user/rizzobitcoinhistory/">Follow me on Reddit</a>.



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bitcoin halving

A year after the Bitcoin halving, how much does 1 BTC cost to mine?

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Liberland has fallen.



It’s a tale almost as old as Bitcoin itself. One day, you’re buying just a little bit of bitcoin. Stacking sats on Saturdays.&nbsp;



Suddenly, you mistakenly catch a glimpse of a video about stablecoin yield in your feed. The algorithm’s fault.&nbsp;



Then, a screenshot of generational memecoin gains. A string of governance airdrop tweets follow fast; farmers rich, KOLs richer. You? Fully FOMO&#8217;d.



Congratulations! You’ve been radicalized by the Web3 cabal.&nbsp;



All of your remaining bitcoin has been reallocated to the top 50 altcoins, weighted by their respective partnerships and memorandums of understandings. “E/acc” has been unironically added to your X handle. WAGMI.



<h2 class="wp-block-heading">On This Day — Liberland goes Bitcoin</h2>



It’s enough to make you retch. After checking in on Liberland, the libertarian Balkan micronation founded in 2015, I fear it has suffered a similar fate.



It’s not that Liberland was ever exactly sold as a Bitcoin maximalist paradise. Established under Terra nullius rules, Czech politician and activist Vít Jedlička initially <a href="https://www.nytimes.com/2015/08/16/magazine/the-making-of-a-president.html">positioned</a> the “three-square-mile teardrop of no man’s land” on the western bank of the Danube as a libertarian refuge for the entire world. A tiny sanctuary for “honest people,” free of big government, central banks and taxes. 



It’s easy to see how bitcoin once fit into that vision. Bitcoin was, and still is, symbolic of what’s possible under laissez-faire capitalism — proof that people can change the foundational structures of our world by taking matters into their own hands.



And while there’s no “legal tender” of Liberland, bitcoin was indeed to be accepted as money within its border, alongside practically all other currencies, even an official Liberland cryptocurrency “like bitcoin” somewhere down the line, as Jedlička himself red-flagged in initial media appearances.



Perhaps Jedlička and Satoshi shared a kindred audacity. Liberland sounds like just as much of an impossible dream as Bitcoin once did.



After arrests, court battles, attempted settlements, festivals and temporary exiles, the Free Republic of Liberland today <a href="https://liberland.org/">boasts</a> more than 1,100 registered citizens, more than 4,000 e-residents, and over 700,000 applicants on their waiting lists. But as one <a href="https://unherd.com/2023/07/inside-liberland-europes-bitcoin-micronation/">report</a> put it in 2023, very few Liberland citizens actually live there. Instead, there’s a “handful of activists moored downstream on a houseboat, under the close supervision of the Croatian police.”



<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">This weekend, we celebrated the 10th anniversary of the Free Republic of Liberland — a sovereign state nestled between Croatia and Serbia on the west bank of the Danube River. It was an incredible experience! Congratulations to President Vit Jedlička (<a href="https://twitter.com/JedlickaVit?ref_src=twsrc%5Etfw">@jedlickavit</a>) on a decade of… <a href="https://t.co/XSEext3xMA">pic.twitter.com/XSEext3xMA</a>&mdash; Brock Pierce (@brockpierce) <a href="https://twitter.com/brockpierce/status/1912288756222009810?ref_src=twsrc%5Etfw">April 15, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">Liberland celebrated its 10th birthday this past weekend</figcaption></figure>



But whatever spiritual overlap there was between Bitcoin and Liberland (which had attracted many to its remote European floodplain in the first place), it’s all but gone from its public messaging.&nbsp;&nbsp;



One might’ve expected the ties between Liberland and Bitcoin to strengthen over the past decade. Especially so, considering bitcoin is up nearly 200x since early <a href="https://www.context.news/digital-divides/breakaway-balkans-micronation-dreams-of-crypto-future">reports</a> suggested that Liberland held much of its reserves in BTC. That would surely have made the microstate relatively wealthy if true.



(For what it’s worth, Liberland’s known bitcoin <a href="https://www.blockchain.com/explorer/addresses/btc/13H2VmPrmoucaEgCCoimCPmPU9a7CaMyuw">address</a> contains less than $2,000 worth of bitcoin right now but in total has seen 275 BTC inflows — $23 million at current prices. Liberland deposited its last bitcoin to crypto exchange Bitcoin Suisse in August 2020.)



Today, there is no “bitcoin” on Liberland’s official website, barring what seems to be a single mention about it being a preferred currency alongside Liberland’s own coin.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdQcNd74Xeypm1sIX7LqSpdyHijci9Sq7bzpeeKvv0Is5Ns5UVU5OutQiTbwsAI9I_ioOC_90rUoWtHn7LLilnwq0C-dEvTk4lwHRCrFFESqYgtme395GpOBRjoGyG_R4bkZicGkg?key=ZFawP0Bw9GgBkQFWfWYH0xr_" alt=""/></figure>



There’s blockchain governance, and then there’s blockchain government.



Instead, the worst of blockchain’s buzzwords now overrun Liberland.org: soulbound NFTs that represent citizenship, on-chain governance that enables “decentralized hyperdemocracy,” all powered by an “operational token similar to DOT or ETH,” which users can bridge to TRX, and a small number of other chains.



It took only 10 years for Liberland to go from an economy with Bitcoin at its base, as President Jedlička <a href="https://news.bitcoin.com/liberland-bitcoin-truly-base-economy/">said</a> in 2016, to an economy built around an inflationary governance token, Liberland Dollars, issued on a Polkadot fork called the Liberland Blockchain.&nbsp;



A secondary token, Liberland Merit, is meant to represent the ownership of the actual land.&nbsp; The site promises that one day, the tokens can be “converted into tokenized political power,” giving citizens additional avenues to vote.



<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">Many friends have recently asked me about my involvement with <a href="https://twitter.com/Liberland_org?ref_src=twsrc%5Etfw">@Liberland_org</a> , and I am indeed very happy to see the community elect me as the Prime Minister of Liberland. My understanding of Liberland is as follows: Liberland is not just a country; it is a manifestation of a…&mdash; H.E. Justin Sun 🍌 (@justinsuntron) <a href="https://twitter.com/justinsuntron/status/1844664803945775256?ref_src=twsrc%5Etfw">October 11, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Liberland’s Congress recently elected Justin Sun prime minister for the <a href="https://protos.com/justin-sun-elected-prime-minister-of-liberland-for-a-second-time/">second</a> time running.



As it stands, Liberland is essentially a token economy experiment for a blockchain-powered nation that doesn’t really exist. Yet.



Still, the government <a href="https://docs.liberland.org/blockchain/tokenomics-primer">receives</a> vested token unlocks every month to fund itself and its initiatives (which include paying for token listings on crypto exchanges, marketing and incentives) in much the same way as VCs do from their portfolio Web3 companies. The coin has a $2.1 million market cap right now.



Just as there are no true Scotsmen, there is, of course, no one true representation of “Bitcoiner.” And no doubt, there are many among Liberland residents, believers, supporters and investors.&nbsp;



All that only makes the current iteration of Liberland, with all of its mumbo jumbo, that much more of a letdown. Luckily, it’s never too late to adopt the Bitcoin standard — although good luck ever getting the votes.



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A decade in, Liberland needs the Bitcoin standard more than ever

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Bitcoin’s first Ponzi scheme was nothing special — but it was early.



After the 1906 inception of the international reply coupon, it took 14 years for Charles Ponzi to come along with his <a href="https://www.smithsonianmag.com/history/in-ponzi-we-trust-64016168/">legendary</a> scheme, which he peddled across Boston society to the tune of $20 million at the time ($319 million in today’s money).



Meanwhile, it only took Trendon Shavers, aka Pirateat40, less than three years to pull off something similar on the Bitcoin blockchain: Bitcoin Savings &amp; Trust.



<h2 class="wp-block-heading">On This Day – Bitcoin Savings &amp; Trust&nbsp;</h2>



Shavers originally launched the scheme as First Pirate Savings &amp; Trust in November 2011, having cultivated an online persona of a savvy over-the-counter bitcoin trader in IRC channels and on Bitcointalk.



Bitcoin had opened the year at $0.30, hit $30 in June, and had since settled at around $3. Shavers’ supposed OTC desk was now running dry, with requests for more coins only “getting larger and more frequent.”&nbsp;



“Over the last few months I have been selling BTC to a group of local people,” Shavers wrote in his launch <a href="https://pastebin.com/yH0jr6KY">post</a>. “Now this is a ‘don&#8217;t ask don&#8217;t tell&#8217; group of people, so I can&#8217;t tell you exactly where and to whom the coins ultimately end up with, but so far it&#8217;s been pretty painless.”



To help source liquidity, he devised two ways to inspire early adopters to send him their bitcoin, starting at a minimum of 50 BTC ($150 then, $4 million now).



<ul class="wp-block-list">
<li>The “on-demand” tier would pay a 3.5% fee for filling buy orders over what the desk has available.</li>



<li>The “storage” tier would pay 1% per day for bitcoin sent to First Pirate Savings &amp; Trust, with a promise that “you can withdraw your balance at any time.”</li>
</ul>



As was the case with the original Ponzi scheme, initial inflows were rather small, only $60,000 in total over the first two months.&nbsp;



But after rebranding it to “Bitcoin Savings &amp; Trust” on this day in 2012 (with a new website) Shavers’ wallets saw that much on an average day, despite repeated warnings of the community, including <a href="https://bitcoinmagazine.com/business/ponzi-schemes-the-danger-of-high-interest-savings-funds-1338461999">from</a> Vitalik Buterin.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcVSRh9xXbGUjnpZ8nUZKHr8BqN4bpwt-Pg2qCs4Lxmu6UsQVdHYSyYDygREXaEff6H2bBuJlPQw_wZd72pVBvWkvYT2QpZcpGMn00SGIy2jS1WEb0D6L8sWakXDRtnMLYPpBsN?key=xm2WtSBqbG4DoznrxKgR4WvZ" alt=""/><figcaption class="wp-element-caption">Bitcoin’s push to $15 was interrupted by Bitcoin Savings &amp; Trust’s sudden closure, but BTC quickly rebounded.</figcaption></figure>



Just like the real Charles Ponzi almost a century earlier, Shavers never really did any of what he said. To go back in time a bit: Ponzi had promised up to 100% returns to investors who’d backed his wacky plan to arbitrage postage stamps between Italy, where they were cheap in the wake of World War I, and the US, where they were still expensive.



Ponzi couldn’t actually redeem his stamps for cash, or ship enough of them from Europe in any case. Still, he easily paid out interest with the waves of fresh capital, splitting the difference with a mansion, luxury car and a honeymoon vacation. Ponzi was sentenced to five years in prison.



Similarly, Shavers was simply selling coins to cover rent, car payments, shopping and casino gambling. Both plans were over and done in under 12 months.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdgGVAZESOhrEeoQfAYeJIfmlI6CeFPdP09OBF4jHYJiBuHdeUSpfU1p3JVVvmEUWjVGEQ5CEWTlRCwyMnpsJRk96bvDPWwt0oa15wQW7p89qyeGzxOvLhBKmA57lbhKu5e7kDmrA?key=xm2WtSBqbG4DoznrxKgR4WvZ" alt=""/></figure>



Shavers’ username is a reference to a Jimmy Buffett song, “A Pirate Looks at 40,” which laments about a man born too late in history to get away with adventurous crimes.



The Feds calculated that Shavers, drawing from about 100 investors, had siphoned 193,000 BTC for himself, worth up to $1.5 million back then and $16 billion today (coincidentally similar to the BTC supposedly held by the US government). He was <a href="https://www.vice.com/en/article/lawyer-reveals-details-about-the-man-behind-bitcoins-45-million-ponzi-scheme/">fined</a> $40 million and sentenced to 18 months in prison.



Look onchain and you can still spot the robbing of Bob to pay Alice: On every other day, total flows for Shavers’ wallets would be divided fairly evenly between inflows and outflows. Coins in from new investors, coins out to older ones.



And you can still see almost 1.18 million BTC flowing through wallets linked to Bitcoin Savings &amp; Trust in its short history — the equivalent of around 10% of the entire circulating supply at the time.



At risk of searching for a silver lining in the fraud, there’s this: Whereas actual physical records of Charles Ponzi’s scheme are presumably long gone, we’ll at least forever have a perfect account of Bitcoin’s first-ever imitation.



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Bitcoin’s first Ponzi scheme would be worth $16B today

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When it comes to whether bitcoin is (or was ever) a bubble, the late John McAfee <a href="https://x.com/officialmcafee/status/938938539282190337">said</a> it best. 



“Those of you in the old school who believe this is a bubble simply have not understood the new mathematics of the Blockchain, or you did not [care] enough to try.



“Bubbles are mathematically impossible in this new paradigm. So are corrections and all else.”



That was in early December 2017, when bitcoin traded at under $17,000. It peaked one week later, stopping just shy of $20,000 to cap off a nearly three-year bull market.



Four months passed, and bitcoin slipped by two-thirds to less than $7,000, marking the first act of a bear market that lasted only one year.&nbsp;



If only Bloomberg and Bank of America chief investment strategist Michael Hartnett had listened to McAfee.



On this date in 2018, <a href="https://www.bloomberg.com/news/articles/2018-04-09/bitcoin-seen-popping-like-the-greatest-bubbles-by-bofa">Bloomburg posted an article</a> called “Bitcoin, the Biggest Bubble in History, Is Popping.&#8221; In analysis cited the article, Hartnett’s team plotted bitcoin’s most recent bull market against well-known asset bubbles — the Wall Street crash that ended the Roaring Twenties, the South Sea Company and Mississippi bubbles in the 18th century, and the often-cited Dutch tulip craze a century earlier.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeYDx_tmaJE1uCWA6HV8er6ulG9wIriJCxr5AQDI1M_O10Sqp0gUHT-akgDAOxq6vwGBG6WO4bMlYODsj4K8GPGXh7RuwvEICquy1UUf8OMbfJzw-7pJee1HxdODymUavsOId2ODw?key=EWy5H33Q5JDD9iYKGCNA-ra2" alt=""/></figure>



But there are bubbles, and then there’s price discovery.



Dutch tulips had indeed exploded from a single guilder in early 1635 to 60 guilders two years later — a 5,900% rally — before collapsing by more than 99% in a matter of weeks.&nbsp;



Bitcoin, meanwhile, had managed 8,900% in the three years leading up to its December 2017 all-time high, starting at $224.



That’s more returns than the South Sea Company, Mississippi Company, and Roaring Twenties bubbles combined.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfXZkAKH0mY9GAxKLVU0Xj1P9LW97hNeR_CqkwN5BD4rlwQbIdMt4q6XvKBTiGQ3W4CxQHe3nLC9e82bFS5-UmmI0sQsVEVWfKxeeE1xaksRzNOigyV5ZoOSV1vpFEQJWi4fkxy?key=EWy5H33Q5JDD9iYKGCNA-ra2" alt=""/><figcaption class="wp-element-caption">The original BofA chart implied bitcoin was the “greatest asset price bubble” in history</figcaption></figure>



But where the South Sea and Mississippi Companies folded entirely after their individual markets tanked, and the Dow languished for nearly a decade through the Great Depression, bitcoin itself never suffered such a drastic fate.



Despite a string of bankruptcies for over-leveraged bitcoin miners — which helped to push bitcoin down by another 50% in the nine months following Hartnett’s note — bitcoin reversed course significantly over the next two quarters in what’s <a href="https://thedefiant.io/news/research-and-opinion/charting-history-s-rhyme-understanding-the-cyclicality-of-crypto-markets">considered</a> a short but legitimate bull market cycle.



Bitcoin returned to its December 2017 all-time high three years later almost to the day, whereas it took 15 years for the Nasdaq to do the same following the bursting of the dot-com bubble, and almost a decade longer for Japan’s Nikkei 225 after its own market mania in the late ‘80s.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe4Ile4r5R8p2iFXwBrK28GoWDoYEgtpU7oWwWhmd106Isv-pnSfq6cuj_DbioayNjPjhMUJ8vfvIe3rY_-e4pH_yHjW0d5ZjXZ7SEEeM2V-lYIvfgU0b4lIOp364ZKTwluSCPHUQ?key=EWy5H33Q5JDD9iYKGCNA-ra2" alt=""/><figcaption class="wp-element-caption">Take that, tulips!</figcaption></figure>



Bitcoin has been declared <a href="https://bitcoindeaths.com/">dead</a> 67 more times since Bloomberg’s article, and it’s up more than 1,000%.



Which, of course, makes the notion of a “bitcoin bubble” mathematically impossible, just like McAfee said. RIP.



— David Canellis



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



<h2 class="wp-block-heading">Did You Know?</h2>



If Sir Isaac Newton — the famed mathematician who defined our modern laws of physics — was alive today, there’s a good chance you’d see him in the trenches.



Newton <a href="https://royalsocietypublishing.org/doi/10.1098/rsnr.2018.0018#:~:text=It%20is%20easy%20to%20imagine,of%20%C2%A320%20000%20or%20more">built</a> up a strong diversified portfolio of government bonds and stocks in the early 18th century, and he was even appointed as Master of the Royal Mint for more than 30 years due to his scientific achievements.



Despite this, Newton was still caught in a pump and dump for a stock he’d been holding for years — the South Sea Company.



The South Sea Company was a joint-stock government enterprise intended to stymie spiraling national debt by exploiting what were supposed to be massively lucrative trade routes with Spanish territories across South America.



Despite very low revenue at the time, hype in Britain quickly reached fever pitch and the stock went nearly 10x in the first six months of 1720.



But with no actual profits, it resembled a Ponzi scheme more than a bona fide company, while insiders manipulated the market for massive personal gain.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcUePvht7vsqUCTIruoe1mle9rhUwOo6nbTa2L8JsawjCkumjUMVNQUzHVcoZD8g7YvFhKepIXnXJXz3RaPpdQeYIyYMXWPJ2hRkO35hmJyJwyMJ39bhEM4k-H97VHLQVX0Db8j?key=EWy5H33Q5JDD9iYKGCNA-ra2" alt=""/></figure>



<a href="https://newtonandthemint.history.ox.ac.uk/global-financial-world/newton-and-the-south-sea-bubble#:~:text=It%20is%20likely%20that%20Newton,out%20arrangements%20for%20the%20Company">Legend</a> has it that Newton had, unfortunately, cashed out too early, FOMO&#8217;d back in at the top, and bought massively on the way down, losing today’s equivalent of $25 million in the crash.



“I can calculate the motion of heavenly bodies, but not the madness of people,” he supposedly said, and forbade anyone in earshot from mentioning “South Sea” ever again.



If only they’d heard of HODLing in the 1700s.



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BofA’s blunder: How bitcoin turned a ‘crash’ into a 1,000% surge

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Can BitCoin be “trusted”? Will anyone accept bitcoins as payment? Could bitcoin eventually replace national currencies and “break the monopoly power of the Federal Reserve”?



These were questions fielded by then-lead developer Gavin Andresen, 14 years ago this week.&nbsp; Andresen was speaking on the <a href="https://www.econtalk.org/andresen-on-bitcoin-and-virtual-currency/">first podcast episode dedicated</a> to “BitCoin.” (The price was a cool $0.73.)



This hour-long EconTalk chat was recorded in March 2011, back in the very early months of GPU mining. It&#8217;s still worth listening to this episode, for nothing more than to transport yourself back to your first few times hearing about Bitcoin.&nbsp;



You can relive the curiosity in real time, as Andresen walks host Russ Roberts — the one who sounds eerily like <a href="https://x.com/pete_rizzo_/status/1886391766460330376">Michael Saylor</a> — through the basics (as they were when you mined coins on your laptop and they traded for 90 cents apiece).



Those days are obviously long gone. Almost 95% of the bitcoin supply has been mined, and solo mining is no longer guaranteed to net any bitcoin at all. It’s that enshrined scarcity that’s now drawing institutions and sovereigns to buy bitcoin that already exists. They don’t even need to run the software.



But just because mining is not necessarily profitable now doesn’t mean it’s not possible — you can mine Bitcoin today with solo rigs like the <a href="https://bitaxe.org/">BitAxe</a>, <a href="https://d-central.tech/the-piaxe-one-asic-one-vote/">PiAxe</a>, and other <a href="https://blockworks.co/news/mine-bitcoin-from-your-pocket">customized Raspberry Pi builds</a>. And solo miners regularly solve blocks — at least more than a <a href="https://mempool.space/mining/pool/solock">dozen over the past year</a> — with their luck usually boosted by <a href="https://theminermag.com/news/2025-01-30/bitcoin-foundation-solo-mining/">donated</a> or otherwise shared hash rate.



However, it’s still so rare now that when solo miners do solve blocks, we <a href="https://blockworks.co/news/solo-bitcoin-miner-solves-block">collectively celebrate</a>: Successful solo mining is the exception and not the rule, even if it wasn’t always meant to be that way.



We know that Satoshi had <a href="https://satoshi.nakamotoinstitute.org/posts/bitcointalk/20/">pushed</a> to “postpone the GPU arms race as long as we can for the good of the network,” and in the first two years <a href="https://www.reddit.com/r/Bitcoin/comments/36vnmr/heres_what_satoshi_wrote_to_the_man_responsible/">encouraged</a> Laszlo Hanyecz to slow down work on GPU mining, <a href="https://cointelegraph.com/news/satoshi-invented-gpu-mining-to-defend-the-network-says-early-dev">saying</a> that “the big attraction is that anybody can download Bitcoin and start mining with their laptop.”



It was those laptop miners who bootstrapped bitcoin with their CPUs. Satoshi, by opting not to sell his coins, left the responsibility of distributing and decentralizing the supply with new users.&nbsp;



Whether those initial miners were aware of their critical role in bitcoin’s future is moot — they were interacting with the Bitcoin network in a tangible way that supported Satoshi’s vision of what it could be.



This all means that solo mining is anything but performative. Far from it. Consider solo mining on par with spiritually fighting alongside Satoshi in the trenches of the GPU arms race.



Because Bitcoin is more than a technology — it’s a supratechnology, encompassing computer science, math, sociology, politics, philosophy, psychology and economics.



Listening back to Andresen speak in 2011, what stuck most of all is that the reason Bitcoin is so attractive to institutions and sovereign nations in 2025 is very different from what made it so interesting to early adopters in the nascent 2010s. And that’s okay.



In the podcast, Andresen reasons that when Bitcoin mining reaches the point it has today, i.e. when it takes “dedicated fleets of computers with high-speed network interfaces […] big iron to actually do all that transaction processing,” that those who’d been generating bitcoins on their own computers, “and who like the fact that they can be a self-contained unit,” might not be so happy about “trusting someone running these bigger data computers.”



Obviously, there are many reasons to solo-mine bitcoin, even with the few extra steps required now compared to 2011.&nbsp;



But most importantly, among them is the very off chance that you’ll (at least for the time it takes for Bitcoin to add the next block) be the one to dictate the state of the network — not multibillion-dollar companies or other hypercapitalized operations, however well-intentioned.



— David Canellis



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



<h2 class="wp-block-heading">Rizzo’s take, the Bitcoin Historian</h2>



“Benevolent dictator.” “De-facto lead.” While there’s a lot of nice descriptions about Bitcoin’s inner-workings in this 2011 podcast (I personally think mainstream coverage of the subject was actually better “back then”), it’s hard not to focus squarely on its real historical significance. This podcast provides an almost eerie backdrop to the events that would force Gavin Andresen from his “leadership position” in the open-source project he inherited from Satoshi not some months before the recording.



Fast-forward to the 23:00 mark, and you’ll find Andresen opening up about some of the thornier parts of the software development process that are still a mystery (even to people who have spent a decade watching the Bitcoin charts like me).&nbsp;



At around this mark, Andresen begins diving into the rights and privileges he believed he had as project maintainer, which, while common to open-source projects, were eventually torn away by the project users, who didn’t want to run <a href="https://en.bitcoin.it/wiki/Bitcoin_XT">his more experimental forks</a>. As Bitcoin begins to consider coming soft fork upgrades, (see my most recent conversation with <a href="https://www.youtube.com/watch?v=GdgQ3IflBJ0">Jeremy Rubin</a>), it’s a reminder that the core of the system remains fragile human consensus, along with software, a written medium that, due to the nature of evolving hardware, must change. That Andresen himself was <a href="https://www.coindesk.com/markets/2017/05/19/where-is-gavin-andresen-the-quiet-exile-of-bitcoins-former-face">eventually evicted over his attempts</a> to exert authority over this process makes listening to this podcast, with this context, bittersweet. 



— Rizzo



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Bitcoin is up 11,000,000% since this 2011 podcast episode

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Few things are built to stand the test of time. Bitcoin is.



Engineers design bridges to last only around 100 years. Modern-day dams might be built that only make it to half that. 



Perhaps regular maintenance could stretch those numbers by a few decades. They would still crumble much sooner than Bitcoin was ever intended to.



Today is the 11th anniversary of a testament to exactly that: BIP-42, the clutch proposal that averted a potential supply crisis 240 years from now.



Bitcoin Core contributor <a href="https://x.com/pete_rizzo_/status/1880616287363059980">Pieter Wuille</a> submitted BIP-42 on April Fool’s Day, 2014, years after Satoshi Nakamoto’s last post. BIP-42 was based on a solution proposed by <a href="https://x.com/pete_rizzo_/status/1878079505052413965">Gregory Maxwell</a>. Fittingly, it was both very serious and deeply unserious at the same time.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcxexSwe6D6Dhm0k2ObNvIs8ip8LXwulYlpFsHj7RnslBpy5T5ITyr6oDzmLEi3sbexIIAONmCO811Ta6XOTdTHKQs3rrpRmcZefPRMGtkb3l6KGj_7NtHThZ5Bcf8c6oqRP_j-Mg?key=OWOEEWME-Gq6nfqaq74dza6b" alt=""/><figcaption class="wp-element-caption">BIP-42 doubled as a roast of Satoshi Nakamoto (<a href="https://github.com/bitcoin/bips/blob/master/bip-0042.mediawiki">source</a>).</figcaption></figure>



As it turns out, Satoshi had made a grave but obscure error when coding the logic for bitcoin halvings.&nbsp;



The block reward had been correctly set to halve every 210,000 blocks, all the way down to an unspendable fraction of a sat by the year 2140 or so. This is what makes the BTC supply predictably and provably finite.



But the code was written in such a way that it determines the mining reward using the current block height. And when the block height gets too high — much higher than it is today — Satoshi would’ve had to write special rules informing the software how to process such a calculation safely.



The exact impact of the bug isn’t really knowable, but the largest of unintended consequences would have been that the block reward reverted to its original state of 50 BTC. BTC’s supply issuance curve would be rebooted to 2009.



Left unchecked, the bug would return again and again every two and a half centuries, making for potentially infinite bitcoins over the millennia.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdjMI40BjNZZ0vsmV8py9UXnvBjp6ClH_kHUnIPe0yIFLdhoOvkQZAYWKbJSYMnUuzBWoQ5kxzAVX8e3-lUPN-agTUHcKfVj9BLdg38Y-zX1f0AgKB8PJlh3SUh8rzlbmSEk_-Riw?key=OWOEEWME-Gq6nfqaq74dza6b" alt=""/><figcaption class="wp-element-caption">Bitcoin’s circulating supply would hit 126 million in the year 3417, without fixing the supply bug.</figcaption></figure>



“Although it is widely believed that Satoshi was an inflation-hating goldbug, he never said this, and in fact programmed Bitcoin&#8217;s money supply to grow indefinitely, forever,” Wuille wrote.



What’s humbling is that BIP-42 aborted a cataclysmic event that would’ve occurred 10 generations from now — in the approximate year 2265, when the block height should reach 13.44 million (today, it’s under 890,000). That’s over a century after the last slice of spendable bitcoin is expected to be mined, in 2140.&nbsp;



So, I suppose our great, great, great, great, great, great, great, great grandchildren will have Wuille and Maxwell to thank for making sure that’s so.



— David



<h2 class="wp-block-heading">Rizzo’s view, as the Bitcoin Historian</h2>



It’s nice that David can have a laugh over BIP-42. It is one of the more objectively quirky events in Bitcoin development history. That said, a more sober assessment raises thorny questions about the management of the Bitcoin software.&nbsp; One that I always linger on is the natural tension over what defines a “bug” in Bitcoin. Should we consider BIP-42 through the lens of jurisprudence, it helped enshrine two interesting views.&nbsp;



<ul class="wp-block-list">
<li>First is the assertion that the code which BIP-42 patches is indeed a “bug” because it contradicts what Satoshi wrote, namely, that Bitcoin would have a fixed supply. </li>



<li>Second is the view that the code is a “bug” because it contradicts what he told users to expect (creating a kind of social contract). </li>
</ul>



There’s a truth to both assertions, but it seems to get more problematic when compared to how other code debates were handled. Take the infamous “block size,” for instance. In this case, Satoshi said it would be raised over time, and it’s also what most (if not all early users) expected.



Ergo, the unchanged block size checks similar boxes as BIP-42. Yet no action was ever taken to change it. How to square this circle? Perhaps there’s the issue of safety. It’s true that eliminating the block size could lead to DDOS attacks, block withholding attacks, and potentially contribute to Bitcoin’s ultimate centralization. Equally, it could be said that rebooting the Bitcoin supply would constitute economic attacks. So, perhaps this was what swayed the decision.



I talked to Luke Jr. about this, and here’s what he had to say: “It was the behaviour everyone expected. And also there was no guarantee future CPUs would have the previous behavior for the existing code either.” Unfortunately, due to the tone of the patch, however, we might never know what all the participants had to say.



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