Hi all, happy Tuesday! Crypto rallied on Monday before reversing overnight as optimism around the CLARITY Act faded ahead of today’s Senate vote. We also examine Ethena Pay’s revenue model and what its launch, alongside the approved fee switch, could mean for ENA.

Crypto started the week higher across 22 of 25 indices at the end of Monday’s UTC session. BTC gained 2.2%, the S&P 500 added 1.0% and the Nasdaq rose 1.4%, while gold fell 1.1%. Privacy (6.9%), DEXs (6.3%) and Low Revenue, High FDV (5.6%) led, while Bittensor Ecosystem (-3.6%), Meme (-1.7%) and Crypto Miners (-1.0%) were the only decliners.

At 2:15pm ET, the Senate votes on cloture on the motion to proceed to the CLARITY Act, a procedural step requiring 60 votes. Republicans hold 53 seats, so at least seven Democrats or independents would need to support the motion, with any Republican defections raising that threshold. Yesterday’s newsletter covered the ethics concession intended to secure that support, but opposition has since hardened. 

Polymarket’s implied probability of the CLARITY Act being signed into law this year rose from 22% to 34% within two hours of Sunday night’s revised text and held near 30% through much of Monday. BTC followed higher, rising over $79k by 2pm ET. 

Later in the day, Warren rejected the revised ethics language, Van Hollen restated his opposition, and eight banking groups criticized the stablecoin circuit breaker. Democrats then submitted a counterproposal to a text Republicans had called final. By 7pm ET, enactment odds had fallen to 16.5%. BTC also reversed, falling 2.8% from its afternoon high to $76.97k overnight. 

The Fed’s rate decision comes tomorrow, with hike odds near 93%. The first rate hike since US spot BTC ETFs launched is expected to add pressure on risk assets and crypto just as hopes for progress on CLARITY weaken. 

— Joe

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Ethena Pay: A Different Starting Point

I’ve been saying for the past few months that neobanks are one of crypto’s most exciting opportunities. Stablecoin rails let neobanks serve a global audience from day one, combining dollar access, transfers, savings, and everyday spending. Tracked crypto-card spending hit a weekly record of $283M in the first week of September, up more than 200% year over year.

Ethena enters this market with a fundamentally different monetization model. Money entering Ethena Pay converts into USDe, allowing Ethena to earn backing income from the first funded customer balance. For crypto neobanks using USDC or USDT, reserve income generally stays with the issuer, Circle or Tether. Their playbook is to acquire customers through payments and cashback, which can consume much of the interchange revenue, then deepen monetization through borrowing, trading, and subscriptions.

Interest income is already a major revenue source for traditional fintechs. Net interest represented approximately 34% of Robinhood’s 2025 revenue, while interest income contributed roughly 22% of Revolut’s. Ethena keeps more of that income, without needing a bank charter or sharing USDe’s backing income with a sponsor bank. What it retains after customer yield and costs can fund lower fees, better rewards, and product development.

The challenge is turning those economic advantages into a superior consumer product. Ethena Pay processed a record $250k in card spend volume last week and has $4.3M in balances across 456 funded accounts. Access remains referral-only, and I expect activity to accelerate as the rollout broadens. However, Ethena still has to prove itself against competitors like EtherFi, which already processes roughly $30M in weekly card spending.

Ethena Pay and USDe can reinforce each other as they grow: new money entering the neobank creates demand for USDe, while backing income supports Ethena Pay’s pricing and rewards. Winning customers and retaining their balances would benefit both sides of Ethena’s business.

In parallel, the approved fee switch introduces another catalyst for ENA. Buybacks are set to begin once USDe supply reaches $7.5B, linking protocol revenue to token demand. USDe supply has climbed back to $4.6B following six consecutive weeks of net inflows, while last week’s launch on TRON continues to expand its distribution.

Ethena has also repurchased select early-investor positions, reducing the VC overhang. Alongside Pay’s launch and the approved fee switch, these changes warrant a fresh look at ENA’s valuation.

— Carlos

Uniswap v4 hooks were a mistake

0x argues that Uniswap v4 hooks created a serious new attack surface for aggregators and users. Because hooks can run arbitrary logic around swaps while inheriting Uniswap’s distribution, malicious pools can advertise attractive quotes and then change execution behavior at settlement. 0x says its analysis of more than 84k hooks across six chains found only 19.4% safe, with the majority malicious or likely malicious, and observed some trades executing up to 50% worse than quoted. The broader takeaway is that permissionless liquidity is not automatically trustworthy liquidity: routers need to verify quote-to-execution consistency, apps need fast route-removal controls, and displayed price alone is no longer enough to judge execution quality.

TradeXYZ: Onboarding the world to Hyperliquid, Part II

Hanson Birringer from Hyperdash published Part II of his Hyperliquid onboarding analysis, showing that TradeXYZ markets have become Hyperliquid’s largest user-acquisition channel. Since launch, TradeXYZ has onboarded 173.8k first-time Hyperliquid users, with 84% of new August arrivals coming through third-party apps and nearly 70k first trading on a weekend. These users do not stay siloed in RWAs: 28% later traded native crypto perps, generating $40.8M in fees overall, half of which came from non-XYZ markets. The XYZ cohort also retained better than crypto-native arrivals and was net positive for user growth, while the rest of the exchange was net negative over the same period. The broader takeaway is that 24/7 traditional-asset perps are becoming both a flagship product and a top-of-funnel growth engine for Hyperliquid.