February Market Commentary
"After all, tomorrow is another day"
Bybit Security Breach
On February 21, Bybit, a prominent cryptocurrency exchange, experienced a security breach resulting in the theft of approximately $1.5 billion in Ethereum tokens. The U.S. Federal Bureau of Investigation (FBI) has attributed this heist to North Korean state-sponsored hackers, specifically the Lazarus Group. This was the largest hack in dollar terms ever for the cryptocurrency community. In response, the FBI has urged private sector entities, including exchanges and blockchain analytics firms, to block transactions associated with the compromised addresses.
Solana's Proposed Economic Reforms
In a significant move to address token inflation, Solana has introduced the SIMD-0228 proposal. This proposal aims to reduce the annual issuance of SOL tokens by 80% through a dynamic adjustment of the inflation rate, linking it to staking participation. Currently, Solana releases about 4.5% new tokens annually, a rate that decreases by 15% each year. The proposed change would adjust emissions based on the proportion of staked tokens: if staking participation is high, the inflation rate would decrease; if low, the rate would increase to incentivize more staking. While this move could enhance the token's value stability, it has sparked debate within the community. Critics express concerns that reduced staking rewards—potentially decreasing by nearly 80%—might discourage participation and impact network security. The proposal is slated for a community vote in early March 2025.
Pump.fun's Declining Growth
Pump.fun, a leading platform for launching memecoins on the Solana blockchain, has experienced a significant downturn in activity. Recent data indicates that successful new token listings have decreased by over 80% from their January highs. This decline is evident in the number of tokens completing Pump.fun's "bonding curve," a prerequisite for listing on decentralized exchanges like Raydium. The daily count of such tokens has dropped from nearly 1,200 in late January to approximately 200 by February 26. This reduction in platform activity suggests waning interest in new memecoins, possibly due to market saturation and recent controversies.
Five Notable Things That Happened in Crypto This Past February
1. Coinbase Lists $TAO, Sparking AI Token Revival
Coinbase announced the listing of $TAO, the native token of the Bittensor network, which soared 17% following the news. The listing has reignited interest in AI-related tokens, highlighting the growing intersection of artificial intelligence and blockchain technology. This move underscores Coinbase's commitment to expanding its offerings and supporting innovative projects in the crypto space.
"TAO Soars 17% on Coinbase Listing, Sparking AI Token Revival"
Achieve your financial goals with AI assisted investment platform. Use AInvest stock screener to build watchlists and to make optimal investment decisions.
2. SEC Dismisses Investigations into Coinbase Uniswap and Robinhood
In a significant win for the crypto industry, the SEC dismissed its investigations into Coinbase and Robinhood, signaling a potential shift toward more favorable regulatory conditions. Both companies expressed relief, with Coinbase calling it "righting a major wrong." This development is seen as a positive step for the broader adoption and legitimacy of cryptocurrencies in the U.S.
Robinhood says SEC has closed its investigation into the company
Lawsuits filed against cryptocurrency platforms during President Joe Biden's administration continue to fall away as the administration of President Donald Trump has projected a much more lenient stance on cryptocurrency markets.
3. Hyperliquid Launches HyperEVM, a Major Leap in DeFi Evolution
Hyperliquid, a leading decentralized exchange (DEX), launched HyperEVM, a highly scalable Ethereum Virtual Machine (EVM) designed to enhance DeFi capabilities. This launch marks a significant milestone in Hyperliquid's evolution, offering users faster transactions, lower fees, and improved interoperability within the DeFi ecosystem.
HyperEVM: A Major Leap in Hyperliquid's DeFi Evolution
The Hyper Foundation has officially launched the Hyperliquid EVM, also referred to as HyperEVM, marking a significant upgrade to the Hyperliquid decentralized finance (DeFi) ecosystem.
4. Uniswap Unveils Unichain, Joining the ETH L2 Ecosystem
Uniswap, the largest decentralized exchange by volume, launched Unichain, its own Ethereum Layer-2 solution. Unichain aims to reduce transaction costs and improve scalability for Uniswap users while maintaining compatibility with the broader Ethereum ecosystem. This move strengthens Uniswap's position as a leader in decentralized finance (DeFi).
Uniswap Labs launches Unichain L2 mainnet
Uniswap Labs has rolled out its Ethereum-compatible layer 2 network "Unichain" after four months of testing and over 100 million settled on-chain transactions.
5. DTAO Public Launch: A New Era for Decentralized AI Governance
The DTAO (Dynamic TAO), a key component of the Bittensor network, was publicly launched, marking a significant advancement in decentralized AI governance. DTAO introduces a dynamic mechanism that allows Bittensor's subnetworks to operate more efficiently by adapting to changing conditions and demands. This innovation strengthens the network's ability to distribute AI workloads transparently and democratically, addressing concerns around the centralization of AI technologies. The launch underscores Bittensor's commitment to creating a community-driven framework for AI development and deployment.
Dynamic TAO | Bittensor
Dynamic TAO is a recent major evolution of Bittensor's integrated tokenomic and governance model, representing a significant step in Bittensor's trajectory toward more thorough decentralization.
++ Find more things to read this month
Things We're Reading - February 2025 - Cosimo Capital
Deep dive on crypto within the payments space https://paragraph.xyz/@archetype/cryptorails-superconductors-for-payments Piece on the different future trajectories of Ethereum https://paragraph.xyz/@rm/the-garden-and-the-machine How Coinbase's L2 Base plans to scale in 2025 https:/
To access more of Cosimo's insights or recommendations,
please contact info@cosimo.fund
Cosimo Capital
Cosimo is a digital asset management company based in Chicago
Disclaimer: This newsletter is intended solely for informational purposes. It does not constitute investment advice or an offer to sell securities. The insights and projections are based on current data and are subject to change. Past performance is not indicative of future results. Please keep contact us with any questions.
