Canary in the Server Room: Oracle’s Debt Inferno
Oracle—once the boring database plumber—has turned itself into the most leveraged bet on AI infrastructure on Earth.

• Debt-to-equity: 500 % (Amazon: 50 %, Microsoft: < 30 %).

• CDS spread: at multi-year highs—insurance on Oracle bonds now costs more than on some BB-rated miners.

The market’s smartest money is essentially buying fire insurance on the neighbour who stores dynamite in the basement.

The “Infinite-Money Loop”
A closed-circle accounting magic trick:

1. Nvidia “invests” $100 m in OpenAI.

2. OpenAI immediately wires the $100 m to Oracle for “cloud capacity”.

3. Oracle spends the same $100 m buying Nvidia GPUs.

Zero external customer, zero new cash-flow—yet all three book $100 m of fresh revenue.
The loop holds only while credit keeps expanding. When one linker blinks (Oracle’s junk-grade balance-sheet?), the entire daisy-chain implodes.

Echoes of 2008—Five Rhymes

1. Hyper-leverage masked by off-balance-sheet commitments.

2. Asset prices (GPU farms, model weights) underpinned by cheap credit, not discounted cash-flows.

3. Risk repeatedly sold to the next buyer—venture funds → IPO → retail ETFs.

4. Rating agencies blessing “AI” the way they once blessed “AAA sub-prime CDOs”.

5. A collective market mantra: “This time it’s different.”

Why It’s Not 2008—Three Critical Differences
Collateral that lays eggs
Data-centres and GPUs are cash-generating; suburban tract housing was not. The question is speed of pay-back, not existential worth.

Borrowers with balance-sheets
2008: NINJA home owners.
2025: Microsoft, Google, Amazon—cash-rich titans that can absorb a 30 % asset write-down without triggering a Lehman moment.

A post-2008 regulatory moat
Banks now hold >3× the tier-1 capital, and central banks scan for systemic leverage in real time. Contagion channels are narrower.

Scenario: Dot-com 2.0, Not GFC 2.0
Expect a sectoral blood-bath, not a global credit freeze:

• 50–70 % wipe-out in story-driven AI names.

• Consolidation into a handful of cash-flow-positive platforms.

• Limited spill-over to Main-Street lending books.
  Painful, but not 2008.

How to Play the Endgame
1. Segregate your holdings

• Core Players (Nvidia, Google, Microsoft) – fund capex from free cash-flow; survive the winter.

• High-Risk Challengers (Oracle, certain SPAC-listed GPU clouds) – living on rollover debt; treat as short candidates or avoid.

2. Take money off the table
Trim positions that have tripled on narrative alone; move gains into cash, T-bills, or gold. Convert paper wealth into bullet-proof liquidity.

3. Index, don’t idolise
Replace single-name bets with broad tech indices (QQQ) or equal-weight S&P 500 ETFs to keep upside exposure while diluting idiosyncratic blow-ups.

Standing at the Crossroads
AI will transform the world—but the path matters. We can build the future on real cash-flows and durable innovation, or on recursive credit and accounting hallucinations.
The choices investors make in the next six quarters will decide whether they ride out the coming shake-out—or become the cautionary footnote in the next edition of Extraordinary Popular Delusions.

2. Four Catalysts—All Tactical, None Fundamental
a) The “Prince Group” Shock
– 14 Oct: DoJ seizes 127 271 BTC from Cambodian conglomerate founder.
– Transparent chain lesson: Uncle Sam can taint, freeze, confiscate.
– Narrative: “Zcash is insurance against Bitcoin’s surveillance.” Privacy-coin basket squeezes: ZEC +217 %, XMR +9 %, DASH +13 %.

b) Narrative Vacuum
Meme-season fatigue, no new L1 breakthrough, DeFi yields flat.
Rotation into “forgotten” sectors—privacy, miner-coins, 2017 relics.

c) KOL FOMO
Naval (Oct 1): “ZEC is bitcoin’s privacy hedge” → price doubles in a week.
Arthur Hayes, Ansem, CryptoTwitter avatars all change to Z-logo.
Classic late-cycle signal: influencers front-run, audience chases.

d) Liquidity Desert
ZEC daily turnover <1 % of supply—order-books 2 % deep.
A few million USD buys the whole float; exit door identical width.

3. On-Chain Reality Check
Shielded-pool usage: 30.4 % of transactions—flat since August.
If privacy demand were exploding, shielded % would spike; it hasn’t.
70 % of flows still transparent → ZEC acting as BTC swap conduit, not SOV.
CryptoMaid memo: “Anon-coins are just off-ramps for people who need to wash BTC before selling on tier-3 exchanges.”

4. Tech Milestones Can’t Hide Adoption Gap
Orchard upgrade, Halo 2 proofs, ECC 2025 roadmap—solid engineering.
But code ships ≠ users. Reg uncertainty keeps wallets and exchanges wary; no Apple-Pay-level integration in sight.

5. Chart & Cycle: The “Doomsday Tank” Pattern

• Jan 2018: $50 → $704 (14×) then –93 %.

• May 2021: $57 → $386 (6.8×) then –92 %.
  Each top marked the last vertical before BTC entered a 75-85 % bear.
  Nickname born: when the tank rolls, the party is over.

6. Regulator Roulette
EU MiCA “privacy-coin delisting” clause takes effect Q2 2026.
Coinbase already geo-blocks XMR; ZEC is one policy tweet away from the same.
A single下架 notice has historically sliced 50-70 % within hours.

7. Take-Out
This is not a privacy renaissance—it is liquidity’s last scavenger hunt.
Parabolic moves in the most illiquid, politically fragile corners of crypto have never marked new bull cycles; they have always marked the final act.
When the doomsday tank exhausts its fuel, the battlefield is usually littered with the same coins that just mooned.
Trade the squeeze if you must, but don’t confuse it with fundamentals—and don’t be in the turret when the music stops.

* Technological Breakthrough: Hyperliquid's HIP-3 upgrade enables permissionless creation of on-chain order books, fostering native perpetual markets and reducing reliance on synthetic assets or oracles.

* Representative Case: The XYZ100 perpetual contract launched by TradeXYZ has shown impressive performance, with daily trading volume reaching tens of millions of USD and its open interest limit raised to $60 million.

* Sector Competition: Multiple protocols are entering the market, such as xStocks (spot trading), Derive.xyz (options & perps), Kraken xStocks (compliant exploration), and Ostium (fully on-chain synthetic assets).

* Risks & Challenges: Include the difficulty of rebuilding on-chain liquidity, oracle manipulation risks (e.g., price deviation during non-trading hours), and regulatory uncertainty (potential SEC classification as securities).

* Core Driver: Crypto traders are turning to U.S. stocks for steadier returns, with on-chain platforms breaking traditional market hour and settlement restrictions, although their scale remains far smaller than traditional finance.

---

Author: Seed.eth

"On-chain U.S. stocks" isn't a new concept, but it has become a fertile ground for trading activity recently, amidst the persistently weak crypto market and lack of clear direction for major cryptocurrencies.

Over the past year, many projects have attempted to bring U.S. stock indices, treasury yields, and even single stocks on-chain. However, most of these products remained in the "shadow asset" stage: either overly reliant on oracles for price feeds, suffering from insufficient trading depth, or maintaining significant price discrepancies with traditional markets, making it difficult to be considered a truly "fungible market."

Hyperliquid's HIP-3 upgrade appears to be a turning point. This upgrade technically allows for the permissionless creation of native on-chain order books for perpetual markets. This, to some extent, moves beyond the previous dominance of synthetic asset or oracle-driven models for on-chain traditional asset trading, offering another possibility for building an independent market on-chain with its own price discovery capabilities.

Take the XYZ100 launched by TradeXYZ as an example: Since its launch, its trading volume has continuously climbed, with single-day transaction volume stabilizing in the tens of millions of USD range, and its open interest limit has been repeatedly raised from an initial $25 million to $60 million.

Background

TradeXYZ, incubated within the Unit ecosystem on Hyperliquid, focuses on introducing real-world assets (RWA)—such as U.S. stocks and indices—into on-chain trading scenarios via tokenization. The protocol supports both spot and perpetual contract trading modes and integrates Unit Protocol to handle spot asset liquidity and settlement. Users can use USDC for deposits, withdrawals, and trading. Its current core product is equity-based perpetual contracts built on the HIP-3 standard, aiming to bridge traditional financial markets and decentralized trading experiences.

XYZ100 utilizes a fully on-chain CLOB (Central Limit Order Book) model, supporting up to 20x leverage and 24/7 trading. The price is anchored to the CME Nasdaq futures oracle, using an 8-hour EMA during non-trading hours to smooth the price and avoid sharp fluctuations.

HIP-3 went live around October 13, 2025, and TradeXYZ almost simultaneously launched XYZ100, initially offering alpha access only to the first 100 whitelisted users (requiring cumulative trading volume exceeding $5 million on Hyperliquid).

Within just two days, XYZ100's trading volume exceeded $63 million, with OI reaching $15 million, far surpassing other RWA perpetual contract DEXs.

Why Are Crypto Traders Turning to U.S. Stocks?

Firstly, crypto's "high volatility, low certainty" is being overshadowed by the "steady growth" of U.S. stocks. While BTC shows signs of institutional accumulation, the "10.11 leverage crash" left retail investors wary.

Currently, the U.S. stock market is soaring. This week, the S&P 500, Dow Jones, and Nasdaq indices have hit record highs for three consecutive trading days. Meanwhile, on-chain trading platforms are attracting global investors with their unique advantages: through 24/7 trading, no KYC requirements, and leverage up to 20x, users from different time zones like Asia and Europe can adjust their positions at any time, completely breaking free from the T+1 settlement mechanism and weekend closures of traditional markets.

However, traditional Nasdaq E-mini futures on CME still see a daily trading volume in the hundreds of billions of USD. Compared to this, the scale of on-chain assets remains "a decimal point."

Competition in the On-Chain U.S. Stocks Arena

With the rise of this trend, the entire on-chain U.S. stocks ecosystem is rapidly evolving, with multiple protocols entering the market from different angles:

* xStocks: Operating on Solana and BNB Chain, it offers spot trading for over 80 U.S. stocks/ETFs through its alliance ecosystem, allowing users to directly collateralize tokens representing Apple or Tesla for loans. Its cumulative trading volume exceeds $2 billion, accounting for 58.4% of tokenized stock trading volume in 2025, with over 30,000 daily active users, gradually capturing retail market share from Robinhood.

* Derive.xyz: Focuses on multi-chain options and perpetual contracts, covering Bitcoin, Ethereum, and some RWA indices, attracting advanced players with its institutional-grade tools and real-time oracles. Despite higher fees and a steeper learning curve, its total trading volume has reached $18.6 billion, with its RWA perpetual sub-market maintaining an average monthly trading volume of around $500 million.

* Kraken xStocks: Backed by the Kraken exchange, it received preliminary SEC approval and is migrating to Layer 2 networks like Arbitrum to enhance composability. Its cumulative trading volume surpassed $5 billion, with over 37,000 unique holders covering 60+ assets. However, its non-fully-on-chain custody model still carries centralization risks.

* Vest Markets: Takes a different approach, focusing on reducing slippage for weekend trades via an RFQ fill mechanism, achieving a 24-hour trading volume of $34.05 million. Its blockchain audit and LP incentive models are innovative, but current market depth remains insufficient.

* Ostium: Based on Arbitrum, it offers a fully on-chain experience for synthetic RWA perpetual contracts, expanding from U.S. stocks to commodities like crude oil and gold. The protocol's TVL growth exceeds 150%, with Q1 perpetual contract trading volume at $2.36 billion, providing a key option for zero-KYC entry users.

Risks and Challenges

Naturally, this space is not without its controversies.

Kaledora, co-founder of Ostium Labs, points out that the model of rebuilding market depth via on-chain order books is more suitable for crypto-native assets than traditional financial assets, as the latter have more stable, centralized, and deeper liquidity structures. In Kaledora's view, a better solution is the "on-chain brokerage model": directly accessing the price depth of TradFi markets through on-chain channels, rather than trying to rebuild an order book on-chain that competes with CME.

Another issue is Oracle & Manipulation Risk. During non-trading hours, on-chain prices rely on algorithms to smooth the trend, but this isn't foolproof. Previously, the PAXG gold contract saw millions in positions liquidated due to abnormal price volatility, serving as a warning for all RWA products—when markets are closed but on-chain trading continues, the risk of price deviation indeed exists.

Regulatory uncertainty is also a significant concern. The U.S. SEC is scrutinizing the compliance of these on-chain U.S. stock products. If they are ultimately classified as securities, existing DeFi protocols might need to apply for corresponding licenses. Although many projects are exploring compliant paths, most still operate in a regulatory grey area.

Summary

The crypto world once entertained itself within its own circle: new chains, new coins, new stories, new narratives. But real financial power comes from being able to host the markets where global capital truly wants to participate.

And the Nasdaq is always there, with trillions in capital flowing, trading the world's most valuable companies.

Therefore, true crypto players never care where the battlefield is, only where the opportunity lies.

Disclaimer: This article is for informational purposes only and does not constitute any investment advice. Invest cautiously, make rational decisions based on your own situation, and bear the risks yourself.

Market liquidity is excessively fragmented. Capital inflows can no longer effectively propel the entire market, creating liquidity black holes instead of growth flywheels.

Market manipulation is rampant, involving tactics like Time-Weighted Average Price games, oracle exploits, and fake trading volume, while governance mechanisms fail.

Builders face significant challenges. Protocol upgradability renders infrastructure unreliable, composability is broken, and innovation is stifled.

Potential solutions include enhancing token issuance transparency, having exchanges delist tokens based on integrity, incentivizing protocol composability, and supporting real products over mere narratives.

The industry needs consolidation and curation to reduce noise. The future should focus on building trustworthy systems, not on infinite token issuance.

Summary

Expand

Author: jawor

Compiled by: AididiaoJP, Foresight News

The Paradox of Choice

When people are faced with too many choices, they effectively have fewer. In a famous study, a table displaying 24 varieties of jam attracted a large crowd, but almost no one made a purchase. What happened when the choices were reduced to six? Sales skyrocketed.

Now, apply this paradox to cryptocurrency. We have over 20,000 listed tokens. If we count all the experiments, rug pulls, memecoins, and abandoned sidechains, the total might reach fifty million. It's sheer madness. The casino isn't just open; it's infinite. Infinite betting tables, infinite tokens, infinite meta-consumption.

The result? No one knows what to bet on anymore.

An Unwinnable Game for Users

Retail investors don't stand a chance. Wallet user experience is a minefield. You bridge assets, pay fees, forget to revoke approvals, and end up holding ten dead tokens. Most new users leave within 90 days. It's brutal, yet unsurprising. We've deliberately made this difficult—not to protect value, but to chase it.

The deeper issue is that crypto no longer feels sincere. We talk about decentralization and financial freedom, yet every week brings a new Trump-themed coin, a new insider pump-and-dump, another "influencer-led" rug pull. All this happens while liquidity fragments, narratives cannibalize each other, and attention spans thin to nothing.

This isn't a market maturing; it's chaotic entropy increase.

The Liquidity Illusion

Liquidity is now a joke. Even when capital flows in, it no longer lifts the market like it used to. Why? Because it gets spread thin across thousands of tokens. Everyone wants an "altcoin season," but there's no room left. It's like trying to inflate a thousand balloons with a single breath—impossible.

Take projects like Axiom, with impressive technology, but they often don't create new liquidity; they siphon user capital without reinjecting it into the ecosystem. Or observe OTC deals that dilute supply but don't appear on the books until insiders decide to dump.

We are building liquidity black holes, not flywheels.

Rampant Manipulation and Failed Governance

When the pool is drained faster than it's filled, you get more than just price stagnation; you get market manipulation.

Manipulation has become cheap. TWAP games, oracle exploits, fake volume—it's all too easy. Governance has become a farce. Voter turnout plummets, whales grab everything, and Sybil attackers farm with 30 wallets unnoticed.

It's not just users who suffer; builders feel the strain too.

The Builder's Dilemma

Teams burn through millions launching the "next big Layer 1" without product-market fit. Projects chase the same primitive concepts with minor tweaks. Composability is broken because everyone optimizes for token value, not protocol stability. Malleable infrastructure stifles innovation.

The fundamental DeFi primitives used to be immutable—things other builders could rely on. Now, most protocols are upgradeable, prioritizing short-term revenue over reliability.

This has a cascading effect:

* Builders cannot safely build on infrastructure.

* Liquidity becomes siloed.

* Protocols turn into isolated fiefdoms.

We broke the money legos. Now we're just playing with loose bricks.

An Unsustainable Trajectory

Most of these tokens never should have existed. But in crypto, permissionless = inevitable. Anyone can launch anything. You can't stop that.

But perhaps we can shape the environment.

The Need for Curation, Not Just Permission

Centralized exchanges still act like value-neutral platforms. They delist tokens when trading volume dries up, not when the team abandons the project or the ecosystem decays. This needs to change. Initiatives like @blockworksres's Token Transparency Framework are a start, but imagine if multiple token rating agencies existed, and their average scores influenced CEX listing/delisting decisions.

This isn't censorship; it's curation. And it's desperately needed.

The Silver Lining: Consolidation

Venture capital is drying up. Mediocre projects can no longer easily secure funding rounds. Q2 2025 saw record M&A volume. Coinbase acquired Deribit and Echo. Stripe acquired Bridge. We're talking about multi-billion dollar deals. Why? Because there are too many moving parts and too little actual utility in the space.

That's not noise; that's consolidation.

* Too many projects chasing the same idea? They get absorbed.

* Too many tokens diluting the narrative? They get weeded out.

* Too many chains lacking traction? They shut down.

Less noise, more signal.

Building Belief, Not Just Hype

Crypto needs belief again—not memes, not hopium, not another token-lock presale with a $300 million fully diluted valuation and no product.

Belief doesn't come from more. It comes from clarity. From the surface area of a smaller set of things that genuinely work. From protocols that care more about their product than their price pump.

We can build filters, not firewalls.

We can:

* Demand greater transparency from token issuers.

* Push exchanges to delist tokens based on integrity, not just revenue.

* Create incentives for protocols to become composable again.

* Reward builders who ship real products, not just narratives.

* Prefer fewer, higher-conviction bets over infinite "re-rotation."

The future doesn't lie in launching the next altcoin casino. It lies in creating systems that people can trust and want to stay in for longer than 90 days.

A bull market will come again. It always does.

But next time, let's not waste it on another thirty million tokens that nobody needs.

USDe: The Darling That Became the Detonator
USDe, the “synthetic dollar” issued by Ethena Labs, had spent 2025 swaggering into third place among stable-coins with a $ 14 B supply. It carried no bank deposits; instead it ran a textbook delta-neutral book—long spot ETH, short perp ETH. Funding-rate cash-flow (often 12-15 % APR) was handed to stakers, and when looped 3-4× through lending pools the headline yield hit 40-50 %.
The model works only while two assumptions hold:

1. Perp funding stays positive (longs pay shorts).

2. Instant liquidity lets anyone exit at $ 1.
   Both failed within minutes. ETH’s 16 % slide flipped funding deeply negative, turning USDe’s hedge into a bleeding liability. Then a cross-margin whale on Binance—rumoured to be a traditional market-maker—was liquidated, its USDe collateral auto-dumped. Price kissed $ 0.60 on the world’s largest exchange. The peg was broken, confidence snapped, and the stable-coin became a leveraged risk bomb.

The Looping Trap: 50 % APY in Three Clicks
Here is how the “risk-free” 50 % was manufactured:

• Deposit 100 k USDe → borrow 80 k USDC → swap to 80 k USDe → re-deposit.

• Repeat twice more; you now have ~350 k USDe earning “base” yield.
  A 5 % move in the collateral price triggers liquidation of the entire tower. When USDe slipped to $ 0.95 the health-factor of every looped position cratered. Smart-contracts began forced selling, pushing price to $ 0.92, which triggered more liquidations—classic reflexive death-spiral. Investors who thought they were in a “high-yield savings account” woke up with negative balances and no exit door.

Market-Makers Blow Up: Liquidity Evaporates
USDe had quietly become the margin currency of choice on Hyperliquid, Apex, and several CEX cross-margin books. When it marked-to-market at $ 0.60, every $ 1 M nominal hedge suddenly counted as $ 600 k. Leverage ratios doubled, stop-outs cascaded, and HFT desks watched their risk-limits breach in milliseconds.
Hyperliquid’s HLP liquidity-provider vault printed a 40 % single-day gain, jumping from $ 80 M to $ 120 M—blood-money collected from liquidated punters. Bid-ask spreads on mid-cap alts ballooned to 8 %; order-books went ghost-town. The stable-coin crisis mutated into a market-wide liquidity vacuum, turning an ordinary correction into an 80 % alt-coin genocide.

Ghost of Luna: Rhyming, Not Repeating
Veterans smelled May-2022 déjà vu:

• Eye-popping yield (Anchor 20 % → Ethena 50 %)

• Algo-stability backed by reflexive tokens

• Death-spiral triggered by exogenous shock

• Contagion from “safe” coin to whole ecosystem
  Key difference: USDe is over-collateralised by staked ETH and short perp PnL, so it did not go to zero. Supply has already rebounded to $ 0.92 and reserves are auditable on-chain. Yet the social damage is identical—retail piled in chasing yield, institutions used it as collateral, and no one asked “what if everyone exits at once?”
  Three years after Luna, the industry re-created the same leverage candy with shinier wrappers.

Lessons Carved in Red Candles

1. There is no stable-coin that pays 50 % risk-free; the coupon is the risk.

2. Looping is hidden leverage—four-fold in three clicks.

3. Any hedge that requires perpetual funding to stay positive is short a tail-event that arrives… periodically.

4. When the same asset becomes collateral, liquidity token and yield farm, it will fail all three jobs at once.

5. “This time is different” are the four most expensive words in finance; the algorithmic stable-coin graveyard already has tombstones: Basis, Terra, Iron, Empty Set, Frax v1… USDe just dug the next row.

Epilogue: Survival > Return
Buffett’s tide went out and half the market was naked. The tariff tweet was unpredictable; the leverage built on USDe was not.
If you cannot explain where the yield comes from in one sentence, assume it comes from your principal.
If the product needs a white-board, a funding-rate curve and three smart-contracts to stay at $ 1, it is not a dollar.
Remember Luna’s week, remember 11 October 2025, and remember the simplest rule in crypto:
Staying alive beats getting rich—because getting rich means nothing if you’re not around to spend it.

Reflecting on predictions made a year ago about this cycle's main trends, they were about half right. The current primary and secondary trends feel like this:

1. PayFi / Stablecoins / RWA

This category was anticipated, but more accurately, it's "Stablecoins" (which now includes RWA). Key projects to watch:

* $CRCL: Essentially a bet on Circle maintaining its top-two position in stablecoins. While still not cheap at $135, considering the potential 5-8x expansion of stablecoins over the next five years and the major correction from $300 to $108, it might be an acceptable entry point. The author bought in at $115.

* $PlasmaFDN: With Tether equity unavailable, Plasma is a key proxy. Wait for the spot token and mainnet launch rather than trading futures. Plasma currently leads competitors like Stable in funding, ecosystem development, and social buzz. Mainnet TVL is projected to start at 3-4B. Its pre-market/contract valuation of 6B is also high, so wait for spot listing opportunities. The battle for the top stablecoin blockchain is a major看点, with veteran Tron seeing its USDT TVL drop from 83B to 77B last month, while newcomers like Plasma lead the pack.

* $ENA: A hedge within the stablecoin narrative, betting on both centralized and decentralized leaders. Ethena is arguably the only decentralized stablecoin worth buying, with USDE surpassing 13.5B, DAT and fee switch ready, and strong fundamentals. It also has a centralized USDTB nearing 2B and its own RWA chain, Converge, coming. Despite solid fundamentals, the token price has recently underperformed.

* $ONDO: This enables 5x24h, no-KYC (via 1inch) trading of tokenized U.S. stocks with institutional backing. If you believe in the borderless, on-chain stock trend (a major RWA use case), Ondo is a rare investable asset. However, its market cap is also high, with characteristics of high holder concentration and high FDV – a case of "you get what you pay for."

2. AI Agent

The initial wave of AI Agents like Goat and ai16Z were largely meme-driven and fizzled out. However, 2025 has seen the emergence of genuinely usable AI Agents with potential Product-Market Fit, such as Skywork in Web2, and HeyAnon, Giza, Almanak, and Rei Network in Web3.

The most anticipated event is the Bittensor halving early next year. If this creates a significant price dip, it could be a golden buying opportunity. Bittensor remains the leader in Web3 AI, with several of its subnets starting to generate meaningful revenue, making it the most promising project in the space.

3. Meme

This trend was correctly predicted and has continued from last year into 2025. The competition has intensified, with major launchpads now competing directly with Pump.fun. Yet, "Pump.fun remains the king," still leading by a wide margin and now expanding into live streaming, positioning itself as a "Web3 TikTok." While specific Meme coin alpha changes daily, the consistent beta play remains $PUMP.

4. Prediction Markets - A Potential New Main Trend

Prediction markets are emerging as a potential new main narrative. Polymarket shows steady growth, but Kalshi's recent data has been explosive, surpassing Polymarket last month. The crypto space is crowded with new prediction market projects. Hyperliquid's HIP-4 proposal also focuses on event prediction markets. Some experts even suggest this sector could eventually disrupt the traditional insurance industry by allowing users to directly hedge against transparent probabilities instead of relying on insurers' opaque odds.

However, there are few investable assets in this sector on secondary markets, leaving everyone waiting for a Polymarket token (rumored at a $3B valuation – again, expensive).

An Alternative Perspective: Value & Tokenomics

Another way to view the main trend is simply: "Projects with real revenue, profits, and token buybacks." From this pure value perspective, arguably only two tokens truly fit the bill: $HYPER & $PUMP.

Additional Note on PayFi/Stablecoins/RWA:

Besides CRCL, Plasma, ENA, and Ondo, Tempo is another key project. Initially omitted due to token issuance uncertainty, the latest Bankless podcast suggests a token is likely.

The thesis differs from Plasma: while Plasma is backed by Tether, a highly effective founder, and strong connections to major DeFi protocols and Binance, Tempo's strength lies in Stripe's powerful B2B distribution channel (serving millions of merchants) and the fact that Paradigm is directly building it (not just investing).

Hyperliquid's stablecoin recruitment efforts highlight the critical importance of distribution channels beyond just issuance. The future might see a "Twin Kings" model for stablecoin blockchains: Plasma dominating the consumer (To C) side, and Tempo dominating the business (To B) side.

Pros: Why the Market Wants Plasma to Win

1. Speed & Cost – Sub-second blocks and zero transfer fees; even after Tron slashed fees by 60 % it still isn’t “free”.

2. EVM Legos – Aave, Curve, Pendle, etc. can fork-and-deploy instead of rewriting for Tron’s TVM; TVL could arrive in weeks, not years.

Cons: The Moats Tron Has Been Digging Since 2019

1. Liquidity Gravity – 76 B USDT live on Tron (down from 83 B, but still an order of magnitude ahead of any rival).

2. Exchange Plumbing – Most CEX hot-wallets run a Tron full-node; traders instinctively select “TRC-20” when withdrawing. That integration is sticky—ask anyone who tried to displace ERC-20 USDT in 2018.

3. Use-Case Reality Check – 80 % of USDT never leaves CEXes or sits as a dollar SOV in cold wallets; “payments” is a narrative, not yet a metric. For that job, Tempo’s distribution channels (cash-in/out in 120 k retail stores) look more disruptive than either chain.

Shill File: Why Plasma Might Actually Ship

• Binance listed a pre-launch perpetual at 6–7 B FDV and still absorbed size—venture-level validation before main-net.

• Founding team’s CV screams “we know how to talk to institutions” (same shop that courted Aave, Circle and Fireblocks last year).

• Early eco-grants are already out; DINBuild lets an agent buy RPC calls with x402 micro-payments—hinting at programmable fee abstraction (something Tron can’t match without a hard-fork).

FUD Corner: Blast Déjà Vu?
On-chain sleuths note overlapping GitHub handles between Plasma and the Blast crew. Blast delivered a 2 B TVL headline, then slowly ghosted deliverables. If the overlap is real, it cuts both ways: proven ability to manufacture hype, but also a reputation for hit-and-run. Eco-projects we spoke to, however, say this time the multi-year grant schedule is written into the genesis block—code beats promises.

Bottom Line
Tron’s channel dominance is still the elephant—76 B USDT doesn’t move overnight. But elephants can be flanked: if Plasma launches with Binance-grade liquidity and blue-chip DeFi yields on day-one, the marginal USDT flow could flip within a single cycle. Watch the CEX withdrawal menus in Q1-2026; the first venue that defaults to “PLASMA” instead of “TRC-20” will sound the starting gun.

Global fascination with stablecoins is surging, yet most people still confuse them with the digital money already sitting in PayPal or Apple Pay. The difference is structural: stablecoins run on public blockchains, eliminating the daisy-chain of banks, card schemes and remittance agents that slow fiat down. The result is permissionless, programmable, 24/7 value transfer that behaves like physical cash—only digital and borderless.

An Argentine freelancer can open a self-custody wallet in seconds, auto-convert peso earnings to USD-stable value for 0.1 % fees, and be protected from 200 % inflation by the time the block confirms. The problem: to reach this promised land users must juggle chains, gas tokens, bridges and seed phrases—tasks as inviting as early-2000s Active-X plug-ins.

Enter Plasma – Building the “Chrome” Moment for Stablecoins

Internet Explorer once owned 95 % of the browser market; users tolerated crashes and pop-ups because nothing better existed. Chrome’s 2008 launch changed the game with a 10× speed boost, sandboxed tabs and silent security updates. Plasma wants to do to stablecoin rails what Chrome did to web browsing: make the tech invisible and the experience frictionless.

PlasmaBFT – One-Second Finality, No More “Spinning Wheel”

Traditional chains can take minutes—or hours—to guarantee a payment. PlasmaBFT, a Fast-HotStuff variant, compresses validator chatter and aggregates signatures so that two consecutive certificates finalize a block in ~1 s. Think of it as Chrome’s multi-process architecture: one frozen tab no longer crashes the whole browser.

EVM Compatibility – “Works Out of the Box” for Developers

Chrome won because every existing website just worked. Plasma is built on Reth, a Rust-based Ethereum client, so Solidity contracts, Hardhat scripts and MetaMask integrations migrate with zero code changes—no IE-style compatibility mode required.

Native Bitcoin Bridge – Turning BTC into Programmable Collateral

Wrapped-BTC models rely on centralized custodians and high fees. Plasma’s trust-minimized bridge moves BTC directly into an EVM environment where it can collateralize dollar-stable assets while retaining Bitcoin’s 15-year security track-record. Users can hold BTC and spend USDT in the same block.

Zero-Fee USDT Transfers – The “Free” That Actually Scales

Chrome was free, but somebody still paid the Google bill. Plasma Foundation underwrites gas for official Tether transfers up to a daily quota; KYC-bound wallets prevent Sybil attacks. Merchants and remittance apps can now quote the exact amount received—no “you must buy 0.003 ETH first” drop-off.

Custom Gas Tokens – Pay Fees in Whatever Coin You Hate Least

Forget the ETH → MATIC → TRX scavenger hunts. A Chainlink-style oracle basket lets users pay gas in USDT, BTC, or any whitelisted asset. Exchange rates are settled atomically inside the block, so the sender never sees the swap.

Privacy Mode – Incognito for Stablecoins

Full transparency is a feature—until it isn’t. Plasma’s optional privacy module spins up one-time stealth addresses and encrypts memo fields while staying EVM-compliant. Regulators retain the ability to decrypt via view-key, mirroring Chrome’s “incognito, but still subject to law” balance.

From Beta to Ecosystem – The Extension Store Phase

Initial hype (XPL sale closed in minutes, Binance Earn capped at $1 B) mirrors Chrome’s 2008 launch buzz. The real moat will be the extension layer: Aave, Pendle and Ethena are already porting contracts; a grants program is recruiting micro-payment apps for real-time payroll, pay-per-article journalism and dollar-based nano-lending.

Bottom Line – Usability, Not TPS, Wins the Race

Chrome did not beat IE by boasting more HTML tags; it won by hiding complexity. Plasma’s thesis is identical: abstract away gas, bridges, custody and volatility risk so that stablecoins feel like spending money, not configuring a router. If the roadmap ships, the “stablecoin Chrome” nickname may stop being a metaphor and become the default wallet in every AI agent, remittance app and point-of-sale device on Earth.

Co-founder Chris Larsen personally holds over 2.5 billion XRP (approximately $7 billion), distributed across multiple wallets. His recent selling activities have drawn market attention, yet his holdings still account for 4.6% of XRP’s market value.

Exchange holdings are significant: South Korea’s Upbit custodies about 6 billion XRP, Binance holds 2.7 billion, while Uphold and Coinbase hold 2 billion and 780 million XRP, respectively, reflecting strong retail demand.

Whale addresses hit a record high: In June 2025, wallets holding over 1 million XRP reached 2,708, indicating growing institutional confidence. Daily active addresses surged to 295,000, a sevenfold increase from previous levels.

High concentration and market impact: The top 100 addresses control approximately 68% of the circulating supply, raising decentralization concerns. However, regulatory clarity (following the conclusion of the SEC lawsuit) is driving enthusiasm among institutional and retail investors.

Summary
Author: Marcel Deer, Cointelegraph
Compiled by: Felix, PANews

1. Ripple Labs

Ripple Labs is currently the largest holder of XRP, controlling approximately 42% of the total supply of 100 billion tokens. This is unsurprising, as the company developed the XRP distributed ledger and created the XRP digital currency.

The San Francisco-based company categorizes its substantial XRP holdings into two main groups:

• 4.5 billion XRP as liquid assets for operations.

• 35 billion XRP locked in escrow accounts.

Ripple operates a managed release system, unlocking a certain amount of XRP each month. Typically, 1 billion XRP is released monthly through a smart contract mechanism on the XRP distributed ledger. This approach helps manage supply and maintain price stability. The released funds are used to cover Ripple’s operational expenses and provide liquidity for its On-Demand Liquidity (ODL) service.

As part of prudent financial management, Ripple does not inject all the newly unlocked XRP into the market each month. Instead, 60% or more of the monthly unlocked funds are re-locked, as the company’s operational costs do not require the entire amount.

In an extreme scenario, if Ripple were to stop re-locking tokens, the entire 35 billion XRP in escrow would be depleted within just three years. The current re-locking pattern suggests that Ripple will likely remain at the top of the XRP holdings list for years to come.

For many crypto users, such a large degree of control over the supply is concerning. A 42% share grants Ripple unprecedented influence over market dynamics. This high concentration is a double-edged sword: while it provides flexibility, it also raises questions about decentralization and the principles it advocates.

Note: There are currently over 6.6 million active XRP wallets; however, many of these may be wallets with very small balances or dormant addresses. Additionally, a significant portion of these wallets likely belong to duplicate users managing multiple addresses. In reality, the global number of XRP holders is likely less than 1 million.

2. Chris Larsen’s Billion-Dollar Empire

Ripple co-founder and executive chairman Chris Larsen is the largest individual holder of XRP, with over 2.5 billion XRP worth approximately $7 billion.

He distributes his XRP holdings across eight different crypto wallets, all of which are labeled on blockchain explorers. Among these eight wallets, Wallets 1 to 4 still hold just over 500 million XRP and have never seen any outgoing transactions. These funds were acquired through founder grants in 2013. However, Wallet 5 has been actively selling during 2025, reducing its holdings from 500 million to 280 million XRP.

In July 2025, Chris Larsen made headlines with a large-scale sell-off. After July 17, $175 million worth of XRP was transferred to exchanges. These sales coincided with XRP’s price reaching a seven-year high, surpassing $3.

Despite this, Chris Larsen’s total XRP holdings still account for 4.6% of the entire XRP market value. This not only makes him one of the wealthiest XRP holders but also one of the richest individuals in the crypto space. Even as an individual, the amount of XRP he holds is sufficient to significantly influence market dynamics.

As ZachXBT noted on X: "Wallets associated with Chris Larsen now hold only 2.81 billion XRP ($8.4 billion)."

Note: To rank among the top 10% of XRP holders, one needs only 2,396 XRP, which was worth approximately $7,000 as of August 2025.

3. XRP Exchange Giants

During daily trading activities or for storage purposes, billions of dollars in customer funds are held on exchange platforms. This places some of the world’s most popular exchanges among the top XRP holders.

South Korean exchange Upbit leads in XRP trading, custoding approximately 6 billion XRP. This reflects extremely strong retail demand in South Korea, as well as substantial institutional trading volume.

Additionally, Binance ranks second among exchanges, with multiple custody wallets holding over 2.7 billion XRP. Similarly, Uphold recently held nearly 2 billion XRP, followed by Coinbase with 780 million XRP.

Interestingly, Coinbase’s holdings have significantly decreased since Q2 2025. This is likely due to strategic adjustments rather than regulatory caution, especially given the SEC’s decision to drop its lawsuit against Ripple Labs in early August 2025. This has given XRP an unprecedented judicial standing in the U.S.

Nevertheless, Coinbase reduced its holdings by 57% within a month, while its competitors continued to accumulate reserves.

It is worth noting that exchanges primarily hold customer assets rather than institutional trading positions. Therefore, understanding which exchanges hold large amounts of XRP provides insight into retail ownership and demand, rather than institutional control.

Note: In 2025, just 100 addresses controlled approximately 68% of XRP’s circulating supply. This makes it one of the most concentrated assets among top cryptocurrencies by market cap.

4. Record-High Whale Accumulation of XRP

2025 has been a watershed year for XRP. It has transformed from a crypto "pariah" sued by the U.S. Securities and Exchange Commission (SEC) into an asset with clear legal status.

As whales accumulate XRP, momentum continues to build. In June 2025, XRP reached another milestone: the number of wallet addresses holding over 1 million XRP reached 2,708. This is the highest level in XRP’s nearly 12-year history.

At 2025 prices, each whale wallet holds XRP worth over $2 million. This reflects growing confidence among institutional investors. The number of daily active addresses on the XRP ledger climbed to 295,000 in June 2025.

The surge in active addresses indicates interest from both retail and institutional players. This figure is nearly seven times the average of the past three months (35,000 to 40,000 active addresses).

XRPScan provides a glimpse into the holdings ranking. Among the top wallets, Ripple’s escrow accounts hold 5 billion XRP. Beyond this, the notable wallets on the list are associated with globally recognized exchanges, with only two anonymous trader wallets making it into the top 20.

It is clear from the 2025 XRP holdings ranking that token ownership is highly concentrated. Ripple Labs dominates across metrics, and Larsen’s total XRP holdings exceed $8 billion.

This raises concerns about decentralization, especially amid record whale accumulation and growth in institutional wallets. However, the legal clarity following a five-year lawsuit is strengthening institutional investors’ confidence in XRP.

Exchanges are also accumulating record levels of funds, with customer custody deposits driving these numbers higher on the holdings ranking. This metric indicates that, despite concerns, token ownership remains attractive to retail investors.

DeFi Sector

• USD1: An institutional-grade USD stablecoin issued by WLFI, with a market cap exceeding $2.4 billion. Deployed on BNB Chain, Ethereum, Tron, and Solana.

• Chainlink (LINK): Provides cross-chain interoperability support for USD1. Market cap approx. $15.53 billion.

• Ethena (ENA), Ondo Finance (ONDO), Plume Network (PLUME): Collaborate with WLFI in stablecoin integration and RWA, with market caps ranging from hundreds of millions to billions.

• Dolomite (DOLO), Raydium (RAY), Kamino (KMNO): DeFi protocols serving as core lending markets or trading platforms for USD1, with some showing significant recent gains.

• Falcon Finance, Lista DAO, Kernel DAO, StakeStone (STO): Integrate USD1 through collateral, restaking, or liquidity distribution.

MEME Sector

• BONK.fun (BONK/GP): Official Launchpad for USD1 on Solana, with market caps of $1.64 billion and $100 million respectively.

• BUILDON GALAXY (B), DORA, Torch of Liberty (Liberty): MEME tokens leveraging the USD1 ecosystem, each with market caps over $100 million.

• Blockstreet (BLOCK), EGL1, U, America.Fun (AOL): Gained attention due to potential USD1 partnerships or official holdings, with some tokens experiencing high volatility.

DAT (Crypto Treasury Strategy)

• ALT5: Secured $1.5 billion in funding led by WLFI, with WLFI executives actively参与 governance. Market cap: $793 million.

Other Collaborations

• Vaulta (A): Backed by WLFI investment to advance Web3 banking. Market cap: over $760 million.

• Tagger (TAG): Adopts USD1 for data settlement. Market cap: approx. $93.6 million.

Summary
Author: Nancy, PANews

World Liberty Financial (WLFI) is launching tonight (September 1), with pre-market prices recently rebounding after a dip. As market excitement builds, WLFI’s ecosystem is drawing significant attention. This article highlights 23 related projects, focusing on DeFi and MEME sectors, while WLFI executives also play key roles in DAT (Digital Asset Treasury) strategies.

DeFi
USD1
USD1 is an institutional-grade stablecoin announced by WLFI in March. By September 1, its market cap surpassed $2.4 billion. It is deployed on BNB Chain, Ethereum, Tron, and recently Solana, with BNB Chain accounting for over 88.5% of its circulation.

Chainlink (LINK)
WLFI recently enabled multichain functionality for USD1 via Chainlink’s Cross-Chain Interoperability Protocol (CCIP). LINK’s market cap is approx. $15.53 billion.

Ethena (ENA)
WLFI partnered with Ethena Labs in December 2024, starting with yield token sUSDe. ENA’s market cap exceeds $4.18 billion.

Ondo Finance (ONDO)
Collaboration announced in February to promote tokenized RWA adoption. WLFI plans to integrate Ondo’s tokenized assets, including USDY and OUSG, as reserve assets. ONDO’s market cap: over $2.75 billion.

Plume Network (PLUME)
Strategic partnership announced in July to expand USD1’s multichain presence. USD1 will serve as reserve for Plume’s pUSD and support its RWAfi ecosystem. PLUME’s market cap: $230 million.

Dolomite (DOLO)
A leading lending protocol on Berachain, aiming to be a core lending market for USD1. It switched its primary trading pair from USDC to USD1 and recently listed on Binance Spot. Its founder is also a WLFI technical advisor. DOLO’s market cap: ~$130 million, with a 123% gain in 30 days.

Raydium (RAY)
Became the official DEX for USD1 on Solana on September 1, listing USD1-SOL and USD1-USDC pairs. Integration with WLFI App is upcoming. RAY’s market cap: over $890 million.

Kamino (KMNO)
Integrated USD1 on Solana on launch day. KMNO’s market cap: ~$150 million.

Falcon Finance
A synthetic stablecoin protocol by DWF Labs, added USD1 as collateral. Received a $10 million strategic investment from WLFI in late July.

Lista DAO (LISTA)
Partnered with WLFI in May to expand USD1 use cases. Over 100 million USD1 deposited, making it the largest USD1 DeFi protocol. Plans to launch a yield-bearing stablecoin based on USD1 in Q3. LISTA’s market cap: over $56.998 million.

Kernel DAO (KERNEL)
Integrated with USD1 in May as a restaking asset, marking USD1’s first use for third-party app security. KERNEL’s market cap: over $43.9 million.

StakeStone (STO)
A full-chain liquidity partner for USD1. Launched USD1 LiquidityPad Vault in July for cross-chain liquidity distribution. STO’s market cap: ~$18.37 million.

Memecoin
BONK.fun (BONK/GP)
Officially partnered with WLFI to become USD1’s official Launchpad on Solana. BONK’s market cap: ~$1.64 billion; GP’s market cap: $100 million.

BUILDON GALAXY (B)
Originally the first MEME to feature USD1 as a core trading pair. Rebranded in July and plans to launch USD1’s first Launchpad. Market cap: over $710 million, an all-time high.

DORA (DORA)
A USD1 ecosystem MEME on BNB Chain with a female-centric narrative. Market cap: reached $180 million.

Torch of Liberty (Liberty)
Another USD1 ecosystem MEME on BNB Chain. Market cap: over $120 million.

Blockstreet (BLOCK)
The first official USD1 native Launchpad. Its co-founder Matthew Morgan is a WLFI advisor and ALT5’s CIO. Market cap: over $64 million.

EGL1 (EGL1)
Won USD1 trading competition hosted by Four.Meme. Market cap: ~$52 million.

U (U)
A MEME on BNB Chain, with WLFI’s public wallet holding over 45% of its supply. Market cap: over $18.86 million.

America.Fun (AOL)
Launched by WLFI advisor ogle on BONK.fun. Surged on speculation of USD1 collaboration but dropped 50% after no announcement. Market cap: fell below $10 million.

DAT
ALT5
Raised $1.5 billion in early August led by WLFI, launching WLFI’s treasury strategy. WLFI executives hold key governance roles. ALT5’s stock rose 27.1% in a week, with a market cap of $793 million.

Others
Vaulta (A)
Received a $6 million investment commitment from WLFI in July to advance Web3 banking in the U.S. USD1 will be integrated into Vaulta’s infrastructure. Market cap: over $760 million.

Tagger (TAG)
Adopted USD1 for settling Web2 enterprise data orders. Plans to reward data annotators in USD1. Market cap: ~$93.6 million.

Treasury Strategies: Funding Gaps and Star Power
The divergence is starkest in “crypto-treasury” plays.

• BitMine Immersion, the self-styled “Ethereum MicroStrategy,” plans to raise $20 billion to keep buying ETH and already sits on $5.3 billion in net-asset value (NAV).

• Upexi, the SOL counterpart, commands only $365 million in NAV—more than 10× smaller—and lacks a marquee spokesperson.

Wall Street’s perennial bull Tom Lee (Fundstrat) was appointed BitMine’s chairman on June 30; ETH has since rallied 88 %.
Upexi is fighting back: on August 12 it recruited Arthur Hayes, co-founder of BitMEX and head of the Maelstrom fund, as the first member of its new advisory board. Hayes brings heavyweight derivatives and TradFi credibility the Solana camp has sorely lacked.
Upexi currently stakes 1.8 million SOL (≈ $365 million) at 7-9 % yield and buys discounted locked-SOL from OTC desks to enhance shareholder returns. Other public companies—DFDV, BTCM—have also disclosed seven-figure SOL purchases, gradually reducing free float.

ETF Scoreboard: $22 Billion vs. $150 Million

• ETH spot ETFs now manage $22 billion; BlackRock has even filed to add staking rewards, luring sticky institutional capital.

• SOL ETFs remain boutique: REX-Osprey’s SSK, a staking-enabled offshore wrapper, has pulled in only $150 million since July. Market attention is fixed on potential October approvals from VanEck and Grayscale for a true U.S. spot product—an event that could unlock a tidal wave of allocations.

Narrative Fork: Compliance vs. Memes

• Ethereum has become the settlement layer for compliant finance: over half of the $250 billion global stable-coin float and 30 % of associated gas are settled on ETH. Robinhood tokenizes equities on Base; Coinbase doubles down on Layer-2. ETH’s moat looks increasingly like a “structural call option” on regulated on-chain finance.

• Solana still leans on meme-coin virality and high-beta launchpads. Yet a turning point may be at hand: on August 8, CMB International (China Merchants Bank’s offshore arm) joined Singapore’s DigiFT and Solana service provider OnChain to tokenize a cross-border money-market fund—CMBMINT—on Solana. The deal, the first of its kind, sent SOL back above $200 and is being hailed as Solana’s “RWA starter pistol.”

Conclusion: SOL’s Window Is Still Open
ETH has seized the first-mover advantage via treasury firepower, ETF inflows, and a compliance-first narrative. SOL’s underperformance, however, may be consolidation rather than capitulation. As the “American chain,” Solana enjoys superior regulatory clarity. If October delivers a spot ETF approval and CMBMINT-style tokenized funds proliferate, SOL could finally attract the institutional flows it has craved. For now, the pullback looks more like reloading than retreat.

Customer vs. Non-Customer: Who Needs KYC?

Under HKMA’s guidelines, not all stablecoin holders are subject to KYC obligations. The distinction lies in whether the holder is a "customer" of the stablecoin issuer:

• Customer Stablecoin Holders: Users who directly interact with the issuer (e.g., request issuance/redemption or establish a business relationship) must undergo full KYC/KYB procedures.

• Non-Customer Stablecoin Holders: Those who acquire stablecoins via secondary markets (e.g., DEXs or peer-to-peer transfers) do not automatically require KYC, provided the issuer maintains robust risk controls.

However, issuers must continuously monitor all stablecoin transactions, including those by non-customers, to comply with anti-money laundering (AML) and counter-terrorist financing (CFT) rules.

KYC as a Regulatory Backstop, Not a Mandate

HKMA’s framework allows issuers to avoid blanket KYC if they implement effective on-chain risk management, such as:

• Blockchain analytics tools

• Address blacklisting

• Transaction risk scoring

• Wallet profiling and freezing mechanisms

If these measures satisfy HKMA, KYC can be waived for non-customers. Otherwise, issuers must enforce KYC universally.

A Binary Choice for Issuers

Stablecoin issuers face two compliance paths:

1. Advanced Risk Controls: Deploy real-time monitoring, blacklisting, and AML systems to avoid mass KYC.

2. Full KYC Coverage: Apply identity verification to all holders, including secondary-market participants.

This approach balances regulatory rigor with flexibility, rewarding issuers capable of mitigating risks without imposing unnecessary burdens.

Conclusion: Compliance Through Innovation

Hong Kong’s stablecoin regulations do not inherently stifle decentralization but demand accountability. The key question for issuers is not whether to implement KYC but how to prove their risk controls suffice.

As the industry evolves, the challenge lies in bridging regulatory expectations with blockchain’s permissionless nature—a task requiring both technical ingenuity and compliance foresight.

For a detailed breakdown of HKMA’s requirements, refer to the original article.

This summary is based on analyses from BlockSec and other regulatory insights. For full context, consult the referenced sources.

Recent developments signal an accelerated rollout of offshore RMB stablecoins: According to Reuters, mainland tech giants JD.com and Ant Group have repeatedly lobbied the People’s Bank of China (PBOC) to pioneer the issuance of offshore RMB (CNH)-denominated stablecoins in Hong Kong. Notably, PBOC Governor Pan Gongsheng, while historically cautious toward cryptocurrencies, has expressed openness to stablecoins, acknowledging their potential to streamline cross-border payments via "payment-as-settlement" while emphasizing regulatory challenges. Earlier, Guotai Junan International’s approval from Hong Kong’s Securities and Futures Commission (SFC) to upgrade its virtual asset trading license—triggering a stock surge—was seen as a signal of "state-backed" entry into crypto. Against this policy "thaw," market players are gearing up, transforming RMB stablecoins from concept to reality.

I. Event Timeline

Per Caixin, on May 21, Hong Kong’s Legislative Council passed the Stablecoin Bill, establishing a licensing regime for fiat-backed stablecoin issuers. By May 30, the bill was gazetted, formalizing it as law.

Tech giants swiftly responded:

• June 12: Ant Group announced applications for stablecoin licenses in Hong Kong, Singapore, and Luxembourg to bolster blockchain-based cross-border payments and treasury services, via subsidiaries Ant International (Singapore) and Ant Digital Technologies (Hong Kong).

• June 17: JD.com revealed plans to issue a Hong Kong dollar-pegged stablecoin on public blockchains, targeting B2B payments before expanding to consumers. Notably, the U.S. Senate passed the Clarity for Payment Stablecoins Act the same day, marking America’s first regulatory framework for stablecoins.

Hong Kong regulators moved rapidly. The Stablecoin Ordinance takes effect August 1, with the Hong Kong Monetary Authority (HKMA) opening license applications. With only a handful of licenses expected, over 40 firms—primarily Chinese financial heavyweights and tech giants like JD.com, Standard Chartered, and Ant—are vying for slots. Smaller players face high barriers, and some are accused of exploiting the hype for stock gains.

Hong Kong’s Secretary for Financial Services and the Treasury, Christopher Hui, framed the ordinance as a milestone to "provide prudent oversight and foster sustainable growth for Hong Kong’s digital asset ecosystem," reinforcing its global financial hub status.

II. Key Debates & Expert Insights

1. Misconceptions vs. Reality

Discussions among regulators, scholars, and market participants converge on viewing stablecoins as digitized extensions of fiat currency, not independent money. Wang Yongli, ex-vice president of Bank of China, stressed that regulated stablecoins are "tokenized fiat," highlighting inefficiencies in traditional cross-border systems. He noted recent U.S. and Hong Kong laws—mandating licensing, 100% reserves, and interest bans—reinforce centralized oversight, mitigating decentralization risks.

Clarifying myths:

• Myth 1: "Stablecoins are blockchain Alipay."
  Reality: Unlike Alipay (a payment conduit), stablecoins are value-bearing assets.

• Myth 2: "The Hong Kong dollar is a ‘USD stablecoin.’"
  Reality: While both are 100% collateralized, HKD is a sovereign currency managed by the HKMA for public benefit, whereas USDT profits private issuers like Tether ($10B+ in 2023).

• Myth 3: "Stablecoins are decentralized."
  Reality: They are hybrid—centralized in issuance/reserves (e.g., fiat backing) but decentralized in circulation.

Conclusion: Stablecoins are transitional tools bridging traditional finance and blockchain, reflecting the resilience of sovereign currencies despite crypto’s rise.

2. Hong Kong as China’s Testing Ground

Morgan Stanley warns that U.S. stablecoin laws could cement dollar dominance, prompting Beijing to leverage Hong Kong as a "regulatory sandbox" for RMB stablecoins. Ex-PBOC governor Zhou Xiaochuan cautioned that dollar stablecoins may accelerate global "dollarization," urging vigilance.

Li Yang of China’s National Finance and Development Lab advocates a "dual-track" approach:

• Track 1: Accelerate the digital yuan (e-CNY) for domestic/wholesale use.

• Track 2: Pilot offshore RMB stablecoins in Hong Kong for cross-border trade, synergizing with CIPS (China’s cross-border payment system) and swap lines.

Notably, RMB’s share of global reserves fell from 2.8% (2022) to 2.2% (2024), attributed to concerns over China’s "triple challenges" (debt, deflation, demographics).

Design Proposals:

• Xiao Feng of HashKey suggests a "two-tier model": CBDC (wholesale) + licensed stablecoins (retail/cross-border), with issuers holding e-CNY reserve accounts.

• Hong Kong’s early-mover advantage could later extend to mainland pilot zones (e.g., Greater Bay Area, Hainan).

III. Hong Kong’s Regulatory Framework

The Stablecoin Ordinance combines licensing and sandbox testing, with the HKMA launching a pre-legislation sandbox in March 2025. Key requirements:

1. Reserves & Transparency: 100% high-liquidity backing, monthly audits, and public disclosures.

2. Redemption: Guaranteed T+0/T+1 redemption at par.

3. Local Presence: HK-registered entities with physical offices and HK-based management.

4. AML/CFT: Strict KYC and cross-border compliance, aligning with FATF standards.

HKMA CEO Eddie Yue warned of stablecoins’ anonymity risks, while legislator Johnny Ng stressed they are "payment tools, not speculative assets."

Conclusion

Hong Kong’s stablecoin push balances innovation with prudence, aiming to:

1. Position itself as a global compliance benchmark.

2. Pilot RMB digitization without destabilizing mainland finance.

3. Counter U.S. dollar hegemony through "dual-track" coordination (e-CNY + offshore stablecoins).

As geopolitical tensions reshape finance, Hong Kong’s experiment could redefine RMB’s role in the digital age—if it navigates the tightrope between ambition and risk.

Translated with emphasis on:

• Fluency: Natural English phrasing (e.g., "policy thaw" for "破冰").

• Technical precision: Clarifying terms like "双重架构" as "two-tier model."

• Structural clarity: Bolded headers and logical paragraph breaks for readability.

• Cultural context: Explaining Chinese-specific concepts (e.g., CIPS) for global audiences.

With Robinhood, Kraken, and Bybit successively announcing their foray into US stock tokenization, and Chainlink, Jupiter, and other major ecosystems subsequently declaring support for the trading of tokenized stocks of Apple, Tesla, Nvidia, and others, this "boundary-breaking" concept has gone viral in the crypto community overnight. Among them, the crypto-native exchanges Kraken and Bybit have chosen to adopt the Sol-based underlying architecture of the stock tokenization platform xStocks, while the digital brokerage firm Robinhood has opted for Arbitrum as the token issuance chain.

Amidst the undiminished fervor of various ecosystems, the market was hit with a "cold water" piece of news. According to LinkedIn data, the three co-founders of the Israeli company Backed Finance, which stands behind the stock tokenization platform xStocks, namely Adam Levi Ph.D., Yehonatan Goldman, and Roberto Klein, have all been confirmed to have worked at the now-defunct DAOstack.

xStocks US Stock Tokenization Trapped in "Precedent" Suspicion: Operated by DAOstack's Bankrupt Team

Among them, Adam Levi Ph.D. served as a co-founder of DAOstack to provide endorsement, Yehonatan Goldman was the Chief Operating Officer of DAOstack, and Roberto Klein was in charge of legal and regulatory affairs at DAOstack.

Data from ICO Drops indicates that DAOstack raised approximately $30 million in funding through multiple rounds of financing from the fourth quarter of 2017 to May 2018, and shut down at the end of 2022 due to financial exhaustion. The DAOstack team was accused of a "soft RUG PULL."

According to crypto influencer @cryptobraveHQ, DAOstack issued the token $Gen in 2019, and after experiencing the 2021 bull market, the team simply let the token "free fall." "The team was too lazy to even list it on a small exchange; after the token issuance, they just let it go to zero," he said.

xStocks' Operation Mechanism

However, in terms of its operation mechanism, xStocks has, at least for now, provided a viable path.

xStocks is operated by its parent company registered in Switzerland, with the actual controller being the issuer Backed Assets based in Jersey. Backed Assets purchases stocks in the US market through the IBKR Prime channel under Interactive Brokers, and then transfers and places them into segregated accounts at Clearstream, a depository institution affiliated with the Deutsche Börse.

Once the "three-step" process of purchasing, transferring, and depositing is completed, the issuer Backed Assets triggers the contract deployed on the Solana blockchain, initiating the minting of corresponding stock tokens. For instance, for every 1,000 shares of Tesla stock purchased and deposited, 1,000 TSLAx tokens are minted on a 1:1 basis on the chain. The control address of the token contract belongs to the issuer Backed Assets. Subsequently, third-party exchanges such as Kraken, Bybit, and Jupiter can directly list these tokens for spot and futures trading.

If investors or market makers actually purchase one or more TSLAx tokens, they can approach Backed to exchange them for the actual Tesla stocks held by the brokerage. Additionally, dividends are automatically airdropped as more of the same tokens after a snapshot is taken.

During market closures, the prices of stock tokens across the network will refer to Chainlink's oracle. If there is a significant deviation from the actual US stock prices, arbitrageurs can profit by buying and selling tokens on the xStocks platform or on exchanges like Kraken and Bybit, thereby pushing prices back to a reasonable range.

Potential Concerns

However, in addition to the aforementioned "soft RUG PULL" precedent of the founders, community users still report many shortcomings of xStocks, some of which are difficult to substantially improve. Some users frankly stated: "On-chain stock tokens are just a castrated version of stocks created for tax evasion."

For example, users generally believe that the liquidity of xStocks is very thin. Each stock currently listed only supplies 6,000 tokens, which has already shown significant volatility on the chain that exceeds the actual situation of US stocks.

Secondly, the fees are excessively high. On-chain tokenized stocks on xStocks have a high burn rate of 0.50% plus an annual management fee of 0.25%, making it more expensive to hold US stocks on the chain than to hold actual shares.

In addition, some community members believe that the pledged stocks are custodied by off-chain custodians without public auditing, posing a risk of exposure. The on-chain stocks lack shareholder voting rights, and what is actually held is an unsecured note, which is also a cause for concern. The slow experience of purchasing and redeeming is also intolerable for users.

Borrowing the comment of the KOL who exposed the scandal of the xStocks founders, "Israeli web3 projects have both the 'laid-back' demeanor of European projects and the capitalization operation ability of American projects; in summary, they are irresponsible to users from beginning to end."

Solana, one of the top high-performance blockchains, has addressed this challenge with the Solana Attestation Service (SAS), which combines off-chain identity verification with on-chain communication. Launched in May 2025, SAS introduces a privacy-preserving, reusable, and composable way to link real-world credentials with blockchain accounts.

Let’s delve into what SAS is, how it works, why it’s important, and how it will redefine the concept of identity in the decentralized world.

What is Solana Attestation Service?

The Solana Attestation Service is essentially an open, permissionless protocol designed to enable secure, verifiable credentials on-chain without exposing sensitive personal data. It allows trusted third parties, known as “issuers,” to create attestations about a user’s identity or qualifications, which are then stored in the user’s wallet.

These attestations can be used to verify the following across various applications:

• Know Your Customer (KYC) status

• Geographical eligibility

• Accredited investor status

• Age verification

• Association with real-world organizations or events

The attestations themselves do not reveal sensitive information but rather serve as cryptographic proofs that the claims have been verified by a trusted party. The system achieves seamless and secure access to services while preserving privacy.

Solana Identity Group: Driving the Future of On-Chain Identity

The SAS initiative is the first release from the Solana Identity Group, a collaborative project among ecosystem participants, including:

• Solana Foundation: Supporting the growth and security of the network.

• Civic: A leader in decentralized identity.

• Solana.ID: Focused on on-chain reputation.

• Trusta Labs: Utilizing AI for identity verification and Sybil attack resistance.

• Solid: Building globally interoperable identity tools.

Together, these organizations lay the foundation for a standardized, composable identity layer on Solana.

How Solana Attestation Service Works

SAS operates through a tripartite model and a dedicated on-chain program:

• Issuers: Issuers are trusted third parties (such as KYC providers, event organizers, or government agencies) that create attestations for users. These attestations are digitally signed to prove their authenticity and adhere to established standards.

• SAS Program: The on-chain program responsible for issuing, verifying, and managing attestations. It ensures that attestations are composable, interoperable, and verifiable without relying on any centralized authority.

• Holders: Users (holders) receive attestations and store them in their digital wallets. Since SAS is integrated into Solana-compatible wallets (such as Phantom or Backpack), users can carry verified credentials across the ecosystem.

• Verifiers: These can be any DApp, protocol, or smart contract that requests verification of certain attributes (such as age or residence) before granting access to services or tokens. Verifiers never see the full underlying data; they only see the verified claims.

Since the system is non-custodial, composable, and interoperable, developers can stack and combine attestations like building blocks without having to start from scratch when designing verification systems.

Steps to create an attestation:

1. Define Schema: Establish the structure of the attestation, specifying the types of claims (e.g., “over 18 years old,” “residing in the UK”).

2. Issue Attestation: The issuer signs the attestation with its private key and associates it with the holder’s wallet address.

3. Store Attestation: The signed attestation is stored on-chain or off-chain according to privacy requirements and is linked to the holder’s wallet.

These proofs can then be presented by the holder to verifiers, who can verify their authenticity without accessing the underlying personal data.

Key Features of SAS

Here are the key features of SAS:

• Portable Credentials: Users can reuse their attestations across other platforms after completing a single verification process.

• Privacy by Default: Only necessary information is shared. Sensitive data is never shared or retained without permission.

• Composable and Interoperable: Developers can stack multiple attestations to fit complex use cases.

• Instant Verifiability: Verifiers can verify the validity of credentials with a single SDK call, without the need for a dedicated backend system.

• Open Infrastructure: Anyone can build on SAS. There is no central authority managing who can issue or verify attestations.

Getting Started with Solana’s SAS

To integrate SAS into your application or issue attestations, follow these steps:

1. Install SAS SDK: For JavaScript/TypeScript projects, manually install the SAS library as follows:

   npm install @solana/attestation-service
   

   For Rust, use the following command:

   cargo add solana-attestation-service-client
   

2. Review Documentation: Check the official SAS documentation.

3. Implement Attestation Logic: Use the SDK to create, sign, and verify attestations in your application. The SDK provides functions to handle the entire attestation lifecycle.

4. Test Integration: Test the implementation on Solana’s devnet before deploying to the mainnet to ensure functionality and security.

5. Deploy to Mainnet: After testing, deploy your application to the Solana mainnet and start issuing or verifying attestations.

Core Use Cases of SAS

SAS supports a wide range of applications in Web3:

• KYC Passports: Users can undergo KYC once and reuse verified credentials across exchanges, DeFi platforms, and launchpads.

• Geo-Based Access Control: Projects may restrict participation, content, or token access based on users’ jurisdictions.

• Sybil Attack Resistance: By confirming user uniqueness, it prevents bot attacks and ensures fair token distribution.

• Investor Accreditation: Verifies investor qualifications on platforms offering real-world asset tokenization.

• DAO Reputation Systems: Establishes systems based on trust and merit, where voting and rewards reflect actual contributions.

• DePIN and Proof of Location: Supports decentralized infrastructure networks by verifying hardware or geographic locations.

Key Ecosystem Adopters of SAS

The success of SAS lies in its adoption. Leading projects have integrated or announced plans to support the protocol:

• Civic: Users with Civic Pass now automatically hold SAS-compatible credentials, unlocking compliant asset access in Solana DApps.

• Solana.ID: Uses SAS to verify work and professional certifications, allowing employers to issue immutable employment proofs.

• Solid: Issues “Premium Passes” containing KYC and social credentials, usable across multiple Solana applications.

• Trusta Labs: Combines AI and SAS for identity verification, Sybil attack resistance, and user localization in DeFi and governance.

• RNS.ID: Enables self-sovereign digital identities supported by the government of Palau, integrated with SAS for trusted on-chain verification.

• Wecan: Connects official government registries (such as land or shareholder records) to the blockchain using SAS.

• Polyflow: Supports verifiable transactions and identities in PayFi applications, making payments traceable and compliant.

• Range: Enhances blockchain security with on-chain identity intelligence.

• Sumsub: As a leading KYC provider, now supports SAS credentials for its reusable identity framework, helping users register seamlessly across platforms.

• Honeycomb Protocol: A game SDK that uses SAS to enable verifiable quests, profiles, and reputation in Solana-based games.

The institutionalization of crypto assets is not a cyclical bubble but a systemic embrace of decentralized trust mechanisms by the global financial system. The shift from "crypto speculation" to "stock investing" reflects an evolution from zero-sum gaming to value co-creation. Compliance defines survival, technology dictates growth potential, and real-world adoption shapes valuation ceilings.

The Institutional Pivot: A New Era for Crypto Assets

The first half of 2025 marked a decisive shift from retail-driven volatility to institutional dominance in crypto markets. Bitcoin hit a yearly high of $110,000 on May 22, fueled by institutional inflows that repositioned crypto from a speculative asset to a portfolio staple. This transformation has unlocked new opportunities in crypto-related equities.

• U.S. Stocks:

  • Coinbase surged to $271.95 on May 22.

  • Circle’s June 5 IPO triggered multiple trading halts, closing 167% above its offering price.

• Hong Kong Stocks:

  • Hua Sheng Capital (early Circle investor) jumped 14% intraday on June 9.

  • Lianlian DigiTech (+80%), OKG Technology (+41%), and ZhongAn Online (+70% in 5 days) rallied on stablecoin regulatory tailwinds.

• A-Shares:

  • Digital currency firms like Chutian Dragon (10% gain on June 3) and Sinodata (limit-up on June 5) outperformed.

The late-May to early-June crypto rally propelled equities, signaling a maturation toward institutionalization, compliance, and value reassessment.

The Symbiosis of Crypto Assets and Equities

Three key factors drove this convergence:

1. Institutional Control & Capital Concentration

   • Bitcoin’s rally correlated with rising institutional holdings (e.g., BlackRock and Fidelity’s spot ETFs absorbed billions).

2. Ethereum’s Ecosystem Expansion

   • Layer 2 transactions now dominate (60% share), with TVL surpassing $108B post-Cancun upgrade.

3. Stablecoin Regulation Breakthroughs

   • The U.S. GENIUS Act mandated 100% reserve backing, lifting USDC/USDT’s combined market cap to $280B+.

   • Hong Kong’s Stablecoin Ordinance cemented its role in cross-border payments.

Crypto-Linked Stocks: Valuation Reimagined

U.S. Market Leaders

• Coinbase: Peaked at $271.95 (May 22), sustaining high volatility.

• Circle: IPO frenzy (+167%) reflected confidence in compliant stablecoins.

• Miners: Marathon Digital ($15.5–$16) and Riot Platforms ($4.5–$5) stabilized.

Hong Kong’s Policy-Driven Rally

• Hua Sheng Capital: +14% (Circle investment exposure).

• Lianlian DigiTech: +80% (payments infrastructure play).

• ZhongAn Online: +70% in 5 days (blockchain insurance applications).

A-Shares: Policy & Tech Catalysts

• Chutian Dragon, Sinodata, and Hengbao surged on China’s digital yuan advancements.

Three Drivers of Value Reconstruction

1. Compliance as the Foundation

   • U.S. GENIUS Act, EU’s MiCA, and Hong Kong’s dual-track regime created "license premiums."

2. Institutional Capital Reshaping Markets

   • Sovereign funds and corporates (e.g., DayDayCook’s 5,000 BTC treasury plan) adopted crypto as inflation hedges.

3. Technology as a Growth Multiplier

   • Tokenized gold, bonds, and RWA platforms bridged TradFi and DeFi, lifting valuations beyond pure-finance metrics.

Future Trends: Regulatory Divergence & Real-World Adoption

• Regulatory Fragmentation:

  • U.S. custody licensing, EU AML/KYC tightening, and Hong Kong’s hub ambitions will shape cross-border flows.

• RWA Expansion:

  • McKinsey forecasts trillions in tokenized real estate, carbon credits, and supply chain finance.

• Corporate Adoption:

  • Firms like DayDayCook integrating BTC into balance sheets signal a shift from speculation to strategic allocation.

Conclusion: Anchoring Value in a New Paradigm

The institutionalization of crypto assets reflects structural, not cyclical, change. Investors must pivot from price swings to evaluating:

• Compliance moats,

• Technological edge,

• Real-world utility.

The fusion of digital and traditional finance is here—value creators, not gamblers, will thrive.

(Data as of June 2025. Full analysis available at HashKey Research.)

Key Terms:

• GENIUS Act: U.S. stablecoin law requiring 100% reserves.

• MiCA: EU’s Markets in Crypto-Assets regulation.

• RWA: Real-World Asset tokenization (e.g., property, bonds).

• TVL: Total Value Locked (DeFi liquidity metric).

Disclaimer: This report is for informational purposes only and not investment advice.

The strength of the equity and risk markets has left Wall Street hedge funds astonished and has led many to question what hidden information they might have missed. Following the April rebound, the three major US stock indices continued their robust rally, while BTC reached a new all-time high.

Behind this, the "reciprocal tariff war" has seen some easing but has not yet achieved a breakthrough in reaching an agreement. The Russia-Ukraine conflict remains deadlocked between negotiations and offensives. However, the influx of capital has been overwhelming, with over $2.7 billion flowing into the BTC Spot ETF channel. Long-term holdings are approaching record highs, while exchange holdings continue to decline, indicating a very strong supply and demand situation for BTC.

On the policy front, the state-level BTC reserve bill in the US has achieved a historic breakthrough. The GENIUS ACT, related to stablecoins, has also passed the Senate vote.

The US economy has seen strong employment data, a continuous decline in inflation, and an upward revision in GDP expectations. This is perhaps the fundamental reason for the market's strength. However, the tariff war remains unresolved, and the US debt panic triggered by the "Beautiful Big Plan" has not subsided. The performance of US stocks and BTC this month already includes the most optimistic estimates. The market may experience volatility in the near term to eliminate uncertainties, awaiting the rate cuts expected in the third quarter.

Macroeconomic Finance: Reciprocal Tariffs and the Risk of a "Mild Recession"

In our April report, we noted that "the most painful period has passed, and once Washington and the Federal Reserve return to a rational game, the market should be able to return to its natural operating rules." The reality has shown that global geopolitical games and the US democratic system have triumphed over President Trump's ambitions. Market expectations have ultimately returned to rationality, leading to a sustained rebound and the most optimistic pricing.

The consecutive occurrence of a "triple kill" in stocks, bonds, and the exchange rate has caused severe turbulence in the US financial market. Coupled with strong opposition from the business community, Trump was forced to concede. The "reciprocal tariff war" he initiated quickly entered the second stage of "negotiation" in May and began the third stage, first reaching a tariff agreement with the UK.

In early May, the US and China held the first round of trade talks in Switzerland, pressing the pause button on the intense tariff war that had lasted for over a month. On May 12 (Eastern Time), both sides issued a joint statement, committing to reduce the previously imposed high tariffs over the next 90 days and to continue negotiating on economic and trade relations. The S&P 500 surged by 3.26% on that day.

In early April, as Trump softened his stance, US stocks launched a major counterattack, recovering most of the losses since the tariff war began in April. In May, with the formal start of US-China trade negotiations, the previously stagnant US stocks received another boost and continued to rise. By the end of May, the Nasdaq, S&P 500, and Dow Jones indices recorded monthly gains of 9.56%, 6.15%, and 3.94%, respectively.

We view the April rebound in US stocks as a reflection of the end of panic selling and Trump's softening stance, representing a rapid pricing after the first stage of the "reciprocal tariff war." The May rally signifies an optimistic pricing for the second stage (negotiation) of the tariff war. Based on the currently available public information, this pricing appears to be sufficient and optimistic. We believe it would be imprudent to expect further substantial upward pricing until there is progress in the tariff war, a rate cut by the Federal Reserve, or further developments in the Russia-Ukraine conflict.

The May pricing has already incorporated the relatively "strong" performance of the US economy and employment fundamentals.

Economic Data and GDP Now

The economic data released at the end of May showed that the US economy contracted by 0.2% on an annualized basis in the first quarter. This figure was slightly revised upward from the previously announced preliminary estimate of a 0.3% contraction, but it still indicates that the US economy suffered some damage at the beginning of the year due to consumption spending and imports.

After several months of underestimation, the GDP Now data from the Federal Reserve Bank of Atlanta showed a rebound. The data returned to above zero by the end of April and reached 3.8% by the end of May, reflecting the optimistic sentiment following the easing of the tariff war.

Inflation and Employment Data

The PCE data released in May, which is closely watched by the Federal Reserve, showed that inflation continued to slow down. The PCE annual rate fell for three consecutive months to a low of 2.15%, while the core PCE dropped to 2.52%, the lowest since the pandemic began, gradually approaching the 2% target that the Federal Reserve is aiming for in its rate cut expectations.

US PCE Data

Employment data exceeded market expectations. The US Bureau of Labor Statistics announced in early May that the non-farm payrolls increased by 177,000 in April 2024, higher than the market expectation of 138,000. As of the week ending May 24, 2025, the number of people filing for unemployment benefits was 240,000, an increase of 14,000 from the previous week (revised to 226,000), higher than the market expectation of 230,000. The strong employment data not only dispelled market concerns about a US economic recession but also focused the Federal Reserve on its "anti-inflation" target.

The Federal Reserve's interest rate decision this month was to maintain the status quo for three consecutive months. Although the Federal Reserve had released some "dovish" remarks to the market during the "triple kill" period in stocks, bonds, and the exchange rate, it withstood the immense pressure from President Trump and continued to hold steady after the financial market stabilized, emphasizing that the uncertainty caused by tariffs could lead to a rebound in inflation data.

The strong performance of the financial market, combined with the ongoing "reciprocal tariff war" and the potential for inflation to rebound, led the market to conclude that the Federal Reserve would not restart rate cuts in the first half of the year. The latest data from CME FedWatch indicates that traders are betting that the US will only cut rates twice this year, in September and December, each by 25 basis points. This expectation effectively "curtailed" the space for a liquidity-driven surge in US stocks and crypto assets.

Outlook for US Stocks and BTC

Based on the current data and situation, we anticipate that US stocks and BTC are likely to remain volatile over the next two months, with the potential for new all-time highs not expected until the rate cut expectations in August. This forecast includes an optimistic resolution of the "reciprocal tariff war" and a relatively "mild" recession in the US economy.

The US GDP recorded a -0.21% contraction in Q1, and if the "reciprocal tariff war" causes a decline in consumer confidence and market turmoil in Q2, leading to a slight drop in Q2 GDP, it would meet the criteria for a "mild recession." Therefore, starting rate cuts in September might be a more cautious expectation.

Crypto Assets: Robust Capital Inflows Drive BTC to New Highs

In May, BTC opened at $94,182.55 and closed at $104,645.87, rising by $10,463.33 or 11.11% for the month, with a volatility of 19.79% and a continuous decline in trading volume for two months.

BTC Monthly Price Chart

From our ongoing technical analysis, after BTC returned to the "Trump Bottom" ($90,000-$110,000) in April, it set a new all-time high of $112,000 and moved above the "first upward trendline of the bull market."

In the high-interest-rate environment, retail investors have not formed a truly decisive buying force. In fact, since March of last year, the daily increase in BTC addresses has fallen to a low level.

BTC New Addresses (Daily)

In the bottoming-out and rebound since April, the decisive force came from institutions.

Strategy Company Holdings Statistics

Based on the announcement data of Strategy companies included in the Nasdaq 100, they have increased their holdings by 133,850 BTC since 2025, bringing their total holdings to 580,250 BTC.

Since January 2024, when 11 BTC Spot ETFs were approved, and May 2024, when the US House of Representatives passed the Financial Innovation and Technology Act (FIT21), crypto assets and blockchain technology have gradually been established as key development areas in the US. Since then, the adoption of crypto assets, represented by BTC, has become more mainstream in the US.

In March 2025, US President Trump signed an executive order to establish a "Strategic Bitcoin Reserve," designating approximately 200,000 BTC held by the government as a national reserve asset.

Subsequently, more than 20 US states began to propose state-level Bitcoin reserve bills. This initiative also saw a breakthrough in May. On May 7, the governor of New Hampshire signed a bill, making it the first state in the US to officially incorporate cryptocurrency into its strategic reserves. The bill allows the state treasurer to invest up to 5% of state funds in cryptocurrency. The Bitcoin reserve bills in Texas and Arizona have also passed the Senate vote and are awaiting the governors' signatures to take effect.

Regulatory and Institutional Developments

On the blockchain and Web3 front, the GENIUS ACT, which aims to regulate stablecoin development, passed a procedural vote in the Senate on May 19 with 66 votes in favor and 32 against, paving the way for its final enactment. In the same month, the Hong Kong Legislative Council officially passed a bill to establish a licensing regime for fiat-backed stablecoin issuers.

Several major US banks are exploring the launch of a joint stablecoin. The banks involved include JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo.

With a total issuance of over $240 billion, stablecoins are set to enter a new era of compliance and development. Beyond BTC, stablecoins are likely to become the second most widely adopted crypto asset and are poised to be the first killer application in the Web3 space to break the 1 billion user mark. This will lay a solid foundation for the growth of blockchain technology, especially smart contract platforms.

Institutional Adoption and Policy Breakthroughs

Once incorporated into the regulatory framework, BTC and blockchain are becoming a technological high ground that the US must dominate. The investment and speculative sentiment driven by this trend is spreading. Following Strategy, companies around the world, including Trump Media Group, are initiating hoarding plans for BTC and other crypto assets such as ETH and SOL.

The expansion of use cases and the FOMO (Fear of Missing Out) sentiment and purchasing power stimulated by regulatory breakthroughs are the fundamental drivers of the price increase of BTC and other crypto assets.

Capital Flows: Optimistic Pricing and Robust Expansion

During the stock market crash in March and April, the inflow of capital into BTC Spot ETFs came to a sudden stop, causing BTC to adjust more than 30% in tandem with the stock market (the largest correction in this cycle). However, since April and May, with the strong rebound of US stocks, the buying power of BTC Spot ETFs has also recovered strongly, with inflows of $605 million and $2.775 billion, respectively. This has enabled BTC to recover all its losses and set a new all-time high of $112,000.

Capital Flow (Monthly)

On the stablecoin front (not all used for crypto trading), there has also been an increase, with inflows of $537.5 million and $556.7 million in April and May, respectively. However, compared to the capital flow changes in the BTC Spot ETF channel, this is relatively small.

As we previously noted, the pricing power of BTC has been transferred from on-exchange capital to the BTC Spot ETF channel and institutions like Strategy. These institutions exhibit a long-term bullish bias, driven by the continuous policy breakthroughs for BTC and crypto assets in the US. This is both the reason why BTC was able to rebound rapidly in April and May and surpass the Nasdaq to set a new all-time high, and the underlying logic supporting its long-term outlook.

Cautionary Notes

It should be noted that the US stock market has already made an extremely optimistic pricing for the tariff war and may have implicitly assumed that the US economy will not experience a significant recession. Currently, it is difficult for the US stock market to break new highs, and volatility is inevitable. Although institutions like Strategy continue to flow in, BTC Spot ETFs are unlikely to deviate from the Nasdaq in the short to medium term. Therefore, expecting BTC to set new highs again in the near future may be overly optimistic.

Exchange BTC Holdings Continue to Decline

During the decline in March and April, long-term BTC investors once again initiated purchases, objectively acting as a balancer to reduce market selling pressure.

Long and Short Position Structure (Monthly)

By the end of May, the scale of long-term holdings reached 14.4199 million BTC, near a historical high, while the inventory of centralized exchanges continued to decline, with only 2.9882 million BTC remaining, close to the level at the end of November 2020.

In previous cycles, when liquidity surged, long-term holders chose to sell, which objectively curbed price increases. However, during price declines within the cycle, long-term holders would slow down their selling or even switch to buying, which is also the case in this cycle.

What is different from previous cycles is that in the past, the "second sale" of long-term holders would end the bull market, but this time, after the "second sale," the market chose to continue upward. We interpret this as a change in market dynamics due to the addition of institutions like Strategy to the long-term holder structure. Whether this change is permanent or temporary requires close attention.

Conclusion

While we maintain a long-term optimistic view on the expansion of BTC's use cases and its long-term trajectory based on long-termism, the strength and sharp rise of BTC prices in the short term have still exceeded our most optimistic estimates.

This is due to the excessive optimism in the equity market, as well as the investment and speculative fervor triggered by BTC's significant expansion of use cases in the US. We are confident about the latter, but we believe that the pricing of the "reciprocal tariff war" in both the US stock market and BTC is overly optimistic, and there will inevitably be many twists and turns ahead. Additionally, we have revised our expectations for the Federal Reserve's rate cuts.

In our March report, we anticipated that BTC would begin a reversal in the summer, but the market response has been beyond expectations, with BTC setting a new high in May. Considering the many uncertainties and the delay in liquidity expectations, we believe that BTC is more likely to follow the volatility of the US stock market in the next two months, and setting new highs and reaching new price levels will be a low-probability event.

If all goes well, the next step up should be a story for the third quarter!

BNB Alpha Platform will list SOON ($SOON) on May 23, enabling trading and interactions. Eligible users can claim incentives using Alpha Points on the event page. Detailed rules will be announced upon launch.

Introducing SOON

SOON is a next-generation Rollup solution built on an optimized OP Stack, delivering superior execution efficiency for public chains through its innovative Decoupled SVM architecture. The platform uniquely integrates a modular data availability layer, allowing developers to choose from multiple storage solutions like Celestia and EigenDA, ensuring security while boosting network throughput.

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SOON Tokenomics

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• 51% Community Incentives: Fair launch distribution

• 25% Ecosystem Growth: Developer grants, strategic partnerships, and expansion

• 8% Marketing & Operations: User incentives and liquidity provisions

• 6% Long-Term Reserves: Sustainable project development

• 10% Core Team: Rewards for founders and early contributors

SOON’s Architecture

• The first SVM Rollup with execution-layer separation, settling on Ethereum for finality.

• Delivers high-performance SVM execution without compromising security.

2. Modular Development Suite (SOON Stack)

• A flexible framework for deploying custom SVM Rollups on different blockchains.

• Ideal for AI and other innovative use cases, featuring:

  • Multi-chain settlement compatibility

  • Integrated data availability solutions

  • App-specific optimizations

  • Efficient execution & consensus layers

3. Cross-Chain Coordination Protocol (InterSOON)

• Solves liquidity fragmentation in multi-chain ecosystems via secure message passing.

• Enables cross-chain smart contract interoperability, eliminating traditional bridging inefficiencies.

The SOON Team

• Joanna Zeng (Co-founder & CEO): Former VP at Aleo.

• Ruki Hu (Chief Marketing Officer): Previously at JDI Global.

SOON’s Funding Milestone

• January 22, 2025: Raised $22 million in funding.

SOON in Summary

SOON establishes a new paradigm for modular blockchains with its three core products, achieving breakthroughs in architecture and functionality. The platform not only offers highly flexible modular solutions but also addresses critical bottlenecks in performance and interoperability, laying a strong foundation for scalable dApps. Its unique design provides fresh insights into high-performance blockchain systems, accelerating the evolution of Web3.

Mainnet: Officially Live!
Shardeum, the world’s first auto-scaling L1 blockchain, is now live, boosting TPS per node while maintaining low gas fees. The testnet saw 81M+ transactions, 1.2M+ wallets, and 171K+ validators—all-time highs. Now, it’s time to scale the mainnet.

Shardeum TGE is complete—$SHM is now live!

Project Overview

Shardeum is an EVM-based, linearly scalable smart contract platform that delivers permanently low gas fees, true decentralization, and robust security via dynamic state sharding.

Tokenomics (2025 Update)

Shardeum’s dynamic supply mechanism features an initial circulating supply of 249M SHM, allocated as follows:

• Market Circulation (36.72%): 91.44M SHM – 3-month lockup, then daily linear release over 2 years.

• Core Team (30.6%): 76.2M SHM – Same 3-month lock + 2-year linear unlock.

• Development Reserve (22.44%): 55.88M SHM – Released fully at TGE.

• Ecosystem & Incentives (10.23%): 25.48M SHM – Distributed immediately at TGE.

Key Advantages

1. Technical Innovation

• Horizontal Scaling: Adds nodes linearly, avoiding centralization.

• Dynamic Sharding: Auto-adjusts network state for efficiency.

• Elastic Capacity: Scales resources on demand.

2. Economic Model

• Stable Low Fees: Costs stay cheap, regardless of network load.

• Dynamic Tokenomics: Flexible supply for long-term sustainability.

3. User Experience

• Fast Finality: Settles transactions in seconds (faster than rivals).

• Low Node Barriers: Runs on consumer hardware, boosting decentralization.

Team Highlights

• Nischal Shetty (Co-founder): Founder of WazirX (India’s top crypto exchange).

• Omar Syed (Co-founder): Ex-Yahoo! Chief Architect, NASA engineer, and blockchain architect at Shardus.

Funding Milestones

• July 2023: $5.4M strategic round at a $248M valuation.

• October 2022: $18.2M seed round at a $200M valuation.

Why Shardeum Matters

Shardeum’s dynamic sharding and auto-scaling push blockchain boundaries—balancing decentralization, security, and high throughput. As a next-gen infrastructure, it could enable mass Web3 adoption by solving the "scalability trilemma."

With mainnet live, Shardeum is poised to become a foundational layer for dApps, offering a rare blend of performance and decentralized principles.

Join the conversation—follow for deeper insights! 🚀

1. The "Ivory Tower" Mindset Restricts Innovation

The Ethereum Foundation (EF) had an elite culture that was detached from the market between 2020 and 2024, continuously piling up technical concepts while ignoring the real needs of users.

Faced with widespread criticism and guidance, the EF management chose to "turn a blind eye." This led to the loss of a critical time window for fixing problems, allowing high-performance chain competitors like Solana and Sui to break free from the oligopolistic effects of the Ethereum ecosystem and grow rapidly.

2. Overloaded Technical Narratives Cause Market Fatigue

From DeFi and NFTs to various Layer 2 scaling solutions, the Ethereum ecosystem acts like a narrative production factory, constantly rolling out new technical narratives without effectively capturing value.

This has caused users to gradually become fatigued with a development path that is purely technology-driven but does not reflect in the ecosystem or token prices. Ethereum has always hoped to stimulate a market building boom by raising the technical bar, but in reality, technical narratives alone are not enough to sustain market prosperity.

3. The Layer 2 Strategy Leads to Ecosystem Fragmentation and Liquidity Dispersion

Although Layer 2 projects like Optimism, Arbitrum, and Base have solved certain scalability issues technically—such as reducing Gas fees to imperceptible levels and significantly increasing TPS—they have also complicated and abstracted the user experience and caused excessive liquidity dispersion.

The compatibility issues of cross-chain standards between the OP Stack, ZK Stack, and various native Ethereum factions, as well as the interoperability barriers, have turned these market darlings into vampires issuing tokens for the sake of it. Not only do they fail to nourish the broader Ethereum ecosystem, but they also cause its continued decline.

4. The ETH Value Capture Model Fails

After the implementation of the EIP-1559 burn mechanism, the value capture effect of ETH did not work as expected. ETH lacks a direct value accumulation mechanism tied to network usage, and the(prosperity) of the layer 2 market in transaction fees has not been fully passed on to the main network. The modular architecture advocates for the separation of the base layer and the application layer, making ETH a basic infrastructure settlement layer rather than a necessary "value hub."

Therefore, while competitors like Solana achieve multiple times growth in short cycles, ETH still fails to effectively break through its historical high point.

5. Geek Community Culture Is Detached from the Mainstream Market

The Ethereum community, dominated by geeks, has long embraced technological purism, creating a rift with mainstream market players. Its refusal to embrace "Meme culture" and other seemingly "low-level" innovative forms has led to a cognitive generation gap with the new generation of users.

In contrast, the Solana ecosystem, with its inclusive attitude towards diverse innovations, has successfully attracted a large amount of fresh blood and market attention, forming a positive cycle of development.

The above points are noted.

However, like many friends who deeply care about Ethereum, even though we can clearly see the problems with Ethereum, we still believe that its current困境 (dilemma) is not irreversible. It cannot be denied that its active developer ecosystem and accumulated DeFi infrastructure security consensus remain the strongest.

Once the market's main melody of technical narrative and long-termism is set, the broader Ethereum will still occupy a core position. For most Ethereum enthusiasts and HODLers, giving up the excessive expectation of being the "second in the crypto universe" and viewing ETH from a pure decentralized network asset perspective in the broader market may lead to making more correct choices.